Amicus Curiae Brief — Wells Fargo & Co., et al., Petitioners v. City of Miami, Florida

Nos. 19-675 & 19-688

IN THE

Supreme Court of the United States

________________

BANK OF AMERICA CORP., ET AL.,

Petitioners,

v.

CITY OF MIAMI, FLORIDA,

Respondent.

________________

WELLS FARGO & CO. AND WELLS FARGO BANK, N.A.,

Petitioners,

v.

CITY OF MIAMI, FLORIDA,

Respondent.

________________

On Petitions of Writ of Certiorari to

the U.S. Court of Appeals for the Eleventh Circuit

_________________________________________________

BRIEF FOR THE CATO INSTITUTE AS AMICUS

CURIAE SUPPORTING PETITIONERS

_________________________________________________

December 20, 2019

ILYA SHAPIRO

Counsel of Record

TREVOR BURRUS

SAM SPIEGELMAN

CATO INSTITUTE

1000 Mass. Avenue, N.W.

Washington, D.C. 20001

(202) 842-0200

ishapiro@cato.org

i

QUESTIONS PRESENTED

In its prior decision in this case, this Court held

that the Fair Housing Act requires proof of proximate

cause in the same way as other federal statutes with

common-law roots. Following the relevant “directness

principles,” the Court held, generally limits recovery

to injury at the “first step” of the causal chain. Bank

of America v. City of Miami, 137 S. Ct. 1296 (2017).

On remand, the Eleventh Circuit held that the

governing “directness principles” do not limit the

length of the causal chain, but instead require only

some “logical bond” or “meaningful and logical

continuity” between a statutory violation and the

claimed injury. Miami alleges that the terms of loans

made to individual borrowers led, through a lengthy

causal chain, to lost tax revenue. The Eleventh

Circuit held that claim sufficiently “direct.”

The question presented by the cert petitions is:

1. Whether the FHA’s proximate-cause element

requires more than just some “logical bond” between

a statutory violation and the claimed injury.

Amicus also addresses an additional question

that the Court may need to resolve as it takes up the

above, given that the Court also previously held that

the FHA’s “zone of interests” extended standing to sue

to municipalities who claim a loss of tax revenue from

banks’ allegedly discriminatory and predatory

mortgage lending:

2. Whether the Court in Bank of America was

correct to find that Miami’s alleged injuries place the

city within the FHA’s “zone of interests” for standing

purposes.

ii

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ...................................... i

TABLE OF AUTHORITIES .................................... iii

INTEREST OF AMICUS CURIAE .......................... 1

SUMMARY OF ARGUMENT................................... 1

ARGUMENT ............................................................. 4

I.

THE LOWER COURT’S REFORMULATION

OF “PROXIMATE CAUSE” UNDER THE

FHA MISINTERPRETS BANK OF

AMERICA’S “FOUR GUIDING

PRINCIPLES” .................................................... 4

A. The First-Step Principle .............................. 5

B. The Nature of the Statutory Cause of

Action ........................................................... 8

C. What Is Administratively Possible

and Convenient .......................................... 11

D. The FHA’s Common-Law Antecedents ..... 13

II. THE COURT SHOULD RECONSIDER

BANK OF AMERICA’S “ZONE OF

INTERESTS” FINDING .................................. 16

III. FAILURE TO REVIEW THE LOWER

COURT’S “PROXIMATE CAUSE”

FORMULATION AND RECONSIDER BANK

OF AMERICA’S “ZONE OF INTERESTS”

FINDING THREATENS “MASSIVE AND

COMPLEX DAMAGES LITIGATION,” AND

A CIRCUIT SPLIT ........................................... 19

CONCLUSION ........................................................ 22

iii

TABLE OF AUTHORITIES

Page(s)

Cases

Anza v. Ideal Steel Supply Corp.,

547 U.S. 451 (2006) .............................................. 14

Assoc. Gen. Contractors v. Cal. State Council of

Carpenters, 459 U.S. 519 (1983) ...................... 5, 10

Bank of America v. City of Miami,

137 S. Ct. 1296 (2017) ................................... passim

City of Miami v. Wells Fargo & Co.,

923 F.3d 1260 (11th Cir. 2019) ..................... passim

City of Phila. v. Wells Fargo & Co.,

No. 17-cv-2203, 2018 WL 424451

(E.D. Pa. Jan 16, 2018) ......................................... 21

City of Sacramento v. Wells Fargo & Co.,

No. 18-cv-416, 2019 WL 3975590

(E.D. Cal. Aug 22, 2019) ....................................... 21

Clarke v. Sec. Indus. Ass’n, 479 U.S. 388 (1987)..... 16

CSX Transp., Inc. v. McBride,

564 U.S. 685 (2011) ................................................ 8

Cty. of Cook v. HSBC N. Am. Holdings Inc.,

314 F. Supp. 3d 950 (N.D. Ill. 2018) .................... 21

Curtis v. Loether, 415 U.S. 189 (1974) .................... 14

Holmes v. Sec. Investor. Prot. Corp.,

503 U.S. 258 (1992) .................................... 7, 11, 13

Lexmark Int’l, Inc. v. Static Control

Components, Inc., 572 U.S. 118 (2014) .... 3, 6, 8, 10

iv

Page(s)

Montgomery Cty. v. Bank of America Corp.,

No. 18-cv-3575, 2019 WL 4805678

(D. Md. Sept. 30, 2019) ......................................... 21

Palsgraf v. Long Island R.R. Co.,

248 N.Y. 339 (1928) .................................... 7, 13, 19

Paroline v. United States,

572 U.S. 434 (2014) ................................................ 8

Thompson v. N. Am. Stainless, LP,

562 U.S. 170 (2011) ...............................3, 16, 17, 18

Trafficante v. Metropolitan Life Ins. Co.,

409 U.S. 205 (1972) ........................................ 16, 18

Other Authorities

Martin H. Redish, “Private Contingent Fee Lawyers

and Public Power: Constitutional and Political

Implications,” 18 S. Ct. Econ. Rev. 77 (2010) ...... 20

Nicole Summers, “Setting the Standard for

Proximate Cause in the Wake of Bank of

America Corp. v. City of Miami,”

97 N.C. L. Rev. 529 (2019) ............................... 8, 15

U.S. Chamber Inst. for Legal Reform, “Privatizing

Public Enforcement: The Legal, Ethical and

Due-Process Implications of Contingency-Fee

Arrangements in the Public Sector”

(Sept. 2013) ........................................................... 21

1

INTEREST OF AMICUS CURIAE1

The Cato Institute was established in 1977 as a

nonpartisan public policy foundation dedicated to

advancing the principles of individual liberty, free

markets, and limited government. Cato’s Robert A.

Levy Center for Constitutional Studies was

established to restore the principles of limited

constitutional government that are the foundation of

liberty. Toward those ends, Cato publishes books and

studies, conducts conferences and forums, and

produces the annual Cato Supreme Court Review.

Among its many areas of focus, Cato spotlights

government

overreach

through

uncontrolled

spending, including by state and local governments.

This case typifies these concerns, while also twisting

basic concepts of proximate cause and standing.

SUMMARY OF ARGUMENT

Instead of resolving its fiscal challenges by

reducing spending or seeking residents’ consent to

increase local taxes, Miami looks to fund its budget at

the expense of the petitioning banks through a

creative litigation strategy involving allegations of

highly attenuated economic harm. Lawsuits like this

one are a growing phenomenon, particularly under

the FHA. The temptation of local governments to

pursue such tendentious litigation strategies

threatens to diminish the freedom and power of

citizens by separating local fiscal policy from the

1 Rule 37 statement: All parties were timely notified and

consented to the filing of this brief. No part of this brief was

authored by any party’s counsel, and no person or entity other

than amicus funded its preparation or submission.

2

healthy constraints of democracy. This temptation

depends entirely on courts’ willingness to ignore the

substantive limitations Congress placed on private

causes of action under statutes like the FHA.

Here, Miami’s allegations of indirect harm to its

fiscal interests are insufficient to support a cause of

action against petitioners under the FHA. The Court

should grant the petition for three reasons:

1. Bank of America v. City of Miami, 137 S. Ct.

1296 (2017), although leaving to the lower courts the

task of defining FHA proximate cause, set forth the

following “four guiding principles,” as the Eleventh

Circuit articulated them:

We begin by considering (a) what falls within

the first step of the causal chain, as we are

aware of the general tendency in these cases

. . . not to go beyond that first step. What falls

within the first step will, we’re told, depend on

(b) the nature of the statutory cause of action,

and (c) an assessment of what is

administratively possible and convenient.

Finally, since the common law is the basis for

the direct relation requirement, we also look to

(d) the FHA’s common-law antecedents to the

extent that we can.

City of Miami v. Wells Fargo & Co., 923 F.3d 1260,

1272–73 (11th Cir. 2019) (quoting Bank of America,

137 S. Ct. at 1306) (cleaned up). The purpose of these

principles is to avoid the “massive and complex

damages litigation” that could result if litigation

related to the housing market, so “interconnected

with economic and social life,” were subject to a

“proximate cause” formulation untethered to a

3

common-law standard arrived at through centuries of

fine-tuning. Bank of America, 137 S. Ct. at 1306

(internal citations omitted). The “four guiding

principles” ensure that liability only attaches to

causes that bear “some direct relation” to the injuries

alleged. Id. And this Court did not use “some direct

relation” as a synecdoche for the dictionary definition

of “relation.” Instead, it used the term to ensure that

lower courts did not ignore that for any “sufficiently

close connection” to be found between a cause and its

effect, there must be a direct and unobstructed line

between the two. Id. This Court should thus reject the

Eleventh Circuit’s reformulation of FHA’s “proximate

cause” standard as inconsistent with the conditions

imposed upon it in Bank of America.

2. In Lexmark Int’l, Inc. v. Static Control

Components, Inc., 572 U.S. 118 (2014), the Court

made clear that to allow a civil action under a federal

statute, a court must first determine “whether a

plaintiff comes within” the law’s “zone of interests.”

This, in turn, requires that a court “determine, using

traditional statutory-interpretation tools, whether a

legislatively conferred cause of action encompasses a

particular plaintiff’s claim.” Id. at 119. The Court in

Bank of America held that Miami indeed falls within

the FHA’s “zone of interests.” The Court should

reevaluate that finding, as the dissent made a

compelling case that the alleged harms to Miami are

similar in nature to the indirect consequential losses

that the Court in Thompson v. N. Am. Stainless, LP,

562 U.S. 170 (2011) concluded fall outside the scope of

the similar Title VII “zone of interests.”

3. The failure of the court below to properly apply

the Bank of America conditions invites the trouble-

4

some and potentially abusive phenomenon exemplified by this lawsuit and a growing wave of others, the

proliferation of which will lead to a circuit split. Local

governments will be tempted to partner with

plaintiffs’ lawyers to pursue creative litigation

theories of fiscal harm under federal statutes as a

means to meet their local budget needs. Such suits

harm the banking industry and let governments avoid

having to reduce spending or seek their residents’

consent for a tax increase. In other words, they

circumvent the usual constraints of democracy that

are the primary guarantors of the people’s liberty.

ARGUMENT

The Court should review the Eleventh Circuit’s

reformulation of FHA’s “proximate cause” standard

against Bank of America’s “four guiding principles”

for making this determination and reconsider Bank of

America’s “zone of interests” finding in line with the

dissent’s view. To let the ruling below stand would be

to invite a flood of litigation that would cause “ripples

to flow” across the national economy.

I. THE LOWER COURT’S REFORMULATION

OF “PROXIMATE CAUSE” UNDER THE FHA

MISINTERPRETS BANK OF AMERICA’S

“FOUR GUIDING PRINCIPLES”

Although the Court in Bank of America declined to

set the boundaries of FHA “proximate cause” itself, its

remand of that task to the lower courts included

certain indispensable conditions. The Eleventh

Circuit properly articulated these conditions as Bank

of America’s “four guiding principles”:

5

We begin by considering (a) what falls within

the first step of the causal chain, as we are

aware of the general tendency in these cases

. . . not to go beyond that first step. What falls

within the first step will, we’re told, depend on

(b) the nature of the statutory cause of action,

and (c) an assessment of what is

administratively possible and convenient.

Finally, since the common law is the basis for

the direct relation requirement, we also look to

(d) the FHA’s common-law antecedents to the

extent that we can.

City of Miami v. Wells Fargo & Co., 923 F.3d 1260,

1272–73 (11th Cir. 2019) (quoting Bank of America,

137 S. Ct. at 1306) (cleaned up). The purpose of these

principles is to prevent the “massive and complex

damages litigation” that could result from such a

broad scope of liability. Bank of America, 137 S. Ct. at

1306. This is especially true with respect to liability

in the housing market, where “a violation of the FHA

may . . . ‘be expected to cause ripples of harm to flow’

far beyond the defendant’s misconduct.” Id. (quoting

Assoc. Gen. Contractors v. Cal. State Council of

Carpenters, 459 U.S. 519, 534, 545 (1983)). Although

the Eleventh Circuit endeavored to adhere to these

principles, its reading of each is ultimately incorrect.

A. The First-Step Principle

With respect to the “first step/general tendency”

principle, the court below found that “an intervening

step does not vitiate proximate cause.” Wells Fargo,

923 F.3d at 1273. While this statement is true in some

contexts, it is incorrect here—and the court’s own

reasoning elucidates its error. First, the court avers,

6

“Supreme Court precedent makes crystal clear that

an intervening step does not necessarily mean

proximate cause has not been plausibly alleged.” Id.

Second, “[p]roceeding beyond a first step here is

consistent with the instruction that we stop at the

first step only as a ‘general tendency.’” Id. at 1276.

In reaching its first rationale, the court leans

heavily on Lexmark, which held that proximate-cause

liability “requir[es] ‘economic or reputational injury

flowing directly from the [defendant’s] deception.”

Lexmark, 572 U.S. at 133–34. A “requirement [that]

would not be met ‘when the deception produces

injuries to a fellow commercial actor that in turn

affect the plaintiff.’” Wells Fargo, 923 F.3d at 1234

(quoting Lexmark, 572 U.S. at 133–134). The court

understands this to mean “that a competitor whose

business failed because of false advertising could sue

the false advertiser, but that competitor’s landlord

could not sue the false advertiser for the value of rent

payments he could no longer collect.” Id. at 1274.

The Eleventh Circuit is correct that Lexmark

shows “intervening steps in a causal chain cannot

automatically and invariably end the analysis.” Id.

But the logic underlying the Lexmark example it cites,

applied to this case, makes the first causal step the

end of the analysis. Because stopping there prevents

municipalities from suing as surely as it does utilities

companies that also lost profits as a result of the

foreclosures. In both cases, these are plaintiffs in turn

affected by earlier direct injuries.

While this case deals with foreclosed-upon

residential borrowers and not commercial actors, the

directness presumption underlying proximate-cause

7

analysis remains the same: foreseeability, continuity,

and direct harm. Otherwise, there can be no end to

liability. “Life is too short to pursue every human act

at its most remote consequences; ‘for want of a nail, a

kingdom was lost’ is a commentary on fate, not the

statement of a major cause of action against a

blacksmith.” Holmes v. Sec. Investor. Prot. Corp., 503

U.S. 258, 287 (1992) (Scalia, J., concurring). Whatever

the purpose of the FHA, it cannot overcome the

inherent thrust of “proximate” causation to cauterize

rather than metastasize liability.

As for its second rationale, the Eleventh Circuit

misinterprets what this Court meant by the “general

tendency” of analogous cases “not to go beyond [that]

first step.” Bank of America, 137 S. Ct. at 1306. The

court treats this reference as guidance on how to

proceed, instead of a description of the frequency with

which the application of the common-law principle of

directness (as the Court has interpreted it) ends

proximate-cause analysis at the first step.

In his famous Palsgraf dissent, Judge William

Andrews of the New York Court of Appeals opined,

“What we . . . mean by the word ‘proximate’ is that,

because of convenience, of public policy, of a rough

sense of justice, the law arbitrarily declines to trace a

series of events beyond a certain point. This is not

logic. It is practical politics.” Palsgraf v. Long Island

R.R. Co., 248 N.Y. 339, 352 (1928) (Andrews, J.,

dissenting). Although Judge Benjamin Cardozo’s

“foreseeability” standard prevailed in that timehonored case, it did not have the final word. Indeed,

Judge Andrews’s reasoning appears to have become

the keystone of this Court’s recent proximate-cause

analysis. Besides specifically rejecting the Eleventh

8

Circuit’s foreseeability-alone theory, the Court has

“within a span of only three years, from 2011 to 2014

. . . described the concept of proximate cause as:

shorthand for the policy-based judgment that

not all factual causes contributing to an injury

should be legally cognizable causes, as

“serv[ing] . . . to preclude liability in situations

where the causal link between conduct and

result is so attenuated that the consequence is

more aptly described as mere fortuity,” and as

reflective of “[t]he difficulty that can arise when

a court attempts to ascertain the damages

caused by some remote action.”

Nicole Summers, “Setting the Standard for Proximate

Cause in the Wake of Bank of America Corp. v. City of

Miami,” 97 N.C. L. Rev. 529, 544–45 (2019) (quoting

CSX Transp., Inc. v. McBride, 564 U.S. 685, 701

(2011); Paroline v. United States, 572 U.S. 434, 445

(2014); and Lexmark, 572 U.S. at 135). Thus the

“general tendency”—at least where this Court is

concerned—is toward a proximate-cause theory far

closer to Judge Andrews’s public-policy focus on social

economy, which leads to the essentially moral choice

of drawing the liability circle closer to the seismic

center of activity rather than further afield.

B. The Nature of the Statutory Cause of

Action

Bank of America offered that “the question [the

nature of the statutory cause of action] presents is

whether the harm alleged has a sufficiently close

connection to the conduct the statute prohibits.” Bank

of America, 137 S. Ct. at 1305 (quoting Lexmark, 572

U.S. at 133). The Eleventh Circuit answered that “the

9

text and history of the FHA suggest a far-reaching

statute.” Wells Fargo, 923 F.3d at 1278. But just

because the FHA is generally far-reaching does not

mean that every one of its elements—including its

“what” (purpose), “how” (enforcement), and “who”

(plaintiffs)—must also be far-reaching. Indeed, Bank

of America suggests that the FHA’s far-reaching

purpose cuts against an expansive proximate-cause

standard—that a “violation of the FHA may . . . be

expected to cause ripples of harm to flow far beyond

the defendant’s misconduct,” and that, concordantly,

“nothing in the statute suggests that Congress

intended to provide a remedy wherever those ripples

travel.” Bank of America, 137 U.S. at 1306 (cleaned

up). This Court provided, therefore, that there must

be a “sufficiently close connection” between the harm

and the injury alleged. Id. at 1305. And this is no mere

recommendation. It ensures the directness element

discussed in Part I.A, supra.

This Court well understands that the FHA’s broad

purpose can only be achieved if plaintiffs seek, or at

least threaten, damages sufficiently high to correct or

deter harmful behavior. And since the FHA targets

one of the most pervasive market activities in the

country—housing—this purpose can likely only be

achieved if those who are harmed directly can

aggregately correct or deter discriminatory lending

practices through thousands of individual lawsuits

(perhaps consolidated into class actions). Amicus does

not doubt that this is a tall order, and that perhaps

government-led lawsuits such as this one would have

a greater corrective or deterrent effect. But the failure

of lawmakers to fashion a statute to its underlying

purposes does not license courts to reassemble the law

10

into a leaner and meaner machine. The FHA, like any

law, comes before the court pre-fabricated.

Just as common-law principles impose a

“directness” requirement on any proximate-cause

analysis, so too does it control how far a court may go

in reading the scope of a statutory cause of action.

“The judicial remedy cannot encompass every

conceivable harm that can be traced to alleged

wrongdoing.” Assoc. Gen. Contractors, 459 U.S. at

536. “Congress, we assume, is familiar with the

common-law rule and does not mean to displace it sub

silentio. We have thus construed federal causes of

action in a variety of contexts to incorporate a

requirement of proximate causation.” Lexmark, 572

U.S. at 132. Lexmark thus clarified that the

proximate-cause rule is a species of common law,

unless Congress says otherwise for a specific law.

There is nothing in the FHA’s text or history to

suggest that its version of “proximate cause” is any

different than the garden-variety kind that the Court

has previously read into other federal laws. “A claim

for damages under the FHA—which is akin to a tort

action, is no exception to this traditional requirement”

that “‘in all cases of loss, we are to attribute it to the

proximate cause, and not to any remote cause.’” Bank

of America, 137 U.S. 1305 (cleaned up). The import of

the majority’s views on common-law proximate cause

in general, and as applied to the FHA specifically,

could not be clearer: “[T]he majority opinion leaves

little doubt that neither Miami nor any similarly

situated plaintiff can satisfy the rigorous standard for

proximate cause that the Court adopts and leaves to

the Court of Appeals to apply.” Id. at 1311 (Thomas,

J., concurring in part, dissenting in part).

11

C. What Is Administratively Possible and

Convenient

A crucial step in measuring the scope of liability in

any context is the feasibility of determining damages.

Here, if the banks are indeed liable for Miami’s

injuries, the city’s “Hedonic regression” method could

conceivably be used to determine precise damages.

The Eleventh Circuit, relying heavily on Holmes v.

Sec. Investor. Prot. Corp., 503 U.S. 258 (1992), found

that “tracing causation here is not administratively

infeasible” for Miami’s tax-revenue injury (even

though it is infeasible for its municipal-expenditures

injury). Wells Fargo, 923 F.3d at 1281. But the

question of what is administratively possible and

convenient is not limited to the damages that could be

rewarded in one case. Instead, the issue extends to

the costs and complexities that could result from

pending and potential litigation if this Court were to

approve the lower court’s reformulation. To see why,

amicus draws the Court’s attention to the Eleventh

Circuit’s answer to two questions from Holmes.

The court below considered whether “recognizing

claims of the indirectly injured would force courts to

adopt complicated rules apportioning damages among

plaintiffs removed at different levels of injury from

the violative acts.” Wells Fargo, 923 F.3d at 1286

(quoting Holmes, 503 U.S. at 269). The court answers

that “no such problem is presented in this case”

because “the injuries to the City’s treasury are not

shared by any other possible plaintiff.” Id. at 1287.

That simply isn’t true. While lost revenues from

foreclosures within Miami are unique to Miami, this

hardly means that “its injuries are unique.” Id.

12

Indeed, towns and cities across the country have

already begun to follow Miami’s example.

At the time of Bank of America’s previous

petition for certiorari, twelve local governments

had brought suits similar to Miami’s. Four

additional local governments have since filed

suits—including Philadelphia and Oakland—

bringing the total number of government

plaintiffs to sixteen. The vast majority of these

governments have sued multiple lenders.

Pet. for Cert. 15 & n.4, Bank of America v. City of

Miami (19-675) (Nov. 25, 2019) (emphasis original).

When this Court spoke of “massive and complex

damages litigation” that could ensue if the courts read

the FHA’s “proximate cause” standard too broadly, it

wasn’t just worried about Miami. The national costs—

the “ripples” and how far they might travel—would be

massive. Bank of America, 137 U.S. at 1306.

What begins with Miami and 16 other local

governments today could very well spread to nearly

every county and municipality with the resources to

sue. The costs to banks, big and small, passed on to

their customers and then to the national (and

eventually global) economy would be significant. And

so, while individual municipalities could likely use

“Hedonic regression” to cabin the damages they

themselves are owed, that sort of case-specific focus

ignores the forest for the trees. It doesn’t account for

the excessive aggregate costs, of the sort Judge

Andrews’s analysis in Palsgraf warned against.

This Court has in recent cases reflected Judge

Andrews’s wisdom. See supra, Argument I.A. And it

13

should continue to do so here. “An overturned lantern

may burn all Chicago. We may follow the fire from the

shed to the last building. We rightly say the fire

started by the lantern causing its destruction.”

Palsgraf, 248 N.Y. at 352 (Andrews, J., dissenting).

However, Andrews offered, this lantern is a “cause,”

not “the proximate cause.” And the line at which a

cause ceases to be “proximate” to a harm is to be

drawn, ultimately, “arbitrarily.” Id. This sort of linedrawing ensures that the entirety, or virtual entirety,

of damages falls upon those liable for the harm, and

does not extend to the broader society (beyond those

transferred costs that are impossible to avoid). Again,

“[t]his is not logic. It is practical politics.” Id.

Second, the Eleventh Circuit regarded the Holmes

proviso to limit recovery to “directly injured victims”

who “can generally be counted on to vindicate the law”

as impertinent to cases such as this one, wherein the

collective power of individual borrowers is not so

easily summoned. Wells Fargo, 923 F.3d at 1287

(quoting Holmes, 503 U.S. at 269) (cleaned up). But

again, this is not a problem for the courts to solve.

Laws come before the courts prepackaged. And

although judges might disagree as to a law’s correct

interpretation, all should agree that only one

interpretation is correct. In this case, the obstacles

individual borrowers face in taking collective action to

aggregately vindicate the law cannot justify a court’s

eroding the directness requirement at the heart of

Bank of America’s “four guiding principles.”

D. The FHA’s Common-Law Antecedents

The Eleventh Circuit was not impressed with the

FHA’s “common-law antecedents.” The court

14

admitted that these antecedents “are the basis for

imposing the requirement” of directness. Wells Fargo,

923 F.3d at 1294. It chose, however, to ignore

common-law principles and morph the definition of

“some direct relation”—which conspicuously ignores

the word “direct”—into requiring only a “logical and

direct bond” between a cause and an effect. A “bond”

that implies, simply, “no discontinuity between the

violation and the harm.” Id. (emphasis added).

But the FHA’s “common-law antecedents” show

that the lower court’s focus on the seeming inherent

logic of continuity is not the end of the story. That

ancient common-law principles still apply to the FHA,

as they did to statutes in two of the analogous cases

Bank of America referenced. See Curtis v. Loether, 415

U.S. 189, 195 (1974) (“A damages action under the

statute sounds basically in tort . . . this cause of action

is analogous to a number of tort actions recognized at

common law.”); Anza v. Ideal Steel Supply Corp., 547

U.S. 451, 457 (2006) (“The Holmes Court turned to the

common-law foundations of the proximate cause

requirement . . . conclud[ing] that even if [the

plaintiff] were subrogated to the rights of certain

aggrieved customers, the RICO claims could not

satisfy this requirement of directness.”).

Indeed, “continuity,” however logical a bond it

creates between a cause and an effect, is no better

than “foreseeability” alone, and may well be worse. It

stretches the universe of liability at least as thin as

foreseeability does but without the proper moral

limitations that foreseeability imposes. Whatever can

be “logically” bonded to an FHA violation through the

lens of continuity alone likely includes a myriad of

15

harms that are not foreseeable from the outset. For

obvious reasons, no examples come to mind.

The Eleventh Circuit continued:

We lack any clear indication that Congress had

these common-law claims in mind when

drafting the FHA, and so we are reluctant [to]

draw too much from them beyond the “some

direct relation” requirement. For one thing, we

would not know which common-law claim to

begin with, since we do not see the obvious

correspondence to the common law the Court

has identified elsewhere.

Wells Fargo, 923 F.3d at 1292.

But this Court’s recent precedents “read a

proximate cause requirement into statutes” ranging

from employment-protection statutes to the Lanham

Act, the main federal trademark law. As one postBank of America commenter put it:

These statutes do not facially refer to proximate

cause, but the Court has reasoned that the

statutes’ structural resemblance to a common

law tort, combined with the use of general

causal language in the statutory text, indicate

Congress’s intent to impose some limitation on

the ‘ripples of harm’ that are recoverable.

Summers, supra, at 532. The court below was wrong

to overlook the importance of that principle. It is no

real excuse that “it would not know which” analogous

“common-law claim to begin with.” Wells Fargo, 923

F.3d at 1292.

16

II. THE COURT SHOULD RECONSIDER BANK

OF AMERICA’S “ZONE OF INTERESTS”

FINDING

This Court’s recent decisions establish that

plaintiffs seeking to pursue causes of action created

by a federal statute must show that their claims fall

within the “zone of interests” protected by the statute.

The Bank of America majority found that Miami’s

allegations, taken as true, place it within the FHA’s

“zone of interests.” “We have said that the definition

of ‘aggrieved person’ in the original version of the

FHA . . . ‘showed a congressional intention to define

standing as broadly as is permitted by Article III of

the Constitution.” Bank of America, 137 U.S. at 1303

(quoting Trafficante v. Metropolitan Life Ins. Co., 409

U.S. 205, 209 (1972)) (other citations omitted).

In Thompson v. N. Am. Stainless, LP, the Court

held that the term “aggrieved” must be read to

incorporate the “zone of interests” test, which

precludes suits by plaintiffs whose claims are “so

marginally related to … the purposes implicit in the

statute” as to fall outside the sphere “arguably

[sought] to be protected” by the law. 562 U.S. 1701,

178 (2011) (quoting Clarke v. Sec. Indus. Ass’n, 479

U.S. 388, 399–400 (1987)). The question here is

whether Thompson, which applies to Title VII of the

Civil Rights Act, relates any new “zone of interests,”

test to the Title VIII (FHA) standing analysis

developed in Trafficante and similar cases.

On this, the majority and dissent in Bank of

America disagree. And their disagreement turns on

polarized readings of this passage from Thompson:

17

In deciding [Trafficante], we relied upon, and

cited with approval, a Third Circuit opinion

involving Title VII, which, we said, “concluded

that the words used showed ‘a congressional

intention to define standing as broadly as is

permitted by Article III of the Constitution.’”

We think that dictum regarding Title VII was

too expansive. Indeed, the Trafficante opinion

did not adhere to it in expressing its Title VIII

holding that residents of an apartment complex

could sue the owner for his racial

discrimination against prospective tenants.

The opinion said that the “person aggrieved” of

Title VIII was coextensive with Article III

“insofar as tenants of the same housing unit that

is charged with discrimination are concerned.”

Later opinions, we must acknowledge, reiterate

that the term “aggrieved” in Title VIII reaches

as far as Article III permits. . . . We now find

that this dictum was ill-considered, and we

decline to follow it. If any person injured in the

Article III sense by a Title VII violation could

sue, absurd consequences would follow.

Thompson, 562 U.S. at 176–77 (emphasis original)

(internal citations omitted). Thompson thus

construed “aggrieved” in Title VII “more narrowly

than the outer boundaries of Article III.” Id. at 177.

The dissent in Bank of America urges that the same

narrow reading be applied to Title VIII. Bank of

America, 137 U.S. 1307–11 (Thomas, J., concurring in

part and dissenting in part). After all, Thompson

narrowed Title VIII’s “zone of interests” to something

less than Article III standing, emphasizing that

Trafficante held Title VIII and Article III standing to

18

be co-extensive only “insofar” as the case-specific facts

“are concerned.” Thompson, 562 U.S. at 176 (quoting

Trafficante, 409 U.S. at 209). Otherwise, Thompson

read precedential language finding a “congressional

intention to define” Title VIII and Article III standing

as co-terminus to be “ill-considered” “dictum.” Id.

The Bank of America majority, on the other hand,

held that “[t]he ‘dictum’ we cast doubt on in

Thompson addressed who may sue under Title VII,

the employment discrimination statute, not under the

FHA.” Bank of America, 137 U.S. at 1303. That

conclusion is inapposite to the dissent’s view that the

“ill-considered” “dictum” to which Thompson referred

regarded “some language in our older precedents

suggest[ing] that the FHA’s zone of interests extends

to the limits of Article III.” Id. at 1304 (Thomas, J.,

concurring in part and dissenting in part).

The dissent’s view should carry the day, especially

since the Thompson majority reasoned that limiting

Title VII’s “zone of interests” to something less than

Article III standing properly “exclud[es] plaintiffs

who might technically be injured in an Article III

sense but whose interests are unrelated to the

statutory prohibitions.” Thompson, 562 U.S. at 178.

And so, to the extent Trafficante and similar cases can

be read to suggest that the FHA’s private right of

action is co-extensive with Article III standing, the

dissent in Bank of America makes clear that

Thompson disavowed those suggestions as “illconsidered dictum” and should no longer be followed.

19

III. FAILURE TO REVIEW THE LOWER

COURT’S

“PROXIMATE

CAUSE”

FORMULATION AND RECONSIDER BANK

OF AMERICA’S “ZONE OF INTERESTS”

FINDING THREATENS “MASSIVE AND

COMPLEX DAMAGES LITIGATION,” AND A

CIRCUIT SPLIT

If courts construe the FHA to authorize suits to the

full extent of Article III standing, then any type of

consequential economic loss, no matter how far

detached from the social ills Congress sought to

redress, can give rise to a claim under the statute. The

loss would need only some “logical bond” to alleged

housing or lending discrimination.

The economic loss claimed here is the ultimate in

consequential damages: the impact of urban blight on

Miami’s property-tax base. It invites just the sort of

“massive and complex damages litigation” that

longstanding proximate-cause jurisprudence aims to

avoid. While the history of proximate-cause analysis

is jumbled and often incoherent, inherent to all its

iterations is an adherence to economic feasibility.

Ultimately, all things merge into one causal

universe. “Each cause brings about future events.

Without each the future would not be the same. Each

is proximate in the sense that it is essential. But that

is not what we mean by the word.” Palsgraf, 248 N.Y.

at 352 (Andrews, J., dissenting). We draw legal lines

not only in pursuit of justice, but to allow economic

actors some bright-line characterizations of the risks

to which their activities expose them. To draw these

lines too broadly threatens to massively chill

economic activity. This case highlights the danger.

20

It seems the prospect that Miami can recoup its

tax revenue losses by tapping into the resources of the

nation’s largest banks through the FHA is too

tempting to pass up, national economic costs be

damned. Most governments have an insatiable

hunger for revenue, and plaintiffs’ lawyers, who

themselves stand to win sizable fee awards from these

actions, have little trouble convincing local officials

that FHA litigation or similar suits under other

federal civil rights laws are the answer to their fiscal

woes. These suits promise a new and potentially rich

source of funding that does not require elected

officials to secure the consent of voters or face the

wrath of local property owners and other taxpayers.

This species of lawsuits is the latest wave in the

troubling trend of regulation by litigation. It follows

the pattern set by state attorneys general who have

joined forces with contingency-fee lawyers to sue, for

example, the tobacco industry for the states’ share of

healthcare costs attributable to smoking and the gun

industry for the societal costs of gun violence—

litigation models that have been criticized by legal

commentators as unconstitutional, unethical, and

inconsistent with democratic government.2

2 See Martin H. Redish, “Private Contingent Fee Lawyers

and Public Power: Constitutional and Political Implications,” 18

S. Ct. Econ. Rev. 77, 80–81 (2010) (arguing that “[i]t is difficult

to imagine an arrangement more rife with danger, cynicism and

potential abuse than this one” and concluding that the

“government’s use of private contingent fee attorneys in civil

litigation is (1) inconsistent with the nation’s democratic

tradition, (2) unethical, and (3) a violation of the Due Process

Clause”); U.S. Chamber Inst. for Legal Reform, “Privatizing

Public Enforcement: The Legal, Ethical and Due-Process Impli-

21

Should Miami prevail on the questions now before

the Court, this litigation tide will be uncontainable.

Cities and counties from coast to coast will have a

potentially unlimited flow of revenue to fund their

spending habits—an enticing source of new funds

that is beyond the constraints of democracy and free

of any need to secure the consent of the governed.

Further, upholding the Eleventh Circuit

reformulation of FHA “proximate cause” threatens a

circuit split sooner rather than later. Already, district

courts are scrambling to discern Bank of America’s

implications, with mixed results. Since 2017, one

district court has held that lost tax revenues are

outside this Court’s FHA proximate-cause standard,

to the extent Bank of America created one. See Cty. of

Cook v. HSBC N. Am. Holdings Inc., 314 F. Supp. 3d

950, 963–64 (N.D. Ill. 2018). One seems inclined to

agree. See City of Phila. v. Wells Fargo & Co., No. 17cv-2203, 2018 WL 424451, at *6 (E.D. Pa. Jan 16,

2018). And two appear to be going in the same or a

similar direction as the Eleventh Circuit. See City of

Sacramento v. Wells Fargo & Co., No. 18-cv-416, 2019

WL 3975590, at *6–*9 (E.D. Cal. Aug 22, 2019);

Montgomery Cty. v. Bank of America Corp., No. 18-cv3575, 2019 WL 4805678 (D. Md. Sept. 30, 2019).

Amicus urges this Court to cabin FHA’s

proximate-cause standard within the tried-and-true

confines of common-law precedents. Those precedents

limit the scope of liability to the direct causes of harm

to avoid a chill on economic activities. Judge

Andrews’s analysis in Palsgraf, reflected in this

cations of Contingency-Fee Arrangements in the Public Sector”

(Sept. 2013), https://bit.ly/35ltmzk.

22

Court’s recent proximate-cause caselaw and in Bank

of America’s “four guiding principles,” warns of the

dangers of an overly broad definition of liability. Alas,

the court below did not heed this warning.

CONCLUSION

For the foregoing reasons, the Court should grant

the petitions and review both the Eleventh Circuit’s

reformulation of FHA “proximate cause” and its own

“zone of interests” finding from Bank of America.

Respectfully submitted,

Ilya Shapiro

Counsel of Record

TREVOR BURRUS

SAM SPIEGELMAN

CATO INSTITUTE

1000 Mass. Ave., N.W.

Washington, D.C. 20001

(202) 842-0200

ishapiro@cato.org

December 20, 2019