Today, the Supreme Court issued two decisions, described below, of interest to the business community.
Foreign Sovereign Immunities Act—Pleading Standards
Although foreign sovereigns are generally immune from defending themselves in U.S. federal and state courts, their immunity is subject to certain exceptions. Under the expropriation exception, foreign sovereigns are subject to jurisdiction in cases involving rights in property taken in violation of international law. Today, the Supreme Court considered how district courts should decide whether a case properly invokes the expropriation exception. In an 8-0 decision authored by Justice Breyer, the Court held that U.S. courts can maintain jurisdiction to consider the merits of a case under the expropriation exception only if they find that the property in which the plaintiff claims to hold rights was actually "property taken in violation of international law." It is not sufficient for parties merely to make allegations that would suffice to satisfy the ordinary motion to dismiss standard. To determine whether the right at issue is a property right and whether there was a violation of international law, a court is permitted to take evidence and resolve factual disputes, but the court should resolve such disputes as near to the outset of the case as is reasonably possible.
Fair Housing Act—Aggrieved Persons
The Fair Housing Act permits any "aggrieved person" to file a civil action to seek damages for violations of the statute, defining "aggrieved person" to include "any person who ... claims to have been injured by a discriminatory housing practice." The Supreme Court granted certiorari to decide whether that statutory language authorizes suit by any plaintiff who has Article III standing, or whether a plaintiff must also fall within the zone of interests that the statute is designed to protect.
Today, in a 5-3 ruling authored by Justice Breyer, the Court held that a plaintiff must allege injuries that arguably fall within the FHA's zone of interests but interpreted that zone broadly. The action before the Court involved claims by the City of Miami that it had lost tax revenues and sustained additional municipal expenses when banks foreclosed on properties that had been the subject of discriminatory lending procedures. But the Court held that Miami must bear a higher burden to establish that its economic injuries were caused by the banks' alleged misconduct. Rejecting the suggestion that foreseeability alone was sufficient, the Court directed the court of appeals to consider on remand whether there is a direct relation between the injury asserted by Miami and the injurious conduct alleged.
Justice Thomas, joined by Justices Kennedy and Alito, dissented. In his view, Miami's injuries fall outside the FHA's zone of interests and are, in any event, too remote to satisfy the FHA's proximate-cause requirement.
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