923 F.3d 1260
11th Cir.2019Background
- The City of Miami sued Bank of America and Wells Fargo under the Fair Housing Act (FHA), alleging intentional redlining and reverse‑redlining that targeted Black and Latino borrowers, produced disproportionate predatory loans and foreclosures, depressed property values, reduced city tax revenue, and increased municipal service costs.
- Miami pleaded detailed statistical/regression evidence showing higher foreclosure rates and greater likelihood of predatory loans for minority borrowers and alleged banks also denied refinancing/loan modifications on fair terms.
- The district court dismissed; the Eleventh Circuit first held Miami had standing and that foreseeability sufficed for proximate cause; the Supreme Court reversed in part, holding foreseeability alone is insufficient and remanded for lower courts to define FHA proximate‑cause contours.
- On remand the Eleventh Circuit applied the Supreme Court’s directives and Holmes factors to assess whether Miami had plausibly alleged the required “some direct relation” between defendants’ conduct and the City’s injuries.
- The court concluded Miami plausibly alleged proximate cause for its reduced property‑tax revenue (tax‑base injury) — given the FHA’s broad remedial scope, hedonic/regression methodology plausibly ties aggregate bank misconduct to tax losses — but failed to plausibly allege proximate cause for increased municipal‑expenditure claims (police, fire, sanitation), which the pleadings did not show could be apportioned or traced with sufficient specificity.
- The Eleventh Circuit reversed the district court’s wholesale dismissal and remanded, holding the district court should have granted leave to amend rather than deem amendment futile.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper proximate‑cause standard under the FHA | Bank of Am. panel: foreseeability suffices; Miami argues FHA’s remedial scope supports broad causation | Banks: foreseeability is too lax; proximate cause requires close, direct causation and limiting step‑counting | Supreme Court: foreseeability alone insufficient; proximate cause requires “some direct relation.” Eleventh Circuit: apply Holmes factors and FHA context to find some direct relation in appropriate cases |
| Whether Miami plausibly alleged proximate cause for lost tax revenue | Miami: detailed statistics + hedonic regression can isolate tax‑revenue losses traceable to aggregate discriminatory lending and foreclosures | Banks: injuries are too attenuated, involve intervening steps/third parties, and are administratively infeasible to apportion | Held: Plausibly pleaded. Aggregate pattern of misconduct, the FHA’s broad remedial purpose, and feasible hedonic methods supply “some direct relation” for tax‑base injury |
| Whether Miami plausibly alleged proximate cause for increased municipal expenditures | Miami: foreclosures produced vacancies/decay requiring extra police, fire, sanitation, etc. | Banks: expenditures are remote, attributable to many intervening causes, and not susceptible to precise apportionment | Held: Not plausibly pleaded. Complaints lack factual showing how to isolate/exactly attribute increased municipal costs to banks’ conduct |
| Pleading/amendment sufficiency at motion‑to‑dismiss stage | Miami: allegations and explanation of methodologies suffice to state plausible claims and warrant leave to amend | Banks: claims are legally deficient and amendment would be futile | Held: District court erred to dismiss in entirety; leave to amend should have been granted as to viable claims (tax‑revenue claim survives pleading challenge; expenditure claim dismissed without sufficient pleading) |
Key Cases Cited
- Bank of Am. Corp. v. City of Miami, 137 S. Ct. 1296 (2017) (Supreme Court: foreseeability alone insufficient; proximate cause requires “some direct relation”)
- Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258 (1992) (articulates Holmes factors: attribution difficulty, apportionment/duplicative recovery, and deterrence/availability of direct plaintiffs)
- Lexmark Int’l, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377 (2014) (explains proximate‑cause analysis beyond first‑step and evaluates discontinuity and directness)
- Bridge v. Phoenix Bond & Indemnity Co., 553 U.S. 639 (2008) (permitted recovery by indirect victims where direct relationship and policy considerations justify it)
- Gladstone Realtors v. Village of Bellwood, 441 U.S. 91 (1979) (municipality has standing to sue for discriminatory housing practices; reduction in property values directly injures municipality)
- Hemi Grp., LLC v. City of New York, 559 U.S. 1 (2010) (cautions courts about expanding proximate‑cause reach beyond direct consequences)
- Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205 (1972) (interpreting FHA standing broadly in light of statute’s remedial purposes)