BANK OF AMERICA CORP. et al. v. CITY OF MIAMI, FLORIDA

Certiorari To The United States Court Of Appeals For The Eleventh Circuit

No. 15-1111. Argued November 8, 2016--Decided May 1, 2017 1

The City of Miami filed suit against Bank of America and Wells Fargo (Banks), alleging violations of the Fair Housing Act (FHA or Act). The FHA prohibits, among other things, racial discrimination in connection with real-estate transactions, 42 U. S. C. 3604(b), 3605(a), and permits any “aggrieved person” to file a civil damages action for a violation of the Act, 3613(a)(1)(A), (c)(1). The City’s complaints charge that the Banks intentionally targeted predatory practices at African-American and Latino neighborhoods and residents, lending to minority borrowers on worse terms than equally creditworthy nonminority borrowers and inducing defaults by failing to extend refinancing and loan modifications to minority borrowers on fair terms. The City alleges that the Banks’ discriminatory conduct led to a disproportionate number of foreclosures and vacancies in majority-minority neighborhoods, which impaired the City’s effort to assure racial integration, diminished the City’s property-tax revenue, and increased demand for police, fire, and other municipal services. The District Court dismissed the complaints on the grounds that (1) the harms alleged fell outside the zone of interests the FHA protects and (2) the complaints failed to show a sufficient causal connection between the City’s injuries and the Banks’ discriminatory conduct. The Eleventh Circuit reversed.

Held:

1. The City is an “aggrieved person” authorized to bring suit under the FHA. In addition to satisfying constitutional standing requirements, see Spokeo, Inc. v. Robins, 578 U. S. ___, ___, a plaintiff must show that the statute grants the plaintiff the cause of action he or she asserts. It is presumed that a statute ordinarily provides a cause of action “only to plaintiffs whose interests ‘fall within the zone of interests protected by the law invoked.’ ” Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U. S. ___, ___.

The City’s claims of financial injury are, at the least, “arguably within the zone of interests” the FHA protects. Association of Data Processing Service Organizations, Inc. v. Camp, 397 U. S. 150. The FHA defines an “aggrieved person” as “any person who” either “claims to have been injured by a discriminatory housing practice” or believes that such an injury “is about to occur,” 8 U. S. C. 3602(i). This Court has said that the definition of “person aggrieved” 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,’ ” Trafficante v. Metropolitan Life Ins. Co., 409 U. S. 205; and has held that the Act permits suit by parties similarly situated to the City, see, e.g., Gladstone, Realtors v. Village of Bellwood, 441 U. S. 91 (village alleging that it lost tax revenue and had the racial balance of its community undermined by racial-steering practices). Against the backdrop of those decisions, Congress did not materially alter the definition of person “aggrieved” when it reenacted the current version of the Act.

The Banks nonetheless contend that the definition sets boundaries that fall short of those the Constitution sets. Even assuming that some form of their argument is valid, this Court concludes that the City’s financial injuries fall within the zone of interests that the FHA protects. The City’s claims are similar in kind to those of the Village of Bellwood, which the Court held in Gladstone, supra, could bring suit under the FHA. The Court explained that the defendants’ discriminatory conduct adversely affected the village by, among other things, producing a “significant reduction in property values [that] directly injures a municipality by diminishing its tax base, thus threatening its ability to bear the costs of local government and to provide services.” Id., at 110–111. The City’s alleged economic injuries thus arguably fall within the FHA’s zone of interests, as this Court has previously interpreted that statute. Stare decisis principles compel the Court’s adherence to those precedents, and principles of statutory interpretation demand that the Court respect Congress’ decision to ratify those precedents when it reenacted the relevant statutory text. Pp. 5–9.

2. The Eleventh Circuit erred in concluding that the complaints met the FHA’s proximate-cause requirement based solely on the finding that the City’s alleged financial injuries were foreseeable results of the Banks’ misconduct. A claim for damages under the FHA is akin to a “tort action,” Meyer v. Holley, 537 U. S. 280, and is thus subject to the common-law requirement that loss is attributable “ ‘to the proximate cause, and not to any remote cause,’ ” Lexmark, 572 U. S., at ___. The proximate-cause analysis asks “whether the harm alleged has a sufficiently close connection to the conduct the statute prohibits.” Id., at ___. With respect to the FHA, foreseeability alone does not ensure the required close connection. Nothing in the statute suggests that Congress intended to provide a remedy for any foreseeable result of an FHA violation, which may “ ‘cause ripples of harm to flow’ ” far beyond the defendant’s misconduct, Associated Gen. Contractors of Cal., Inc. v. Carpenters, 459 U. S. 519; and doing so would risk “massive and complex damages litigation,” id., at 545. Rather, proximate cause under the FHA requires “some direct relation between the injury asserted and the injurious conduct alleged.” Holmes v. Securities Investors Protection Corporation, 503 U. S. 258. The Court has repeatedly applied directness principles to statutes with “common-law foundations.” Anza v. Ideal Steel Supply Corp., 547 U. S. 451. “ ‘The general tendency’ ” in these cases, “ ‘in regard to damages at least, is not to go beyond the first step.’ ” Hemi Group, LLC v. City of New York, 559 U. S. 1. What falls within that step depends in part on the “nature of the statutory cause of action,” Lexmark, supra, at ___, and an assessment “ ‘of what is administratively possible and convenient,’ ” Holmes, supra, at 268.

The Court declines to draw the precise boundaries of proximate cause under the FHA, particularly where neither the Eleventh Circuit nor other courts of appeals have weighed in on the issue. Instead, the lower courts should define, in the first instance, the contours of proximate cause under the FHA and decide how that standard applies to the City’s claims for lost property-tax revenue and increased municipal expenses. Pp. 10–12.

No. 15–1111, 800 F. 3d 1262, and No. 15–1112, 801 F. 3d 1258, vacated and remanded.

Breyer, J., delivered the opinion of the Court, in which Roberts, C. J., and Ginsburg, Sotomayor, and Kagan, JJ., joined. Thomas, J., filed an opinion concurring in part and dissenting in part, in which Kennedy and Alito, JJ., joined. Gorsuch, J., took no part in the consideration or decision of the cases.

Notes
1 Together with No. 15–1112, Wells Fargo & Co. et al. v. City of Miami, Florida, also on certiorari to the same court.


BOLIVARIAN REPUBLIC OF VENEZUELA et al. v. HELMERICH & PAYNE INTERNATIONAL DRILLING CO. et al.

Certiorari To The United States Court Of Appeals For The District Of Columbia Circuit

No. 15-423. Argued November 2, 2016--Decided May 1, 2017

The Foreign Sovereign Immunities Act (FSIA) shields foreign states from suits in United States Courts, 28 U. S. C. 1604, with specified exceptions. The expropriation exception applies to “any case . . . in which rights in property taken in violation of international law are in issue and that property . . . is owned or operated by an agency or instrumentality of the foreign state . . . engaged in a commercial activity in the United States.” 1605(a)(3).

A wholly owned Venezuelan subsidiary (Subsidiary) of an American company (Parent) has long supplied oil rigs to oil development entities that were part of the Venezuelan Government. The American Parent and its Venezuelan Subsidiary (plaintiffs) filed suit in federal court against those entities (Venezuela), claiming that Venezuela had unlawfully expropriated the Subsidiary’s rigs by nationalizing them. Venezuela moved to dismiss the case on the ground that its sovereign immunity deprived the District Court of jurisdiction. Plaintiffs argued that the case falls within the expropriation exception, but Venezuela claimed that international law did not cover the expropriation of property belonging to a country’s nationals like the Subsidiary and that the American Parent did not have property rights in the Subsidiary’s assets. The District Court agreed as to the Subsidiary, dismissing its claim on jurisdictional grounds. But it rejected the claim that the Parent had no rights in the Subsidiary’s property. The District of Columbia Circuit reversed in part and affirmed in part, finding that both claims fell within the exception. With respect to the Subsidiary’s claim, it concluded that a sovereign’s taking of its own nationals’ property would violate international law if the expropriation unreasonably discriminated based on a company’s shareholders’ nationality. With respect to the Parent’s claim, it held that the exception applied because the Parent had raised its rights in a nonfrivolous way. The court decided only whether the plaintiffs might have a nonfrivolous expropriation claim, making clear that, under its standard, a nonfrivolous argument would be sufficient to bring a case within the scope of the exception. Given the factual stipulations, the court concluded, the Subsidiary had satisfied that standard for purposes of surviving a motion to dismiss.

Held: The nonfrivolous-argument standard is not consistent with the FSIA. A case falls within the scope of the expropriation exception only if the property in which the party claims to hold rights was indeed “property taken in violation of international law.” A court should decide the foreign sovereign’s immunity defense “[a]t the threshold” of the action, Verlinden B. V. v. Central Bank of Nigeria, 461 U. S. 480, resolving any factual disputes as near to the outset of the case as is reasonably possible. Pp. 6–16.

(a) The expropriation exception grants jurisdiction only where there is a legally valid claim that a certain kind of right is at issue (property rights) and that the relevant property was taken in a certain way (in violation of international law). Simply making a nonfrivolous argument to that effect is not sufficient. This reading is supported by the provision’s language, which applies in a “case. . . in which rights in property taken in violation of international law are in issue.” Such language would normally foresee a judicial decision about the jurisdictional matter. This interpretation is supported by precedent. See, e.g., Permanent Mission of India to United Nations v. City of New York, 551 U. S. 193–202. It is also supported by a basic objective of the FSIA, which is to follow international law principles, namely, that granting foreign sovereigns immunity from suit both recognizes the “absolute independence of every sovereign authority” and helps to “induc[e]” each nation state, as a matter of “international comity,” to “respect the independence and dignity of every other,” Berizzi Brothers Co. v. S. S. Pesaro, 271 U. S. 562. Nothing in the FSIA’s history suggests that Congress intended a radical departure from these principles in codifying the mid-20th-century doctrine of “restrictive” sovereign immunity, which denies immunity in cases “arising out of a foreign state’s strictly commercial acts,” but applies immunity in “suits involving the foreign sovereign’s public acts,” Verlinden, supra, at 487. It is thus not surprising that the expropriation exception on its face emphasizes conformity with international law, requiring both a commercial connection with the United States and a taking of property “in violation of international law.”

A “nonfrivolous-argument” reading of the exception would undermine the objectives embedded in the statute’s language, history, and structure. It could also embroil a foreign sovereign in an American lawsuit for some time by adopting a standard limited only by the bounds of a lawyer’s (nonfrivolous) imagination. And it could cause friction with other nations, leading to reciprocal actions against this country. Pp. 6–12.

(b) Plaintiffs’ arguments to the contrary are unpersuasive. They suggest that the expropriation exception should be treated similarly to 28 U. S. C. 1331’s “arising under” jurisdiction, which applies if a plaintiff can make a nonfrivolous argument that a federal law provides the relief sought—even if, in fact, it does not, Bell v. Hood, 327 U. S. 678 685. But 1331 differs from the exception in language and concerns. Section 1331 often simply determines which court doors—federal or state—are open, and neither it nor related jurisdictional sections seek to provide a sovereign foreign nation with immunity—the FSIA’s basic objective. Nor does the text of 1331 suggest that consistency with international law is of particular importance.

Plaintiffs also claim that the nonfrivolous-argument approach will work little harm since the matter could be resolved by motion practice before the sovereign bears the expense of a full trial. But resolving a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) or summary judgment under Rule 56 may impose increased burdens of time and expense upon the foreign nation. And a district court’s decision that there is a “violation of international law” as a matter of jurisdiction may be immediately appealable as a collateral order, while the same decision made pursuant to a Rule 12(b)(6) or Rule 56 motion would be a decision on the “merits” not subject to immediate appeal. Moreover, the Circuit would part with its nonfrivolous-argument standard where a “violation of international law” is not an element of the claim to be decided on the merits. This bifurcated approach is difficult to reconcile with the statute’s language, history, or purpose; and it creates needless complexity for judges and lawyers, domestic and foreign. Pp. 12–16.

784 F. 3d 804, vacated and remanded.

Breyer, J., delivered the opinion of the Court, in which all other Members joined, except Gorsuch, J., who took no part in the consideration or decision of the case.