The Eleventh Circuit has denied a petition to rehear en banc City of Miami Gardens v. Wells Fargo & Co., 931 F.3d 1274 (11th Cir. 2019), which dismissed for lack of standing Fair Housing Act claims brought against Wells Fargo by the City of Miami Gardens. City of Miami Gardens v. Wells Fargo & Co., 2020 WL 1983892 (11th Cir. Apr. 27, 2020).
The city claimed it had standing to challenge Wells Fargo’s lending practices because the bank’s loans to African-American and Hispanic borrowers were more likely to go into default or foreclosure, thus affecting the city’s property tax base. It also claimed that foreclosures and defaults increased the costs of municipal services, and that Wells Fargo’s alleged lending practices impaired the city’s ability to provide the benefits of living in an integrated society.
The district court did not dismiss the case on standing grounds, but granted Wells Fargo’s motion for summary judgment based on the statute of limitations. On appeal, the Eleventh Circuit held that the case should be dismissed for lack of standing. In a per curiam opinion, the panel noted that, at the summary-judgment stage, it was the plaintiff’s burden to establish standing by demonstrating a genuine issue of material fact. In response to the Eleventh Circuit’s request for briefing on the question of standing, the city pointed to two pieces of evidence: a delinquent loan which, the city suggested, would likely go into foreclosure and cause damages to the city; and a list of ten loans which had already gone into foreclosure. As to the delinquent loan, the court found the city’s “speculation” about what might happen in the future insufficient to meet the standing requirement that a threatened injury be “imminent, not conjectural or hypothetical.” The list of ten loans in foreclosure was also insufficient; while the list indicated that the properties associated with those loans had declined in value, “the City did not produce any evidence of the effect of these foreclosures on property-tax revenues or municipal spending.” And both pieces of evidence failed to demonstrate a causal connection between the alleged actions of Wells Fargo and some injury to the city.
The Eleventh Circuit also rejected the city’s argument that it would be unfair to dismiss its complaint for lack of standing in light of the district court’s order phasing discovery and setting a deadline for “summary judgment motions on the statute of limitations issue.” Acknowledging that there are “limited circumstances” in which the absence of notice of the need to prove standing can alter the standard applied to assess standing, or require that the plaintiff be allowed additional time to develop its proof, the court determined that this case was not one of them. The city’s standing had been “prominently challenged” in Wells Fargo’s motion for summary judgment, and the city had responded to that argument, citing the same two pieces of evidence found insufficient on appeal. The city never argued to the district court, in its Rule 56(d) motion or otherwise, that it needed additional discovery on the issue of standing.
The subsequent order denying rehearing included a statement by Judge William Pryor, joined by Judge Branch and Judge Newsom (the other two judges on the panel to which the case was assigned), explaining why the court’s initial decision “adheres to both Supreme Court and our precedent,” and responding to Judge Wilson’s dissent. Under Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992), Judge Pryor wrote, the city’s burden to establish standing “increased with the successive stages of litigation: although mere allegations sufficed at the pleading stage, actual evidence was required to withstand summary judgment.” And the city had sufficient notice of the standing issue—despite the fact that the district court had set a specific deadline for Wells Fargo’s motion for summary judgment based on the statute of limitations, Wells Fargo also repeatedly raised the question of the city’s standing. The case was therefore in “stark” contrast, in Judge Pryor’s view, to prior Eleventh Circuit and Supreme Court decisions in which standing was assessed under the relatively lenient pleading standard because the plaintiffs were without notice that more would be required. “And even when we gave the City the opportunity on appeal to explain how further discovery would have enabled it to establish its standing,” Judge Pryor added, “the City came up short.”
Judge Wilson, joined by Judge Martin, dissented from the denial of the petition for rehearing, writing that “the City received neither proper notice that it failed to prove standing nor a legitimate opportunity to discover or produce the requisite evidence,” and that under Alabama Legislative Black Caucus v. Alabama, 575 U.S. 254 (2015), sua sponte dismissal was therefore inappropriate. That conclusion was reinforced, according to Judge Wilson, by the fact that “the defendant Wells Fargo controlled the evidence that the City needed to prove its Article III standing.”