Should Bank of America and Wells Fargo be held responsible for potentially billions of dollars in tax revenue Miami and other cities lost after property values plunged in minority neighborhoods due to questionable lending practices and foreclosures?
That’s just one of the tough questions U.S. Supreme Court justices asked in oral arguments over Bank of America v. Miami, which tests the limits of who can sue under the expansive Fair Housing Act.
A series of probing questions from Justice Elena Kagan, the daughter of a housing attorney who served as Solicitor General in the Obama administration said the FHA is “a very peculiar and distinctive kind of anti-discrimination statute that focuses on community harms, not individual injuries,” she said.
The banks had it tough. A pair of Supreme Court precedents established that the FHA extends standing, or the right to sue, “to the full limits of Article III” of the Constitution, including cities and even non-profit organizations dedicated to fighting housing discrimination.
Last year in Texas Dept. of Housing v. Inclusive Communities, Justice Anthony Kennedy upheld the disparate-impact theory in FHA suits, allowing plaintiffs to prove discrimination with statistics instead of direct evidence of discriminatory intent.
Given these precedents, attorney Neal Katyal, arguing for the banks, conceded from the outset that cities can sue under the FHA. He argued Miami was pushing its theory too far, appropriating the injuries allegedly suffered by minority borrowers as its own. That violated the idea of proximate cause as well as the requirement that the lending discrimination falls within the “zone of interest” the city can enforce.
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