The Supreme Court Monday ordered a lower court to take a fresh look at whether the city of Miami can sue Bank of America and Wells Fargo for discriminating against African-American and Latino residents when issuing mortgage loans.

In a 5-3 ruling, the justices held that the city is an “aggrieved person” authorized to bring suit under the Fair Housing Act (FHA), but said it needs to be able to show more than a foreseeable injury.

The city claimed 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.

ADVERTISEMENT

In delivering the opinion of the court, Justice Stephen Breyer, however, said the 11th Circuit erred when it concluded that the city's 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. The FHA requires proximate cause — or some direct relation between the injury asserted and the alleged misconduct — to file suit.

“We conclude that foreseeability alone is not sufficient to establish proximate cause under the FHA, and therefore vacate the judgment below,” Breyer wrote, sending the case back down to the lower court.

Chief Justice John Roberts and Justices Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan joined Breyer in the majority.

Justice Clarence Thomas issued a dissenting opinion on which Justices Anthony Kennedy and Samuel Alito joined.

Thomas said he would have held that Miami’s injuries fall outside the FHA’s zone of interests and that Miami’s alleged injuries are too remote to satisfy the FHA’s proximate-cause requirement.

“The FHA prohibits ‘discrimination’ against ‘any person’ because of ‘race, color, religion, sex, handicap, familial status, or national origin’ with respect to the ‘sale or rental’ of ‘a dwelling,’" he wrote.

“Miami’s complaints do not allege that any defendant discriminated against it within the meaning of the FHA.”

Newly sworn-in Justice Neil Gorsuch took no part in the case.