United States Court of Appeals

FOR THE EIGHTH CIRCUIT

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No. 07-1894

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Marva Jean Saunders, et al., *

*

Plaintiffs - Appellants, *

*

v. *

*

Farmers Insurance Exchange, et al., *

*

Defendants - Appellees. *

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Appeals from the United States

No. 07-1897 District Court for the

___________ Western District of Missouri

Marva Jean Saunders, et al., *

*

Plaintiffs - Appellants, *

*

v. *

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American Family Mutual Insurance *

Company, *

*

Defendant - Appellee. *
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No. 07-1903

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Coleman McClain, et al., *

*

Plaintiffs - Appellants, *

*

v. *

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Shelter General Insurance *

Company, et al., *

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Defendants - Appellees. *

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United States of America; Lawyers' *

Committee for Civil Rights *

Under Law; National Community *

Reinvestment Coalition, *

*

Amici on Behalf of Appellants. *

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Submitted: January 17, 2008

Filed: August 12, 2008

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Before LOKEN, Chief Judge, HANSEN and MURPHY, Circuit Judges.

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LOKEN, Chief Judge.

These are purported class actions on behalf of persons living in a “single,

contiguous black community in Kansas City.” Plaintiffs allege, inter alia, that

defendant insurance companies (“the Insurers”) violated the Fair Housing Act, 42

U.S.C. §§ 3601 et seq., and 42 U.S.C. §§ 1981 and 1982, by “charg[ing] higher
1

The federal civil rights statutes on which plaintiffs rely do not “specifically

relate” to the business of insurance, so the McCarran-Ferguson Act bars applying

these statutes to “invalidate, impair, or supersede” state insurance laws. Like the

Seventh Circuit, we reject the contention by amicus Lawyers’ Committee for Civil

Rights Under Law that the McCarran-Ferguson Act does not apply to subsequently

enacted federal civil rights legislation such as the Fair Housing Act. See NAACP v.

Am. Family Mut. Ins. Co., 978 F.2d 287, 294 (7th Cir. 1992) (the term “‘No Act of

Congress’ could not be more comprehensive”), cert. denied, 508 U.S. 907 (1993).

Accord Murff v. Prof’l Med. Ins. Co., 97 F.3d 289, 292 n.4 (8th Cir. 1996), cert.

denied, 520 U.S. 1273 (1997).

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premium rates for the same type of homeowner’s coverage to homeowners in the

Community . . . than [they] charged homeowners in white communities.” In Saunders

v. Farmers Insurance Exchange, 440 F.3d 940 (8th Cir. 2006), after years of related

litigation, we affirmed the dismissal of other claims that minority residents of the

community were denied coverage due to the Insurers’ discriminatory underwriting

criteria. But we reversed the district court’s dismissal of the price discrimination

claims under the “filed rate doctrine,” and we remanded those claims. 

In remanding, we noted that the discriminatory pricing claims might be barred

by the McCarran-Ferguson Act, 15 U.S.C. §§ 1011-1015, as construed by the

Supreme Court in Humana Inc. v. Forsyth, 525 U.S. 299 (1999). Enacted in response

to the decision in United States v. South-Eastern Underwriters Ass’n, 322 U.S. 533

(1944), the McCarran-Ferguson Act preserves the traditional role of state insurance

regulation by providing, in pertinent part, that no federal statute “shall be construed

to invalidate, impair, or supersede any law enacted by any State for the purpose of

regulating the business of insurance . . . unless such Act specifically relates to the

business of insurance.” 15 U.S.C. § 1012(b). In Humana, the Court construed the

word “impair” to mean, in addition to a “direct conflict” with state law, any

application of federal law that would “frustrate any declared state policy or interfere

with a State’s administrative regime.” 525 U.S. at 310. We concluded that the record

on the prior appeal was not adequate to decide that issue.1
2

The HONORABLE FERNANDO J. GAITAN, JR., Chief Judge of the United

States District Court for the Western District of Missouri. 

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On remand, the Insurers renewed their Rule 12(b)(6) motions to dismiss,

arguing that analysis of plaintiffs’ lengthy complaints and the Missouri insurance laws

establishes that the McCarran-Ferguson Act bars plaintiffs’ price discrimination

claims. Without objecting to deciding the issue on Rule 12 motions, plaintiffs argued

that the McCarran-Ferguson Act does not preclude their federal civil rights claims.

The district court2

 granted defendants’ motions, concluding that the price

discrimination claims would “impair” the Missouri laws that regulate the business of

insurance within the meaning of 15 U.S.C. § 1012(b) as construed in Humana.

Saunders v. Farmers Ins. Exch., 515 F. Supp. 2d 1009 (W.D. Mo. 2007). Plaintiffs

appeal. Reviewing de novo the grant of motions to dismiss, we affirm. Benton v.

Merrill Lynch & Co., 524 F.3d 866, 870 (8th Cir. 2008) (standard of review).

I. Plaintiffs’ Price Discrimination Claims.

Plaintiffs’ complaints allege that the Insurers “used a multi-tiered rate structure

based in whole or in part on the racial composition of Kansas City zip code areas”

with the “intentional and/or unintentional unlawful effect of extracting higher

premium rates from homeowners” in the predominantly black community. Their

allegations of issues common to the class include:

Whether [the Insurers] used separate rating territories to charge higher

premium rates for risks located in the Community . . . than for

comparable risks located in white communities.

Whether [the Insurers] can provide any loss histories, or other actuarial

or statistical data, to support [their] use of such segregated and

discriminatory rating territories.
3

A HUD regulation interprets § 3604(b) as applying to the business of

homeowners insurance. See 24 C.F.R. § 100.70(d)(4); American Family, 978 F.2d

at 297-301. However, “HUD has never applied a disparate impact analysis to

insurers.” Nationwide Mut. Ins. Co. v. Cisneros, 52 F.3d 1351, 1362 (6th Cir. 1995),

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

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Plaintiffs allege that the Insurers violated 42 U.S.C. § 3604(b), which bars race

discrimination “in the terms, conditions, or privileges of sale or rental of a dwelling,

or in the provision of services or facilities in connection therewith,” as well as § 1981

and § 1982. Their prayers for relief seek a declaration that the Insurers violated these

civil rights statutes, an injunction against “any further conduct violating plaintiffs’

rights,” compensatory and punitive damages, and attorneys’ fees and costs. 

Plaintiffs’ allegations of unintentional unlawful discrimination seek relief on

a disparate impact theory of Fair Housing Act liability, that is, challenges to “practices

that are fair in form, but discriminatory in operation.” Griggs v. Duke Power Co., 401

U.S. 424, 431 (1971). In a number of prior cases, we have recognized a disparate

impact cause of action under the Fair Housing Act against governmental authorities.

See, e.g., Darst-Webbe Tenant Ass’n Bd. v. St. Louis Hous. Auth., 417 F.3d 898, 902-

03 (8th Cir. 2005). Applying Department of Housing and Urban Development

standards, we have recognized a disparate impact Fair Housing Act claim against

private actors in another context. See United States v. Badgett, 976 F.2d 1176 (8th

Cir. 1992). But at least with respect to insurers, the question is not free from doubt.

See NAACP v. Am. Family Mut. Ins. Co., 978 F.3d 287, 290-91 (7th Cir. 1992).

However, the Insurers have not raised the issue and therefore we assume, without

deciding, that private insurers may be liable under the Fair Housing Act on a disparate

impact theory.3

 

Seeking to deflect the significance of their disparate impact theory on the

McCarran/Ferguson Act analysis, plaintiffs on appeal note that they “complain of

racially disparate treatment, or intentional discrimination, as well as disparate impact.”
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They did not argue this distinction in the district court, which is reason enough to

ignore it on appeal. Moreover, after twelve years of litigation, plaintiffs provide no

factual basis for their conclusory allegations that the Insurers intentionally charged

rates based on a homeowner’s race. Their factually explicit allegations are that the

Insurers used rating zones based on facially neutral risk factors that have a disparate

racial impact. It is these disparate impact allegations that satisfied the threshold

pleading requirement of Rule 8(a)(2) -- “allegations plausibly suggesting (not merely

consistent with)” unlawful conduct. Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955,

1966 (2007). Viewing the complaints in their entirety, the lengthy litigation history,

and plaintiffs’ categorical argument that no Fair Housing Act claims are barred by the

McCarran/Ferguson Act, we conclude their conclusory allegations of discriminatory

intent are mere “labels . . . and a formulaic recitation of the elements of a cause of

action.” Id. at 1965. The point is important. Our opinion should not be read as

deciding whether disparate treatment claims against Missouri insurers are barred by

the McCarran/Ferguson Act. In this case, “[t]he allegations of intentional race

discrimination . . . do not appear to be preempted, but they are a diversion.” Dehoyos

v. Allstate Corp., 345 F.3d 290, 300 (5th Cir. 2003) (Jones, J., dissenting).

 II. Missouri’s Regulatory Regime.

Like most States, Missouri thoroughly regulates the business of insurance. The

premium rates charged by property and casualty insurers are governed by Chapter 379

of the Missouri Statutes. Insurers must file their rates and policy forms and, in the

case of homeowners insurance, may only charge the filed rates. See Mo. Rev. Stat.

§§ 379.321, 379.356. In setting rates, insurers must consider “past and prospective

loss experience within and outside this state,” “catastrophe hazards,” “past and

prospective expenses both countrywide and those specifically applicable to this state,”

“a reasonable margin of underwriting profit and contingencies,” and “all other

relevant factors, including trend factors.” § 379.318(1). In establishing rates, insurers

may group risks by classifications that “measure any differences among risks that can

be demonstrated to have a probable effect upon losses or expenses.” § 379.318(2).
4

Public hearings are conducted in accordance with detailed, recently amended

administrative hearing procedures found in Mo. Code. Regs. Ann. tit. 20 § 800-1.100

(effective May, 30, 2008). See also Mo. Rev. Stat. § 374.046. 

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Missouri prohibits rates that are “excessive . . . or unfairly discriminatory,” terms

carefully defined in § 379.318(4): 

No rate shall be held to be excessive unless such rate is unreasonably

high for the insurance coverage provided and a reasonable degree of

competition does not exist in the area . . . . Unfair discrimination shall

be defined to include, but shall not be limited to, the use of rates . . .

which unfairly discriminate between risks having essentially the same

hazard and having substantially the same degree of protection against

fire and allied lines. 

Plaintiffs note that two provisions in Chapter 375 specifically address the issue of race

discrimination, prohibiting an insurer from canceling or refusing to insure or refusing

to continue to insure because of race. Mo. Rev. Stat. §§ 375.007, 375.936(11)(g). But

they cite no authority extending those statutes beyond their plain meaning to cover a

disparate impact claim of racially discriminatory pricing. Thus, discrimination in

pricing is governed exclusively by § 379.318(4).

The Missouri Department of Insurance is “charged with the execution of all

laws . . . in relation to insurance and insurance companies doing business in this state.”

§ 374.010. The Director of Insurance may examine an insurer “at any time he may

deem it advisable,” but at least once every four years. § 379.343. If the Director finds

that “any rate” filed by an insurer may not comply with the provisions of Chapter 379,

he “shall hold a public hearing in connection therewith.” § 379.346.2.4

 If he finds

after a hearing that the rate does not comply, he “shall issue an order . . . stating when,

within a reasonable period of time thereafter, the further use of such rate . . . shall be

prohibited.” § 379.346.3. The Director may also order the insurer to cease and desist

violating the insurance laws, to take affirmative steps to comply with those laws, and
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to pay a civil penalty and the reasonable costs of investigation. § 374.046.1. The

authorized amount of civil penalties is specified. Charging unfairly discriminatory

rates is a level two violation for which the maximum penalty is $1,000 per violation

or $50,000 per year for multiple violations. §§ 374.049.2(2), 379.361. The Director

may suspend or revoke an insurer’s license for a willful violation. § 379.361.1.

A person “aggrieved by any rate charged” may ask the insurer to review the rate

and, if the request is denied, may “file a written complaint and request for hearing

with the director,” who must hold a hearing if he finds that the complaint is made in

good faith and with probable cause. § 379.348. Plaintiffs filed no administrative

complaints in these cases. We assume -- though it appears the Supreme Court of

Missouri has never considered the question -- that a decision by the Director not to

hold a hearing in response to a § 379.348 complaint could be judicially reviewed

under the contested case provisions of the Missouri Administrative Procedure Act.

See Mo. Rev. Stat. §§ 536.063(1), 536.100; cf. Farm Bureau Town & Country Ins. Co.

of Mo. v. Angoff, 909 S.W.2d 348 (Mo. banc 1995). Under that statute, the court

reviews whether the agency action was in excess of its authority; unsupported by

substantial evidence; procedurally unlawful; arbitrary, capricious or unreasonable; or

an abuse of discretion. § 536.140. 

In July 2006 amendments, the Legislature authorized the Director to file a civil

action in state court seeking various remedies against a non-complying insurer,

including “an order of restitution or disgorgement” in favor of “identifiable

consumers” who have suffered “financial loss” from a violation of the insurance laws.

§ 374.048.2(d). This remedy applies to violations of the rate-regulating provisions of

Chapter 379. § 379.361.2. As with the administrative remedies, punitive damages are

unavailable and civil penalties are limited to $1,000 per violation. § 374.049.3(2).

No provision of the Missouri insurance statutes allows an aggrieved insured to file a

lawsuit in state court challenging an unlawful rate. Only the Director, in his

discretion, may do so. Plaintiffs also concede there is no implied private right of

action under Missouri law to enforce the mandate in § 379.318(4) that rates not be
5

There appears to be no direct conflict because, as the court observed in

Dehoyos, 345 F.3d at 297-98 n.5, “the federal regulatory goal of disallowing racially

discriminatory insurance pricing is in harmony with the state’s goal of disallowing

racially discriminatory insurance pricing.” See Mo. Rev. Stat. § 379.318(4), defining

unfair discrimination “to include, but . . . not be limited to” risk and hazard

discrimination. However, the Supreme Court observed in Humana that “the term

‘supersede’ ordinarily means to displace (and thus render ineffective) while providing

a substitute rule.” 525 U.S. at 307 (quotation omitted). The Missouri insurance laws

allow rate classifications based on factors such as loss experience and define when a

rate is “unfairly discriminatory” in terms specific to the business of insurance -- “risks

having essentially the same hazard.” § 379.318(4). In this disparate impact case,

plaintiffs seek to displace the state law definition of unfair discrimination with a

federal rule that is based on a single factor -- disparate racial impact -- and looks

suspiciously like a “substitute rule.” Arguably, therefore, these pricing claims would

“supersede” state law, as that term was defined in Humana. But the issue was not

raised in this case, and we need not decide it.

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excessive or unfairly discriminatory. Cf. Dierkes v. Blue Cross & Blue Shield of Mo.,

991 S.W.2d 662, 667 (Mo. banc 1999). In Dierkes, the Court dismissed claims “based

solely on the statutory violation” but allowed common law fraud and breach-ofcontract claims against an insurer for misrepresenting that its policies met all “state

and federal requirements” because those claims existed “independent of the foregoing

statute.” Id. at 667-68. 

III. Applying The McCarran-Ferguson Act and Humana.

The McCarran-Ferguson Act bars the application of federal statutes to

“invalidate, impair, or supersede” state laws regulating insurance. In this case, it is

not argued that the federal laws invoked by plaintiffs would invalidate or supersede

state law.5

 Rather, the issue is whether the theory of liability asserted and the relief

sought by plaintiffs would impair state law by interfering with Missouri’s

comprehensive administrative regime. 
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In Humana, the Supreme Court resolved a conflict in the circuits when it

clarified that Congress in using the word “impair” intended to encompass more than

direct conflicts with state law but did not intend “to cede the field of insurance

regulation to the States.” 525 U.S. at 308. The Court went on to conclude that the

McCarran-Ferguson Act did not bar the civil RICO fraud claim at issue because

Nevada’s insurance laws also prohibited insurance fraud, and those laws permitted

statutory and common law private actions to remedy such misconduct and allowed the

recovery of damages exceeding the treble damages available under RICO. Therefore,

the RICO claims at issue complemented rather than impaired Nevada’s administrative

regime. Id. at 311-13. 

 In applying Humana’s fact-intensive interpretation of the word “impair,” our

focus must be on the precise federal claims asserted. Federal civil rights statutes are

drafted broadly, so a statute might “impair” state insurance laws when applied in some

ways, but not in others. For example, a federal claim alleging that an insurer’s

coverage denial was the product of overt racial animus would doubtless be in harmony

with state insurance regulation, while a suit challenging the racially disparate impact

of industry-wide rate classifications may usurp core rate-making functions of the

State’s administrative regime. Compare Moore v. Liberty Nat’l Life Ins. Co., 267

F.3d 1209, 1222-23(11th Cir. 2001), cert. denied, 535 U.S. 1018 (2002). “It is one

thing to say that an insurance company may not refuse to deal with . . . persons . . . .

It is another thing to require federal courts to determine whether limitations on

coverage are actuarially sound and consistent with state law.” Doe v. Mut. of Omaha

Ins. Co., 179 F.3d 557, 564 (7th Cir. 1999), cert. denied, 528 U.S. 1106 (2000). 

The Missouri insurance laws require insurers to establish rates based upon

economic factors such as loss experience that are essential to insurer solvency, and

permit insurers to classify risks based upon standards that “measure any differences

among risks that can be demonstrated to have a probable effect upon losses or
6

As the Seventh Circuit observed in American Family, 978 F.2d at 290,

“Insurance works best when the risks in the pool have similar characteristics. . . . To

curtail adverse selection, insurers seek to differentiate risk classes with many

variables. Risk discrimination is not race discrimination.” 

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expenses.” Mo. Rev. Stat. § 379.318.1-2.6

 These state statutes prescribing what rates

may be charged are essential to the core of Missouri’s regulation of the business of

insurance. See SEC v. Nat’l Sec., Inc., 393 U.S. 453, 458-59, 463 (1969). In these

cases, plaintiffs ask a federal court to determine that the Insurers’ filed rates are

unlawful using a different federal standard -- disparate racial impact -- and then to

award damages based upon the lower rates they would have paid absent

discrimination plus injunctive relief to prevent further violations of federal law. But

in Missouri, the Director of Insurance has been delegated the essentially legislative

task of rate-making by reviewing Insurer risk classifications and pricing differentials.

If a federal court may assess damages based upon what a non-discriminatory rate

would have been, and then prescribe the future rate in an injunctive decree, “[a] more

complete overlap with the state [agency’s] pricing decisions is impossible to

conceive.” Dehoyos, 345 F.3d at 302 (Jones, J., dissenting). 

Moreover, unlike Nevada law at issue in Humana, 525 U.S. at 312, neither the

Missouri insurance laws nor Missouri common law provide a private right of action

for unfairly discriminatory insurance rates. Rather, aggrieved insureds must seek

relief from the Director of Insurance, who has the exclusive authority to conduct an

administrative hearing, or to commence an action in state court to remedy an insurer

violation and the insured’s financial injury. By mandating an exclusively

administrative remedy, Missouri law preserves the agency’s primary authority to

determine whether rates are excessive or unfairly discriminatory, § 379.318(4), subject

only to judicial review for arbitrary and capricious agency action. Even if the same

legal standards apply under federal and state law (which would not be the case),

transferring their administration from state agency to federal court “obviously would
7

We reiterate that our decision is limited to the impact of the specific claims

asserted and relief sought by plaintiffs on the exclusively administrative insurance

rate-setting regime under Missouri law. The McCarran-Ferguson Act’s application

might well be different if other disparate impact claims were asserted or if Missouri

were to allow private actions challenging unfairly discriminatory rates. 

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interfere with the administration of the state law. The states are not indifferent to who

enforces their laws.” Doe, 179 F.3d at 564.

In response, plaintiffs rely on Dierkes to argue that the Missouri insurance laws

do not exclude remedies available under other state laws. But Dierkes held only that

the insurance laws do not preclude common law claims “arising under a private

agreement or from private misconduct . . . . not new rights created solely by the

statute.” 991 S.W.2d at 668. The state law right not to pay “unfairly discriminatory”

insurance rates is solely a creature of the insurance statutes. By barring private actions

to enforce that right, and by granting the Director of Insurance exclusive authority to

seek the limited remedies for violations of Chapter 379 prescribed by statute, Missouri

law creates an administrative regime that would be frustrated and interfered with, if

not supplanted, by “a rate-payer’s cause of action to recover damages measured by the

difference between the filed rate and the rate that would have been charged absent

some alleged wrongdoing.” Taffet v. Southern Co., 967 F.2d 1483, 1491 (11th Cir.)

(en banc), cert. denied, 506 U.S. 1021 (1992); see LaBarre v. Credit Acceptance

Corp., 175 F.3d 640, 643 (8th Cir. 1999).7 

For the first time on appeal, plaintiffs -- joined by the United States as amicus --

argue that Missouri allows private actions against insurers for rate discrimination

under the Missouri Human Rights Act (MHRA), Mo. Rev. Stat. §§ 213.010 et seq.

They fail to cite a case in which a state or federal court has applied the MHRA, which

does not specifically mention insurance, to unlawful discrimination in the provision

or pricing of insurance. More significantly, after the Insurers moved to dismiss

plaintiffs’ price discrimination claim as barred by the McCarran-Ferguson Act,
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plaintiffs failed to raise this issue, even though in Saunders we specifically stated that

the availability of state remedies was crucial to the issue of preclusion under the

McCarran-Ferguson Act after Humana. 440 F.3d at 946. Therefore, plaintiffs did not

preserve the issue for appeal. We decline to consider it, or its significance. See

Snider v. United States, 468 F.3d 500, 512 (8th Cir. 2006); Von KerssenbrockPraschma v. Saunders, 121 F.3d 373, 375-76 (8th Cir. 1997).

 The judgment of the district court is affirmed.

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