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9th Cir. Holds City of LA’s FHA ‘Discriminatory Lending’ Claims Failed for Lack of ‘Robust’ Causal Link

The U.S. Court of Appeals for the Ninth Circuit recently affirmed a trial court’s summary judgment ruling in favor of a bank and against the City of Los Angeles on the City’s claims that the bank violated section 3605(a) of the federal Fair Housing Act (FHA) through alleged discriminatory lending practices, and that the bank was unjustly enriched.

A copy of the opinion in City of Los Angeles v. Wells Fargo & Co. is available at:  Link to Opinion.

As you may recall, section 3605(a) of the FHA makes it unlawful for financial institutions “to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race [or] color.” 42 U.S.C. § 3605(a).

The City alleged both disparate impact and disparate treatment theories of discrimination, but primarily presented evidence to support disparate impact.  The City also sued the bank for alleged unjust enrichment.

The trial court entered summary judgment in favor of the bank and against the City on all claims.  This appeal followed.

Initially, the Ninth Circuit observed that to establish a prima facie disparate impact claim the City must demonstrate a statistical disparity and show that a policy or policies caused the disparity.  Tex. Dep’t of Hous. & Cmty. Affairs v. Inclusive Cmtys. Project, Inc., 135 S. Ct. 2507, 2523 (2015). Further, the City must show a “robust” causal link between the policy and the disparity.  Id.  If the City fails to demonstrate a causal connection, then it “cannot make out a prima facie case of disparate impact.” Id.

The Ninth Circuit did not analyze whether the City showed a statistical racial disparity, because it found that the City did not show the required “robust” causal link necessary between any disparity and the bank’s facially-neutral policy.

The City alleged three facially-neutral policies caused a disparity: (1) the bank’s compensation plan allegedly provided incentives to its loan officers to issue higher-cost loans; (2) the bank’s marketing supposedly targeted low-income borrowers; and (3) the bank allegedly did not properly monitor its loans for any disparities.

The Ninth Circuit determined that the City did not show how the first two policies were causally connected to the alleged racial disparity in a “robust” way, as required, because the policies “would affect borrowers equally regardless of race.”

Additionally, the Ninth Circuit rejected the City’s third claim that the bank did not adequately monitor any loans for disparities because this was “not a policy at all.”

Thus, the Ninth Circuit held that the trial court correctly entered summary judgment in favor of the bank and against the City on the City’s FHA claim because there was no genuine issue of material fact “as to a policy with a robust casual connection to any racial disparity.”

The Ninth Circuit next turned to the City’s unjust enrichment claim.  As you may recall, under California law, a court may award unjust enrichment “where the defendant obtained a benefit from the plaintiff by fraud, duress, conversion, or similar conduct.” Durell v. Sharp Healthcare, 108 Cal. Rptr. 3d 682, 699 (Ct. App. 2010).

The Ninth Circuit concluded that the City’s claimed lost tax revenue and increased spending on services did not confer any benefit upon the bank, as required to prevail on an unjust enrichment claim.  Thus, the Ninth Circuit held that the trial court correctly determined that there was no genuine issue of triable fact as to the City’s unjust enrichment claim.

Accordingly, the Ninth Circuit affirmed the trial court’s judgment order in favor of the bank and against the City.

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Ernest Wagner practices in Maurice Wutscher's Commercial Litigation and Consumer Litigation groups, and leads the firm’s Insurance Recovery and Advisory group. Based in Chicago, he also supports the firm’s litigation matters in its Florida office. Ernest has substantial experience in various types of commercial and insurance recovery litigation. He has conducted more than 35 jury trials, and more than 150 arbitrations for plaintiffs and defendants. He has also successfully represented clients in numerous appeals, in various jurisdictions. Ernest earned his Juris Doctor from Emory University School of Law in Atlanta, Georgia, and his Bachelor of the Arts from the University of Iowa. For more information, see

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