Ortega v. Merit Ins. Co.
Decision Date | 31 May 1977 |
Docket Number | 76 C 2638.,No. 76 C 2314,76 C 2314 |
Citation | 433 F. Supp. 135 |
Parties | Anna Marie ORTEGA, Individually and on behalf of all others similarly situated, Plaintiffs, v. MERIT INSURANCE COMPANY and Aronson Furniture Company, Defendants. Robert HERNANDEZ, Individually and on behalf of all others similarly situated, Plaintiffs, v. UNITED FIRE INSURANCE COMPANY and Aronson Furniture Company, Defendants. |
Court | U.S. District Court — Northern District of Illinois |
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Robert E. Masur, Garfield Austin Legal Services, Chicago, Ill., for Ortega and Hernandez.
Gerald M. Rotheiser, Stern & Rotheiser, Chicago, Ill., for Merit Ins.
Fohrman, Lurie, Holstein & Sklar, Chicago, Ill., for Aronson Furniture Co.
Theodore P. Fields, Fields, Smoller & Fields, Chicago, Ill., for United Fire Ins. Co.
These are two related actions alleging a discriminatory pricing scheme for the sale of credit property insurance. In No. 76 C 2314, plaintiff, a "brown-skinned resident alien of Hispanic (Mexican) origin", sues for declaratory and injunctive relief and monetary damages pursuant to 42 U.S.C. § 1981. In No. 76 C 2638, plaintiff, a Spanish-surnamed citizen of the United States, sues for similar relief under 42 U.S.C. §§ 1981 and 1982. Motions to dismiss have been filed in each case. For the reasons herein stated, we deny in part and grant in part the motions to dismiss.
Credit property insurance is sold, generally, in connection with retail installment credit sales of property. The insurance protects against damage or destruction to the property during the life of the contract. Two types of credit property insurance are relevant to our discussion of the instant cases: (1) single interest insurance, which protects only the creditor's interest, defined as the unpaid balance at the time of the occurrence of the insured risk; (2) dual interest insurance, which purportedly protects both the creditor's and the debtor's interest, so that if the depreciated value of the property destroyed is worth more than the creditor's interest, the debtor receives the difference. Conversely, if the property destroyed is not worth more than the creditor's interest, the benefits paid under the dual interest policy will be no greater than those paid under the single interest policy.
Plaintiff in each case alleges that United sold single interest insurance in stores with predominantly Caucasian customers at a rate of $1.50 per $100 of insurance per year, but only dual interest insurance, at a rate of $4.00 per $100 of insurance per year, in stores with predominantly non-Caucasian customers. Merit is alleged to have entered the market in 1973, selling dual interest insurance at the $4.00 rate to selected stores, the great majority of whose customers were black or Hispanic.
In April 1974, the Illinois Department of Insurance ordered United to lower its dual interest rates and make both single and dual interest policies available at all retail establishments marketing its insurance. United subsequently lowered the dual interest rate to $3.00 per $100 of insurance per year. Merit continued the $4.00 rate until June 1976.
Defendant Merit moves to dismiss on the ground that there are no allegations that Merit sold property insurance to different people based on race, and that none of the persons who contracted with Merit were in any way forced to contract or were unable to purchase insurance from any other person or entity. Merit further alleges that plaintiff Ortega lacks standing to sue as the insurance agreement was signed by plaintiff's husband rather than plaintiff.
Prior to dealing with these defenses, however, a more basic question of jurisdiction and standing, not addressed by the parties, exists. 42 U.S.C. § 1981 provides as follows:
See also Gradillas v. Hughes Aircraft Co., 407 F.Supp. 865 (D.Ariz. 1975); Schetter v. Heim, 300 F.Supp. 1070 (E.D.Wis. 1969).
Several cases, however, have applied § 1981 to United States citizens of Puerto Rican descent, Maldonado v. Broadcast Plaza, Inc., 10 FEP Cases 839 (D.Conn.1974), or to other Spanish surnamed or Hispanic persons. Miranda v. Clothing Workers Local 208, 10 FEP Cases 557 (D.N.J. 1971). An example of the rationale of such decisions is found in Budinsky v. Corning Glass Works, 425 F.Supp. 786, 788 (W.D.Pa. 1977), which dismissed a § 1981 action charging discrimination in employment against people of Slavic origin:
See also Sokolski v. Corning Glass Works, 14 FEP 936 (W.D.Pa. 1977).
We recognize the logical problems in the "pragmatic" approach, whereby an ethnic minority, such as Italians and Jews at the turn of the century or Hispanics today, may "drift" within and later without Section 1981 protection, depending on the circumstances of the times, and the shifts in recognition of ethnic and racial equality by the majority. But we agree with the above-cited cases that there is both "a practical need and a logical reason" today to include people of Hispanic origin as a group entitled to the protection of § 1981 against claims of discrimination such as alleged herein. Hopefully, the day is not too far distant when § 1981 will become obsolete and discrimination on racial and ethnic grounds will be a matter of history. So long as such discrimination continues, however, the reason and purpose of the section as well as its language are applicable to ensure that such groups enjoy the same rights under the law as the white majority. Accordingly, we find that the subject matter of the case is properly before us.
We next turn to defendant's claim that plaintiff Ortega does not have standing to bring this action as she did not sign the insurance agreement complained of and, therefore, has suffered no injury. Plaintiff has enclosed a copy of the retail installment sales contract and insurance agreement as Exhibit "A" of her complaint. It indicates that the buyer was Fernando Ortega and his name appears as the signatory on the insurance agreement. Plaintiff's name appears as co-signer at the bottom of the installment contract. At the time the contract...
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