## Facts

- Patrick O. Ojo, an African-American Texas homeowner, held a Farmers homeowners’ property-and-casualty insurance policy.
- In January 2004, Farmers increased Ojo’s premium by 9% despite his allegation that he had made no prior claims.
- Farmers allegedly attributed the increase to unfavorable credit information produced by an automated credit-scoring system.
- Ojo alleged Farmers’ credit-scoring method used undisclosed, race-neutral factors that disproportionately harmed minority insureds and applicants.
- Ojo asserted a federal Fair Housing Act claim based solely on disparate impact, not intentional discrimination.

## Issues

1. Whether applying the Fair Housing Act’s anti-discrimination provisions to homeowners’ insurance practices is barred by the McCarran–Ferguson Act because it would “invalidate, impair, or supersede” Texas insurance law regulating the use of credit information.
2. Whether Texas insurance law permits insurers to use race-neutral credit information in underwriting and rating homeowners’ insurance when the practice allegedly causes a disparate racial impact.
3. Whether the uncertainty in controlling Texas law warranted certification to the Texas Supreme Court.

## Decision

- The Ninth Circuit, sitting en banc, withdrew the prior panel opinion and did not decide the merits of the Fair Housing Act or McCarran–Ferguson questions.
- The court certified a determinative question of Texas insurance law to the Texas Supreme Court under Texas Rule of Appellate Procedure 58.
- The court stayed further federal appellate proceedings pending the Texas Supreme Court’s response.

## Legal Principles

- Under the McCarran–Ferguson Act, a federal statute that does not specifically relate to insurance may not be construed to invalidate, impair, or supersede state laws enacted to regulate the business of insurance.
- Whether a federal claim is reverse-preempted under McCarran–Ferguson can depend on the content and operation of the relevant state insurance regulatory scheme.
- A federal appellate court may certify a state-law question to a state supreme court when the question is determinative of the pending matter and there is no clearly controlling state-court precedent.

## Conclusion

The en banc Ninth Circuit concluded that the scope of Texas insurance law governing insurers’ use of credit information was unsettled yet potentially dispositive of McCarran–Ferguson reverse-preemption, so it certified the state-law question to the Texas Supreme Court and postponed any merits ruling on Ojo’s Fair Housing Act disparate-impact claim.


Ojo v. Farmers Grp., Inc., 600 F.3d 1205 (9th Cir. 2010)