Tuesday, October 27, 2009

Ninth Circuit Grants En Banc Review To Suit Against Insurer Alleging Discrimination In

In another Ninth Circuit case, yesterday the court entered an order granting en banc review in Ojo v. Farmers Group, Inc. (06-55522) and vacating the panel's opinion.  The original panel decision was released on May 12, 2009 an can be found here.  The original panel decision was written by Judge Pregerson with a dissent by Judge Bea.  The two judge majority included Senior Eighth Circuit Judge Myron H. Bright, sitting by designation.  Judge Bright will not participate in the en banc review as Judge Bright is neither an active judge nor a judge of the Ninth Circuit.

According to this Reuters article, the en banc court "will reconsider its decision to let African-American homeowners sue Farmers Group Inc for racial discrimination based on alleged overcharges on property and casualty insurance policies."

The panel decision's majority stated:
Ojo, an African-American resident of Houston, Texas, alleges that Farmers used “a number of undisclosed factors” to compute credit scores and price homeowners’ insurance policies. As a result, “Farmers charged minorities higher premiums for homeowners’ property and casualty insurance than the premiums charged to similarly situated Caucasians.”  Farmers moved to dismiss the Complaint under 12(b)(1) for lack of subject matter jurisdiction and under 12(b)(6) for failure to state a claim. The district court granted Farmers’ 12(b)(1) claim on the grounds that it was reverse-preempted by the McCarran-Ferguson Act, 15 U.S.C. §§ 1011 et seq.

In dismissing Ojo’s claim, the district court erred in two respects. First, the district court erroneously read Ojo’s claim as challenging the practice of credit scoring per se. Second, the district court erroneously interpreted Texas state insurance law as permitting disparate impact race discrimination that results from credit scoring, thereby triggering McCarran-Ferguson reverse-preemption.


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