Opinion ID: 4558819
Heading Depth: 3
Heading Rank: 1

Heading: General principles of proximate cause.

Text: Proximate cause is designed to limit liability. Id. (“For centuries, it has been ‘a well established principle of [the common] law, that in all cases of loss, we are to attribute it to the proximate cause, and not to any remote cause.’” (alteration in original) (quoting Waters v. Merchs.’ Louisville Ins. Co., 36 U.S. (11 Pet.) 213, 223 (1837))). 16 Underpinning this bedrock legal principle is “the reality that ‘the judicial remedy cannot encompass every conceivable harm that can be traced to alleged wrongdoing.” Id. (quoting Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 536 (1983)). We therefore assume that Congress is familiar with the longstanding common-law rule that loss must be attributable to its proximate cause and does not mean to displace this rule unless it does so expressly. Miami I, 137 S. Ct. at 1305. This is certainly true for the FHA, because “[t]he housing market is interconnected with economic and social life” such that violations of the statute “may, therefore, ‘be expected to cause ripples of harm that flow’ far beyond the defendant’s misconduct.” Id. at 1306 (quoting Associated Gen. Contractors, 459 U.S. at 534). Simply put, the purpose of the FHA’s proximate-cause requirement is to limit recovery to more direct harms, because “[n]othing in the statute suggests that Congress intended to provide a remedy wherever those ripples travel.” Id. There is no hard and fast rule for establishing proximate cause. Far from being a one-size-fits-all “blackletter rule 16 Importantly, proximate cause is not a requirement of Article III, but rather an element of the cause of action under a statute, and it “must be adequately alleged at the pleading stage in order for the case to proceed.” Lexmark, 572 U.S. at 134 n.6. 18 CITY OF OAKLAND V. WELLS FARGO & CO. that will dictate the result in every case,” the proximatecause requirement varies by statute. Holmes v. Secs. Inv’r Prot. Corp., 503 U.S. 258, 272 n.20 (1992) (quoting Associated Gen. Contractors, 459 U.S. at 536); see also Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639, 654 (2008) (“Proximate cause . . . is a flexible concept.” (emphasis added) (citing Holmes, 503 U.S. at 272 n.20)). As a result, the proximate-cause requirement is “controlled by the nature of the statutory cause of action.” Lexmark, 572 U.S. at 133. Although proximate cause “is not easy to define,” the basic inquiry is “whether the harm alleged has a sufficiently close connection to the conduct the statute prohibits. Put differently, the proximate-cause requirement generally bars suits for alleged harm that is ‘too remote’ from the defendant’s unlawful conduct.” Id. (emphasis added). 17 The only controlling Supreme Court precedent on the FHA’s proximate-cause requirement is its recent decision in Miami I. In that case, the City of Miami, like Oakland, claimed that Wells Fargo’s and Bank of America’s discriminatory lending practices caused Miami’s decreased property-tax revenues and increased municipal expenses. Miami I, 137 S. Ct. at 1300–01. Reversing the Eleventh Circuit, the Court held that “to establish proximate cause under the FHA, a plaintiff must do more than show that its injuries foreseeably flowed from the alleged statutory 17 With these principles in mind, the Supreme Court has defined the contours of the proximate-cause requirement of several other statutes, but not the FHA. See, e.g., id. at 132–34 (Lanham Act); Dura Pharms., Inc. v. Broudo, 544 U.S. 336, 346 (2005) (Private Securities Litigation Reform Act); Holmes, 503 U.S. at 265–68 (Racketeer Influenced and Corrupt Organizations Act (“RICO”)); Associated Gen. Contractors, 459 U.S. at 529–35 (Clayton Act). CITY OF OAKLAND V. WELLS FARGO & CO. 19 violation.” 18 Id. Rather, “some direct relation between the injury asserted and the injurious conduct alleged” is required. Id. at 1306 (emphasis added) (quoting Holmes, 503 U.S. at 268). “The ‘general tendency’ in these cases,” the Court explained, “is not to go beyond the first step” of the causal chain. Id. (quoting Hemi Grp., LLC v. City of New York, 559 U.S. 1, 10 (2010)). But what is included in this “first step” varies; it “depends in part on the ‘nature of the statutory cause of action,’ and an assessment ‘of what is administratively possible and convenient.’” Id. (first quoting Lexmark, 572 U.S. at 133; then quoting Holmes, 503 U.S. at 268). The Supreme Court then declined to “draw the precise boundaries of proximate cause under the FHA and to determine on which side of the line the City’s financial injuries fall.” Id. Instead, it asked lower courts to weigh in by offering “the benefit of [their] judgment on how the contrary principles [of foreseeability and directness] apply to the FHA.” Id. 19 18 The Court also reaffirmed its well-established precedent that cities have statutory and Article III standing to sue under the FHA, noting that “the City’s claimed injuries fall within the zone of interests that the FHA arguably protects. Hence, the City is an ‘aggrieved person’ able to bring suit under the statute.” Miami I, 137 S. Ct. at 1301. 19 Since Miami I was decided, only the Eleventh Circuit and a handful of district courts have tackled this question. On remand, the Eleventh Circuit held that Miami’s use of statistical regression analyses—which are virtually identical to those used in Oakland’s amended complaint—was sufficient to plausibly allege that the drop in Miami’s property-tax revenues was proximately caused by Wells Fargo’s redlining and reverse redlining. City of Miami v. Wells Fargo & Co. (Miami II), 923 F.3d 1260, 1280 (11th Cir. 2019). 20 CITY OF OAKLAND V. WELLS FARGO & CO. We are thus asked to decide the questions before us as a matter of first impression, guided by the two-step analysis laid out by the Supreme Court in Miami I: first, we must evaluate “the contours of proximate cause under the FHA,” and second, we “decide how that standard applies to the City’s claim for lost property-tax revenue and increased municipal expenses.” Miami I, 137 S. Ct. at 1306. We now turn to each prong of this analysis.