Bank of Am. Corp. v. City of Miami
The Court ruled that Miami could sue Bank of America and Wells Fargo under the Fair Housing Act for financial harms like lost tax revenue, but said the lower court used the wrong test for deciding whether the banks' conduct actually caused those harms.
The decision keeps cities' fair-housing lawsuits over the foreclosure crisis alive while tightening the standard for showing that a bank's discriminatory lending directly caused a city's financial losses, sending the case back for the lower courts to apply a stricter causation test.
How it got here: A federal trial court dismissed Miami's suits; the Eleventh Circuit reversed and let the claims proceed; the banks asked the Supreme Court to review both rulings.
The Case in Depth
What happened
The City of Miami sued Bank of America and Wells Fargo, claiming the banks intentionally steered Black and Latino borrowers into riskier, costlier mortgages than similarly qualified white borrowers received. The City said this led to a wave of foreclosures and vacant homes concentrated in minority neighborhoods, which lowered property values, cut the City's property-tax revenue, and forced it to spend more on police, fire, and building services.
The question before the Court
Could a city sue banks under the Fair Housing Act for lost tax revenue and city spending caused by discriminatory mortgage lending?
Why it matters
Cities that were hit with lost tax revenue and higher municipal costs during the foreclosure crisis retain a legal path to sue lenders under fair-housing law, but they must now show a much closer, more direct link between discriminatory lending and their financial losses. Banks facing similar suits gained a tougher causation defense that could sharply limit which claims survive.
What changes now
The case returns to the lower courts, which must now work out exactly how close a connection the Fair Housing Act requires between discriminatory lending and a city's financial losses, and then decide whether Miami's specific claims meet that standard. This is a final merits ruling on the two legal questions the Court addressed, but it leaves the ultimate outcome of Miami's lawsuits undecided pending further proceedings.
What this does not decide
The Court did not decide whether Miami's financial injuries actually satisfy the stricter proximate-cause standard it announced, nor did it draw the exact legal boundaries of that standard. It left those questions for the lower courts to work out on remand.
Concurrences and dissents
Dissent in part — Justice Thomas
Justice Thomas agreed that foreseeability alone cannot establish proximate cause, but disagreed that Miami's injuries fall within the Fair Housing Act's zone of interests at all. He argued the City's claims about lost tax revenue and municipal costs were too disconnected from the Act's core concern with discrimination in housing transactions and racial segregation, unlike the racial-steering harms in earlier cases. He would have reversed outright and held Miami cannot sue.
How the Court got there
The legal reasoning, step by step
- The Court asked whether the Fair Housing Act's cause-of-action requirement — the 'zone of interests' test, which asks whether a plaintiff's claimed harm is the kind of harm the statute was designed to protect against — covered the City's financial injuries.
- Relying on earlier rulings including a case allowing a village to sue over lost tax revenue and racial-steering harms, the Court found that Congress had broadly defined who counts as an 'aggrieved person' under the Act and had left that broad definition in place when it later amended the statute.
- Because the City's claimed losses in tax revenue and municipal spending were similar in kind to harms the Court had already recognized as covered, the Court held the City qualified as an aggrieved person entitled to sue.
- The Court then turned to proximate cause, the requirement that a harm be closely enough connected to the wrongful conduct to support a damages claim, rather than merely a foreseeable ripple effect of it.
- The Court held that foreseeability alone — the standard the Eleventh Circuit had used — is not enough to establish proximate cause under the Act; a plaintiff must show a more direct relationship between the discriminatory conduct and the financial harm.
- Because the lower court had approved the City's claims solely on a foreseeability theory, the Court concluded that the causation analysis needed to be redone under the correct, stricter standard.
Doctrinal impact
Cases affected by this decision
Reaffirms Gladstone, Realtors v. Village of Bellwood (441 U. S. 91)
The Court relied on this case as still-good law allowing a municipality to sue over lost tax revenue from housing discrimination.
Distinguishes Thompson v. North American Stainless, LP (562 U. S. 170)
The Court said its narrowing dictum in this Title VII case did not apply to the Fair Housing Act's different statutory text.