Life Ins. Co. of North America v. Reichardt

• Decision Date: 11 January 1979
• Docket Number: Nos. 75-3031,75-3032,s. 75-3031
• Parties: LIFE INSURANCE CO. OF NORTH AMERICA et al., Petitioners-Appellants, v. Martha Ellen REICHARDT, etc., Respondent-Appellee. Martha Ellen REICHARDT et al., Plaintiffs-Appellees, v. Wesley J. KINDER, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 499

591 F.2d 499

LIFE INSURANCE CO. OF NORTH AMERICA et al., Petitioners-Appellants, v. Martha Ellen REICHARDT, etc., Respondent-Appellee.

Martha Ellen REICHARDT et al., Plaintiffs-Appellees, v. Wesley J. KINDER, Defendant-Appellant.

Nos. 75-3031, 75-3032.

United States Court of Appeals, Ninth Circuit.

Jan. 11, 1979.

Rehearing and Rehearing En Banc Denied March 12, 1979.

Guy O. Kornblum of Pettit, Evers & Martin, Jack G. Knebel and Robert H. Daniels of McCutcher, Doyle, Brown and Enersen (argued), San Francisco, Cal., for petitioners-appellants.

Robert J. Reinstein, Atty. Dept. of Justice, Washington, D. C., Mary Dunlap, Atty. of Equal Rights Advocates, Inc. (argued), for Martha Ellen Reichardt et al.

Mervin R. Samuel, Deputy Atty. Gen. (argued), San Francisco, Cal., for defendant-appellant.

Appeals from the United States District Court for the Northern District of California.

Before BROWNING and WRIGHT, Circuit Judges, and KUNZIG, Judge of the United States Court of Claims.

EUGENE A. WRIGHT, Circuit Judge.

Reichardt, a resident of California, sued on behalf of herself and others similarly situated alleging unlawful discrimination in the sale of disability insurance. She complained that disability policies sold by the defendant insurance companies and approved by the California State Insurance Commissioner discriminate against women who cannot obtain coverage for as long a period, must wait longer for benefits, and are charged higher premiums than are men. She alleged that these differences were actuarially not justified.

She alleged four causes of action:

(1) that the Commissioner, by approving the forms of disability policies, has deprived her and her class of their civil rights in violation of 42 U.S.C. § 1983; ¹

(2) that the Commissioner, by the same acts, has effected a deprivation of rights in violation of California law;

(3) that the named insurers and the class they represent have conspired to deprive her and her class of civil rights in violation of 42 U.S.C. §§ 1983, 1985(3); ² and (4) that the Life Insurance Company of North America (LINA) inflicted emotional distress upon her by its discriminatory policy.

The district court granted defendants' Rule 12(b)(6) motion as to the § 1983 claim against the insurance companies and the emotional distress claim against LINA, but denied it as to the § 1983 claim against the insurance commissioner and the § 1985(3) claim against the insurance companies. The district court certified interlocutory appeals from its refusal to dismiss the latter two claims. We accepted jurisdiction pursuant to 28 U.S.C. § 1292(b). Reichardt has not appealed the dismissal of her other claims. ³

I. SECTION 1983 CLAIM AGAINST THE INSURANCE COMMISSIONER

To state a claim under § 1983 the challenged action must have been taken "under color of state law." The district court found the Commissioner's approval of the discriminatory insurance policy forms sufficient state action.

The Supreme Court has declared that "where the impetus for the discrimination is private, the State must have 'significantly involved itself with (the) invidious discriminations.' " Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 173, 92 S.Ct. 1965, 1971, 32 L.Ed.2d 627 (1972) (quoting in part Reitman v. Mulkey, 387 U.S. 369, 380, 87 S.Ct. 1627, 18 L.Ed.2d 830 (1967)).

Accordingly, the Court has found significant involvement when a state encouraged private discrimination, Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); Public Utilities Comm'n v. Pollak, 343 U.S. 451, 72 S.Ct. 813, 96 L.Ed. 1068 (1952); commanded the discrimination, Lombard v. Louisiana, 373 U.S. 267, 83 S.Ct. 1122, 10 L.Ed.2d 338 (1963); Peterson v. Greenville, 373 U.S. 244, 83 S.Ct. 1119, 10 L.Ed.2d 323 (1963); heavily subsidized the discriminator, Burton v. Wilmington Parking Authority, 365 U.S. 715, 81 S.Ct. 856, 6 L.Ed.2d 45 (1961) (symbiotic relationship); or enforced the discrimination, Shelley v. Kraemer, 334 U.S. 1, 68 S.Ct. 836, 92 L.Ed. 1161 (1948).

Courts have refused to find state action, however, where a state merely regulates the business conduct, Jackson v. Metropolitan Edison Co., 419 U.S. 345, 350, 95 S.Ct. 449, 42 L.Ed.2d 477 (1974); Watkins v. Mercy Medical Center, 520 F.2d 894, 896 (9th Cir. 1975); Martin v. PNB, 441 F.2d 1116 (9th Cir. 1971); extends ordinary government benefits to the discriminator, Moose Lodge, 407 U.S. 163, 92 S.Ct. 1965, 32 L.Ed.2d 627; licenses the discriminator, Id.; Szijarto v. Legeman, 466 F.2d 864 (9th Cir. 1972); or fails to disapprove the discriminatory practice, Jackson, 419 U.S. 345, 95 S.Ct. 449, 42 L.Ed.2d 477; Moose Lodge, 407 U.S. 163, 92 S.Ct. 1965, 32 L.Ed.2d 627.

Determining whether there has been sufficient state action to give rise to a claim under § 1983 requires a sifting of the circumstances of each case. Wilmington Parking Authority, 365 U.S. at 722, 81 S.Ct. 856. ⁴ We must determine here the extent to which the state has become involved with the insurance companies' alleged discrimination as a result of its Insurance Commissioner's approval of the form of the alleged discriminatory policies. ⁵

Insurers doing business in California must submit their policy forms to the Insurance Commissioner for approval. Their policies may be issued only on his approval or his inaction for 30 days. ⁶

The Commissioner's act of approving a form of policy does not necessarily result in discrimination. The state does not command the discrimination. See Moose Lodge, 407 U.S. 163, 92 S.Ct. 1965, 32 L.Ed.2d 627. The record suggests that the Commissioner's approval was pro forma as in Jackson, 419 U.S. at 357, 95 S.Ct. 449; rather than an approval after full investigation of matters as in Public Utilities Comm'n v. Pollak. The Commissioner has placed no official imprimatur on the practice of which Reichardt complains.

Mere state action is insufficient to support a § 1983 cause of action. There must be a sufficient nexus between the state action and the private discrimination. Here the nexus is insufficient. The private carriers decided whether and to whom such policies would issue. We find insufficient state action to state a claim under § 1983.

II. SECTION 1985(3) CLAIM AGAINST THE INSURANCE COMPANIES

In Griffin v. Breckenridge, 403 U.S. 88, 91 S.Ct. 1790, 29 L.Ed.2d 338 (1971), the Supreme Court enumerated the elements of a cause of action under § 1985(3):

a complaint must allege that the defendants did (1) "conspire or go in disguise on the highway or on the premises of another" (2) "for the purpose of depriving, either directly or indirectly, any person or class of persons of the equal protection of the laws, or of equal privileges and immunities under the laws." It must then assert that one or more of the conspirators (3) did, or caused to be done, "any act in furtherance of the object of (the) conspiracy," whereby another was (4a) "injured in his person or property" or (4b) "deprived of having and exercising any right or privilege of a citizen of the United States."

Id.. at 102-03, 91 S.Ct. at 1798-99.

We shall first determine whether the statutory elements of the § 1985(3) cause of action have been satisfied. We then discuss the propriety of the parties' arguments regarding congressional power to regulate the conduct sought to be proscribed here.

(a) Statutory Elements of § 1985(3).

Reichardt's complaint sets forth enough facts to support her allegation of a conspiracy, satisfying the first element sufficiently to survive a motion to dismiss for failure to state a claim. Similarly, the issuance of the alleged discriminatory policy is enough to satisfy the third and fourth elements. Our analysis focuses then on the second element of the § 1985(3) claim which, in turn, has two requirements: (1) violation of a protected right, and (2) an invidiously discriminatory class-based animus motivating the violation.

(1) Violation of a protected right.

Griffin made it unmistakably clear that § 1985(3) was intended to reach private conspiracies: "It is thus evident that all indicators text, companion provisions, and legislative history point unwaveringly to § 1985(3)'s coverage of private conspiracies." ⁷ Griffin, 403 U.S. at 101, 91 S.Ct. at 1798. Although the scope of prohibited activity has thus been expanded to include the actors here, the scope of rights protected from their private conduct by § 1985(3) is subject to much uncertainty.

The Griffin Court concluded that § 1985(3) protects the right to be free from racial discrimination, the right of interstate travel, and the right to equal protection of the laws. The Court did not articulate what might constitute a deprivation of equal protection by private persons. Griffin,403 U.S. at 97, 91 S.Ct. 1790.

In Lopez v. Arrowhead Ranches, 523 F.2d 924, 926 (9th Cir. 1975), this court explained Griffin as creating a cause of action for any tortious interference with a legally protected right if motivated by the requisite class-based animus:

(T)he (Griffin) Court, recognizing that the statutory language, taken literally, might be construed to give a claim for every conspiratorial tortious interference with a legally protected interest (the equal status being to be protected by law from All intrusions on legal rights ), limited the statute's application to conform to the drafters' perceived intent. (Emphasis added.)

"The constitutional shoals that would lie in the path of interpreting § 1985(3) as a general federal tort law can be avoided by giving full effect to the congressional purpose by requiring, as an element of the cause of action, the kind of invidiously discriminatory motivation stressed by the sponsors of the limiting amendment. See the remarks of Representatives Willard and Shellabarger, quoted Supra, at 100. The language requiring intent to deprive of Equal protection, or Equal privileges and immunities, means that there must be some racial, or perhaps otherwise class-based, invidiously...