Effective Use of Statistics in Fair Housing Act Litigation

The Fair Housing Act (FHA), 42 U.S.C. § 3604, broadly prohibits discrimination on the basis of race, color, religion, sex, familial status, or national origin in transactions related to residential properties. The statutes scope captures not only rental and sale transactions, but also the provision of services or facilities in connection therewith,” advertising, lending, and more. 

The statutes broad scope offers municipalities several options for pursuing damages and injunctive relief against parties who violate the FHA. In complex cases, statistical evidence can be of central importance to quantifying the harm caused by the defendants actions. A recent case, City of Oakland v. Wells Fargo & Co., 972 F.3d 1112 (9th Cir. Cal. 2020), offers a useful example for city attorneys to learn from.

Practitioners can access our Municipal Law Update on the City of Oakland case by clicking here.

Municipalities can bring suit under the FHA

Congress drafted the FHA with both public and private enforcement mechanisms.  The Secretary of the Department of Housing and Urban Development (HUD), and the U.S. Attorney General each have statutory authority to bring civil actions against violators. FHA also allows any aggrieved person” to bring suit in federal or state court, even if federal authorities are also pursuing a case.

The FHA defines an aggrieved person” as an individual or entity that claims to have been injured by a discriminatory housing practice; or believes that such person will be injured by a discriminatory housing practice that is about to occur.” The U.S. Supreme Court has affirmed that local government agencies can fall within the scope of aggrieved persons under the statute. Bank of Am. Corp. v. City of Miami, 137 S. Ct. 1296 (2017).

Civil suits under the FHA can pursue a full suite of remedies, including actual damages, equitable relief, and punitive damages. Cities typically seek a mix of remedies to address discriminatory practices within their jurisdictions. Injunctive relief can protect the community from ongoing harm, but cities also often seek damages for the real revenue impacts of housing discrimination. Unsurprisingly, proving the link between discrimination and lost revenue can be an evidentiary challenge.

The example of City of Oakland v. Wells Fargo & Co.

The recent City of Oakland case offers an example of how a city can approach proving damages in an FHA case. In its complaint, the City of Oakland alleged that Wells Fargo had engaged in predatory lending practices against Black and Latino residents, leading to widespread foreclosures. The City sought recovery of lost tax revenue, injunctive relief, and expenses. Those expenses included costs which the City claimed were caused by the increased number of foreclosed properties in its jurisdiction: additional policing, firefighting, and safety code enforcement, along with a diversion of resources that had been earmarked for fair-housing programs. 

In its defense, Wells Fargo argued that the City had failed to show that its alleged discriminatory practices had proximately caused the financial harm asserted by the City and filed motions to dismiss the case. The complexity of many FHA cases makes proximate cause an especially complex issue for litigators and courts to resolve. The Ninth Circuit took up the case to resolve questions about how the District Court should evaluate Wells Fargos motions for dismissal. 

The Supreme Courts decision in City of Miami addressed a similar case, which gave the Ninth Circuit a framework for evaluating the proximate cause question in the City of Oakland. In a nutshell, the Supreme Court instructed lower courts to evaluate proximate cause by considering its contours under the applicable statute and then decide how the standard applies to the claims in the given case. The Ninth Circuit reviewed the purpose of the FHA and concluded that its broad aims can encompass the city-wide injuries that the City claimed.

The Ninth Circuits next step was to examine whether the City had sufficiently shown proximate cause to overcome the Wells Fargo motion to dismiss. Here, the case offers an illustration of how cities successfully—and unsuccessfully—prove proximate cause in FHA cases.

  • A detailed statistical analysis can survive a motion to dismiss. In developing its case, the City of Oakland conducted a “sophisticated and well-explained statistical regression analysis” of the ways in which Wells Fargo’s alleged discriminatory practices reduced the City’s property tax revenues. The Ninth Circuit concluded that the analysis painted a sufficiently clear picture of proximate cause to allow the City’s claim to go forward. It would fall to Wells Fargo to address the statistical analysis in discovery and through expert testimony.
  • A lack of statistical analysis can close the door to relief. In contrast with its evidence regarding property taxes, the City did not conduct a statistical analysis of the increased expenses it alleged resulted from Wells Fargo’s lending practices.  The Ninth Circuit concluded that the District Court was correct to dismiss the City’s claim for these expenses, noting that “Oakland has not accounted for other independent variables that might have contributed to or even caused the spike in expenses.”

This case highlights the value of professionally prepared statistical analysis in preparation for litigation. City attorneys should bear in mind that studies undertaken for potential litigation must follow robust and thorough procedures. Surviving a motion to dismiss is only a first hurdle: in its case, the City of Oakland will also need to overcome what we expect will be a highly sophisticated defense. We recommend engaging forensic accountants and other specialists to build a compelling case.

Jones & Mayer supports Californias cities

As City Attorney for municipalities throughout the state, Jones & Mayer works tirelessly to serve the public interest. If you have questions about the City of Oakland case or FHA litigation generally, please reach out to Keith F. Collins at (714) 446-1400 or by email at kfc@jones-mayer.com.