Moore v. Sun Bank of North Florida, N.A., 88-4018
| Decision Date | 25 January 1991 |
| Docket Number | No. 88-4018,88-4018 |
| Citation | 923 F.2d 1423 |
| Parties | 54 Fair Empl.Prac.Cas. 1598, 55 Empl. Prac. Dec. P 40,534, 59 USLW 2469, 59 USLW 2511, 1 A.D. Cases 1736 David E. MOORE, an individual, Plaintiff-Appellee, v. SUN BANK OF NORTH FLORIDA, N.A. a Florida corporation, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Susan G. Sparks, J. Thomas Kilpatrick, Smith, Currie & Hancock, Atlanta, Ga., for defendant-appellant.
Miriam R. Eisenstein, Acting Asst. Atty. Gen., U.S. Dept. of Justice, Washington, D.C., for amicus curiae.
S. Grier Wells, W. Scott Cole, Brant, Moore, Sapp, MacDonald & Wells, P.A., Jacksonville, Fla., for plaintiff-appellee.
M. David Gelfand, Terry E. Allbritton, Appellate Advocacy Program, Tulane Law School, New Orleans, La., for amicus curiae.
Appeal from the United States District Court for the Middle District of Florida.
Before HATCHETT and CLARK, Circuit Judges, and HILL, Senior Circuit Judge.
This case presents the question whether a national bank's participation in the Small Business Administration's (SBA) guaranteed loan program constitutes receipt by the bank of federal financial assistance pursuant to Section 504 of the federal Rehabilitation Act. 1 The district court, relying upon distinctions between provisions in the Rehabilitation Act and other legislation governing remedies for anti-discrimination and upon cases in this circuit interpreting aspects of the Rehabilitation Act, held that appellant, Sun Bank, was "covered" by the Act and liable for employment discrimination against a handicapped person. We affirm.
In July, 1987, appellee, David E. Moore, filed a complaint seeking relief under section 504 of the Rehabilitation Act. 2 Appellee contends that after being hospitalized for surgery and treatment of a brain tumor, he was, after returning to work, subjected to a continual reduction in authority and responsibility by appellant, Sun Bank, and was eventually terminated by appellant. In his complaint, he claims that appellant violated section 504 when it limited his authority and eventually fired him solely because of his handicap, cancer. Appellee also states a pendent state law claim for intentional infliction of emotional distress.
Section 504 provides in pertinent part:
No otherwise qualified individual with handicaps in the United States, as defined in section 706(8) of this title, shall, solely by reason of his handicap, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance.... 3
Is Sun Bank's participation in the Small Business Administration's guaranteed loan program a "program or activity receiving Federal financial assistance"?
The SBA is a federal agency that operates pursuant to the direction of the President. 4 Congress appropriates funds from the United States Treasury to be used to guarantee up to ninety percent of the loans made by lending institutions participating in the SBA's program. Thus, the purpose of the program is to allow lending institutions to make loans to small businesses with virtually no risk of loss. 5 Through this program, Sun Bank provided loans to small businesses and, on at least one occasion during appellee's employment, received a direct reimbursement from the SBA following the default of a guaranteed loan. Participation by banks in the guaranteed loan program is voluntary.
Appellant Sun Bank argues that its participation in the SBA guaranteed loan program does not subject it to coverage under Section 504 of the Rehabilitation Act because contracts of insurance or guaranty are excluded from the definition of federal financial assistance. In light of the fact that the Act previously set forth verbatim does not exclude such contracts of insurance or guaranty from the meaning of Federal financial assistance, appellant's argument necessarily relies upon inferring from other sources congressional intent to do so.
At the risk of unduly lengthening this opinion, we begin our consideration of this issue with a brief overview of several anti-discrimination statutes enacted in 1964 and since. The first major legislation was the Civil Rights Act of 1964 which included prohibitions against discrimination in voting practices (Title I), prohibitions against employment discrimination (Title VII), nondiscrimination in federally assisted programs (Title VI), and others. We focus here on Title VI because appellant urges us to incorporate part of that title into the Rehabilitation Act. The applicable language is as follows:
Sec. 601. No person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance.
Sec. 602. Each Federal department and agency which is empowered to extend Federal financial assistance to any program or activity, by way of grant, loan, or contract other than a contract of insurance or guaranty, is authorized and directed to effectuate the provisions of section 601.... 6
In an amendment to the Higher Education Act of 1965, Congress in 1972 enacted Title IX to prohibit sex discrimination. The comparable provisions are as follows:
Sec. 901. (a) No person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving Federal financial assistance....
Sec. 902. Each Federal department and agency which is empowered to extend Federal financial assistance to any education program or activity, by way of grant, loan, or contract other than a contract of insurance or guaranty, is authorized and directed to effectuate the provisions of Section 902.... 7
In the same title, Congress prohibited discrimination against the blind in programs receiving Federal financial assistance:
Sec. 904. No person in the United States shall, on the ground of blindness or severely impaired vision, be denied admission in any course of study by a recipient of Federal financial assistance for any education program or activity....
Sec. 905. Nothing in this title shall add to or detract from any existing authority with respect to any program or activity under which Federal financial assistance is extended by way of a contract of insurance or guaranty. 8
In 1975, Congress prohibited age discrimination in the following legislation:
Sec. 303. Pursuant to regulations prescribed under section 304, and except as provided by section 304(b) and section 304(c), no person in the United States shall, on the basis of age, be excluded from participating in, be denied the benefits of, or be subjected to discrimination under, any program or activity receiving Federal financial assistance.
* * * * * *
(4) ... [T]he head of each Federal department or agency which extends Federal financial assistance to any program or activity by way of grant, entitlement, loan, or contract other than a contract of insurance or guaranty, shall transmit to the Secretary.... 9
Each of these statutes excluded recipients of federal financial assistance who receive benefits from contracts of insurance or guaranty. Our research has disclosed no statute, rule, or decisional law that has defined "contract of insurance or guaranty."
The Vocational Rehabilitation Act was amended in 1973 in many respects, including a prohibition of discrimination against the handicapped. The statute, as originally enacted, provided as follows:
Sec. 504. No otherwise qualified handicapped individual in the United States, as defined in section 7(6), shall, solely by reason of his handicap, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance. 10
Congress, in this legislation, did not include any section comparable to section 602 of Title VI, section 902 or 905 of Title IX, or section 304(a)(4) of the Age Discrimination Act.
Realizing that the 1973 statute, i.e., section 504, failed to provide any enforcement mechanism, Congress in 1978 amended section 504 by adding language as reflected in the note below. 11 Additionally, Congress enacted section 505(a)(2), on which appellant Sun Bank relies in urging that Congress included in the Rehabilitation Act a provision that excluded contracts of insurance or guaranty. Section 505(a)(2) provides in pertinent part:
(2) The remedies, procedures, and rights set forth in title VI of the Civil Rights Act of 1964 shall be available to any person aggrieved by any act or failure to act by any recipient of Federal assistance or Federal provider of such assistance under section 504 of this Act. 12
We cannot accept the contention that the "remedies, procedures, and rights" language in section 505(a)(2) incorporated the language of section 602 of Title VI (42 U.S.C. 2000d-1), excluding "a contract of insurance or guaranty" from the definition of Federal financial assistance.
Appellant argues in its brief:
Contracts of insurance of guaranty are also excluded from the definition of federal financial assistance by specific Congressional action. In 1978, Congress amended Section 504 to incorporate the "remedies, procedures and rights" of Title VI. 29 U.S.C.A. Section 794a(a)(2) (West 1985 & Supp.1988). Title VI, like other anti-discrimination legislation, contains an express exclusion of contracts of insurance or guaranty within a procedural provision of the statute. Therefore, under the 1978 amendment, the language excluding contracts of insurance or guaranty is incorporated within Section 504 of the Rehabilitation Act. Moreover, the legislative history of the 1978 amendments demonstrates that the regulation excluding contracts of insurance or guaranty was...
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