Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-05-02231/USCOURTS-ca8-05-02231-0/pdf.json

Nature of Suit Code: 443
Nature of Suit: Civil Rights Accommodations
Cause of Action: 

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United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 05-2225

___________

Marva Jean Saunders, et al., *

*

*

Plaintiffs - Appellants, *

*

v. *

*

Farmers Insurance Exchange, et al., * Appeals from the United States

* District Court for the

Defendants - Appellees. * Western District of Missouri.

___________

No. 05-2228

___________

Marva Jean Saunders, et al., *

*

Plaintiffs - Appellants, *

*

v. *

*

American Family Mutual Insurance *

Company, *

*

Defendant - Appellee. *

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___________

No. 05-2231

___________

Coleman McClain, et al., *

*

Plaintiffs - Appellants, *

*

v. *

*

Shelter General Insurance *

Company, et al., *

*

Defendants - Appellees. *

___________

Submitted: September 16, 2005

Filed: March 8, 2006 

___________

Before LOKEN, Chief Judge, FAGG and BYE, Circuit Judges.

___________

LOKEN, Chief Judge.

In 1996, numerous plaintiffs sued twenty-five insurers under the Fair Housing

Act, 42 U.S.C. §§ 3601 et seq., and the Civil Rights Acts of 1866 and 1870, 42 U.S.C.

§§ 1981 and 1982, seeking class action relief for defendants’ allegedly discriminatory

policies that deny homeowners insurance to the residents of minority neighborhoods

in Missouri. The district court denied class certification and dismissed the complaint

without prejudice, concluding that plaintiffs lack standing to bring claims against

defendants against whom they have alleged no direct injury. We affirmed. Canady

v. Allstate Ins. Co., 1997 WL 33384270 (W.D. Mo.1997), aff'd, 162 F.3d 1163 (8th

Cir.1998) (table) (Canady). 

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Plaintiffs then filed ten new actions, each asserting the same claims against a

single Canady defendant. Warned by the district court that they “cannot establish a

‘direct injury’ without showing a ‘direct contact’ between the plaintiffs and the

defendant,” plaintiffs filed Revised Second Amended Complaints, each challenging

a single defendant’s alleged unlawful practices with respect to the marketing and

underwriting of homeowners insurance in a single, contiguous black community in

Kansas City. In McClain v. American Econ. Ins. Co., 424 F.3d 728 (8th Cir. 2005)

(McClain), we affirmed the dismissal of the complaints against three insurers for lack

of standing. We now consider three separate appeals challenging the dismissal of

complaints against three other insurers -- Farmers Insurance Exchange (Farmers),

American Family Mutual Insurance Company (American Family), and Shelter

General Insurance Company (Shelter). These appeals raise an issue not raised in

McClain -- whether the district court properly applied the filed rate doctrine in

dismissing claims that defendants’ pricing policies and practices reflect unlawful race

discrimination. We reverse the dismissal of the pricing claims and otherwise affirm.

I. The Insurance Coverage Claims.

Like the appellants in McClain, plaintiffs asserted claims alleging that Farmers,

American Family, and Shelter use unlawfully discriminatory underwriting criteria that

render minority residents in the Community ineligible for homeowners insurance. As

in McClain, the district court dismissed these claims for lack of standing under Rule

12(b)(1) of the Federal Rules of Civil Procedure. See generally Lujan v. Defenders

of Wildlife, 504 U.S. 555, 560-61 (1992); Steger v. Franco, Inc., 228 F.3d 889 (8th

Cir. 2000). The court concluded that no plaintiff has shown a direct contact with a

defendant establishing injury “fairly traceable” to the challenged underwriting criteria.

The court rejected plaintiffs’ alternative theory that they have standing without proof

of direct contacts because their knowledge of the defendants’ underwriting practices

deterred them from making futile applications for insurance. 

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On appeal, plaintiffs argue that the district court did not give them adequate

notice that it would make fact-based rulings under Rule 12(b)(1) and did not allow

adequate discovery to develop evidence of direct contacts. We reject this contention

for the reasons stated in McClain, 424 F.3d at 732. Plaintiffs further argue that it is

sufficient proof of direct contact that a plaintiff applied for homeowners insurance and

was rejected, without regard to the reason for the rejection or whether the plaintiff was

made aware of that reason. The district court rejected this contention, and we agree.

A direct injury must “result[] from the challenged conduct,” McClain, 424 F.3d at

731; that is, it must be “fairly traceable to the challenged action of the defendant.”

Lujan, 504 U.S. at 560 (quotation omitted). Therefore, to make a sufficient showing

of direct injury, a plaintiff must show that he or she applied for homeowners insurance

and was rejected for a reason related to the challenged underwriting criteria. Plaintiffs

failed to make that showing. Finally, plaintiffs press on appeal their alternative

deterrence theory. We reject this contention for the reasons stated in McClain, 424

F.3d at 733-34. 

As in McClain, the district court applied the correct legal standard, carefully

reviewed the lengthy discovery record, and resolved fact disputes relating to these

jurisdictional issues, as Rule 12(b)(1) permits. Plaintiffs fail to demonstrate that the

court’s findings regarding the absence of direct injury were clearly erroneous. 

II. The Price Discrimination Claims.

Plaintiffs further allege that each defendant violated the Fair Housing Act and

the Civil Rights Acts by “charg[ing] higher premium rates for the same type of

homeowner’s coverage to homeowners in the Community . . . than it has charged

homeowners in white communities.” The district court dismissed these price

discrimination claims. Applying what has come to be known as the filed rate doctrine,

the court held that, because homeowners insurers doing business in Missouri may only

charge premium rates filed with the Missouri Department of Insurance, a ratepayer

suffers no injury from being charged the filed rate. Therefore, the court reasoned,

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plaintiffs lack standing to claim that a different rate should have been charged. See

Keogh v. Chicago & N.W. Ry., 260 U.S. 156, 161-65 (1922). On appeal, plaintiffs

concede that Missouri law requires insurers to charge their filed rates. But plaintiffs

argue that the filed rate doctrine may not be applied to bar damage claims under

federal civil rights statutes based upon the State’s economic regulation of insurance

rates. On this record, we agree with plaintiffs. 

At its core, the filed rate doctrine has two components. It prohibits a regulated

entity from discriminating between customers by charging a rate for its services other

than the rate filed with the regulatory agency, and it preserves the authority and

expertise of the rate-regulating agency by barring a court from enforcing the statute

in a way that substitutes the court’s judgment as to the reasonableness of a regulated

rate. See AT&T v. Central Office Tel., Inc., 524 U.S. 214, 221-23 (1998); Arkansas

La. Gas Co. v. Hall, 453 U.S. 571, 577-78 (1981); Montana-Dakota Util. Co. v.

Northwestern Pub. Serv. Co., 341 U.S. 246, 250-52 (1951).

In Keogh, the Supreme Court faced a somewhat different question, namely,

whether a regulated entity’s customers may recover treble damages under the federal

antitrust laws because the rates, though approved by a federal rate-regulating agency,

were the product of an illegal price fixing conspiracy. The Court noted that the

regulatory agency’s approval established the lawfulness of the filed rates. Therefore,

the Court concluded, the antitrust plaintiff could not recover damages because it had

not been injured in its business or property within the meaning of the Sherman Act.

260 U.S. at 162-63. This is not an antitrust immunity, the Court later explained:

The alleged collective activities of the defendants . . . were subject to

scrutiny under the antitrust laws by the Government and to possible

criminal sanctions or equitable relief. Keogh simply held that an award

of treble damages is not an available remedy for a private shipper

claiming that the rate submitted to, and approved by, the ICC was the

product of an antitrust violation.

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The Court’s reference to injunctive relief in Square D was based upon Georgia

v. Pennsylvania Rail Co., 324 U.S. 439 (1945), which limited Keogh by holding that

Georgia could obtain injunctive relief under the antitrust laws against the railroads’

collective rate-making procedures, but not damages. Here, without discussion, the

district court dismissed plaintiffs’ claims for injunctive relief under the civil rights

acts, as well as their claims for damages. On appeal, defendants totally fail to support

this seemingly unjustified expansion of the filed rate doctrine. 

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Square D Co. v. Niagra Frontier Tariff Bureau, Inc., 476 U.S. 409, 422 (1986).

Having narrowly defined the scope of Keogh in this fashion, the Court in Square D

declined to overrule this long-standing precedent.1

In these cases, the district court applied the no-injury principle of Keogh to

dismiss federal race discrimination claims because those claims challenge insurance

premiums rates filed with a state regulatory agency. This ruling goes beyond the core

of the filed rate doctrine, which simply allocates between a regulatory agency and the

courts the authority to approve and enforce rates filed with the agency. Here, as in

Keogh and Square D, the question is whether the agency’s rate-regulating authority

trumps the court’s authority to enforce a different statute. Plaintiffs correctly argue

that the Supreme Court in Keogh and Square D harmonized two federal statutes with

competing purposes, the Sherman Act and the Interstate Commerce Act, whereas here

the Supremacy Clause tips any legislative competition in favor of the federal antidiscrimination statutes. Cf. City of Kirkwood v. Union Elec. Co., 671 F.2d 1173,

1178-79 n.14 (8th Cir. 1982). Therefore, a decision that these federal claims are

barred by the State’s regulation of the defendants must be grounded in the language,

remedies, and purposes of the federal statutes at issue.

Without question, this court and others have applied this aspect of the filed rate

doctrine to bar federal RICO and antitrust claims seeking relief against utility rates

filed with state regulatory agencies. H.J. Inc. v. Northwestern Bell Tel. Co., 954 F.2d

485 (8th Cir.), cert. denied, 504 U.S. 957 (1992); see Texas Commercial Energy v.

TXU Energy, Inc., 413 F.3d 503 (5th Cir. 2005); Wegoland Ltd. v. Nynex Corp., 27

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F.3d 17 (2d Cir. 1994); Taffet v. Southern Co., 967 F.2d 1483 (11th Cir.) (en banc),

cert. denied, 506 U.S. 1021(1992). But RICO and the Sherman Act require a plaintiff

to prove injury to “his business or property.” 18 U.S.C. § 1964(c). Thus, the noinjury principle of Keogh applies to deprive a RICO or antitrust plaintiff of standing

under federal law to challenge a filed rate that must be charged under state law. But

standing to sue under federal anti-discrimination statutes such as the Fair Housing Act

is far broader. See Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205 (1972). If

a defendant’s pricing policies or practices were the product of unlawful race

discrimination, plaintiffs who purchased homeowners insurance at the discriminatory

rates have standing to seek relief under these federal statutes even if the defendant was

required by state law to charge its filed rates. Thus, as to this limited group of

plaintiffs, the no-injury principle of Keogh and H.J. Inc. will not support an

affirmance.

On appeal, beyond supporting the district court’s flawed application of the

Keogh no-injury principle, defendants simply argue at great length that federal courts

should not interfere with the state regulatory regime by adjudicating claims that

particular rates are the product of race discrimination. No doubt a ruling that rates are

unlawfully discriminatory under federal law will have some impact on the state

regulatory regime. But whether our jurisdiction to enforce the federal statutes should

be set aside (or “reverse preempted”) on this ground is a question for Congress, so the

answer must be found in federal statutes. On this aspect of the inquiry, defendants and

the district court are silent.

Congress addressed the extent to which enforcement of federal statutes may be

permitted to impact state regulation of insurance in the McCarran-Ferguson Act, 15

U.S.C. §§ 1011-1015, enacted in response to the Supreme Court’s ruling in United

States v. South-Eastern Underwriters Ass’n, 322 U.S. 533 (1944), that insurance is

interstate commerce under the Commerce Clause. Intending to leave the regulation

of insurance primarily to the States, Congress provided, with exceptions not relevant

here, that no federal statute “shall be construed to invalidate, impair, or supersede any

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law enacted by any State for the purpose of regulating the business of insurance . . .

unless such [federal] Act specifically relates to the business of insurance.” 15 U.S.C.

§ 1012(b). The Fair Housing Act, § 1981, and § 1982 do not specifically relate to the

business of insurance, nor do they “invalidate” or “supersede” the Missouri laws

regulating insurance. Thus, the question under the McCarran-Ferguson Act is whether

enforcement of these federal statutes in the manner urged by plaintiffs would “impair”

the State’s regulation of insurance. State regulation is impaired only if the federal law

“directly conflict[s] with state regulation,” or if its application would “frustrate any

declared state policy or interfere with a State’s administrative regime.” Humana Inc.,

v. Forsyth, 525 U.S. 299, 310 (1999). 

Whether the adjudication of plaintiffs’ pricing claims would impair Missouri’s

regime of insurance rate regulation under Humana is a fact-intensive issue that

defendants did not raise in the district court or on appeal. The requisite level of

interference is certainly more than possible. In holding that the filed rate doctrine

barred RICO claims against a state-regulated electric utility, for example, Judge

Tjoflat for the Eleventh Circuit summarized specific adverse impacts on the affected

state regulatory regimes that might well constitute impairment for McCarran-Ferguson

Act purposes. Taffet, 967 F.2d at 1491-92. Similarly, Judge Easterbrook in NAACP

v. American Family Mut. Ins. Co., 978 F.2d 287, 290-91 (7th Cir. 1992), cert. denied,

508 U.S. 907 (1993), and Judge Jones dissenting in Dehoyos v. Allstate Corp., 345

F.3d 290, 300-02 (5th Cir. 2003), cert. denied, 541 U.S. 1010 (2004), gave powerful

reasons why the relief requested in a disparate impact pricing claim under the Fair

Housing Act could impair comprehensive state regulation of insurance rates. But a

specific showing is needed. “The presence of a general regulatory scheme does not

show that any particular state law would be invalidated, impaired or superseded by the

application of the Fair Housing Act and the Civil Rights Acts.” Mackey v.

Nationwide Ins., 724 F.2d 419, 421 (4th Cir. 1984). 

Here, the record on appeal does not sufficiently delineate either the nature of

plaintiffs’ price discrimination claims, the specific relief they seek, or the extent of

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A number of state courts apply the filed rate doctrine to bar suits challenging

allegedly discriminatory insurance rates under state law. See Schermer v. State Farm

Fire & Cas. Co., 702 N.W.2d 898, 907 (Minn. App. 2005), and cases cited. Though

relevant to the impairment question, the parties cite no Missouri cases addressing this

issue, and based on our review the Missouri insurance statutes appear to be silent. 

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Missouri’s insurance rate regulation to decide the McCarran-Ferguson Act impairment

issue. We know defendants divide the State of Missouri into geographic rating

territories and file different rating schedules for each territory, several of which are

within Kansas City. We know that the Missouri administrative regime protects

insureds from discriminatory pricing, see Mo. Rev. Stat. § 379.318.4, and that the

agency may enforce compliance with this mandate in response to complaints by

insureds, see Mo. Rev. Stat. §§ 379.348, 379.361. But we do not know whether

insureds may bring an action in state court to challenge an insurance rate as

discriminatory or unreasonable, nor do we know whether the Missouri statutes permit

judicial review of the agency’s determination of these issues.2

 Humana teaches that

the mere fact of overlapping complementary remedies under federal and state law does

not constitute impairment for McCarran-Ferguson Act purposes. 525 U.S. at 313-14;

see Nationwide Mut. Ins. Co. v. Cisneros, 52 F.3d 1351, 1363 (6th Cir. 1995), cert.

denied, 516 U.S. 1140 (1996). 

The Supreme Court has repeatedly emphasized “that federal courts have a strict

duty to exercise the jurisdiction that is conferred upon them by Congress.”

Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 716 (1996). Here, rather than

develop a record adequate to apply the federal statute that specifically addresses the

problem, the McCarran-Ferguson Act, defendants brought Rule 12(b)(1) motions

alleging that the filed rate doctrine deprives insureds of standing to assert race

discrimination pricing claims under the Fair Housing Act and the Civil Rights Acts.

The district court erred in invoking the judicially created filed rate doctrine to restrict

Congress’s broad grant of standing to seek judicial redress for race discrimination.

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Our conclusion that the pricing claims must be remanded makes it unnecessary

to address plaintiffs’ contention that the district court erred in striking a declaration

by the former Director of the Missouri Department of Insurance submitted to show

that the state regulators do not meaningfully review defendants’ filed rates. 

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That is the primary question before us regarding the pricing claims and the only

question we decide.3

III. Conclusion.

The following portions of the district court’s final judgments are reversed and

remanded for further proceedings not inconsistent with this opinion: in the Farmers

action, the judgment dismissing the price discrimination claims of plaintiffs Kerry

Butler and Kim Nickerson; in the American Family action, the judgment dismissing

the price discrimination claims of plaintiffs Marva Saunders, Cynthia Canady, and

Kerry Butler; in the Shelter action, the judgment dismissing the price discrimination

claim of plaintiff Kerry Butler. In all other respects, the judgments are affirmed. 

______________________________

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