Opinion
Civil Action No. 01-3422, Section: I/4.
July 9, 2004
ORDER AND REASONS
This matter is before the Court pursuant to a motion for summary judgment filed on behalf of defendant, Atlanta Life Insurance Company ("Atlanta Life"), seeking dismissal of plaintiffs' claims. Plaintiffs, Larry Bruce, James Bruce, and Alston Johnson, brought this action alleging racial discrimination "in the pricing, sale and administration of industrial life insurance policies" in violation of 42 U.S.C. § 1981 and 1982. Specifically, plaintiffs allege that Atlanta Life "has marketed and administered [its] life insurance products on a racially discriminatory basis, charging African-Americans higher premiums for inferior insurance products" and paying African-Americans "less benefits than similarly situated Caucasians." For the following reasons, defendant's motion for summary judgment is GRANTED.
As discussed in the report of defendant's expert, Randall P. Mire, industrial life policies, sometimes referred to as burial insurance, were developed in 1875 for lower income households that had typically not been able to afford insurance. R. Doc. No. 80, Mire Report, pp. 12-14. The characteristics of industrial life policies included a small face amount, i.e. typically less than $2,000.00, premiums payable weekly as opposed to monthly or quarterly, and premiums collected personally by the agent at the insured's home or place of business. Id. at p. 120. The rationale for the frequent and small premiums "was the inability of poorer individuals to pay more than a small weekly or monthly fee for their insurance." Thompson v. Metropolitan Life Insurance Company, 149 F. Supp.2d 38, 41 (S.D.N.Y. 2001).
Specifically, 42 U.S.C. § 1981 provides in pertinent part:
(a) All persons within the jurisdiction of the United States shall have the same right . . . to make and enforce contracts . . . as is enjoyed by white citizens. . . .
(b) For purposes of this section, the term "make and enforce contracts" includes the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship.
Similarly, 42 U.S.C. § 1982 provides in pertinent part:
All citizens of the United States shall have the same right, in every State and Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold, and convey real and personal property.
R. Doc. No. 42, Plaintiffs' memorandum in support of motion for class certification, p. 1. Originally, this action was filed on behalf of Susie Brown alleging claims pursuant to 42 U.S.C. § 1981 and 1982 for alleged racial discrimination in the sale and administration of certain life, health, and accident insurance policies, including home service insurance policies, health and/or accident policies and ordinary life insurance policies sold with a face value of $10,000.00 or less. R. Doc. No. 1, ¶ 1. The complaint also sought to certify a nationwide class African-American persons and all other racial, national origin or ethnic minorities . . . who have, or had at the time of the Policy's termination, an ownership interest in one or more Policies issued, serviced, or administered on a discriminatory basis by Atlanta Life." Id. at ¶ 2. On January 8, 2003, plaintiff filed her first supplemental class action complaint adding Larry Bruce, James Bruce, and Alston Johnson as plaintiffs. R. Doc. No. 41. On January 30, 3002, plaintiffs, Larry Bruce, James Bruce, and Alston Johnson, voluntarily withdrew their original motion for class certification filed on February 27, 2002, and substituted another motion for class certification wherein plaintiffs apparently dropped Susie Brown as a named plaintiff. R. Doc. Nos. 42 and 45. Plaintiffs further limited their claims to allege racial discrimination in the pricing, sale and administration of industrial life insurance policies. R. Doc. No. 42. Plaintiffs further redefined the proposed class as, "All African-Americans who have, or for terminated policies had, at any time since January 1, 1980, an ownership interest in one or more industrial life insurance policies that were issued as a substandard plan or at a substandard rate within the industrial plan codes . . ., or if the class member is deceased, then the class member's estate or other legal successor in interest." R. Doc. No. 42, ¶ 1.
R. Doc. No. 42, Plaintiffs' memorandum in support of motion for class certification, p. 1; R. Doc. No. 1, Class Action Complaint, ¶¶ 33, 38.
FACTUAL BACKGROUND
Atlanta Life is a Georgia based insurance company founded by African-Americans in 1905 to provide insurance products to African-Americans. Specifically, in 1905, because the African-American community was precluded from purchasing insurance from "majority firms," two prominent African-American ministers organized the Atlanta Mutual Aid Association, an organization that provided sick and death benefits to its members for low weekly assessments of five to twenty five cents. That same year, the State of Georgia enacted a guaranty law that required all mutual associations to deposit $5,000.00 with the State Insurance Department to assure that money would be available for the payment of members' claims. The Association was unable to meet that requirement. Alonzo F. Herndon, a former slave who was deeply interested in the economic and social welfare of African-Americans, then purchased the association and established what became known as Atlanta Life Insurance Company. Today, Atlanta Life is the largest African-American stock insurance company in the United States and it continues to be owned and operated by African-Americans.Since its inception, Atlanta Life has provided insurance products to the African-American community. It would have been unable to sustain its business if its insurance products were not properly priced and concomitant benefits were not provided to its policyholders. In addition to providing insurance products, Atlanta Life has actively supported the African-American community for almost 100 years.
Id. at ¶ 6.
Id. at ¶ 7.
Atlanta Life has always marketed primarily, but not exclusively, to the minority community. Nevertheless, it has always had a very small market share, i.e. not higher than 1%, in the industrial life insurance market. In addition, Atlanta Life has always had substantial competition from other life insurance companies selling industrial life insurance policies in every market in which Atlanta Life has done business. Some of those competitors have included Universal Life Insurance Company, North Carolina Mutual Life Insurance Company, Life of Georgia Insurance Company, Metropolitan Life Insurance Company, Security Life Insurance Company of Georgia, United Insurance Company of American, Washington National Insurance Company, State Mutual Life Assurance Company of America, Pilgrim Life and Health Insurance Company, Peninsular Life Insurance Company, Mutual Savings Life Insurance Company, Life Insurance Company of Virginia, Lincoln Life of Georgia, Carolina Life Insurance Company, Bankers Health and Life Insurance Company, American National Life Insurance Company, and others.
Id. at ¶ 8.
Id. at ¶ 15.
Id.
Id.
Of significance to this case, it is undisputed that neither Atlanta Life, nor any of the insurance companies it acquired over the years, has ever had different life insurance rate books for African-Americans and non-African-Americans. It is also undisputed that Atlanta Life has always sold industrial life insurance policies, and all other life insurance policies, utilizing a unitary rate system, charging the same premiums for the same policies sold to African-Americans and to whites.
Id. at ¶ 9; R. Doc. No. 77, Depo. James C. Harrison, pp. 134-35; R. Doc. No. 77, Depo. Johan L. Lotter, p. 50; R. Doc. No. 80, Mire Report, ¶ 28. Plaintiffs do not dispute that Atlanta Life did not have dual rates, i.e. one rate for Caucasians and one rate for African-Americans. See R. Doc. No. 58, Plaintiff's opposition memorandum, pp. 2, 10. In fact, plaintiffs concede that "Atlanta Life marketed its insurance primarily to African-Americans, along with the use of only one rate book . . ." Id. at p. 10.
Id.
Based upon all the information presented before the Court, there is no evidence that Atlanta Life or any of its acquired companies ever:
1. charged African-Americans more for life insurance policies than it charged similarly situated non-African-American policyholders;
2. paid its African-American policyholders proportionately lower death benefits per dollar of premium paid than it paid to its similarly situated non-African-American policyholders;
3. used separate rate charts or mortality tables for African-American and white customers;
4. adopted any procedure or policy whereby its agents and managers were instructed not to offer or sell "more traditional" life insurance policies to African-Americans.
R. Doc. No. 77, Affidavit of Hill, ¶¶ 10-11; R. Doc. No. 77, Depo. Harrison, p. 132.
R. Doc. No. 77, Affidavit of Hill, ¶¶ 10-11.
Id.
Id. The term "more traditional" life insurance policy is not defined by the parties. However, a review of the documents submitted to the Court indicates that the term "more traditional" life insurance policies refers to life insurance policies, such as ordinary life insurance policies, usually issued for larger face amounts with premiums payable on a monthly or quarterly basis. Such policies are also generally renewed on a notice basis. See R. Doc. No. 80, Mire report, ¶ 42, p. 12; R. Doc. No. 77, Depo. of Lotter, pp. 39-41.
Although Atlanta Life at one time in its history used what was known as the 1941 Substandard Industrial Mortality Table to establish reserves for industrial life policies, the table was never utilized to price or otherwise determine the premiums charged for Atlanta Life's industrial life insurance policies. Instead, premiums were established based upon Atlanta Life's own mortality experience and by using the "asset share" method of determining premiums. One reason Atlanta Life established reserves for some of its industrial life insurance policies using the 41 SSI table, which resulted in higher reserves than the law required, was to save on federal income taxes. Another reason was that Atlanta Life was a very "conservative" company and, in an effort to avoid any possibility of becoming insolvent, it preferred to set aside higher reserves than were federally required. On several occasions, Atlanta Life used other valuation tables to calculate reserves for its industrial life insurance policies. However, despite the use of other valuation tables, the premiums for those policies remained the same.
Reserves refers to the assets an insurance company must maintain pursuant to applicable law in order to insure that it will be able to satisfy policyholders' claims. Pricing of a policy refers to the way in which premiums to be paid by a policyholder are determined. According to the uncontroverted expert opinion of defendant's expert, Randall P. Mire, there is no necessary relationship between pricing and reserves. While the amount of reserves a company must maintain is regulated by law, insurance companies are free to price their policies any way they see fit. R. Doc. No. 80, Mire report, pp. 9-10, ¶¶ 30-35; see also, Depo. of Harrison, pp. 99, 124-25.
Standard valuation tables were developed and adopted by insurance regulators to provide insurance companies with a methodology for calculating statutory reserves with respect to any given policy. R. Doc. No. 80, Mire report, p. 147; R. Doc. No. 77, Depo. of Lotter, p. 42. The first official standard valuation table was published in 1941 and it was known as the 1941 Standard Industrial Table ("41 SI"). R. Doc. No. 80, Mire report, p. 147. That table was mandated for all industrial life insurance issued on a "standard basis." Id.; R. Doc. No. 77, Depo. of Lotter, p. 44-45. For "substandard" business, there existed the 1941 Substandard Industrial Table ("41 SSI"). R. Doc. No. 77, Depo. of Lotter, pp. 44-45. However, unlike the 41 SI table, its use was not federally mandated. Rather, insurance companies could voluntarily adopt the 41 SSI table as the official valuation table for "substandard" business or they could use "such tables as may be approved by the commissioner." R. Doc. No. 80, Mire report, p. 147; R. Doc. No. 77, Depo. of Lotter, pp. 44-45. Although valuation mortality tables did not expressly state that they were segregated by race, it is commonly recognized in the industry that the 41 SI table was developed "using the experience of white risks while the [41 SSI table was] created using non-white risks." R. Doc. No. 80, Mire report, p. 147-48; see also R. Doc. No. 77, Depo. of Lotter, pp. 44-45 (testifying that the 41 SI table "was developed on the basis of Metropolitan Life's white lives insured in the industrial branch" while the 41 SSI table "was based on Metropolitan Life's black industrial, or . . . colored lives").
R. Doc. No. 77, Affidavit of Mire, ¶ 12.
As the deposition testimony of James C. Harrison, former vice-president and chief actuary of Atlanta Life, establishes, reserves were used as a basis to determine taxable income. R. Doc. No. 77, Depo. of Harrison, p. 124. The higher the reserves would be, the lower the company's taxable income would be and, therefore, the lower the federal income taxes. Id. at p. 124.
As Harrison testified:
Q. Why did you use [the 41 SSI table] for setting reserves as opposed to using the 41 standards industrial table?
A. Atlanta Life has always been, at least back at that period of time, a very conservative company. So on the basis of conservatism, they used a strong mortality table to show or to avoid any possibility of becoming insolvent, so they used reserves much greater than what was required for minimum standard.Id. at p. 72.
As Harrison explained, the 41 SSI table was not the only valuation table used by Atlanta Life in setting its reserves. Id. at p. 74, 99-100. Atlanta Life used other valuation tables including the American Experience table and the 1961 valuation table. Id.
Id.
Atlanta Life moves for summary judgment in this case dismissing plaintiffs' claims with prejudice. Defendant contends that based upon the pleadings, depositions, discovery responses, affidavits, and admissions on file, there is simply no evidence, much less a genuine issue of material fact, to support plaintiffs' claims that Atlanta Life engaged in any racial discrimination with respect to the pricing, sale, and administration of industrial life insurance policies.
R. Doc. No. 58, Defendant's memorandum.
LAW AND ANALYSIS
Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.Pro. 56(c). Once the moving party carries its burden of proving that there is no material factual dispute, the burden shifts to the nonmovant "to show that summary judgment should not lie." Hopper v. Frank, 16 F.3d 92, 96 (5th Cir. 1994). While the court must consider the evidence with all reasonable inferences in the light most favorable to the nonmovant, the nonmoving party must come forward with specific facts showing that there is a genuine issue for trial. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986); Webb v. Cardiothoracic Surgery Associates of North Texas, 1998 WL 175313, *2 (5th Cir. 1998). This requires the nonmoving party to do "more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec., 475 U.S. at 586, 106 S.Ct. at 1356. The nonmoving party must "go beyond the pleadings and by her own affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986); Auguster v. Vermillion Parish School Board, 249 F.3d 400, 402 (5th Cir. 2001). In this case, there is no genuine issue as to any material fact and the Court finds that Atlanta Life is entitled to judgment as a matter of law."Because of their common origin in the Civil Rights Act of 1866 and their common purpose, § 1981 and § 1982 are generally construed in tandem." Phillips v. Mezera, 2002 WL 31655208, *6 (N.D.Ill. 11/25/02). In an action for racial discrimination brought pursuant to 42 U.S.C. § 1981 or 1982, the Court applies the same three-step burden-shifting procedure established in McDonnell Douglas Corporation v. Green, 411 U.S. 792, 802-05, 93 S.Ct. 1817, 1824-26, 36 L.Ed.2d 668 (1973), for cases alleging Title VII racial discrimination. See Armstrong v. City of Dallas, 997 F.2d 62, 65 n. 2 (5th Cir. 1993); Simmons v. Rothe Development, Inc., 952 F. Supp. 486, 488 (S.D.Tex. 1997) (applying McDonnell Douglas in § 1981 context); Durham v. Red Lake Fishing and Hunting Club, Inc., 666 F. Supp. 954, 956-57 (W.D. Tex. 1987) (applying McDonnell Douglas in § 1982 context).
First, the plaintiff must establish a prima facie case of racial discrimination by proving each of the elements of his claim. McDonnell Douglas Corp., 411 U.S. at 802, 93 S.Ct. at 1824. A prima facie case of discrimination pursuant to 42 U.S.C. § 1981 or 1982 is established when a plaintiff proves that "(1) he is a member of a racial minority; (2) the defendant had an intent to discriminate on the basis of race; and (3) the discrimination involved one of the activities enumerated in the statutes," i.e. the making and enforcing of a contract in the case of 42 U.S.C. § 1981, or the owning of real and personal property in the case of 42 U.S.C. § 1982. Id.
"Although the plaintiff's initial burden of establishing a prima facie case is a light one, [the plaintiff] must state more than conclusory allegations of discrimination." Harris v. Allstate Insurance Company, 83 F. Supp.2d 423, 431 (S.D.N.Y. 1999). "The plaintiff must `specifically allege the events claimed to constitute intentional discrimination as well as circumstances giving rise to a plausible inference of racially discriminatory intent.'" Id. (quoting Yusuf v. Vassar College, 35 F.3d 709, 713 (2d Cir. 1994)).
If the plaintiff proves his prima facie case, a presumption of discrimination arises. Bodenheimer v. PPG Indus., Inc., 5 F.3d 955, 957 (5th Cir. 1993). "The burden of production then shifts to the defendant to rebut this presumption by articulating a legitimate, nondiscriminatory reason for the alleged discriminatory action." Simmons, 952 F. Supp. at 489 (citing Olitsky v. Spencer Gifts, Inc., 964 F.2d 1471, 1478 n. 19 (5th Cir. 1992), cert. denied, 507 U.S. 909, 113 S.Ct. 1253. 122 L.Ed.2d 652 (1993)). If the defendant does so, the presumption of discrimination established by the plaintiff's prima facie case disappears. Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 255 n. 10, 101 S.Ct. 1089, 1095 n. 10, 67 L.Ed.2d 207 (1981). The plaintiff must then prove that the legitimate reasons offered by the defendant are merely pretextual and that discrimination was the real reason. See St. Mary's Honor Center v. Hicks, 509 U.S. 502, 511, 113 S.Ct. 2742, 2749, 125 L.Ed.2d 407 (1993).
The ultimate burden of proving intentional discrimination rests at all times with the plaintiff. Id. at 507, 113 S.Ct. at 2749. Therefore, if the plaintiff fails to come forward with evidence sufficient to establish each element of his prima facie case, of if the plaintiff fails to come forward with evidence to prove that the defendant's stated reasons are pretexts, the defendant is entitled to summary judgment. See Guerin v. Pointe Coupee Parish Nursing Home, 246 F. Supp.2d 488, 497-98 (M.D. La. 2003).
Pretermitting the issue of whether plaintiffs meet the first and third prongs of their prima facie case, the Court finds that summary judgment is proper because plaintiffs cannot prove the second element of their prima facie case pursuant to 42 U.S.C. § 1981 and 1982, i.e., that Atlanta Life engaged in intentional racial discrimination. In order to succeed in this matter, plaintiffs must show that Atlanta Life treated African-Americans differently than it treated white citizens. Absent this showing, plaintiffs simply cannot establish that Atlanta Life engaged in discriminatory conduct. Id.
In order to prevail on a claim pursuant to 42 U.S.C. § 1981 or 1982, the plaintiff must prove a prima facie case of intentional discrimination. Bellows v. Amoco Oil, 118 F.2d 268, 274 (5th Cir. 1997); Dews v. Town of Sunnyvale, 109 F. Supp.2d 526, 531 (N.D.Tex. 2000). In fact, in a discrimination case like this one, the "focus is on whether a genuine issue exists regarding whether the defendant intentionally discriminated against the plaintiff." Lawrence v. University of Texas Medical Branch, 163 F.3d 309, 312 (5th Cir. 1999). Therefore, it is necessary for plaintiff "to present evidence — not just speculation and conjecture — that the defendants discriminated against her on the basis of her race." Id.
See, e.g. Marbly v. Home Properties of New York, 205 F. Supp.2d 736, 745 (holding that in order to succeed with respect to claims brought pursuant to §§ 1981 and 1982, plaintiff was required to come forward with evidence that he was treated differently than similarly-situated non-minority tenants); Martin v. Citibank, N.A, 762 F.2d 212, 217 (2d Cir. 1985) (In a § 1981 claim, "[i]nitially a plaintiff bears the burden of establishing a prima facie case of racial discrimination, which requires, in essence, that she show that she belongs to a racial minority and that she was treated differently than similarly-situated whites"); Rush v. McDonald's Corp., 966 F.2d 1104, 1119 (7th Cir. 1992) ("[S]ome showing of differential treatment on the basis of race is a necessary element of a claim" pursuant to § 1981); Hanley v. Sports Authority, 143 F. Supp.2d 1351, 1357 (S.D.Fla. 2000) ("In order to prevail on their § 1981 claims, plaintiff must show that similarly situated non-black persons were treated more favorably than they were"); Colson v. City of Shaker Heights, 880 F. Supp. 1161 (N.D. Ohio 1995) (granting defendant's motion for summary judgment in § 1982 claim where plaintiff did not come forward with evidence that she was treated differently from other property owners).
Plaintiffs have failed to present any evidence to this Court that Atlanta Life treated African-Americans differently than it treated Caucasians. To the contrary, the only evidence submitted to this Court shows that Atlanta Life treated all of its policyholders the same regardless of race. Specifically, the evidence presented to this Court shows that Atlanta Life never charged African-Americans more for life insurance policies than it charged similarly situated white policyholders. Moreover, Atlanta Life never paid their African-American policyholders proportionately lower death benefits per dollar of premium paid than it paid white policyholders. At no time did Atlanta Life ever use different rate charts for African-American customers and white customers. Finally, there is no evidence presented that Atlanta Life ever refused to sell or offer more traditional life insurance policies to African-Americans. The evidence before this Court shows that every person, regardless of race, was treated in exactly the same manner by Atlanta Life and that all of the industrial life insurance policies issued by Atlanta Life were sold without regard to the person's race.
R. Doc. No. 77, Affidavit of Hill, ¶¶ 10-11; R. Doc. No. 77. Depo. of Harrison, p. 132.
R. Doc. No. 77, Affidavit of Hill, ¶¶ 10-11.
Id., R. Doc. No. 77. Depo. of Harrison, pp. 137-139.
R. Doc. No. 77, Affidavit of Hill, ¶¶ 10-11.
While the Court finds that there are some inconsistencies in Hill's deposition testimony, the material fact in this case is that Atlanta Life did not treat African-Americans differently from white citizens in selling them industrial life insurance policies. Atlanta Life sold African-Americans the policies at the rate it charged everyone else, including white citizens. Hill was consistent on this in his deposition. Specifically, he testified:
A. I'm going to — instead of asking you many, many, many questions, I'm going to ask you a very blunt question. Just, all I'm looking for is a yes-or-no answer. Did Atlanta Life ever issue any products, the price of which products were dependent upon the race of the purchaser?
A. Uh-uh.
Q. Say that very clearly.
A. No.
R. Doc. No. 61, Depo. of Hill, p. 166.
None of the arguments made by plaintiffs constitute evidence of a discriminatory intent on the part of Atlanta Life. Plaintiffs point to the fact that at one time Atlanta Life utilized the 41 SSI table to establish reserves with respect to some of its industrial life policies. Plaintiffs argue that because the 41 SSI table was created based on the risk experience of African-Americans only, its use by insurance companies could only have been motivated by race-based considerations. Plaintiffs' arguments, however, are nothing more than conclusory allegations.
R. Doc. No. 77, Lotter Depo. pp. 47-48; R. Doc. No. 58, Plaintiffs' opposition memorandum, pp. 15-16. Specifically, plaintiffs' expert, Johan Lotter, stated that the sole basis for his opinion that Atlanta Life issued policies on a discriminatory basis was the fact that Atlanta Life reserved a number of its policies utilizing the 1941 substandard mortality table. Id.
R. Doc. No. 77, Lotter report and affidavit, pp. 15-16.
It is well established that conclusory allegations are insufficient to defeat summary judgment. See, e.g., Byers v. Dallas Morning News, Inc., 209 F.3d 419, 425 (5th Cir. 2000) (holding that plaintiffs cannot defeat summary judgment relying on mere allegations in the pleadings, but must "respond to the motion for summary judgment by setting forth particular facts indicating that there is a genuine issue for trial.")
While plaintiffs allege that Atlanta Life reserved its policies using the 41 SSI table, plaintiffs have presented no evidence to suggest that Atlanta Life priced its policies using the 41 SSI table. To the contrary, the evidence before this Court shows that Atlanta Life never used the 41 SSI table to determine the premiums it charged for industrial life insurance policies. Moreover, the evidence indicates that there is no relationship between Atlanta Life's use of the 41 SSI table for reserve purposes and the manner in which it priced its industrial life policies.
R. Doc. No. 77, Affidavit of Hill, ¶ 12.
Even if there was such a relationship, there is no evidence that Atlanta Life used the 41 SSI mortality table for a specific discriminatory purpose. As the deposition testimony of Harrison establishes, the primary reason Atlanta Life used the 41 SSI mortality table to establish statutory reserves for some of its industrial life policies was for income tax purposes. R. Doc. No. 77, Depo. of Harrison, p. 124. Another reason it did so was to establish greater reserves than were federally mandated and, therefore, avoid any possibility of becoming insolvent if faced with the potential of paying out a substantial number of claims. Id. at p. 72. Plaintiffs have failed to provide any evidence that Atlanta Life used the 41 SSI mortality table for a specific discriminatory purpose.
Plaintiffs' references to the policies and practices of companies other than Atlanta Life lack probative value with respect to plaintiffs' claims against Atlanta Life and such references cannot defeat summary judgment when there is absolutely no evidence that Atlanta Life engaged in any such intentional discriminatory practices. Plaintiffs argue that Atlanta Life charged premiums for industrial life policies that were comparable to what other companies "that practiced overt race discrimination" charged their African-American policyholders. Plaintiffs also argue that this constitutes evidence that Atlanta Life practiced racial discrimination in the selling and administration of its industrial insurance business. First, there is no evidence before this Court that these "other companies" have actually been found liable of" overt race discrimination" in the pricing of industrial life insurance policies as alleged by plaintiffs. Second, assuming arguendo that other companies had engaged in prohibited discrimination, there is no evidence that Atlanta Life knew about these "overt" discriminatory practices and, despite such knowledge, charged the same or similar premiums for its industrial life policies with the specific purpose of discriminating against African-Americans. In the absence of such evidence, plaintiffs' unsubstantiated allegations are speculative at best and are rejected by the Court.
R. Doc. No. 58, Plaintiffs' opposition memorandum, pp. 10-13, 15. Specifically, plaintiffs compare Atlanta Life's rates to the rates charged by Pellerin Life and American National Life Insurance Company, two companies which plaintiffs' allege utilized dual rate books for whites and for African-Americans. Id. at pp. 11-13.
R. Doc. No. 58, Plaintiffs' opposition memorandum, p. 15.
Plaintiffs next claim that the premium rates charged by Atlanta Life for industrial life policies were too high so as to leave no room for any explanation other than racial discrimination. This can only mean that the premiums were too high as compared to something. However, plaintiffs fail to give any basis for comparison and fail to explain why such a comparison is factually or legally justified.
R. Doc. No. 42, Plaintiffs' motion for class certification, p. 1; R. Doc. No. 58, Plaintiffs' opposition memorandum, pp. 2, 7, 10.
Finally, citing Clark v. Universal Builders, Inc., 501 F.2d 324 (7th Cir. 1974), plaintiffs argue that even though Atlanta Life may not have treated the plaintiffs differently than white citizens, they may still prevail on their claims on an "exploitation" theory of discrimination pursuant to 42 U.S.C. § 1982. Plaintiffs' reliance on Clark and on its exploitation theory of discrimination is, however, misplaced.
R. Doc. No. 58, Plaintiffs' opposition memorandum, pp. 7-8. It should be noted that Clark v. Universal Builders, Inc., 501 F.2d 324 (7th Cir. 1974) is a thirty-year old case and its exploitation theory of discrimination has not been followed by the Fifth Circuit.
Although plaintiffs' allegations with respect to their exploitation theory of discrimination are unclear, it appears that plaintiffs contend that Atlanta Life somehow exploited plaintiffs and other African Americans by forcing them to purchase more expensive and/or less advantageous policies than are offered to similarly-situated whites. See R. Doc. No. 1, Plaintiffs' class action complaint, p. 2, ¶ 7; R. Doc. No. 58, Plaintiffs' opposition memorandum, pp. 7-10.
In Clark, the court sustained plaintiffs' exploitation theory as stating a claim for relief pursuant to 42 U.S.C. § 1982 where the plaintiffs alleged that as a result of racial residential segregation, there existed dual housing markets and that the defendants took advantage of the situation by demanding unreasonable prices and terms in excess of prices and terms available to whites for comparable housing in areas from which African-Americans were excluded. Id. at pp. 333-34. A key element of the court's decision in Clark was the fact that African-Americans were excluded from the white sections of town and, therefore, the defendant sellers had a captive market to exploit as a result of an existing discriminatory situation. Id. at 331, 33-34.
Although the Court acknowledged plaintiffs' exploitation theory as stating a claim for relief pursuant to 42 U.S.C. § 1982, the district court on remand ultimately found that plaintiffs failed to prove their case. See Clark v. Universal Builders, Inc., 706 F.2d 204, 211 (7th Cir. 1983). Affirming the district court's ruling, the court of appeals in a subsequent appeal stated:
[T]he district court accepted plaintiffs' contention that Chicago suffered from a high degree of racial residential discrimination and that there was a substantial demand for housing among black households, but did not accept plaintiffs' further contention that this phenomenon enabled defendants to exploit the plaintiffs. We find that this conclusion is not clearly erroneous.
Plaintiffs presented no plausible explanation of how defendants could have charged unreasonable prices in the face of a market for housing which showed no indicia of being monopolized or uncompetitive.
* * *
. . . While we agree with plaintiffs' general contention that the Chicago housing market was significantly affected by racial discrimination, we cannot agree that the plaintiffs have met their burden of proving that these market conditions were such that defendants could have exploited them to their advantage. There is no doubt that over the course of this lengthy litigation, plaintiffs have succeeded in demonstrating that defendants were motivated in their business behavior by considerations of profit only and were largely unmoved by any altruistic interest in racial equality. Nevertheless, we think that the plaintiffs did not succeed in proving the existence of a capability on the part of the defendants to exploit the plaintiffs through noncompetitive pricing and we therefore approve the district court's findings with respect to this aspect of the case.Id. at 211-212.
In this case, there is no evidence that Atlanta Life had such a captive market with respect to its industrial life insurance business. Although Atlanta Life sold industrial life policies primarily to African-Americans, there is no evidence that Atlanta Life adopted any procedure or policy whereby its agents and managers were instructed not to offer or sell "more traditional" life insurance policies to African-Americans or that it limited the amount of benefits an African-American could purchase. To the contrary, the evidence shows that there was substantial competition in the industrial life insurance market and that insureds, including plaintiffs, had choices regarding which companies to purchase insurance from, what policies to purchase and, concomitantly, what benefits to receive. As in Clark, plaintiffs have not presented any evidence that defendant had a market share sufficient enough to shelter it from the pressures of competition. See Clark, 706 F.2d at 211. The evidence demonstrates that plaintiffs were free to conduct business with companies other than Atlanta Life or, alternatively, with none at all. None of the representative plaintiffs in this case testified that their parents were forced into purchasing industrial life policies from Atlanta Life. Specifically, Alston Johnston testified that his mother bought his policy and that she could have purchased the policy from another insurance company if she had wanted to. He also stated that he did not know whether Atlanta Life created inferior products to be sold specifically to African-Americans. Similarly, Houston Bruce could not say that his father had no choice but to purchase his policy from Atlanta Life as opposed to being able to shop other companies. He also could not say whether Atlanta Life sold policies to white people for less money than it charged to black people. Finally, Larry Bruce could not say how his father came to purchase his life insurance policy from Atlanta.
See R. Doc. No. 80, Mire report, p. 10, ¶ 36; R. Doc. No. 77, Affidavit of Hill, ¶ 10.
R. Doc. No. 58, Exhibit "C," Depo. of Johnston, p. 15.
Id. at p. 29.
R. Doc. No. 58, Exhibit "B," Depo. of Houston Bruce, p. 12.
Id. at pp. 19-20.
R. Doc. No. 58, Exhibit "A," Depo. of Larry Bruce, pp. 14-15.
Contrary to plaintiffs' contention, plaintiffs were not forced to purchase industrial life policies from Atlanta Life. Plaintiffs have not demonstrated how Atlanta Life exploited plaintiffs to its advantage. Plaintiffs' exploitation theory of discrimination is unsupported by the evidence and it is, therefore, rejected by the Court.
This Court finds that plaintiffs have failed to establish a prima facie case of intentional discrimination pursuant to 42 U.S.C. § 1981 and 1982 against Atlanta Life. Accordingly, for the above and foregoing reasons,
IT IS ORDERED that the motion of defendant, Atlanta Life Insurance Company, for summary judgment is GRANTED, dismissing plaintiffs' claims with prejudice and at plaintiffs' cost.
IT IS FURTHER ORDERED that, in light of the grant of summary judgment, plaintiffs' motion for class certification (Rec. Doc. No. 42), and defendant's motion to strike plaintiffs' expert report (Rec. Doc. No. 57), are DISMISSED as moot.