City of Phila. v. Wells Fargo – ED Pa. – Jan. 16, 2018
MEMORANDUM
On
May 15, 2017, Plaintiff City of Philadelphia filed its 52-page Complaint alleging
one claim against Defendants Wells Fargo & Co., Inc. and Wells Fargo Bank,
N.A. for violating the Fair Housing Act, 42 U.S.C. §§ 36-1, et seq. The
Complaint accuses Wells Fargo of engaging in discriminatory mortgage-lending
practices against African-American and Latino residents of Philadelphia. Wells
Fargo’s alleged practices constitute “reverse redlining,” which involves
targeting minorities and minority communities with exploitive loan products
that have higher costs and worse terms than those offered to similarly situated
white borrowers.
Publicly
available loan data has been analyzed by the City to indicate the existence of
“at least 1,067 discriminatory high-cost or high-risk loans issued to minority
borrowers by Wells Fargo in Philadelphia between 2004 and 2014 that resulted in
foreclosure.” These loans are
concentrated in areas of the city that have high rates of poverty and
significant AfricanAmerican and Latino populations. According to the City, this practice has
“continue[d] through the present and has not terminated.”
The
City alleges disparate treatment and disparate impact as theories for its FHA
claim, Compl. and based on those theories, the City alleges two types of
injuries: non-economic and economic. For its non-economic injuries, the City
alleges that Wells Fargo’s conduct negatively impacts the ability of minority
residents to own homes in Philadelphia, which injures the City’s “longstanding
and active interest in promoting fair housing and securing the benefits of an
integrated community.” The City alleges
that it expends resources combating housing discrimination and that Wells
Fargo’s actions have interfered with those efforts. For its economic injuries,
the City alleges that the discriminatory loans issued by Wells Fargo cause
increases in foreclosures that diminish the City’s tax revenues and increase
its spending on municipal services.
To
remedy its injuries, the City seeks injunctive relief and damages. On July 21, 2017, Wells Fargo filed a motion
to dismiss and a motion to strike. On
November 3, 2017, Wells Fargo filed a motion to stay and/or limit discovery.
I
will deny all motions. The motion to dismiss and motion to stay and/or limit
discovery are discussed below, and the motion to strike will be addressed in a
separate order
