The U.S. Supreme Court issued a mixed decision on the reach of the main federal housing-discrimination law, telling a lower court to reconsider whether Miami can sue banks for lending practices the city said contributed to urban blight.
The ruling is a partial victory for Bank of America Corp. and Wells Fargo & Co., which appealed a lower court ruling that said Miami could press the suits under the Fair Housing Act. The majority opinion by Justice Stephen Breyer said it wasn't clear whether the city had shown the type of direct injury required for the suit to go forward.
But Breyer wouldn't go as far as three conservative colleagues, who said the court should have thrown out the lawsuit, which grew out of the subprime mortgage crisis.
Miami said the banks targeted minorities for riskier and costly loans, leading to foreclosures that cost the city property-tax revenue and forced it to spend more on police and fire services.
Bank of America and Wells Fargo said Congress didn't intend to allow private lawsuits by a plaintiff who wasn't a victim of discrimination and whose interests are so far removed from the alleged wrongdoing. Miami is also suing Citigroup Inc., though that bank wasn't part of the Supreme Court case.
Breyer said cities are eligible to file lawsuits under the Fair Housing Act, saying they fell within the "zone of interests" Congress was seeking to protect.
He said, however, that a federal appeals court made it too easy for Miami to meet the traditional requirement that a plaintiff show it was harmed by a defendant's actions. He said a violation of the Fair Housing Act caused "ripples of harm" well beyond the particular misconduct.
"Nothing in the statute suggests that Congress intended to provide a remedy wherever those ripples travel," Breyer wrote. He said the statute requires "some direct relation between the injury asserted and the injurious conduct alleged."
Chief Justice John Roberts joined the court's four liberals in the majority. Justices Clarence Thomas, Anthony Kennedy and Samuel Alito issued a partial dissent. New Justice Neil Gorsuch didn't participate in the case, which was argued in November.
Similar suits have been filed around the country, including claims by Los Angeles and three Georgia counties.
