This Week At The Ninth: Fair Housing And "Solid Waste"

• Published date: 05 October 2021
• Subject Matter: Environment, Real Estate and Construction, Real Estate, Waste Management
• Law Firm: Morrison & Foerster LLP
• Author: Ms Lena H. Hughes and Adam L. Sorensen

This week, the Court clarifies the Fair Housing Act and Resource Conservation Recovery Act.

CITY OF OAKLAND V. WELLS FARGO & COMPANY

The en banc Court holds that Oakland failed to adequately plead proximate cause under the Fair Housing Act ("FHA") for its claims that allegedly discriminatory lending practices caused lower tax revenues and increased municipal spending, and that the FHA's proximate cause requirement applies to claims for declaratory and injunctive relief.

En Banc Panel: Chief Judge Thomas and Judges McKeown, Wardlaw, Paez, Callahan, Ikuta, Nguyen, Hurwitz, Nelson, Bade, and VanDyke, with Judge McKeown writing the opinion.

Key Highlight: "The City of Oakland claims that Wells Fargo's discriminatory lending practices caused higher default rates, which in turn triggered higher foreclosure rates that drove down the assessed value of properties, and which ultimately resulted in lost property tax revenue and increased municipal expenditures. These downstream 'ripples of harm' are too attenuated and travel too 'far beyond' Wells Fargo's alleged misconduct to establish proximate cause."

Background: Oakland sued Well Fargo, alleging that the bank violated the FHA by steering minority borrowers into costlier and riskier mortgage loans than those regularly offered to similarly situated white borrowers. Those riskier loans caused higher default and foreclosure rates, and lower property values, the City alleged, leading to lower property tax revenues and increased municipal spending on public health and safety. Oakland also claimed that the alleged discriminatory lending undermined its racial-integration goals. The City sought damages, as well as declaratory and injunctive relief. The district court dismissed Oakland's claims for damages from increased municipal expenditures for lack of proximate cause, and dismissed Oakland's claims of non-economic injury on standing grounds. But the court allowed Oakland's damages claims as to decreased property tax revenue to proceed. And it also allowed all claims for declaratory and injunctive relief to move forward. The district court then certified two questions for interlocutory appeal: "(1) whether Oakland's claims for damages satisfy the FHA's proximate-cause requirement, and (2) whether that proximate-cause requirement applies to claims for injunctive and declaratory relief." A Ninth Circuit panel reversed the district court's determination that the FHA's proximate-cause requirement did not apply to...