Removing Barriers Blog

Supreme Court Ruling on City of Miami v. BOA, Mixed Bag for Credit Unions

The Supreme Court of the United States, in a 5-3 decision ruled in the case styled the City of Miami v. Bank of America and City of Miami v. Wells Fargo. This case could have significant impact on credit unions and their potential exposure to class action lawsuits stemming from the anti-discrimination provisions of Fair Housing Act.  CUNA has been active in this case originally filing an Amici Curiae brief to convince the Court to hear the case, and subsequently filing an Amici Curiae brief on the merits of the case.   

This particular case involves the City of Miami which sued Bank of America and Wells Fargo under the Fair Housing Act, claiming that discrimination by the banks against city residents entitles the City to damages for indirect harm.  The City argued that the foreclosures and other events stemming from unfavorable mortgages resulted in lost revenue from lower property taxes. The City also alleged it incurred expenses from services it had to provide to foreclosed properties.  The city raised these allegations of damages even though several years have passed since the alleged bank violations. 

The lower court (the Eleventh Circuit) held that third parties like Miami were allowed to sue under the FHA, even if they never directly faced discrimination their alleged injuries occurred years later.    

The Amicus filed by CUNA urged the court to reverse the decision of the lower court, based on recent rulings from the Supreme Court itself, a lack of standing, and the unnecessary expansion of potential liability without any limiting factor. 

The ruling was somewhat of a “mixed bag”, but the Court did vacate the lower court ruling and remanded it back to the lower court for further proceedings.  The Court did not rule in our favor that the issue of whether the cities are within the “zone of interests” protected by the Fair Housing Act.  They stated that the city is an “aggrieved person” authorized to bring suit under the FHA.  A ruling on this issue could have outright prevented law suits of this type from proceeding outright. 

However, and on a more positive note, the Court did unanimously conclude that the lower court erred in holding that the cities could meet the FHA's “proximate cause” requirement based solely on a showing that their alleged financial injuries were a foreseeable result of the banks’ alleged misconduct.  Instead, the cities must show a “direct relation between the injury asserted and the injurious conduct alleged.”  While the Court left it to the lower courts on remand to define the precise boundaries of “proximate cause” under the FHA, the dissent seems to suggest it will be difficult to meet the standard in this particular case based on the ruling of the majority today.   

CUNA will continue to follow this case on remand to the lower courts.  While this is not the ideal result, it is likely that this new standard on “proximate cause” will help reign in some of the more tenuous claims that some are attempting to use to seek damages from financial institutions.

Ready the Supreme Court's full ruling here