SET-BACK FOR MUNICIPALITIES

The on-going saga of cities suing banks for Fair Housing damages continues. This time there is a significant victory for the banks.

On May 26, 2017 in two separate decisions the U.S. Court of Appeals for the Ninth Circuit affirmed district court rulings that struck a blow to City of Los Angeles suits claiming Wells Fargo and Bank of America violated the Fair Housing Act by discriminating against Latino and black borrowers.

Citing the Supreme Court’s 2015 ruling that affirmed use of the effects test, the Ninth Circuit noted that the City must show both a statistical disparity and a policy or policies that caused, in a robust way, the disparity to make out a prima facie case of disparate impact under the FHA. The court concluded that Los Angeles failed to show a “robust” causal connection between any disparity and a facially-neutral Wells Fargo policy. The Ninth Circuit also ruled that the district court did not err in granting summary judgment on the City’s unjust enrichment claim. “The City’s injuries—lost tax revenue and increased spending on services—did not confer a benefit upon Wells Fargo, and accordingly the City did not show a genuine issue of triable fact as to unjust enrichment,” the court concluded. The Ninth Circuit rulings came close on the heels of two other recent fair lending developments.

Stay tuned for more.

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