dissenting:
I respectfully dissent because the district court got it precisely right: Ojo’s complaint does not state a valid claim for relief because it does not allege that Farmers uses any racebased considerations in its credit scoring system for the computation of insurance premiums. That is an essential allegation in a disparate treatment claim under the Fair Housing Act (“FHA”), 42 U.S.C. §§ 3604 et seq.
But, the majority opinion is correct that Ojo’s claim is not really a disparate treatment claim, but is a disparate impact claim. Maj. Op. at 1177-78. All right then, why isn’t his claim nonetheless valid as a disparate impact claim? Because— again, as the district court correctly determined — Texas insurance law, unlike the FHA, makes it perfectly legal to use credit scores to price insurance policies, even if doing so causes a disparate impact on racial minorities, so long as race is not used as a criteria in computing the credit scores. But, of course, he doesn’t allege race is used as a factor. Therefore, he fails to allege a viable claim for relief under either a disparate treatment or a disparate impact theory.
Ojo does allege that Farmer’s race-neutral policy of using credit scores to price insurance policies results in a disparate impact on racial minorities. To make out a claim under Texas law, Ojo needs to allege that Farmers uses race either (1) directly to price policies or (2) as a factor in determining a credit score that is used to price policies. Texas law allows the use of credit scores to price policies where race is not a factor in the computation of the credit score, even if such use happens to *1190have a disparate impact on racial minorities. Tex. Ins.Code §§ 544.003(c), 559.051 (Vernon 2005); 28 Tex. Admin. Code § 5.9941(a).
Accordingly, the application of a federal law, such as the FHA, which does not allow such use of credit scores if the credit scores have a disparate impact would invalidate, impair, or supersede Texas law. Thus, under the MeCarran-Ferguson Act, the district court was correct when it found that Texas law reverse preempts the claims Ojo makes under federal law, and was correct in dismissing the case for lack of federal jurisdiction.1
The majority holds two things: (1) Ojo’s complaint adequately states a claim for relief for disparate impact racial discrimination in violation of the FHA; and (2) Texas insurance law does not apply to effect a reverse preemption of the FHA because Ojo has alleged that “undisclosed factors” were used by Farmers in computing its credit scoring. Those undisclosed factors, as alleged by Ojo, are interpreted by the majority as perhaps including race-based considerations. Such race-based considerations would be equally illegal under the FHA and Texas insurance law. Where both state and federal law prohibit a practice, the MeCarran-Ferguson Act does not provide for reverse preemption. Therefore, the majority reasons, if discovery uncovers that race-based considerations were a factor in Farmers’s credit scoring algorithms, and such credit scores caused disproportionately higher insurance premiums to be charged to racial minorities, then Ojo has alleged a valid class action claim under both federal and Texas law. This reasoning sounds like it runs on rails, but there are actually several problems with it.
Ojo Failed to Plead a Disparate Impact Claim Under Texas Law Because, under Texas Law, There Is No Such Thing
The majority correctly describes Ojo’s complaint as a disparate impact claim under the FHA. In paragraph 18 of his complaint, Ojo directly complained of Farm*1191ers’s use of credit data to underwrite and price homeowners insurance policies by alleging:
The automated credit scoring program has an adverse impact on minorities. Minorities as a group have lower credit scores than whites. The effect of Farmers’ credit scoring system is that minorities are charged higher premiums.
As is clear from this allegation, the majority is simply wrong when it says that Ojo does not challenge Farmers’ use of credit scores per se. That is exactly what the above allegation challenges.
A measure has a disparate impact on a racial group when its effect has a higher incidence in that group than in similarly situated groups of other races. There are no disparate impact cases under the FHA (Title VIII). The closest cases are found in federal employment discrimination cases (Title VII).
By citing Ojo’s allegations of “undisclosed factors” which perhaps could be race-based considerations, the majority appears to confuse disparate treatment and disparate impact claims. Unlike a disparate treatment claim, a disparate impact discrimination claim does not require proof of intentional racial discrimination. Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 986, 108 S.Ct. 2777, 101 L.Ed.2d 827 (1988). In federal disparate impact cases under Title VII, after the plaintiff makes a prima facie showing that a facially neutral practice has a disparate impact on racial minorities, the burden of proof shifts to the defendant to justify the practice as a business necessity. Connecticut v. Teal, 457 U.S. 440, 446-47, 102 S.Ct. 2525, 73 L.Ed.2d 130 (1982).
Even under statutes that allow an action for claims based on disparate impact, such as Title VII, not all measures that have a disparate impact are actionable. For instance, in Association of Mexican-American Educators v. California, 231 F.3d 572, 584 (9th Cir.2000) (en banc), we held that where the State gave teachers a legitimate test of the skills needed for their positions, the state had a valid affirmative defense that its test was a “business necessity.” This is also the statutory standard under Title VII — an employer can defend a prima facie disparate impact case by proving business necessity. Thus, the state was not liable.
By contrast, where a test was given that did not relate to the skills needed for the position, that measure was actionable. “[Discriminatory tests are impermissible unless shown, by professionally acceptable methods, to be predictive of or significantly correlated with important elements of work behavior which comprise or are relevant to the job or jobs for which candidates are being evaluated.” Albemarle Paper Co. v. Moody, 422 U.S. 405, 431, 95 S.Ct. 2362, 45 L.Ed.2d 280 (1975).
Texas insurance law differs from federal law when the practice being challenged is the use of credit scores to price homeowners insurance. Texas law allows the use of credit scores, without an insurance company having to prove in each case that the use of credit scores satisfies a business necessity. In effect, Texas law has already decided that the use of credit scores to price homeowners insurance constitutes a valid business necessity; a defendant does not have to prove such business necessity in each case.
The Texas Insurance Code specifically allows an insurer to use a policy holder’s credit score in the pricing of its policies, so long as the insurance company does not use race as a factor in computing the credit score:
An insurer may use credit scoring, except for factors that constitute unfair discrimination, to develop rates, rating classifications, or underwriting criteria *1192regarding lines of insurance subject to this chapter.
Tex. Ins.Code § 559.051 (Vernon 2005). Insurance companies may set “differences in rates ... due solely to credit scoring,” as long as these differences are “based on sound actuarial principles.” 28 Tex. Admin. Code § 5.9941(a). Texas law also provides that the use of credit scores is allowed even if it has a disparate impact on racial minorities. Subsection (c) of § 544.003 states, “A person does not violate Section 544.002 [unfair discrimination based on race] if the refusal, limitation, or charge is required or authorized by law or a regulatory mandate,” as is the use of credit scores. Tex. Ins.Code § 544.003(c) (emphasis added). This is an exception to all of the discriminatory bases prohibited by § 544.002, including race.
Given that Texas law specifically authorizes the use of credit scores, even if that practice results in a disparate impact on racial minorities, application of the FHA— which would require a defendant to justify the use of credit scores as a business necessity in each case — would invalidate, impair, or supersede the application of Texas law. This means that under the McCarran-Ferguson Act, Texas law reverse-preempts the FHA. Because Ojo cannot rely on federal law, the district court lacked federal jurisdiction.
To avoid the application of the McCarran-Ferguson Act, Ojo needed to have alleged a practice that violated not only federal law, but also Texas law. What Ojo needed to have alleged is that Farmers uses race-based considerations in its credit scoring algorithms.
Which brings us to the question on which this case turns: Did Ojo adequately allege that Farmers’s credit scoring uses race-based considerations when he alleged Farmers used “undisclosed factors” in computing a policyholder’s credit score? Under the pleading standards set forth in Bell Atlantic, Inc. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1964-65, 167 L.Ed.2d 929 (2007), the answer is clearly “No.”
Ojo Did Not Plead a Claim of Racial Discrimination
The majority holds that when a plaintiff pleads the defendant is doing something unknown to harm the plaintiff, the court can fill in the missing facts and presume the plaintiff has pleaded the facts necessary to state a claim for relief. This holding could have far reaching implications because now the great unknown would conceivably save every complaint from a motion to dismiss.
Perhaps recognizing that Ojo does not have a. valid disparate impact claim, the majority actually fills in the gaps in Ojo’s complaint to provide him with a disparate treatment claim.
Both the FHA and Texas law contain provisions prohibiting discrimination based on race in certain commercial situations. The FHA does not directly address the sale of homeowners insurance, but it does state it is unlawful to discriminate against any person in the provision of services in connection with the sale or rental of a dwelling because of that person’s race. 42 U.S.C. § 3604(a) & (b). This statute is the basis of Ojo’s claim for relief.
Our court has not yet decided whether the FHA applies to discrimination claims with respect of the sale of homeowners insurance. The Sixth and Seventh Circuits have decided the FHA does apply to a disparate treatment claim in the sale of homeowners insurance. See Nationwide Mut. Ins. Co. v. Cisneros, 52 F.3d 1351, 1359 (6th Cir.1995); NAACP v. Am. Family Mut. Ins. Co., 978 F.2d 287, 290 (7th Cir.1992). The Fourth Circuit held the FHA does not apply to homeowners insurance. Mackey v. Nationwide Ins. Cos., *1193724 F.2d 419, 424 (4th Cir.1984).2 The majority wisely refrains from deciding whether the FHA applies to either a disparate treatment claim or a disparate impact claim in the sale of homeowners insurance.
Under Texas insurance law an insurance company cannot use race as a factor in setting premiums. See Tex. Ins.Code art. 1.02(c)(3); Tex. Ins.Code § 544.002(a) (Vernon 2005). Similarly, insurance companies cannot compute a credit score “using factors that constitute unfair discrimination,” such as race. Tex. Ins.Code § 559.052(a); see also Tex. Ins.Code § 559.051.
But Ojo does not allege that Farmers uses race either directly to set pricing or indirectly as a factor in its calculation of a policyholder’s credit score, which is in turn used to set pricing. All he alleges is that certain “undisclosed factors” are used.
The Supreme Court has made clear that a complaint’s “[fjactual allegations must be enough to raise a right to relief above the speculative level.” Bell Atlantic, 127 S.Ct. at 1964-65 (citing 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-36 (3d ed. 2004) (“The pleading must contain something more than a statement of facts that merely creates a suspicion of a legally cognizable right of action.”)).
In Bell Atlantic, the Court held that allegations of parallel conduct by the defendants in an antitrust case were insufficient to survive a motion to dismiss because that parallel conduct could just as easily result from sound business decisions independently made by each defendant, as from an agreement to collude with one another to fix prices.
It is just as plausible that the undisclosed factors upon, which Farmers relies in its credit score computations are race-neutral. The disparate impact could as easily be caused by a legacy of historical societal discrimination and mistreatment, with which Farmers had nothing to do. To state a claim of disparate treatment, the complaint must allege that Farmers uses race as a factor in computing credit scores.
Here, to remedy Ojo’s deficient complaint, the majority reads disparate racial treatment allegations into Ojo’s complaint — and does so without a great deal of sense given that an insurance company’s credit scoring methodology is not undisclosed; it is a matter of public record filed with the Texas Insurance Commissioner.
Insurance companies in Texas using credit scores to price their policies are required to disclose certain credit scoring information, notify applicants of any adverse actions, and file the company’s credit scoring models with the Commissioner of Texas Department of Insurance, who is authorized- to resolve any disputes. Tex. Ins.Code §§ 559.053-559.054, 559.151. Any party dissatisfied with an action' of the Commissioner “may file a petition for judi*1194cial review against the Commissioner as defendant,” but such review is available only after the party fails to get relief from the Commissioner. Tex. Ins.Code § 36.202(a). Ojo does not allege that Farmers failed to file its algorithms and processes with the Texas Department of Insurance as required. Nor does Ojo allege he filed a complaint with the Commissioner to discover the credit scoring algorithms and factors, much less that any such complaint to the Commissioner would be unavailing.
Because this appeal from the district court’s grant of a motion to dismiss requires us to accept the facts pleaded by the plaintiff as true, we accept that minorities as a group have lower credit scores than non-minorities. But we need not accept that minorities’ lower credit scores are caused by Farmers using race as a factor in the computation of credit scores because no such allegation is pleaded. Only speculation can bridge the gap between the facts pleaded in Ojo’s complaint and the majority’s conclusion that Ojo sufficiently stated a claim for disparate racial treatment.
Since Ojo’s complaint does not allege that Farmers intentionally discriminated against minorities based on race, and it does not allege that Farmers used race as a factor in computing credit scores, Ojo has not alleged a cognizable claim of racial discrimination based on disparate treatment. We cannot imply such allegations where none exist. We especially ought not imply such allegations where the plaintiff was given leave to amend his complaint and did not do so, as Ojo did.3
The pleading standards of Bell Atlantic apply to this case because this is a class action, which raises a high risk of abusive discovery. The Court has held that, “[o]n certain subjects understood to raise a high risk of abusive litigation, a plaintiff must state factual allegations with greater particularity than Rule 8 requires.” 127 S.Ct. at 1974 n. 14 (citing Fed.R.Civ.P. 9(b)-(c)). The Supreme Court and our court have since routinely applied Bell Atlantic in antitrust cases4 and in non-antitrust class actions, such as this one.5
But even under the lesser standard of Federal Rule of Civil Procedure 8(a)(2), this complaint still does not allege facts sufficient to survive a motion to dismiss. A plaintiff has a duty under Rule 8(a)(2) to provide “a short and plain statement of the claim showing that the pleader is entitled to relief,” in order to “give the defendant *1195fair notice of what the ... claim is and the grounds upon which it rests.” Bell Atlantic, 127 S.Ct. at 1963-69. The “grounds” to which Rule 8(a)(2) refers are the facts showing the plaintiff is entitled to relief. Id. Here, there are no facts alleged that Farmers discriminated on the basis of race. What there is is speculation that some undisclosed factors may be racially discriminatory.
It’s as simple as this: Bell Atlantic laid down the rules for class action pleading. Class action litigation is too expensive to allow a plaintiff to engage in discovery unless and until the plaintiff can at least in good faith allege the defendant has done something prohibited by law.
Ojo has not done so here. For that reason, I would affirm the district court, and respectfully dissent from the majority opinion
. The McCarran-Ferguson Act declares, "The business of insurance, and every person engaged therein, shall be subject to the laws of the several States which relate to the regulation or taxation of such business.” 15 U.S.C. § 1012(a), It further provides: "No act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance, or which imposes a fee or tax upon such business, unless such Act specifically relates to the business of insurance....” 15 U.S.C. § 1012(b). Accordingly, Congress has made the decision that state statutes that specifically relate to the business of insurance prevail over federal statutes that do not. See Merchants Home Delivery Serv., Inc. v. Frank B. Hall & Co. Inc., 50 F.3d 1486, 1488-89 (9th Cir.1995). Thus, where a general federal law conflicts with a state insurance law, the state law "reverse-preempts” the federal law. We are so accustomed to federal law preempting state law that in the odd case where the contrary happens, we have come to describe it with the phrase reverse preemption. See Merchants Home Delivery Serv., Inc. v. Frank B. Hall & Co., Inc., 50 F.3d 1486, 1488-89 (9th Cir.1995) (construing the McCarran-Ferguson Act).
Under Humana Inc. v. Forsyth, 525 U.S. 299, 119 S.Ct. 710, 142 L.Ed.2d 753 (1999), there are three requirements for the MeCarran-Ferguson Act to trigger such state law preemption of federal law: "(1) the federal law in question must not be specifically directed at insurance regulation; (2) there must exist a particular state law (or declared regulatory policy) enacted for the purpose of regulating insurance; and (3) application of federal law to the controversy in question must invalidate, impair or supersede that state law.” Dehoyos v. Allstate Corp., 345 F.3d 290, 295 (5th Cir.2003). The parties agree the first two prongs of this test are met. The only question is whether application of the federal FHA invalidates, impairs, or supersedes the Texas Insurance Code.
. Note that no court has held that the FHA applies to claims of disparate impact. The Sixth and Seventh Circuits recognized only claims of disparate treatment, which may explain why the majority is willing to rewrite Ojo’s complaint for him to allege a disparate treatment claim. Indeed, the Seventh Circuit was careful to make this distinction. "Because the district judge dismissed claims under Title VIII and Wisconsin’s insurance code in advance of discovery, we must assume that plaintiffs can establish that the defendant intentionally discriminates on account of race. That is, we must assume that the plaintiffs can establish disparate treatment and not just a disparate impact of decisions made on actuarial grounds. The distinction is important not only because the Supreme Court has yet to decide whether practices with disparate impact violate Title VIII, see Huntington v. NAACP, 488 U.S. 15, 109 S.Ct. 276, 102 L.Ed.2d 180 (1988), but also because of the nature of insurance.” NAACP v. Am. Family Mut. Ins. Co., 978 F.2d at 290.
. Ojo did not allege race-based considerations were used in computing Farmers's algorithms and consequent credit scoring. Given the opportunity to amend his complaint to so allege, counsel for plaintiffs refused to do so, thus loyally complying with Federal Rule of Civil Procedure 11. Of course, counsel’s position is understandable given that all insurers in Texas that use credit scores in their pricing must file their algorithms with the Texas Department of Insurance.
. See, e.g., Pacific Bell Tel. Co. v. Linkline Commc'ns, Inc., - U.S. -, 129 S.Ct. 1109, 1112, 1114, 1123, 172 L.Ed.2d 836 (2009) (antitrust class action applying Bell Atlantic); Rick-Mik Enter., Inc. v. Equilon Enters., 532 F.3d 963, 966-67, 970 (9th Cir.2008) (antitrust class action holding that for the purposes of antitrust litigation, Bell Atlantic applies); Kendall v. Visa U.S.A., Inc., 518 F.3d 1042, 1044, 1047 (9th Cir.2008) (same); Cascade Health Solutions v. PeaceHealth, 515 F.3d 883, 891, 905 (9th Cir.2008) (same).
. See, e.g., Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 986-87, 989-90 (9th Cir.2009) (securities fraud class action applying Bell Atlantic), amended on other grounds by 2009 WL 311070 (9th Cir. Feb. 10, 2009); In re Gilead Sciences Sec. Litig., 536 F.3d 1049, 1050, 1055, 1057 (9th Cir.2008) (same); Williams v. Gerber Prods. Co., 552 F.3d 934, 936, 938 (9th Cir.2008) (applying Bell Atlantic to a class action under California law); Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1022 (9th Cir.2008) (same).