Attorneys representing the insurance companies moved to dismiss the case, saying that the plaintiffs' actions were barred by the McCarran-Ferguson Act. The McCarran-Ferguson Act gives states the power to regulate insurance companies except where federal laws specifically relate to "the business of insurance" or "invalidate, impair, or supersede" state laws governing insurance practices.
Citing decisions of the Fourth, Sixth, Seventh, and Ninth Circuits, Judge Gaitan ruled that the McCarran-Ferguson Act does not bar claims made under the Fair Housing Act. Judge Gaitan noted that HUD regulations implementing Section 804 (b) of the Fair Housing Act specifically refer to the provision of insurance and that the Sixth and Seventh Circuits have applied Section 804 (b) to insurance.
Attorneys for the insurance companies then argued that the plaintiffs' claims of discrimination fell within the jurisdiction of the Missouri Department of Insurance and that they didn't not have to be litigated in federal court. Judge Gaitan rejected this argument, saying that the Department of Insurance does not have jurisdiction under the Fair Housing Act.
The defendants' final argument for dismissal was on the grounds that the plaintiffs claims were barred by the filed-rate doctrine. The filed-rate doctrine ensures that consumers are charged the same rates in certain industries. Judge Gaitan said that the filed-rate doctrine does not apply to the insurance industry. He also called the defendants' argument "nonsensical."
Scott McCreight, the Kansas City attorney who is representing the plaintiffs, commented on the judge's decision, saying that the legal argument that the Fair Housing Act doesn't cover insurance is no longer feasible. "HUD has promulgated several regulations relating the Fair Housing Act to insurance redlining." He also noted that the Supreme Court has refused to hear appeals filed by the insurance industry on the subject.
McCreight said that this case is different from other redlining suits. "We made a decision to sue the entire market for strategic reasons. The Department of Insurance had already done studies of the problem which we were able to use. So, we sued 23 different companies. It makes the suit difficult to litigate, and the defendants keep trying to sever themselves from the suit, but we feel this was a good decision."
The case is similar to other redlining cases in one aspect. McCreight said that they had discovered a map of St. Louis from one of the defendants' offices. The map had the inner city marked with a circle and the words "ineligible property" were written on it.