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Letter to the Editor
Friday September 5
Texas Appeals Court Rules to Allow Proposed Class Action Civil Rights Suit Against Allstate's Credit Scoring to Proceed
The U.S. District Court of Appeals for the Western District of Texas has upheld, Case # 02-50721, a district court ruling denying a motion by Allstate to prevent a suit by six non-Caucasian Allstate policyholders alleging racially discriminatory pricing practices on the part of Allstate. The suit is expected to be a class action based on federal civil rights statutes.Allstate attorneys had hoped, under provisions of the McCarran-Ferguson Act, to obtain a ruling precluding application of federal anti-discriminatory laws to the case. The McCarran-Ferguson Act in general leaves insurance regulation to the state.
The appeals court found that "(1) When federal law does not directly conflict with state regulation, and (2) when application of the federal law would not frustrate any declared state policy or interfere with a State's administrative regime, the McCarran-Ferguson Act does not preclude its application."
Appellees are six non-Caucasian Allstate policyholders. They allege that "Allstate uses a 'credit-scoring system' to target non-Caucasian customers for the sale of more expensive insurance policies than those directed at Caucasian customers."
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