Case Information
*2 Before LOKEN, Chief Judge, FAGG and BYE, Circuit Judges.
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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.,
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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.,
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,
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,
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.,
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.,
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.
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.
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 [1] declined to overrule this long-standing precedent.
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 anti-
discrimination statutes. Cf. City of Kirkwood v. Union Elec. Co.,
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,
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,
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,
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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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.
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. *10 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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Notes
[1] The Court’s reference to injunctive relief in Square D was based upon Georgia
v. Pennsylvania Rail Co.,
[2] 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.,
[3] 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.