En Banc Ninth Circuit Rejects Attenuated Causation under Fair Housing Act

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In a ruling today in City of Oakland v. Wells Fargo & Co., a unanimous Ninth Circuit en banc panel, relying heavily on a Supreme Court decision from just four years ago, ruled that the city of Oakland was not entitled to pursue its claim under the Fair Housing Act that Wells Fargo’s allegedly discriminatory lending practices had reduced the city’s property-tax revenues:

The City of Oakland … claims that Wells Fargo’s discriminatory lending practices caused higher default rates, which in turn triggered higher foreclosure rates that drove down the assessed value of properties, and which ultimately resulted in lost property tax revenue and increased municipal expenditures. These downstream “ripples of harm” are too attenuated and travel too “far beyond” Wells Fargo’s alleged misconduct to establish proximate cause.

The en banc ruling thus rejected the conclusion reached by the panel decision authored in August 2020 by Judge Mary Murguia.

As I noted in May, the grant of en banc review required the support of at least one Democratic appointee. It’s a safe bet that the active role in the en banc process played by the new corps of conservative judges on the Ninth Circuit helped secure the grant. Had the court denied en banc review, there surely would have been a strong dissent from the denial. How many unanimous Supreme Court reversals are the moderate liberals on the Ninth Circuit willing to have their court endure?

The unanimous en banc panel was ideologically diverse, so that might make you think that there was overwhelming support to go en banc. I’m speculating, to be sure, but Murguia’s panel opinion strikes me as the sort of wild opinion that the liberal judges have long been happy to let slide.

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Kudos, by the way, to Wells Fargo’s outside counsel Neil Katyal for his big victory against a very expansive application of the Fair Housing Act.

Ed Whelan is a Distinguished Senior Fellow of the Ethics and Public Policy Center and holds EPPC’s Antonin Scalia Chair in Constitutional Studies. He is a regular contributor to NRO’s Bench Memos. He is co-editor of The Essential Scalia: On the Constitution, the Courts, and the Rule of Law.

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