## Facts

- The NAACP, its Milwaukee Branch, and African-American homeowners and prospective homeowners sued a homeowners’ insurer over alleged discriminatory “redlining” in the Milwaukee metropolitan area.
- Plaintiffs alleged the insurer declined to write policies or charged higher rates in neighborhoods with large or increasing minority populations.
- Plaintiffs alleged these practices increased housing costs and impeded access to integrated neighborhoods.
- Plaintiffs claimed homeowners’ insurance is effectively necessary for homeownership because mortgage lenders commonly require it as a condition of financing.
- The complaint asserted, among other theories, claims under the Fair Housing Act (FHA) and Wisconsin insurance statutes.
- The district court dismissed the FHA claim (concluding the FHA did not reach property insurance) and dismissed the Wisconsin insurance-statute claim (finding no private right of action).
- The district court entered partial final judgment under Rule 54(b) on those dismissals, and plaintiffs appealed.

## Issues

1. Whether discriminatory homeowners’ insurance redlining that affects access to housing falls within the FHA’s prohibitions on discrimination in housing-related transactions and services.
2. Whether the McCarran–Ferguson Act bars application of the FHA to insurance practices because the state regulates insurance.
3. Whether the cited Wisconsin insurance statutes create a private right of action.
4. Whether Rule 54(b) was properly used to certify an immediate appeal when the dismissed theories arose from the same alleged course of conduct.

## Decision

- The Seventh Circuit reversed the dismissal of the FHA claim and remanded for further proceedings.
- The court held that the FHA can apply to discriminatory homeowners’ insurance practices when they affect the availability or cost of housing.
- The court held that the McCarran–Ferguson Act did not preclude applying the FHA in this setting because enforcing federal nondiscrimination requirements did not invalidate, impair, or supersede state insurance regulation.
- The court affirmed dismissal of the Wisconsin insurance-statute claim for lack of a private right of action.
- The court accepted appellate jurisdiction under Rule 54(b) but cautioned that Rule 54(b) should not be used to create piecemeal appeals by treating separate legal theories as separate “claims.”

## Legal Principles

- The FHA’s coverage may extend beyond deed or lease transactions to housing-related “services” that function as necessary components of obtaining or maintaining housing, including homeowners’ insurance when it is practically required for mortgage credit.
- Discriminatory denial of insurance or discriminatory pricing that makes housing unavailable or more expensive can state an FHA claim.
- McCarran–Ferguson bars application of a federal statute to insurance only when applying the federal law would “invalidate, impair, or supersede” state insurance regulation; a federal nondiscrimination overlay that can coexist with state regulation is not barred on that ground.
- Wisconsin insurance provisions that assign enforcement to administrative officials do not create a private right of action absent clear legislative authorization.
- For Rule 54(b), a “claim” is generally defined by the operative facts and the relief sought; multiple legal theories based on the same facts ordinarily constitute a single claim, and partial judgments should not fragment such a claim into multiple appeals.

## Conclusion

The Seventh Circuit held that alleged racial redlining in homeowners’ insurance can violate the FHA because insurance may be a housing-related service that affects access to homeownership, and it rejected a McCarran–Ferguson shield where federal enforcement does not displace state insurance regulation; it also affirmed that the cited Wisconsin insurance statutes provided no private cause of action and warned against Rule 54(b) certifications that merely separate legal theories arising from the same conduct.


N.A.A.C.P. v. Am. Fam. Mut. Ins. Co., 978 F.2d 287 (7th Cir. 1992)