Moore v. Liberty Nat. Ins. Co.
| Decision Date | 22 June 2000 |
| Docket Number | No. CV 99-BU-3262-S.,CV 99-BU-3262-S. |
| Parties | Ellen Gayle MOORE, Fannie McConnell, Spencer Williams, and Anita Bowers, on behalf of themselves and all others similarly situated, Plaintiffs, v. LIBERTY NATIONAL INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Northern District of Alabama |
Herman A. Watson, Rebekah Keith, Watson, Jimmerson, PC, Huntsville, John J. Stoia, Jr., Timothy G. Blood, Susan Collyer, Andrew W. Hutton, Thomas R. Merrick, Milberg, Weiss, Bershad, Hynes & Lerach, LLP, San Diego, CA, Joe R. Whatley, Jr., Charlene P. Cullen, Whatley & Drake, LLC, Birmingham, W. Christian Hoyer, Christa Collins, James, Hoyer, Newcomer, Forizs & Smiljanich, PA, Tampa, FL, Ron Parry, Arnzen, Parry & Wentz, PSC, Covington, KY, Andrew S. Friedman, H. Sullivan Bunch, Signal
Mountan, TN Office, Bonnett, Fairbourn, Friedman & Balint PC, Phoenix, AX, for Plaintiffs.
William J. Baxley, William C. Barclift, Baxley, Dillard, Dauphin & McKnight, James Walker May, Michael R. Pennington, Bradley, Arant, Rose & White, Birmingham, Floyd D. Gaines, Gaines & Davis LLC, Birmingham, for Defendants.
Now pending is a motion to alter or amend the judgment of the Court and for leave to file an amended complaint filed by Ellen Gayle Moore ("Moore"), Fannie McConnell ("McConnell"), Spencer Williams ("Williams"), and Anita Bowers ("Bowers") on April 24, 2000. In that motion, the Plaintiffs seek to have this Court (1) permit them to amend their complaint in order that they may surmount any challenge by Liberty National Insurance Company ("Liberty National") to their claims grounded in the statute of limitations and (2) reinstate their action by amending its earlier order dismissing their section 1981 claims as time-barred and dismissing their remaining state law claims for lack of original jurisdiction. Liberty National responds that this Court should disallow the Plaintiffs an amended complaint and that it should not depart from its earlier order dismissing the action.
Moore, McConnell, Williams and Bowers filed their initial complaint on, 1999, alleging a systematic, institutional practice of race discrimination in the provision of industrial life insurance to African-Americans, lasting from the early 1940's into the present. This ongoing practice, attributed to Liberty National and its predecessor, subsidiary, or acquired companies, formed the foundation of the Plaintiffs' complaint, supporting claims under the section 1 of the Civil Rights Act of 1866 prohibiting discrimination in contractual relations, most recently amended by the Civil Rights Act of 1991, and codified at 42 U.S.C. § 1981, and a host of state law claims, brought only on the named Plaintiffs' behalf, but on behalf of a nationwide class of African-American purchasers of Liberty National's industrial insurance products. Liberty national responded to the complaint by filing a motion for more definite statement on January 3, 2000; the motion was denied by the Court on the following day. On the 14th of January, 2000, the earlier motion of Liberty national was succeeded by a motion to dismiss the Plaintiffs' complaint. The Court denied the second- pre-answer motion, stating that the matters raised in it should have accompanied the earlier motion for more definite statement. An answer was filed by Liberty National on January 27, 2000, contemporaneous with a motion for judgment on the pleadings that reiterated the grounds for dismissal contained in the motion to dismiss. The motion was granted by the Court, which determined that the Plaintiffs had failed to overcome a timeliness bar posed by Alabama's two year statute of limitations to their federal section 1981 claims. The section 1981 claims were dismissed, with prejudice, and the state-law claims were dismissed, without prejudice for the Plaintiffs to proceed in state court.
Hoping to revive their case in federal court, the Plaintiffs moved for reconsideration of the motion for judgment on the pleadings and for the opportunity to file an amended complaint. The amended complaint that the Plaintiffs propose to file in place of the original complaint purports to repair the pleading deficiencies that caused the Court to earlier dismiss the action, first, by adding allegations tending to demonstrate that the Plaintiffs had no knowledge of the racially discriminatory practices of Liberty National until shortly prior to the filing of this action and second, by adding to their complaint another theory of recovery under the provisions against discrimination in the maintenance of property under section 1 of the Civil Rights Act of 1866, as codified at 42 U.S.C. § 1982.
In response to letters requesting oral argument, the Court held a hearing on June 20, 2000, to hear argument on the matters raised by the parties. That argument was informative, clarifying many questions of concern to the Court.
Much of the proposed amended complaint is unchanged from the original complaint; factual allegations, both broad and particular, remain as they were in the prior complaint. This being so, the Court need not recount many of those allegations in detail here, as they are canvassed in its earlier order dismissing this action. Rather, the Court confines its account of the allegations expressed in the proposed amended complaint to the general claims and their history.
As a putative class action, this case is brought by Moore, McConnell, Williams, and Bowers on behalf of all African-Americans who purchased industrial life insurance policies from Liberty National or any of its predecessor, subsidiary or acquired companies.1 According to the Plaintiffs, for nearly sixty years, Liberty National sold to African-Americans, including themselves, industrial life insurance in which the proportion of premiums to cash value and benefits was greater than the proportion for similarly situated white individuals -- that is, the premiums on each industrial life insurance policy sold to an African-American were realized in a lower cash value or benefit amount than would have been the case were the same premiums paid by a white individual. The sale of these allegedly discriminatory premiums was accomplished through the use of debit routes, territories assigned to agents of Liberty National who would collect premiums and encourage the purchase of more discriminatorily-priced insurance products.
Central to the Plaintiffs' motion for reconsideration is an account contained in the proposed amended complaint attempting to explain why the Plaintiffs, and allegedly all purported class members, were unaware of the Defendant's purportedly discriminatory rate setting policies. The Plaintiffs assert that, while the Defendant calculated policy rates based upon whether a purchaser of insurance was African-American or white, it would intentionally disguise the basis of its rate-setting through the use of neutral-seeming descriptions of those rates: Liberty national employed the term "standard rates" to refer to insurance rates applicable to African-Americans and the term "premium rates" to refer to insurance rates available only to white individuals. Thus, an African-American, when sold an insurance policy, would be told that the proportion of premiums to benefits in the policy was determined according to the "standard" rate, rather than that her insurance rates were tied to her race. In addition, Liberty National allegedly encouraged its agents to sell discriminatory policies to African-Americans, first, by instructing those agents not to reveal to African-American customers that they were charged higher rates than whites and second, by tying commissions to the type and amount of insurance sold. Because a revelation that rates varied on the basis of race would decrease an agent's African-American customers, Plaintiffs allege, each agent had a disincentive to reveal that the pricing of the policies was discriminatory. Finally, the Plaintiffs aver that Liberty National, after ceasing to make explicit, race-based distinctions among individuals in setting policy rates, nonetheless continued to sell racially-discriminatory policies by including in the calculation of policy rates factors often directly correlated with race, such as employment in certain occupations or residence in "undesirable" neighborhoods. Plaintiffs claim that they did not learn of these practices of Liberty National until shortly before the filing of this action and, in any case, less than two years before the action was filed, though they do not specify a particular date on which each named Plaintiff discovered the allegedly discriminatory manner in which insurance rates were set.
Liberty National first contends that the Court should not permit the proposed amendment to the Plaintiffs' complaint because, even if amendment is permitted, the claims contained in the amended complaint would still run afoul of the statute of limitations. Regarding its argument that the statute of limitations would act as a bar, even to the proposed amended complaint, Liberty National contends, one, that nothing in the proposed amended complaint changes the date on which the Plaintiffs' section 1981 claims accrued and that the addition of the section 1982 claims to their case does not fix the Plaintiffs' timeliness problem because the Plaintiffs' claims under section 1982 accrued at the same time as the section 1981 claims. Next, Liberty National contends, nothing in the proposed amended complaint requires the Court to revisit its determination that the Plaintiffs' federal law claims arise from a continuing violation allowing them to avoid the statute of limitations bar. Liberty National argues, three, that because, in their proposed amended complaint, the Plaintiffs fail to adequately plead fraudulent concealment in compliance with Federal Rule of Civil Procedure 9(b), the Plaintiffs are...
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