The U.S. Supreme Court just issued its decision in another fair housing case, Bank of America Corp. v. City of Miami (No. 15-1111). This case was brought by the City of Miami, alleging several major banks engaged in predatory lending practices against minority borrowers that resulted in waves of foreclosures during the Great Recession. The city claimed that it suffered a variety of harm, including frustration of its fair housing goals, increases in foreclosures and vacancies, decreases in property values and reduction in tax collections. In a 5–3 decision (Justice Gorsuch did not participate), Justice Breyer endorsed a broad reading of the concept of an “aggrieved person” under the Fair Housing Act (FHAct), saying that the city had sufficient economic injury to fall within the FHAct’s coverage.

On the other hand, the court refused to consider the second question raised by the banks—whether the city had established that the banks’ conduct was the proximate cause of the injury the city claimed. The fact that the injury alleged was foreseeable was not sufficient, according to Breyer, to show causation: “the housing market is interconnected with economic and social life,” and “[n]othing in the [FHAct] suggests that Congress intended to provide a remedy wherever those ripples travel.” Slip op. at 11. On remand, the lower courts are directed to examine these proximate cause issues in detail. This echoes the “robust causality requirement” that Justice Kennedy invoked in Texas Dep’t. of Hous. and Comm. Dev. v. Inclusive Communities Project, 135 S.Ct. 2507 (2015), its prior fair housing decision endorsing disparate impact liability under the FHAct.

Justice Thomas (with Alito and Kennedy) issued a separate opinion, arguing that the city’s injury was outside the zone of interests protected by the FHAct and that the city had also failed to show that its injuries were proximately caused by the banks’ lending policies.

The Bottom Line: Since the Supreme Court doesn’t take many fair housing cases, each decision it makes in this area has some potential for significant impact. At a minimum, this decision indicates that the courts have to give broad reading to the types of “aggrieved persons” who can bring FHAct cases, so the decision may encourage people with diverse types of injuries to sue. On the other hand, by invoking the need to show tort-type proximate cause, the court will make it more difficult for litigants to prevail in fair housing cases unless they can establish a direct connection between the alleged discriminatory practice and the injury they suffered.