Appeal from the United States District Court for the Central District of California John F. Walter, District Judge, Presiding D.C. No. CV-05-05818-JFW
Before: Alex Kozinski, Chief Judge, Pamela Ann Rymer, Michael Daly Hawkins, Susan P. Graber, M. Margaret McKeown, William A. Fletcher, Ronald M. Gould, Richard R. Clifton, Milan D. Smith, Jr., Sandra S. Ikuta and N. Randy Smith, Circuit Judges.
In this appeal we are asked to determine whether a disparate impact suit alleging the discriminatory provision of homeowner's insurance in violation of the federal Fair Housing Act ("FHA"), 42 U.S.C. §§ 3601-19, is reverse-preempted by the McCarran-Ferguson Act, 15 U.S.C. § 1012, because it invalidates, impairs, or supersedes Texas insurance law. In order to do so, we must answer two preliminary questions. First, we must decide whether the FHA prohibits discrimination in the denial and pricing of homeowner's insurance. Second, we must determine whether the reverse-preemption standard set forth in the McCarran-Ferguson Act applies to claims brought under latter-enacted civil rights statutes such as the FHA. We answer yes to both questions. Having resolved these issues, in a separate order filed concurrently with this opinion we certify to the Supreme Court of Texas the dispositive question of whether Texas law permits an insurance company to price insurance by using credit-score factors that have a racially disparate impact that, were it not for the McCarran-Ferguson Act, would violate the FHA.
Plaintiff-Appellant Patrick O. Ojo is an African-American resident of Texas and the owner of a homeowner's property-and-casualty policy issued by Farmers Group, Inc. ("Farmers"). Ojo sued Farmers and its affiliates, subsidiaries, and reinsurers (collectively "Defendants") in federal court on behalf of himself and other minorities. He claims that Defendants, acting in concert, use a number of "undisclosed factors" in their credit-scoring system that disparately impact minorities, in violation of the federal Fair Housing Act ("FHA"), 42 U.S.C. §§ 3601-19. Ojo does not claim that Defendants intentionally discriminated against any members of the putative plaintiff class.
Defendants moved to dismiss all claims pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). The district court concluded that the Texas Insurance Code preempted Ojo's FHA claims under the reverse-preemption standard set forth in the McCarran-Ferguson Act, 15 U.S.C. § 1012. Ojo appealed, and a divided three-judge panel of our court initially reversed the district court, holding that Texas law does not reverse-preempt Ojo's FHA claim. Ojo v. Farmers Group, Inc., 565 F.3d 1175 (9th Cir. 2009). We ordered the case reheard en banc pursuant to Ninth Circuit Rule 35-3, and it is now pending before us.
 It is unlawful under the FHA "[t]o discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of race." 42 U.S.C. § 3604(b). This provision has been interpreted to prohibit not just intentional discrimination but also actions that have a discriminatory effect based on race (disparate-impact discrimination). See Pfaff v. U.S. Dep't of Hous. & Urban Dev., 88 F.3d 739, 745-46 (9th Cir. 1996). Where a plaintiff raises a prima facie case of disparate-impact discrimination under the FHA, the burden shifts to the defendant to either rebut the facts underpinning the prima facie case or to demonstrate a "legally sufficient, nondiscriminatory reason" for the practices causing the disparate impact. Affordable Hous. Dev. Corp. v. City of Fresno, 433 F.3d 1182, 1194-95 (9th Cir. 2006) (internal quotation marks omitted).
We have not yet had occasion to decide whether or not the FHA applies to homeowner's insurance. We now hold that the FHA prohibits racial discrimination in both the denial and pricing of homeowner's insurance.
Although there is a circuit split on the issue, we conclude that the Sixth and Seventh Circuits have the better of the argument. See Nationwide Mut. Ins. Co. v. Cisneros, 52 F.3d 1351, 1359-60 (6th Cir. 1995) (giving Chevron deference to the Secretary of Housing and Urban Development's interpretation of the FHA and holding that the FHA applies to home-owner's insurance); NAACP v. Am. Family Mut. Ins. Co., 978 F.2d 287, 300-01 (7th Cir. 1992) (same). Section 3604(a) of the FHA makes it unlawful to "otherwise make unavailable or deny" a dwelling because of race. 42 U.S.C. § 3604(a). Similarly, Section 3604(b) makes it unlawful to discriminate because of race "in the provision of services or facilities" in connection with "the terms, conditions, or privileges of sale or rental of a dwelling." Id. § 3604(b). The terms "make unavailable" and "service" are ambiguous. See NAACP, 978 F.2d at 298.
 When statutory language is ambiguous, we defer to a "permissible construction" of that statute by the agency charged with administering that statute. Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43 (1984). Here, Congress has charged the Department of Housing and Urban Development ("HUD") with the duty to make rules to carry out the FHA. See 42 U.S.C. § 3614a. HUD in turn has determined explicitly that the FHA does indeed prohibit discrimination in the provision of homeowner's insurance. See 24 C.F.R. § 100.70(d)(4). The terms of the FHA reasonably can bear this construction. For example, the denial of homeowner's insurance can make housing unavailable: Mortgage lenders require prospective borrowers to obtain homeowner's insurance, so without insurance, there may be no loan, and without a loan, there may be no home available to a person who wants to buy the home. Homeowner's insurance can also be seen as a "service" connected to the sale of a dwelling. In sum, HUD's construction of the FHA is reasonable and Chevron requires us to defer to it.
The Fourth Circuit has held that the FHA does not apply to homeowner's insurance. Mackey v. Nationwide Ins. Cos., 724 F.2d 419, 424-25 (4th Cir. 1984). However, it is the only circuit to have done so, and its decision pre-dated a regulation promulgated by HUD that interprets the FHA to apply to homeowner's insurance. See 24 C.F.R. § 100.70(d)(4); Implementation of the Fair Housing Amendments Act of 1988, 54 Fed. Reg. 3232-01 (January 23, 1989) (effective date March 12, 1989). As Judge Easterbrook observed, "Events have bypassed Mackey. . . . No matter how a court should have ...