County Of Cook v. Bank of America Corporation et al

Filing 52

Enter MEMORANDUM Opinion and Order Signed by the Honorable Elaine E. Bucklo on 3/19/2015. Mailed notice (jdh)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

COUNTY OF COOK,
Plaintiff,
v.
BANK OF AMERICA
CORPORATION, et al.
Defendants.

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No. 14 C 2280

MEMORANDUM OPINION AND ORDER
Cook County (“the County”) alleges that Defendants-collectively referred to as “Bank of America” or “BOA” for
purposes of this opinion--discriminated against African American
and Hispanic borrowers in violation of the Fair Housing Act of
1968 (“FHA”), 42 U.S.C. § 3601 et seq.
BOA has moved to dismiss the County’s complaint on the
grounds that it lacks Article III and statutory standing; is
attempting to bring time-barred claims; and has failed to state
any FHA claims upon which relief may plausibly be granted.

I

deny BOA’s motion to dismiss for the reasons stated below.
I.
At the motion to dismiss stage, I must accept the County’s
factual allegations as true and draw all reasonable inferences
in its favor.

See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

1

The County alleges that Defendants targeted minority
borrowers and made approximately 95,000 home loans with less
favorable terms and conditions than loans made to similarly
situated white borrowers.
431.

See Dkt. No. 9 (“Compl.”) at ¶¶ 6,

The intentional targeting of minority borrowers for the

extension of credit on unfavorable terms is known as “reverse
redlining.”

Id. at ¶ 325; see also United Companies Lending

Corp. v. Sargeant, 20 F. Supp. 2d 192, 203 n.5 (D. Mass. 1998)
(“Redlining is the practice of denying the extension of credit
to specific geographic areas due to the income, race, or
ethnicity of its residents...Reverse redlining is the practice
of extending credit on unfair terms to those same
communities.”).

Approximately sixty (60) percent of the 95,000

discriminatory loans identified in the complaint “already have
or can be expected to become delinquent, default and eventually
be foreclosed upon.”

Id. at ¶ 431.

Defendants allegedly structured home loans to strip equity
from minority homeowners while home prices were at historic
highs using the following practices:
(a) unchecked or improper credit approval decisions
for minority borrowers, resulting in borrowers being
approved for and receiving refinance and home equity
loans they could not afford and consequently were
likely to become delinquent and/or default on;
(b) subjective surcharges on minority borrowers of
additional points, fees and other credit and servicing
costs over and above an otherwise objective risk-based
2

financing rate for such loan products, increasing the
likelihood of delinquencies and/or defaults on such
loans;
(c)...steer[ing] [minority borrowers] into higher cost
loan products, also increasing the likelihood of
delinquencies and/or defaults on such loans; and
(d) undisclosed inflation of appraisal values of
minority residences in order to support loan amounts
to
minority
borrowers,
further
increasing
the
likelihood of delinquencies and/or defaults on such
loans.
Id. at ¶ 7; see also id. at ¶ 103 (alleging additional
discriminatory terms and conditions such as pre-payment
penalties); ¶ 299 (same).

These discriminatory terms and

conditions allegedly continued into the servicing period of each
loan as minority borrowers were required to make higher monthly
mortgage payments on higher loan balances than similarly
situated white borrowers and incurred a disproportionate share
of loan delinquencies, defaults, foreclosures, and home
vacancies.

Id. at ¶¶ 8, 80.

In support of its claims, the County cites statistical
evidence that African American and Hispanic borrowers (1) were
more likely to receive higher interest rate loans that similarly
situated white borrowers at the national level between 2003 and
2007, id. at ¶¶ 36-45; (2) accounted for a disproportionate
share of completed foreclosures and seriously delinquent loans
in the Chicago metropolitan area between 2004 and 2008, id. at ¶
82; and (3) received a disproportionate share of high cost
3

mortgage loans made in Cook County between 2004 and 2007, id. at
¶¶ 318-24, 332, 334-38.

The County also asserts there is a

direct relationship between the concentration of minority
homeowners in a particular neighborhood and the foreclosure rate
between 2004 and 2006.

Id. at ¶ 332.

The County allegedly sustained numerous injuries because of
Defendants’ discriminatory practices, including:
[1] out-of-pocket costs in providing governmental
services (e.g., necessary building code inspections
and repairs, police, and significant administrative,
court and legal costs) related to various affected
properties and neighborhoods; [2] reduced property
values
on
foreclosed
properties
and
surrounding
properties; [3] lost property tax revenue on vacant or
abandoned
properties,
and
on
foreclosed
and
surrounding properties as a result of lower home
values; [4] lost other tax revenues; [5] lost
recording fees as a result of the use of [the Mortgage
Electronic Registration System] to avoid such fees;
and [6] various other injuries resulting from the
deterioration
and
blight
to
the
hardest
hit
neighborhoods and communities.
Id. at ¶ 408.

With respect to each foreclosure, the County

allegedly incurred $19,000 in costs plus additional damages for
declining property values and intangible harm to the community
fabric.

Id. at ¶ 431.
II.

Defendants have moved to dismiss the County’s claims under
the Fair Housing Act on three grounds: (1) the County lacks
standing; (2) the County’s claims are time-barred; and (3) the

4

County has failed to state plausible disparate treatment or
disparate impact claims.
These arguments come from a familiar and largely
unsuccessful playbook utilized by financial institutions in
similar FHA cases filed by counties and municipalities across
the country. 1

Defendants’ standing argument has achieved a

measure of success on only three occasions. 2

Their statute of

limitations argument has prevailed only once as an alternative
holding.

See City of Miami, 2014 WL 3362348, at *6.

And

Defendants have not cited a single reverse redlining case that
1

See City of Los Angeles v. JPMorgan Chase & Co. No. 2:14-cv4168-ODW (RZx), 2014 WL 6453808 (C.D. Cal. Nov. 14, 2014)
(denying motion to dismiss that challenged standing, timeliness,
and the plausibility of the city’s allegations); City of Los
Angeles v. Bank of Am. Corp., No. CV 13-9046 PA (AGRx), 2014 WL
2770083 (C.D. Cal. June 12, 2014) (same); City of Los Angeles v.
Citigroup, Inc., 24 F. Supp. 3d 940 (C.D. Cal. 2014) (same);
City of Los Angeles v. Wells Fargo & Co., 22 F. Supp. 3d 1047
(C.D. Cal. 2014) (same); DeKalb County v. HSBC N. Am. Holdings,
Inc., No. 1:12-CV-3640-SCJ, 2013 WL 7874104 (N.D. Ga. Sept. 25,
2013) (same); City of Memphis v. Wells Fargo Bank, N.A., No. 092857-STA, 2011 WL 1706756 (W.D. Tenn. May 4, 2011) (denying
motion to dismiss that challenged standing and plausibility of
city’s allegations); Mayor and City of Baltimore v. Wells Fargo
Bank, N.A. (“Baltimore III”), No. JFM-08-62, 2011 WL 1557759 (D.
Md. Apr. 22, 2011) (denying motion to dismiss that challenged
standing); Mayor and City of Baltimore v. Wells Fargo Bank, N.A.
(“Baltimore I”), 631 F. Supp. 2d 702 (D. Md. 2009) (denying
motion to dismiss that challenged standing and plausibility of
city’s allegations).
2

See City of Miami v. Bank of Am. Corp., No. 13-24506-CIV, 2014
WL 3362348 (S.D. Fla. July 9, 2014) (dismissing FHA claim for
lack of standing); Mayor and City of Baltimore v. Wells Fargo
Bank, N.A. (“Baltimore II”), 677 F. Supp. 2d 847 (D. Md. 2010)
(same); City of Birmingham v. Citigroup, Inc., No. CV-09-BE-467S, 2009 WL 8652915 (N.D. Ala. Aug. 19, 2009) (same).
5

was dismissed for failure to state a plausible claim.

I review

Defendants’ arguments for dismissal against this backdrop of
district court decisions.
A.
Defendants first argue that the County (1) lacks Article
III standing to sue for the alleged FHA violations and (2) does
not fall with the statute’s zone of interests.
1.
“To establish Article III standing, a plaintiff must show
(1) an ‘injury in fact,’ (2) a sufficient ‘causal connection
between the injury and the conduct complained of,’ and (3) a
‘likelihood’ that the injury ‘will be redressed by a favorable
decision.’”

Susan B. Anthony List v. Dreihaus, 134 S. Ct. 2334,

2341 (2014) (quoting Lujan v. Defenders of Wildlife, 504 U.S.
555, 560-61 (1992)).

“At the pleading stage, general factual

allegations of injury resulting from the defendant's conduct may
suffice, for on a motion to dismiss we ‘presum[e] that general
allegations embrace those specific facts that are necessary to
support the claim.’”

Defenders of Wildlife, 504 U.S. at 561

(quoting Lujan v. Nat’l Wildlife Fed., 497 U.S. 871, 889
(1990)).
Defendants challenge only the first two elements of Article
III standing; that is, they argue that the County has not
alleged a “concrete and particularized injury in fact that is
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fairly traceable to the challenged action of the
[D]efendant[s].”

Lexmark Int’l, Inc. v. Static Control

Components, Inc., 134 S. Ct. 1377, 1386 (2014) (internal
quotation omitted).
The County responds that it has alleged several distinct
injuries arising from Defendants’ alleged discriminatory
practices: (1) an eroding tax base; (2) declining property tax
revenues; (3) the cost of providing government services
associated with foreclosed and/or vacant properties; (4) lost
recording fee income; and (5) intangible injuries to the fabric
of its communities.

See Compl. at ¶ 408.

Only one of these

theories needs to be plausible in order to support Article III
standing.

See Defenders of Wildlife, 504 U.S. at 563-67

(analyzing each of plaintiff’s asserted injuries, none of which
was sufficient to support standing).
The County’s asserted injuries to its tax base and property
tax revenues satisfy Article III’s injury-in-fact requirement.
The Supreme Court has held that “[a] significant reduction in
property values directly injures a municipality by diminishing
its tax base, thus threatening its ability to bear the costs of
local government and to provide services.”

Gladstone, Realtors

v. Village of Bellwood, 441 U.S. 91, 110-11 (1979); see also
City of Chicago v. Matchmaker Real Estate Sales Center, Inc.,
982 F.2d 1086, 1095 (7th Cir. 1992) (same).
7

Numerous district

courts, relying on Gladstone, have held that counties and
municipalities have standing to sue for alleged FHA violations
based on asserted injuries to their tax base and revenues.

See

City of Los Angeles v. Bank of Am. Corp., 2014 WL 2770083, at
*5; City of Los Angeles v. Citigroup, Inc., 24 F. Supp. 3d at
947-48; DeKalb County, 2013 WL 7874104, at *4; City of
Birmingham, 2009 WL 8652915, at *3.

Defendants have not

distinguished Gladstone or offered a persuasive reason to depart
from the unbroken line of district court cases cited above.
On causation, the County must allege that its asserted
injuries are “fairly traceable to the challenged action of the
[D]efendant[s], and not the result of the independent action of
some third party not before the court.”
504 U.S. at 560.

Defenders of Wildlife,

Defendants challenge causation on two grounds:

(1) minority borrowers in Cook County may have defaulted on
their home loans for reasons having nothing to do with whether
the loan had racially discriminatory terms and conditions and
(2) the County’s asserted loss in property tax revenue could
have been caused by factors unrelated to discriminatory lending
activities.

See City of Birmingham, 2009 WL at *4 (dismissing

reverse redlining case based on implausible causal allegations).
With regard to the alleged causal connection between
discriminatory loans and the risk of default, Defendants
allegedly steered minority borrowers into higher cost loans than
8

they would have received in the absence of discrimination.
Compl. at ¶¶ 222, 299.

See

In other words, but for Defendants’

discriminatory lending practices, minority borrowers in Cook
County plausibly would have received appropriately priced home
loans reflecting their ability to repay, thereby lowering the
risk of default and foreclosure.

See Baltimore III, 2011 WL

1557759, at *3 (holding that borrowers who were allegedly
steered in high cost loans plausibly would have made payments on
their mortgage and remained in possession of their homes absent
discrimination).

As for why Cook County’s property tax revenues

allegedly declined in recent years, see Compl. at ¶ 421,
foreclosures stemming from discriminatory home loans plausibly
contributed to this decline.

See Baltimore III, 2011 WL

1557759, at *5 (rejecting argument that “external conditions
affecting the value of real estate” broke the causal chain
between alleged discriminatory lending and asserted injuries to
city’s finances).

I stress, however, that the County’s

allegations pertaining to causation must be supported by
competent evidence at the summary judgment and trial stages of
this litigation.

See Defenders of Wildlife, 504 U.S. at 561.

In sum, the County has asserted an adequate injury-in-fact
that is plausibly connected to Defendants’ alleged
discriminatory lending activities.

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2.
In addition to challenging Article III standing, Defendants
argue that the County does not fall within the FHA’s zone of
interests.
“Whether a plaintiff comes within the zone of interests is
an issue that requires [a court] to determine, using traditional
tools of statutory interpretation, whether a legislatively
conferred cause of action encompasses a particular plaintiff's
claim.”

Lexmark, 134 S. Ct. at 1387 (internal quotation marks

omitted).

The ultimate question is whether the County “falls

within the class of plaintiffs whom Congress has authorized to
sue under [the FHA].”

Id.

The FHA authorizes any “aggrieved person” to file suit.
U.S.C. § 3613.

42

An “aggrieved person” includes anyone who

“claims to have been injured by a discriminatory housing
practice.”

Id. at § 3602(i)(1).

In Trafficante v. Metropolitan

Life Ins. Co., 409 U.S. 205, 209 (1972), the Supreme Court held
that by defining “aggrieved person” in such broad terms,
Congress intended to confer standing to the full extent
permitted under Article III of the Constitution.

“Thus the sole

requirement for standing to sue under [the FHA] is the Art[icle]
III minima of injury in fact: that the plaintiff allege that as
a result of the defendant's actions he has suffered ‘a distinct
and palpable injury.’”

Havens Realty Corp. v. Coleman, 455 U.S.
10

363, 372 (1982) (quoting Warth v. Seldin, 422 U.S. 490, 501
(1975)).
I have already determined that the County’s complaint
satisfies Article III’s standing requirements, so there is no
need to undertake a separate zone of interests analysis.

See

City of Los Angeles, 2014 WL 6453808, at *6 (rejecting argument
that city’s reverse redlining suit fell outside the FHA’s zone
of interests); City of Los Angeles v. Bank of Am. Corp., 2014 WL
2770083, at *8 (same); City of Los Angeles v. Wells Fargo & Co.,
22 F. Supp. 3d at 1056-57 (same).

The only court to hold that a

city’s reverse redlining claims fell outside the FHA’s zone of
interests relied on an Eleventh Circuit case that is not binding
on me and appears out of step with the Supreme Court’s
understanding of Trafficante.

See City of Miami, 2014 WL

3362348, at *3-4 (relying on Nasser v. City of Homewood, 671
F.2d 432, 437 (11th Cir. 1982), which held that the Supreme
Court did not intend to extend standing “to plaintiffs who show
no more than an economic interest which is not somehow affected
by a racial interest.”).

The Supreme Court has repeatedly

declined to upset Trafficante’s holding that “the term
‘aggrieved’ in [the FHA] reaches as far as Article III permits.”
Thompson v. North American Stainless, LP, 562 U.S. 170, 176
(2011) (collecting cases).

11

To the extent Defendants argue that the FHA contains a
proximate causation requirement that is narrower than Article
III’s causation standard, see Lexmark, 134 S. Ct. at 1391 n.6
(distinguishing between these two concepts), I reiterate that
the causal connection between Defendants’ alleged conduct and
the County’s injuries is at least plausible.
In short, the County’s claims falls within the FHA’s zone
of interests and do not fail for a lack of proximate causation.
B.
Defendants’ next argument is that the County’s claims are
barred under the FHA’s two-year statute of limitations.
The only way for Defendants to prevail on their statute of
limitations argument at the motion to dismiss stage is if the
County pleaded itself out of court:
When a defendant charges noncompliance with the
statute
of
limitations,
“[d]ismissal
under
Rule
12(b)(6)
[is]
irregular,
for
the
statute
of
limitations is an affirmative defense.” United States
v. N. Trust Co., 372 F.3d 886, 888 (7th Cir. 2004).
Because “complaints need not anticipate and attempt to
plead around defenses,” id., a motion to dismiss based
on failure to comply with the statute of limitations
should be granted only where “the allegations of the
complaint itself set forth everything necessary to
satisfy the affirmative defense.”
United States v.
Lewis, 411 F.3d 838, 842 (7th Cir. 2005).
In other
words, the plaintiff must affirmatively plead himself
out of court; the complaint must “plainly reveal [ ]
that [the] action is untimely under the governing
statute of limitations.”
Id.
We review de novo a
district court's decision to dismiss a complaint on
statute-of-limitations grounds. Indep. Trust Corp. v.

12

Stewart Info. Servs. Corp., 665 F.3d 930, 934 (7th
Cir. 2012).
Chicago Bldg. Design, P.C. v. Mongolian House, Inc., 770 F.3d
610, 613-14 (7th Cir. 2014).
The FHA provides that a civil enforcement action must be
filed “not later than 2 years after the occurrence or the
termination of an alleged discriminatory housing practice.”
U.S.C. § 3613(a)(1)(A) (emphasis added).

42

The italicized

language was added to the FHA in 1988 to codify the continuing
violation doctrine recognized in Havens: “[W]here a plaintiff,
pursuant to the Fair Housing Act, challenges not just one
incident of conduct violative of the Act, but an unlawful
practice that continues into the limitations period, the
complaint is timely when it is filed within [two years] of the
last asserted occurrence of that practice.”

455 U.S. at 380-81.

Contrary to Defendants’ assertion, the discriminatory
conduct alleged in the County’s complaint is not limited to
discrete home loan decisions made between 2004 and 2008.

The

County alleges that Defendants continue to charge minority
borrowers discriminatory fees and costs during the servicing of
home loans.

See Compl. at ¶¶ 213, 221-22, 368, 401.

These

allegations distinguish this case from City of Miami, the only
reverse redlining case dismissed as untimely at the pleading
stage.

2014 WL 3362348, at *6 (noting that complaint did not

13

allege discriminatory activities that occurred during the twoyear limitations period).

Instead, this case is similar to

DeKalb County, where the court applied the continuing violations
doctrine to allegations of (1) discriminatory lending that
occurred outside the limitations period and (2) loan servicing
that allegedly perpetuated the loan’s discriminatory terms and
conditions into the limitations period.

2013 WL 7874104, at *9-

12.
Defendants counter that even if the County has alleged a
pattern of discriminatory lending and servicing activities, the
continuing violation doctrine does not apply because of
Moskowitz v. Trustees of Purdue Univ., 5 F.3d 279 (7th Cir.
1993), and similar cases:
[T]he fact that a series of discriminatory or
otherwise unlawful acts is indeed a series, a
continuum, rather than a concatenation of unrelated
acts, will delay the deadline for suing with respect
to the earliest acts in the series only if their
character was not apparent when they were committed
but became so when viewed in the light of the later
acts.
Only in such a case is it proper to describe
the acts as adding up to a ‘continuing violation’ that
allows the plaintiff to defer suing until the end of
the statutory period...applicable to the last act.
Id. at 282 (paragraph break omitted); see also Shanoff v. Ill.
Dep’t of Human Servs, 258 F.3d 696, 703 (7th Cir. 2001) (“[I]f
the [discriminatory] conduct that occurred before the
limitations period was sufficient to notify the plaintiff that
he had a substantial claim...the continuing violation doctrine
14

does not apply and he can only base his claim on conduct that
occurred within the limitations period.”).
Defendants’ attempt to preclude application of the
continuing violation doctrine at the pleading stage is
misguided.

I cannot determine on the basis of the complaint

whether the County knew or should have known between 2004 and
2008 that 95,000 home loans signed by minority borrowers
contained discriminatory terms and conditions.

In support of

their statute of limitations argument, Defendants ask me to
consider documents that are beyond the scope of a motion to
dismiss.

See Adams v. City of Indianapolis, 742 F.3d 720, 729

(7th Cir. 2014).

It is plausible that the discriminatory nature

of home loans signed by minority borrowers in Cook County became
apparent only during the servicing period of each loan as high
costs and fees started to add up.

Here, as in DeKalb County,

the date on which the County discovered the basis of its FHA
claims is an issue that “should be decided after evidentiary
submission (and under a summary judgment analysis).”

2013 WL

7874104, at *12.
C.
Defendants’ final argument is that the County has failed to
state plausible disparate treatment and disparate impact claims.
A complaint must contain “only enough facts to state a
claim to relief that is plausible on its face.”
15

Bell Atlantic

Corp. v. Twombly, 550 U.S. 544, 570 (2007).

In a recent FHA

case, the Seventh Circuit reiterated that “[it] does not take
much to allege discrimination.”

Wigginton v. Bank of Am. Corp.,

770 F.3d 521, 522 (7th Cir. 2014) (citing Swierkiewicz v. Sorema
N.A., 534 U.S. 506 (2002) (holding that a plaintiff alleging
disparate treatment need not plead a prima facie case); Swanson
v. Citibank, N.A., 614 F.3d 400, 405 (7th Cir. 2010) (holding
that plaintiff who alleged “the type of discrimination that she
thinks occur[ed]...by whom...and when” had stated a plausible
FHA claim)).

One “essential allegation” in an FHA complaint is

“that someone else has been treated differently.”

Id.; but see

Latimore v. Citibank Fed. Sav. Bank, 151 F.3d 712, 714 (7th Cir.
1998) (questioning “wholesale transposition of the McDonnell
Douglas standard to the credit discrimination context”).
1.
“The Fair Housing Act makes it ‘unlawful for any person or
other entity whose business includes engaging in residential
real estate-related transactions to discriminate against any
person in making available such a transaction, or in the terms
or conditions of such a transaction, because of race[.]’”
Swanson, 614 F.3d at 406 (quoting 42 U.S.C. § 3605(a)).
The County’s central allegation is that Defendants targeted
minority borrowers and steered them into more expensive home
loans with a higher risk of default than loans made to similarly
16

situated white borrowers.

In other words, the County has

identified the type of discrimination that allegedly occurred
(so-called “reverse redlining); by whom (Defendants); and when
(from 2004, when the earliest discriminatory loans in Cook
County were originated, into the loan’s servicing period).
These allegations are sufficient to state a plausible disparate
treatment claim under 42 U.S.C. § 3605(a).
The County also alleges that Defendants’ conduct violated
42 U.S.C. §§ 3604(a)-(c), which prohibit discrimination in the
sale or rental of housing.

I take no position on whether

Defendants’ alleged conduct violates these additional FHA
provisions because neither party has addressed this issue.
Defendants’ two sentence reference to 42 U.S.C. § 3604(c) in a
footnote on the last page of its motion is not a well-developed
legal argument.

See Dkt. No. 29 at n.27.
2.

With regard to the County’s disparate impact claim,
Defendants first argue that such claims are not even cognizable
under the Fair Housing Act.
This issue is currently pending before the Supreme Court.
See Texas Dep’t of Housing and Community Affairs v. Inclusive
Communities Project, Inc., 135 S. Ct. 46 (2014) (granting
certiorari).

The Texas Dep’t of Housing case was argued on

January 21, 2015 and will likely be decided by the end the
17

current term.

I note, however, that two previous cases

presenting the same question were voluntarily dismissed after
the Supreme Court had granted review and set the cases for
argument.

See Twp. of Mt. Holly, N.J. v. Mt. Holly Gardens

Citizens in Action, Inc., 134 S. Ct. 636 (2013); Magner v.
Gallagher, 132 S. Ct. 1306 (2012).
Unless or until the Supreme Court holds that the FHA does
not permit disparate impact claims, I must apply binding Seventh
Circuit precedent holding that such claims are cognizable.

See

Bloch v. Frischholz, 587 F.3d 771, 784 (7th Cir. 2009) (en banc)
(“[W]e have held that, in certain circumstances, plaintiffs can
sustain a § 3604 claim on a modified disparate impact theory.”
(citing Metro. Hous. Dev. Corp. v. Vill. of Arlington Heights,
558 F.2d 1283, 1290 (7th Cir. 1977)); see also Hoffman v. Option
One Mortg. Corp., 589 F. Supp. 2d 1009, 1010-11 (N.D. Ill. 2008)
(rejecting argument that Alexander v. Sandoval, 532 U.S. 275
(2001), and Smith v. City of Jackson, 544 U.S. 228 (2005),
compel the conclusion that disparate impact claims are not
cognizable under the Fair Housing Act).

Therefore, Defendants’

motion for a stay pending resolution of the Texas Department of
Housing case currently before the Supreme Court is denied.
Assuming that the County’s disparate impact claim is
cognizable, Defendants argue that it must be dismissed because
the complaint does not identify a specific practice that
18

allegedly had a disparate impact on minority borrowers and
relies on “deficient” statistics.

Dkt. No. 26 at 37.

The

County has, in fact, alleged a variety of practices that
allegedly had a disparate impact on minority borrowers.

See

Compl. at ¶ 7-8 (alleging that Defendants’ discretionary pricing
policies, credit approval decisions, and appraisal practices
resulted in minority borrowers receiving a disproportionate
share of high cost home loans).

Whether the County’s statistics

establish a prima facie case of disparate impact is not
something I can or must decide at the pleading stage.

See

Swierkiewicz, 534 U.S. at 515.
In sum, the County’s disparate impact claim is cognizable
(at least for now) and identifies specific practices that
allegedly caused minority borrowers to receive a
disproportionate share of high cost home loans.

Whether the

County can prove this claim on the merits is a question for
another day.
III.
Defendants’ motion to dismiss is DENIED for the reasons
stated above.

ENTER ORDER:

_____________________________
19

Elaine E. Bucklo
United States District Judge

Dated: March 19, 2015

20