Stern v. Massachusetts Indemnity and Life Insurance Co.
| Decision Date | 12 October 1973 |
| Docket Number | Civ. A. No. 71-2987. |
| Citation | 365 F. Supp. 433 |
| Parties | Helen H. STERN, on behalf of herself and all those similarly situated v. MASSACHUSETTS INDEMNITY AND LIFE INSURANCE COMPANY and Herbert S. Denenberg, Insurance Commissioner of the Commonwealth of Pennsylvania. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
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Helen H. Cutner (Stern) pro se.
William H. Lowery, Philadelphia, Pa., for Mass. Indemnity.
Gerald Gornish, Deputy Atty. Gen., Harrisburg, Pa., for Herbert Denenberg.
This action arises under Title 42 of the United States Code, Sections 1983 and 1985, and federal jurisdiction is asserted under Title 28, Sections 1331, 1332, 1343 and 2201.
Plaintiff is a woman who applied to defendant, Massachusetts Indemnity and Life Insurance Company (hereinafter Insurance Company) for a disability insurance policy in terms available to men of her age, health, income and occupation. She avers that defendant Insurance Company refuses to sell disability insurance to women containing the same terms and conditions available to men solely on the basis of sex.1 Plaintiff argues that this refusal is without actuarial justification and is with the agreement and approval of the Pennsylvania Insurance Commission.2 She contends that the aforesaid discrimination is a denial of equal protection of the law and is in violation of the Constitution of the United States and of the Commonwealth and Section 626 of the Pennsylvania Insurance Company Act3 which prohibits discrimination by casualty and disability insurance companies between individuals of the same class.
Defendant Insurance Company maintains a number of defenses in its Answer and additional defendant Denenberg also raises essentially the same defenses. These will be explored in greater detail in our Opinion.
The following motions are before us for decision; plaintiff's Motion for Confirmation of Class pursuant to Rule 23(b)(2), F.R.Civ.P.; and plaintiff's Motion to Dismiss Strike Defenses Two Through Twelve of defendant's Answer pursuant to Rule 12(h)(2), F.R. Civ.P. After the filing of these motions, we determined that the Pennsylvania Insurance Commissioner is a necessary party to this action and ordered his joinder.
Additional defendant Denenberg has moved to Dismiss Plaintiff's Amended Complaint. In response, plaintiff has filed a Cross-Motion for Partial Summary Judgment and Injunction. For the reasons set forth in our Opinion, we will partially grant and partially deny plaintiff's Motion to Dismiss Defenses and will deny all the other motions in toto.
OPINIONPLAINTIFF'S MOTION TO DISMISS DEFENSES TWO THROUGH TWELVE OF DEFENDANT INSURANCE COMPANY'S ANSWER.
Defendant Insurance Company contends as its Second Defense that this court lacks subject matter jurisdiction of the complaint under 28 U.S.C. §§ 1331, 1343 and 2201 because of failure to state a cause of action under 42 U.S. C. §§ 1983 or 1985. In his Motion to Dismiss Amended Complaint, additional defendant Denenberg joins in this defense.
As its Third Defense, defendant Insurance Company argues that this court lacks subject matter jurisdiction under 28 U.S.C. § 1332. Additional defendant Denenberg also joins in this defense. Because Commissioner Denenberg has been joined in this action, and is a resident of the Commonwealth, diversity jurisdiction under Section 1332 is destroyed. Therefore, the defense is a valid one and plaintiff's motion to dismiss it will be denied.
Defendant Insurance Company raises as its Fourth Defense the claim that this court lacks subject matter jurisdiction under any section of the U.S. Code.
As its Fifth and Sixth Defenses, respectively, defendant Insurance Company argues that we lack subject matter jurisdiction of complaints about unlawful discrimination in insurance policies and rates and plaintiff has failed to pursue her administrative remedies under the Pennsylvania Insurance Code, 40 P. S. § 1 et seq. Additional defendant Denenberg joins in these defenses.
Defendant Insurance Company's Seventh Defense is now moot. It was a claim that plaintiff had failed to join an indispensable party, the Commissioner, under Rule 19, F.R.Civ.P.
Defendant's Eighth, Ninth, Tenth and Eleventh Defenses are essentially defenses countering plaintiff's allegations that the terms and conditions of disability insurance available to women bear no rational or reasonable relation to the risk to be assumed and that as a class women have been denied equal protection of the law.4
Defendant Insurance Company's Twelfth Defense is simply that the complaint fails to state a claim upon which relief can be granted. Again, additional defendant Denenberg concurs in this defense.
We are disposed at this time to deny plaintiff's motion to dismiss Defenses Eight through Eleven, inclusively, as these defenses involve factual issues better left for determination at trial on the merits. Corresponding defenses of additional defendant Denenberg will be disposed of in the same manner.
Remaining to be decided, then, are defendant Insurance Company's jurisdictional defenses (Second, Fourth, Fifth and Sixth Defenses) and additional defendant Denenberg's request that we abstain from further proceedings in this case until the Supreme Court of Pennsylvania interprets a recently passed amendment to the Pennsylvania Constitution, Article I, § 27,5 P.S. and Section 626 of the Pennsylvania Insurance Companies Law, 40 P.S. § 761.6
It is argued by both defendants that we lack jurisdiction in this matter because plaintiff has failed to show that anyone acted under color of state law. The Civil Rights Act of 1871, 42 U.S.C. § 1983, provides:
"Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress."7
We must first determine whether the allegations of the Complaint sufficiently set forth the requirement of "state action." Plaintiff has alleged that defendant Insurance Company is licensed under the laws of Pennsylvania (Paragraph 7), and that it is extensively regulated by the Pennsylvania Insurance Commissioner pursuant to state law (Paragraph 8). It is further alleged that defendant's discrimination against women is performed with the authority of the Pennsylvania Insurance Commissioner (Paragraph 12). The state insurance department must first approve the terms, conditions and premium rates to be used by defendant insurance company (Answer to Interrogatory 2) and defendant may not utilize any form of policy which is disapproved (Answer to Interrogatory 8).8
With respect to officers or employees of a State or Territory, their actions will be deemed to be under color of law if the alleged deprivation of right is committed in fulfillment of tasks assigned to them. Monroe v. Pape, 365 U.S. 167, 81 S.Ct. 473, 5 L.Ed.2d 492 (1961). Moreover, if the officer or employee is clothed with the authority of the State and purportedly acts pursuant to that authority, such action is under color of state law "whether or not the conduct complained of was authorized or, indeed, even if it was proscribed by state law." Marshall v. Sawyer, 301 F.2d 639, 646 (9th Cir. 1962). Consequently, even if the Commissioner's actions in this case could be interpreted as in contravention of Section 626 of the Pennsylvania Insurance Companies Law or of Article I, § 27 of the Pennsylvania Constitution, these actions may still fall within the proscriptions of Section 1983.
In support of his contention that there is no state action in the instant case, defendant Denenberg urges that we follow the Supreme Court's holding in Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 92 S.Ct. 1965, 32 L.Ed.2d 627 (1972). In Irvis the appellee was refused service at a private club's dining room solely because of his race. Appellee argued that because the Pennsylvania Liquor Control Board issued appellant a private club liquor license, such involvement amounted to state action. In rejecting the appellee's contention the Court noted the lack of a symbiotic relationship between the State and the private entity and concluded that a finding of state action would emasculate "the essential dichotomy between discriminatory action by the State, which is prohibited by the Equal Protection Clause, and private conduct, `however discriminatory or wrongful,' against which that clause `erects no shield.'" 407 U.S. at 172, 92 S.Ct. at 1971. See also Burton v. Wilmington Parking Authority, 365 U.S. 715, 81 S.Ct. 856, 6 L.Ed.2d 45 (1961); Shelley v. Kraemer, 334 U.S. 1, 68 S.Ct. 836, 92 L.Ed. 1161 (1948); and The Civil Rights Cases, 109 U.S. 3, 3 S.Ct. 18, 27 L.Ed. 835 (1883).
The holding in Irvis does not apply to the facts of this case. In Irvis it was found that the Pennsylvania Liquor Control Board played no part in establishing or enforcing the membership or guest policies of the private club and neither approved or endorsed the club's racially discriminatory practices. But here the involvement of the State is unequivocal. Not only does the State license insurance companies desiring to sell policies in Pennsylvania, it also approves such policies and classifications of risks before they can be used. No insurance company is permitted to sell any policy in the State until it has been approved by the state insurance department pursuant to authority granted by the Commonwealth. Such pervasive control by the Commonwealth establishes its intimate involvement in the alleged discriminatory conduct of defendant Insurance Company.
Defendant Insurance Company also maintains that plaintiff has failed to satisfy the color of...
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