On May 30, 2014, the City of Los Angeles filed this lawsuit in the U.S. District Court for the Central District of California. The City sued JP Morgan Chase Bank under the Equal Credit Opportunity Act (ECOA) and Fair Housing Act/Fair Housing Amendments Act (FHAA). The City sought damages, declaratory and injunctive relief, alleging that the bank's lending practices were predatory, intentionally discriminated against minority borrowers, and had a disparate impact on minorities.
Specifically, the complaint alleged disparate impact claims, based on statistical data, that: 1) lending practices resulted in disproportionate number of foreclosures in minority neighborhoods; 2) minority homeowners received disproportionate number of predatory loans. It also alleged the bank intentionally discriminated against minorities by: 1) targeting minorities for predatory loans; 2) underwriting adjustable loan rates that borrowers could not afford; and 3) inducing foreclosures by refusing to offer refinancing or loan restructuring on fair terms. The City claimed it was injured as a result of the bank's practices through loss of property tax and decrease in property value.
The City also brought two other actions regarding discriminatory and predatory lending against Wells Fargo (City of Los Angeles v. Wells Fargo & Company, No. 2:13-cv-09007-ODW) and Citigroup (City of Los Angeles v. Citigroup, Inc., No. 2:13-cv-09009-ODW), respectively.
On June 25, 2014, the bank filed a motion to dismiss for lack of standing and failure to state a claim. On August 5, 2014, Judge Otis D. Wright granted the motion to dismiss but gave the City 21 days to amend its complaint. 2014 WL 3854332 (N.D. Cal. 2014).
On August 26, 2014, the City filed an amended complaint that again alleged that the defendant had engaged in discriminatory and predatory lending practices, adding that minorities in fact received predatory loan terms from JP Morgan and that these loan terms led to rapid foreclosure. The complaint further alleged that the City had been injured by the bank's practices because it still had to provide costly municipal services for properties in minority neighborhoods that had became vacant as a direct result of discriminatory loans originated or purchased by the bank.
On November 14, 2014, Judge Wright denied JP Morgan's motion to dismiss, stating that the City's allegations were sufficient to withstand the pleading stage. Judge Wright found the City's allegations regarding causation to be sufficient to assert standing, and ruled that Chase's arguments for dismissing the case for failure to state a claim went to the weight of the evidence, not the sufficiency of the pleading.
In the related case against Wells Fargo, on July 17, 2015, the Court granted summary judgment against the City. 2015 WL 4398858 (C.D. Cal. July 17, 2015). As a result, on August 6, 2015, the City filed an ex parte application to stay this case pending appeal of the Wells Fargo action, in order to avoid duplicative litigation both in the trial court and on appeal.
However, on September 2, 2015, the court (Judge Otis D. Wright II) dismissed the case with prejudice, as stipulated between the parties. We do not know if the matter was settled, or if Los Angeles simply withdrew it. No settlement papers are available.
Zhandos Kuderin - 08/01/2014
Asma Husain - 11/20/2015
MJ Koo - 02/16/2017
Alexandra Gilewicz - 02/06/2018
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