## Facts

- Gloria E. Swanson, an African-American Chicago homeowner, applied at a Citibank branch for a home-equity loan after Citibank announced lending tied to TARP funds.
- A Citibank representative told Swanson she could not apply without her husband because the home was jointly owned; Swanson suspected the demand was meant to deter African-American applicants.
- Swanson returned the next day, completed the application, and received a conditional approval based on her estimate that the home was worth about $270,000.
- Citibank ordered an appraisal performed by Andre Lanier of PCI Appraisal Services; the appraisal valued the property at $170,000.
- Swanson obtained her own appraisal valuing the property at $240,000.
- Relying on the lower appraisal, Citibank declined to extend the home-equity loan.
- Swanson alleged Citibank, Lanier, and PCI coordinated to undervalue her home as a pretext to deny credit because of her race, asserting claims under the Fair Housing Act (FHA), 42 U.S.C. § 3605, and the Equal Credit Opportunity Act (ECOA), 15 U.S.C. § 1691(a)(1).

## Issues

1. What Rule 8(a)(2) requires for a complaint to be “plausible” under Twombly and Iqbal when challenged under Rule 12(b)(6).
2. Whether Swanson’s allegations plausibly stated race-discrimination claims under the FHA and ECOA against the lender and the appraiser/appraisal firm.

## Decision

- The Seventh Circuit reversed the dismissal and remanded.
- The court held the complaint satisfied Rule 8 and plausibly alleged race discrimination against Citibank, Lanier, and PCI.
- The court concluded that, in a straightforward discrimination case, minimal factual content identifying the type of discrimination, the actor(s), and the time frame can be sufficient to proceed past the pleading stage.
- Judge Posner dissented, reasoning the allegations did not plausibly suggest racial discrimination given economic conditions and the asserted nonracial basis for denial (the appraisal).

## Legal Principles

- Rule 8 requires a short and plain statement that gives fair notice and alleges a claim that is plausible, meaning the facts alleged make liability a reasonable possibility rather than mere speculation.
- Twombly and Iqbal do not impose fact pleading; a complaint need not plead evidence, anticipate defenses, or show that the alleged scenario is more likely than alternatives.
- In many discrimination cases, plausibility may be met by alleging the protected trait and discriminatory conduct, identifying who committed it, and stating when it occurred, together with a coherent description of the adverse action.
- FHA § 3605 and ECOA may reach appraisal-related conduct when an appraiser or appraisal firm is alleged to have participated in discriminatory credit-related practices, including intentionally undervaluing a minority homeowner’s property.

## Conclusion

The Seventh Circuit held that Swanson’s race-discrimination allegations regarding a loan denial based on an allegedly biased appraisal were sufficient under Rule 8’s plausibility standard, and it allowed her FHA and ECOA claims against the lender and appraiser defendants to proceed beyond the motion-to-dismiss stage.


Swanson v. Citibank, N.A., 614 F.3d 400 (7th Cir. 2010)