On Monday, in Bank of America Corp. et al. v. City of Miami, Florida, the Supreme Court held in a 5-3 decision that the City of Miami had standing to challenge alleged violations of the Fair Housing Act by lenders. 581 U.S. ____ (2017). The Supreme Court left open whether there was a “sufficiently close connection” between the alleged misconduct and the injuries claimed by Miami (including reduced property tax revenue and increased police and fire expenses) to allow Miami to recover.

Miami alleged that Bank of America and another defendant violated sections 3604(b) and 3605(a) of the Fair Housing Act by “intentionally target[ing] predatory practices at African-American and Latino neighborhoods and residents[,]” leading to a “‘concentration’ of ‘foreclosures and vacancies’” in minority neighborhoods. 42 U.S.C. §§ 3604(b), 3605(a). Miami claimed that it was harmed because the alleged concentration of foreclosures and vacancies reduced nearby property values (and thus property taxes) and required additional police, fire and other public services in the affected neighborhoods. The alleged practices included charging minorities higher fees and interest rates, steering minorities into loans with “teaser” rates and overstated refinancing opportunities, and refusing to refinance or modify loans to minorities when similar accommodations were granted to whites. There has been no finding that the defendants engaged in the conduct Miami has accused them of.

The Supreme Court held that Miami was authorized to sue under the Fair Housing Act. The Fair Housing Act authorizes suit by an “aggrieved person[,]” which is defined to include “any person who . . . claims to have been injured by a discriminatory housing practice.” 42 U.S.C. §§ 3613(a)(1)(A), 3613(c)(1), 3602(i). The Supreme Court held that even if the Fair Housing Act did not provide standing “as broadly as is permitted by Article III of the Constitution[,]” Miami was entitled to standing because the financial impacts of discrimination on city budgets was within the “zone of interests” protected by the Fair Housing Act.

The other matter on appeal was whether there was a “sufficiently close connection” between the defendants’ alleged misconduct and the reduced tax revenue and increased expenses claimed by Miami (or, put another way, whether the misconduct was the proximate cause of the injuries). The Eleventh Circuit held that Miami satisfied this requirement because the losses it suffered were foreseeable. The Supreme Court vacated this holding, explaining that “foreseeability alone is not sufficient” to satisfy the proximate cause requirement. However, the Supreme Court declined to “draw the precise boundaries of proximate cause[,]” leaving that to the “lower courts [to] define, in the first instance[.]”