Jones v. Allstate Insurance Co

Filing 18

MEMORANDUM OPINION Signed by Judge William M Acker, Jr on 2/13/15. (SAC )

FILED
2015 Feb-13 PM 03:20
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
JAMILIA D. JONES,
Plaintiff,
v.
ALLSTATE INSURANCE CO.,
Defendant.

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CIVIL ACTION NO.
2:14-CV-1640-WMA

MEMORANDUM OPINION
The court has for consideration a partial motion to dismiss1
by defendant Allstate Insurance Co., asserting that plaintiff,
Jamilia D. Jones, fails to state claims under the state tort law
of outrage and under the Rehabilitation Act of 1973. (Doc. 11).
Jones agrees to a dismissal of her state tort law claim but resists
the motion to dismiss her claim under the Rehabilitation Act. (Doc.
17).
Pursuant to § 504 of the Rehabilitation Act, “[n]o otherwise
qualified individual with a disability in the United States . . .
shall, solely by reason of her or his disability, 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.” 29 U.S.C. § 794(a). To ensure that federal

1

On a motion to dismiss, plaintiff’s “complaint must
contain sufficient factual matter, accepted as true, to state a
claim to relief that is plausible on its face.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quotation omitted).
1

funds

are

not

used

to

support

discrimination,

“Congress

intentionally gave broad scope to the term ‘federal financial
assistance’ in section 504.” Arline v. Sch. Bd. of Nassau Cnty.,
772 F.2d 759, 762 (11th Cir. 1985). When determining whether an
entity

receives

federal

financial

assistance,

the

“pertinent

inquiry . . . [is] whether Congress intended to compensate or
provide a subsidy.” Shotz v. Am. Airlines, Inc., 420 F.3d 1332,
1336 (11th Cir. 2005).
To reinforce the broad applicability of the Rehabilitation
Act, Congress in 1988 added a provision defining “program or
activity” to include “an entire corporation, partnership, or other
private organization . . . if assistance is extended to such
corporation,

partnership,

private

organization,

or

sole

proprietorship as a whole.” 29 U.S.C. § 794(b)(3). The legislative
history of this addition suggests that Congress sought “to overturn
the Supreme Court’s 1984 decision in Grove City College v. Bell,
465 U.S. 555" and “to restore the broad scope of coverage and to
clarify the application of . . . the Rehabilitation Act of 1973.”
S. Rep. No. 100-64 at 21 (1988). In particular, Congress explained
that it used the term “as a whole” to include “situations where the
corporation receives general assistance that is not designated for
a particular purpose” while excluding federal aid “limited in
purpose” such as Job Training Partnership Act funds. S. Rep. No.
100-64 at 19-20 (1988).

2

In

her

complaint,

Jones

alleges

that

Allstate

“receives

federal financial assistance pursuant to § 504 through the National
Flood Insurance Program.” She generally cites DeCosta v. Allstate
Ins. Co., 730 F.3d 76 (1st Cir. 2013). (Doc. 1 at 5). While Jones
does not allege or attach to her complaint extensive detail on the
operation of the flood insurance program, her identification of the
specific federal program and her reliance on DeCosta are sufficient
to nudge her claim “across the line from conceivable to plausible.”
Ashcroft v. Iqbal, 556 U.S. 662, 680 (2009).
First, Jones alleges that Allstate participates in a specific
federal program, namely, the National Flood Insurance Program
(“NFIP”). (Doc. 1 at 5). Under the NFIP, “the federal government
provides subsidized flood insurance to fill a gap in the private
insurance market.” DeCosta v. Allstate Ins. Co., 730 F.3d 76, 81
(1st Cir. 2013) (citing 42 U.S.C. § 4001). Given that the character
of the NFIP and Allstate’s alleged participation in it, Jones
states a plausible claim under the Rehabilitation Act. See Muckle
v. UNCF, 420 F. App'x 916, 918 (11th Cir. 2011) (“in order to state
a claim under § 504 of the Rehabilitation Act, a private plaintiff
must show, among other things, the specific program or activity
conferring or withholding the benefit received or was directly
benefitted by federal financial assistance”).
Furthermore, contrary to Allstate’s argument that the NFIP
does not constitute federal financial assistance extended to the
3

Allstate “as a whole,” the NFIP directly relates to insurance, the
principal business in which Allstate is engaged. The NFIP was
created as a “means of which flood insurance, over a period of
time, can be made available on a nationwide basis through the
cooperative efforts of the Federal Government and the private
insurance industry.” 42 U.S.C. § 4001. Given the “actuarial risks
involved in underwriting flood insurance . . . the Act was designed
to secure the involvement of the private insurance industry by
providing equalization payments and other forms of subsidies to
compensate insurers for charging reasonable premiums.” Beverly v.
Macy, 702 F.2d 931, 933 (11th Cir. 1983). Unlike funding provided
under a discrete federal job training program, the NFIP provides
private

insurers

generous

financial

assistance

and

subsidy

arrangements relating to certain insurance products. 61 C.F.R.
51217-51226 (1996). Therefore, the NFIP falls within the broad
definitional

provision

of

“program

or

activity”

under

the

Rehabilitation Act. 29 U.S.C § 794(b). Further, by alleging that
Allstate receives federal financial assistance “as a whole”, Jones
need not show in her complaint that she worked on the specific
flood insurance program at Allstate.
CONCLUSION
For the reasons detailed above, the court will by separate
order deny Allstate’s partial motion to dismiss the claim brought
under the Rehabilitation Act but will dismiss Jones’ outrage claim.

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DONE this 13th day of February, 2015.

_____________________________
WILLIAM M. ACKER, JR.
UNITED STATES DISTRICT JUDGE

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