On December 13, 2013, the City of Miami filed this lawsuit in the United States District Court for the Southern District of Florida, suing Bank of America and Countrywide Financial, under the Fair Housing Act of 1968 (FHA). Represented by the Miami City Attorney’s Office and private counsel, the city sought injunctive relief and damages for discriminatory lending practices. Specifically, it claimed that the banks had engaged in redlining and reverse redlining, both of which led to a disproportionately high number of loan foreclosures in Miami neighborhoods with large minority populations.

The case was initially assigned to Judge Joan A. Lenard. Upon her recusal, it was assigned to Judge Robin S. Rosenbaum, then later reassigned to Judge William P. Dimitrouleas.

On July 8, 2014, the court granted the banks’ motion to dismiss, finding that the city lacked standing to sue under the FHA because its alleged economic injuries were not “affected by a racial interest.” 2014 WL 3362348. In addition, the court held that the city had not alleged facts identifying the banks’ practices as the cause of the alleged disparity, and held that the statute of limitations had expired. The city filed a motion for reconsideration and for leave to file an amended complaint on July 21, 2014, which the court denied on September 8, 2014.

The city then appealed to the Eleventh Circuit on October 7, 2014. On May 12, 2015, that court consolidated the appeal with City of Miami v. Wells Fargo & Co. (for purposes of oral argument only). On September 1, 2015 the court (Judges Stanley Marcus, Charles Wilson, and Harvey Schlesinger) affirmed the district court’s dismissal of an unjust enrichment claim under Florida law, but reversed the decision to dismiss the FHA claims, holding that the city actually had standing to bring the FHA claims and that the district court had erred in its causation analysis. 800 F.3d 1262.

The banks appealed the Eleventh Circuit’s ruling to the United States Supreme Court, and the district court on July 13, 2016 granted an order staying proceedings while the appeal was pending. The Supreme Court heard oral arguments on November 8, 2016 and ruled on June 2, 2017. 137 S. Ct. 1296. It held that the city had standing to sue under the FHA. However, the Eleventh Circuit had erred in finding that the city met the FHA’s proximate-cause requirement simply because the city’s injury was foreseeable. The Supreme Court, requiring “some direct relation between the injury asserted and the injurious conduct alleged,” instructed the Eleventh Circuit to analyze more closely how directly the banks’ actions had harmed the city. Only if the Eleventh Circuit found a sufficiently direct relation could it allow the city to sue under the FHA.

While the appeal was pending before the Supreme Court, the city had filed a second amended complaint (providing facts showing that the violation was within the statute of limitations), the district court had again denied the city’s claims (171 F.Supp.3d 1314), and the city had filed a third amended complaint.

On remand from the Supreme Court, Judge Stanley Marcus of the Eleventh Circuit directed the parties to file briefs as to the meaning of proximate cause under the FHA. On April 30, 2018, both parties submitted their supplemental briefs. In addition, the Court of Appeals granted leave for several amici to file briefs addressing these issues on May 30, 2018.

Nearly a year later, on May 3, 2019, the Eleventh Circuit issued a ruling as instructed by the Supreme Court. The court set about to “endeavor carefully to apply the Court’s mandate to these complaints, to determine if they plausibly state a claim under the Fair Housing Act.” The court found that there was indeed “some direct relation” between the banks’ violations of the FHA and the city’s tax revenue loss, even though there were other causal steps involved. “The Supreme Court has never held that the presence of an intervening causal step or the involvement of a third party necessarily bars a finding of proximate cause as a matter of law, and we decline to establish so hard and fast a rule.” It explained that bad loans “in the aggregate will mean foreclosures in the aggregate, which will mean loss of property value and a reduction in the tax base.” The Eleventh Circuit sent the case back to the district court for further proceedings.

On May 24, 2019, the banks filed a petition for a rehearing before the entire Eleventh Circuit. The petition was denied on August 26, 2019. On December 9, 2019, the district court re-opened the case, directed the city to file an updated version of its complaint, and set a jury trial for February 15, 2021.

On January 29, 2020, the city abruptly dismissed all of its claims against the banks, and the district court dismissed the case the next day. Although the city never provided any explanation for its decision, Wells Fargo announced that the “dismissal was initiated by the city and is not related to a settlement, and Wells Fargo is providing nothing in exchange.” In light of the dismissal of the case, the Supreme Court vacated the Eleventh Circuit’s May 3, 2019 ruling.

Julia Florey - 03/29/2019
Gregory Marsh - 07/24/2020


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