The U.S. District Court for the Eastern District of California denied a motion to limit the discovery the City of Sacramento could take in connection with its allegations that Wells Fargo & Co. had issued discriminatory mortgage loans in violation of the Fair Housing Act (FHA). CCL's Robert S. Peck argued the motion for the City on March 6. The court indicated that the coronavirus pandemic delayed resolution of the argued motion before today.

     The City alleged that, since 2004, the bank had issued loans that were either more expensive or riskier on the basis of race, resulting in a significant number of foreclosures to minority borrowers and reducing the City's property-tax revenue. Wells Fargo, which had used the same tactic in other similar cases, moved to bifurcate discovery, limiting the scope of discovery to the two-year period before the complaint was filed and then challenging the City to prove its entire case on that basis before being permitted to show a continuing violation.

     Peck argued, and the court agreed, that the information then obtained would not be statistically significant and would be inconsistent with U.S. Supreme Court FHA jurisprudence that treats continuing-violations, as defined in the statute, differently from isolated violations. The court held that limiting the period of discovery to the two-year period would unfairly handicap the City's case and denied Wells Fargo's motion.

     The case now moves into the discovery phase.