City of Los Angeles v. Wells Fargo & Co.
691 F. App'x 453
| 9th Cir. | 2017Background
- The City of Los Angeles sued Wells Fargo under the Fair Housing Act (42 U.S.C. § 3605(a)) and for unjust enrichment, alleging discriminatory lending practices that disproportionately harmed minority borrowers.
- The City proceeded primarily on a disparate-impact theory, claiming Wells Fargo’s facially neutral policies produced racial disparities in loan outcomes.
- The City identified three policies as causes: (1) loan-officer compensation incentives favoring larger loans, (2) marketing targeted at low-income borrowers, and (3) inadequate monitoring for disparate outcomes.
- The district court granted summary judgment for Wells Fargo; the City appealed. The Ninth Circuit reviewed the grant of summary judgment de novo.
- The court concluded the City failed to show a discriminatory loan within the limitations period and failed to establish the required ‘‘robust’’ causal link between any neutral policy and a racial disparity for disparate impact liability.
- The court also affirmed dismissal of the unjust enrichment claim, holding the City’s alleged harms (lost tax revenue and increased public spending) did not confer a benefit on Wells Fargo required to support unjust enrichment under California law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether City proved disparate-impact liability under FHA § 3605(a) | City argued Wells Fargo’s neutral policies caused statistical racial disparities in lending outcomes | Wells Fargo argued City failed to identify a policy with a robust causal link to any disparity and failed to show a discriminatory act within the limitations period | Court held City failed to show a robust causal connection; summary judgment for Wells Fargo affirmed |
| Whether City established a qualifying discriminatory loan during the limitations period | City relied on aggregate evidence of disparities and policies to show impact | Wells Fargo argued absence of a timely, discrete discriminatory transaction proved by City | Court found no timely discriminatory loan shown; supported summary judgment |
| Whether the identified practices (compensation, marketing, monitoring) are legally sufficient policies causing disparate impact | City contended each policy plausibly drove disparities | Wells Fargo contended the first two affect borrowers regardless of race and the third is not a substantive policy | Court held City failed to show any policy causally linked to racial disparity in a robust way |
| Whether City’s unjust enrichment claim could proceed under California law | City argued Wells Fargo benefited from City’s harms (e.g., tax revenue losses tied to lending practices) | Wells Fargo argued City’s alleged harms did not confer a direct benefit on Wells Fargo necessary for unjust enrichment | Court held City did not show a benefit conferred on Wells Fargo; unjust enrichment claim fails |
Key Cases Cited
- Tex. Dep’t of Hous. & Cmty. Affairs v. Inclusive Cmtys. Project, Inc., 135 S. Ct. 2507 (2015) (disparate-impact liability requires both statistical disparity and a robust causal link to a neutral policy)
- Bravo v. City of Santa Maria, 665 F.3d 1076 (9th Cir. 2011) (standard of review for district court’s grant of summary judgment)
- Olsen v. Idaho State Bd. of Med., 363 F.3d 916 (9th Cir. 2004) (summary judgment standard — view evidence in the light most favorable to nonmoving party)
- Durell v. Sharp Healthcare, 108 Cal. Rptr. 3d 682 (Cal. Ct. App. 2010) (unjust enrichment requires defendant obtained a benefit from plaintiff by wrongdoing or similar conduct)