Court Opinion

ID: 1001802
Source: CourtListenerOpinion
Date Created: 2013-07-04 18:00:56.757963+00
Date Added: 2024-06-11T12:19:12.534889
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

OSSAMA NAGY; SHERIF SAAD;
NOOSHIN SOOZANGAR; SHAGUFLA
AZAD,
Plaintiffs-Appellants,

and

DAVID C. GRIGGS; ADEL ALALFEY,
Plaintiffs,

v.
                                                               No. 99-1859
THE BALTIMORE LIFE INSURANCE
COMPANY; LIFE OF MARYLAND,
INCORPORATED,
Defendants-Appellees,

v.

THE MARYLAND INSURANCE
COMMISSIONER,
Movant-Appellee.

Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Andre M. Davis, District Judge.
(CA-96-3673-AMD)

Argued: April 7, 2000

Decided: June 5, 2000

Before LUTTIG, Circuit Judge, Roger J. MINER,
Senior Circuit Judge of the United States Court of Appeals
for the Second Circuit, sitting by designation, and
Patrick M. DUFFY, United States District Judge for the
District of South Carolina, sitting by designation.

_________________________________________________________________
Affirmed in part, vacated in part, and remanded in part by unpub-
lished per curiam opinion.

_________________________________________________________________

COUNSEL

ARGUED: Daniel F. Goldstein, BROWN, GOLDSTEIN & LEVY,
Baltimore, Maryland, for Appellants. Stanley Mazaroff, VENABLE,
BAETJER & HOWARD, L.L.P., Baltimore, Maryland, for Appellees.
ON BRIEF: George Hermina, John Hermina, HERMINA LAW
GROUP, Laurel, Maryland, for Appellants.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

Before the court is an appeal from a summary judgment of the
United States District Court for the District of Maryland (Davis, J.)
holding, inter alia, that (1) plaintiffs had not established genuine
issues of material fact concerning claims of race discrimination in
light of the defendants' practice of targeting for insurance sales the
very applicants allegedly discriminated against and (2) plaintiffs'
alienage claim under 42 U.S.C. § 1981 failed because defendants'
denial of life insurance was based on the nation of plaintiffs' origin,
not merely their lack of U.S. citizenship. The appellants also appeal
from certain discovery rulings by the district court.

Because the district court improperly resolved on summary judg-
ment the alienage claims of two of the plaintiffs, despite their produc-
tion of direct evidence supporting a finding of unlawful alienage
discrimination, we remand. With respect to all other matters on
appeal, we affirm.

                     2
BACKGROUND

Plaintiffs-appellants are Sherif M. Saad ("Saad"), Ossama Nagy
("Nagy"), Nooshin Soozangar ("Soozangar"), and Shagufla Azad
("Azad"). Saad, Nagy, Soozangar, and Azad are non-U.S. citizens of
Middle Eastern origin. The appellants allege that they were victims
of the defendants-appellees' discriminatory insurance practices.

The defendants-appellees are Baltimore Life Insurance Company
("Baltimore Life"), and several of its officers and employees, includ-
ing President L. John Pearson, Vice President of Underwriting Wil-
liam Vigliotte ("Vigliotte"), Vice President for Career Marketing
Gary Ray, Executive Vice President David S. Sachs, Executive Vice
President Damian A. Salvi, and Senior Underwriter Morrie R. Clark.
Baltimore Life is the only mutual life insurance company domiciled
in Maryland and is owned by its policyholders and managed for their
benefit.

In 1994, Baltimore Life hired Adel Alalfey as a sales agent to
cover a targeted market -- the Middle Eastern community in the Bal-
timore/Washington metropolitan area. As a result of the efforts of
Baltimore Life and Alalfey, the company was successful in selling
many life insurance policies to persons of Middle Eastern descent.
More specifically, during the period from November 1994 to April
1996, Baltimore Life sold life insurance policies to over 40 persons
whose places of birth or ancestry could be traced to a Middle Eastern
or Arab country. However, Baltimore Life did not issue insurance
policies to some of Alalfey's customers, whom it contends presented
unacceptable mortality risks.

After Alalfey was hired, he met with Vigliotte to discuss plans to
sell life insurance to people from the Middle East. When Alalfey told
Vigliotte about his plan to sell insurance policies to certain employees
of the Kuwaiti embassy, Vigliotte became concerned. Vigliotte stated
that he "was reminded of the Gulf War and the ongoing risk of resid-
ing in Kuwait, and . . . had visions of blindfolded Americans in cap-
tivity in Iran."

After this conversation, Vigliotte cautioned his staff against provid-
ing life insurance policies to customers of Alalfey who were born in

                    3
and remained citizens of unstable countries and consequently were
likely to become poor risks if they returned home. Although Balti-
more Life's application does not ask applicants about their citizen-
ship, it does ask for information about applicants'"Country of Birth."
Between December 1994 and April 1995, as a result of Vigliotte's
caution to the underwriting staff, the staff started checking whether
applicants who answered that they were born abroad remained citi-
zens of their "Country of Birth." To obtain this information, inquiries
were made over the telephone by members of the underwriting staff.

Among the many applications screened, the underwriting staff
found only three applicants who continued to be citizens of their
country of birth and whom Vigliotte determined to be unacceptable
underwriting risks. Those three individuals were Saad, Soozanger,
and a third person who is not a party to this case.

On December 22, 1994, Alalfey submitted Saad's application for
life insurance. The application revealed that Saad was born in Egypt
and worked for the Kuwaiti government at its embassy in Washing-
ton, D.C. Pat Taylor ("Taylor"), a staff member in the underwriting
department, telephoned Saad and learned that he was a citizen of
Egypt. On December 30, 1994, Saad was notified by letter that his
application for life insurance was rejected. The letter read, in pertinent
part:

           We have completed our review of the life insurance pol-
          icy for which you recently applied. Unfortunately, we are
          unable to offer you coverage. . . . This case is being declined
          since it is company policy not to issue coverage on non-
          United States citizens.

(emphasis added).

Soozangar applied for life insurance on December 29, 1994. Her
application showed that she was born in Iran. Accordingly, Taylor
telephoned Soozangar to determine whether she was still an Iranian
citizen. Upon learning that Soozangar remained a citizen of Iran, Bal-
timore Life rejected her application. On January 11, 1995, she
received a letter identical to that sent to Saad. According to Vigliotte,
Baltimore Life stopped inquiring about the citizenship of applicants

                     4
on April 3, 1995. In April 1996, after Vigliotte had informed Alalfey
that Baltimore Life was no longer evaluating applicants' citizenship,
Alalfey resubmitted Soozangar's application for life insurance. The
application was thereafter approved.

On November 25, 1996, the appellants, and a fifth plaintiff named
David C. Griggs ("Griggs"), who was a former District Manager for
Baltimore Life, filed a class action lawsuit in the United States Dis-
trict Court for District of Maryland, asserting violations of 42 U.S.C.
§ 1981, 42 U.S.C. § 1982, and the Maryland common law, arising
from the alleged refusal of Baltimore Life to issue policies to non-
U.S. citizens. The complaint also alleged breach of contract, fraud,
and wrongful discharge on behalf of Griggs and Alalfey. The com-
plaint made a demand for a jury trial and sought an aggregate amount
of approximately $150,000,000.00 in damages.

In December of 1998 and January of 1999, a discovery dispute
arose that related to plaintiffs' service of a motion to compel on Balti-
more Life. After the motion was served, but before it was filed, Balti-
more Life apparently filed a motion to strike. The plaintiffs then
attempted to file their motion to compel with the court. On January
13, 1999, the district court issued an order denying all pending
motions dealing with discovery and setting certain discovery dead-
lines. On the same date, the court sent a letter to counsel stating in
relevant part:

           I have concluded that the most sensible way out of the pit
          into which this case has fallen is to start fresh. Accordingly,
          by separate order, I am DENYING all of your pending
          motions and cross motions for protective order, etc. All
          prior rulings are wiped from the slate, an amended schedul-
          ing order is being issued, and you are all being given the
          opportunity to avoid the imposition of very substantial sanc-
          tions.

           Hereafter, you will cooperate fully in scheduling the com-
          pletion of discovery and you will not file another motion to
          compel or for protective order or any similar motion.

                     5
           Despite the informal nature of this ruling, it shall consti-
          tute an Order of Court, and the Clerk is directed to docket
          it accordingly.

Thereafter, the court returned the motion to compel that the plaintiffs
had attempted to file. The plaintiffs then protested the return by filing
a motion for reconsideration. Apparently, the district court never
ruled on this motion for reconsideration.

On May 24, 1999, the district court issued a Memorandum Opinion
and accompanying Order. The opinion dealt with several pending
motions, two of which are relevant on appeal: (1) the defendants'
motion to exclude the testimony of Alalfey and (2) the defendants'
motion for summary judgment.

With regard to the defendants' motion to exclude the testimony of
Alalfey, the court initially noted that plaintiffs' counsel was represent-
ing Alalfey in state court litigation arising out of his former employ-
ment with Baltimore Life. The court then found that Alalfey's
deposition had been postponed several times and attributed this to
"[t]he inexcusable game-playing and bad faith manifested by Alalfey
and plaintiffs' counsel." The court concluded that the "[e]xclusion of
[Alalfey's] testimony [wa]s a measured and appropriate response
under the circumstances" and granted the defendants' motion.

The majority of the court's opinion addressed the substantive
motion for summary judgment. Because the case giving rise to this
appeal involved claims predicated on direct evidence of discrimina-
tion, the court required plaintiffs to "produce direct evidence of a
stated purpose to discriminate on the basis of [ethnicity or citizenship]
and/or circumstantial evidence of a stated purpose to discriminate on
the basis of [ethnicity or citizenship] of sufficient probative force to
reflect a genuine issue of material fact." (internal quotation omitted).

Turning to the allegations of race discrimination, the court flatly
rejected this claim, finding the record replete with evidence that many
persons other than plaintiffs, yet of the same Middle Eastern ancestry,
applied for and received life insurance policies from Baltimore Life
during the time in question. The court also relied on Baltimore Life's
obvious intent to increase the sale of life insurance policies to mem-

                     6
bers of the Middle Eastern community in the Baltimore/Washington
metropolitan area.

Thus, all that remained were the alienage discrimination claims.
The district court found Duane v. GEICO, 37 F.3d 1036 (4th Cir.
1994), controlling and concluded that Section 1981 had been inter-
preted in our Circuit as outlawing discrimination against aliens. With
regard to Nagy and Azad, the court flatly rejected their contention that
they were ever denied life insurance by Baltimore Life.1 However, the
court found that with regard to Soozangar and Saad,"there [wa]s
direct evidence of discrimination." Discussing the direct evidence of
discrimination, the court noted that Vigliotte admitted that "he insti-
tuted a policy of rejecting applications from certain non-United States
citizens" and also noted that a former Baltimore Life employee con-
firmed the existence of this policy. The court also referred to the
explicit rejection letters that Saad and Soozanger received. Accord-
ingly, the court concluded, "plaintiffs have available a quantum of
evidence supportive of their claims." Nevertheless, the district court
granted summary judgment as to the claims of Soozangar and Saad,
reasoning as follows:

          On the whole, although there is admittedly some direct evi-
          dence that Baltimore Life rejected the plaintiffs in part
          because they were citizens of certain Middle Eastern coun-
          tries, i.e., they were not citizens of the United States (or
          some other country), Baltimore Life nevertheless escapes
          liability as a matter of law because a rational juror would be
          compelled on this record to conclude that, rather than non-
          citizenship, plaintiffs' rejection was "solely" based "on the
          place or nation of [their] origin," see[Saint Francis College
          v. Al-Khazraji, 481 U.S. 604, 613 (1987)] . .., rejection on
          the basis of which does not support a cognizable claim
          under § 1981.

(emphasis added; emphasis from original omitted). The court also
observed that the plaintiffs had not argued, and thus it did not seek
_________________________________________________________________
1 In a separate portion of the opinion, the court noted that it was undis-
puted that Baltimore Life had no record that Azad or Nagy ever applied
to Baltimore Life for life insurance.

                    7
to determine, whether a mixed-motive analysis was appropriate in the
context of Section 1981 alienage claims. Accordingly, the court
granted the defendants' summary judgment motion in its entirety.
This appeal followed.

DISCUSSION

The appellants contend that there are genuine issues of material
fact that preclude summary judgment in favor of defendants. The
appellees argue that the district court was correct to grant summary
judgment because the appellants cannot show that Baltimore Life
denied them insurance on the basis of their alienage status. They con-
tend that they actively marketed policies to persons of Middle Eastern
descent and that they considered persons' place of birth and citizen-
ship only as indicia of the likelihood of their traveling to dangerous
foreign countries. The appellants also dispute the district court's rul-
ings with regard to (1) the exclusion of Alalfey's testimony; (2) the
appellants' attempted filing of a motion to compel discovery from
Baltimore Life; and (3) the appellants' motion for reconsideration of
the motion to compel.

Standard of Review

We review a grant of summary judgment de novo . See Halperin v.
Abacus Tech. Corp., 128 F.3d 191, 196 (4th Cir. 1997). Summary
judgment is appropriate if "`there is no genuine issue as to any mate-
rial fact and . . . the moving party is entitled to a judgment as a matter
of law.'" Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (quoting
Fed. R. Civ. P. 56(c)). In determining whether there is a genuine issue
of material fact, the record is viewed in the light most favorable to the
nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
255 (1986). With regard to the discovery rulings and the decision to
strike the testimony of Alalfey, we assess whether the district court
abused its discretion. See United States v. Hassan El, 5 F.3d 726, 731
(4th Cir. 1993); United States v. Curry, 993 F.2d 43, 45 (4th Cir.
1993); Erdmann v. Preferred Research, Inc., 852 F.2d 788, 792 (4th
Cir. 1988).

                     8
The Alienage Claim

42 U.S.C. § 1981, as amended by the Civil Rights Act of 1991,
Pub. L. No. 102-166, § 101, 105 Stat. 1071, 1071-72, states as fol-
lows:

         (a) Statement of equal rights

          All persons within the jurisdiction of the United States
         shall have the same right in every State and Territory to
         make and enforce contracts, to sue, be parties, give evi-
         dence, and to the full and equal benefit of all laws and pro-
         ceedings for the security of persons and property as is
         enjoyed by white citizens, and shall be subject to like pun-
         ishment, pains, penalties, taxes, licenses, and exactions of
         every kind, and to no other.

         (b) "Make and enforce contracts" defined

          For purposes of this section, the term "make and enforce
         contracts" includes the making, performance, modification,
         and termination of contracts, and the enjoyment of all bene-
         fits, privileges, terms, and conditions of the contractual rela-
         tionship.

         (c) Protection against impairment

          The rights protected by this section are protected against
         impairment by nongovernmental discrimination and impair-
         ment under color of State law.

In 1994, we interpreted the meaning of Section 1981 in the alien-
age context in Duane v. GEICO, 37 F.3d 1036 (4th Cir. 1994). Duane
was a lawfully admitted, permanent resident alien of the United States
and a citizen of Australia. As in our case, the plaintiff had sought
insurance -- home insurance in that case -- and had been denied cov-
erage. GEICO's sales agent had informed Duane that the company
would not issue him a homeowner's policy because he was not a
United States citizen. Thereafter, Duane confirmed that information

                     9
with a GEICO supervisor and filed suit. On appeal from a district
court decision dismissing his claim, we found the 1991 amendments
to Section 1981 inapplicable to the defendant's conduct, since the
conduct occurred before passage of the Civil Rights Act of 1991.
Accordingly, we looked only to what is currently codified as Section
1981(a). See id. at 1038. After detailing the history of Section 1981
and the Supreme Court caselaw surrounding its application, we noted
that the Supreme Court had found Section 1981 applicable to govern-
ment discrimination against aliens in Takahashi v. Fish & Game
Comm'n, 334 U.S. 410 (1948). We then found that the relevant
Supreme Court caselaw, legislative history, and construction of the
Act indicated that Congress intended the Act to reach private discrim-
ination against aliens. We concluded that Section 1981 prohibited pri-
vate discrimination on the basis of alienage. See id. at 1042-43.

In the present case, the district court's own discussion of the evi-
dence presented by Soozangar and Saad demonstrated that these two
plaintiffs met their burden of producing direct evidence of discrimina-
tion on the basis of alienage. The rejection letters that both received
from Baltimore Life stated that they were being denied insurance
because "it is company policy not to issue coverage on non-United
States citizens." These letters followed telephone calls inquiring into
citizenship status. Additionally, Soozangar and Saad presented Vigli-
otte's own testimony that "he instituted a policy of rejecting applica-
tions from certain non-United States citizens." Nevertheless, the court
discounted the importance of this evidence, drawing a distinction
between discrimination based on the place or nation of origin, which
it found permissible, and discrimination on the basis of non-
citizenship. Finding that the discrimination here was really based on
the plaintiffs' place or nation of origin, the court concluded that no
rational juror could find for the plaintiffs.

However, the court inappropriately weighed the evidence and
failed to recognize that once it found direct evidence of alienage dis-
crimination, a "quantum of evidence" as the court put it, that there
was presented a genuine issue of material fact that required resolution
by a jury.2 It is on this basis that we vacate and remand so much of
_________________________________________________________________
2 We recognize that the defendants contend that they only denied life
insurance policies based on applicants' place of citizenship, not appli-
cants' non-citizenship. Yet, these are arguments properly resolved by a
trier of fact, not a district court or appellate court on summary judgment.

                    10
the district court's decision as rendered summary judgment for the
defendants on the alienage claims made by Saad and Soozangar. As
for the alienage claims advanced by Nagy and Azad, we agree with
the district court that they failed to show that they were ever denied
life insurance by Baltimore Life.

The Racial Discrimination Claims

Plaintiffs also dispute the district court's summary judgment
against them on the race discrimination claims. We affirm the district
court's ruling on this issue for substantially the same reasons given
by that court. The plaintiffs failed to make the required showing either
by direct or indirect evidence supporting a claim for discrimination on
the basis of race so as to preclude summary judgment.

The District Court's Discovery and Motion in Limine Rulings

We also affirm the district court on these points, as the appellants'
contentions lack merit. First, contrary to the appellants' assertions, the
record supports the district court's decision to strike Alalfey's testi-
mony on the basis of its finding of bad faith -- the sanction was rea-
sonable in relation to the harm occasioned. Second, the district court's
discovery rulings with regard to the motion to compel and consequent
motion for reconsideration were reasonable. In any event, there is no
evidence that the district court abused its discretion in these rulings.
See Erdmann, 852 F.2d at 792.

CONCLUSION

We vacate so much of the district court's summary judgment as
rejected the alienage claims of Saad and Soozangar and remand for
further proceedings as to those claims in accordance with the forego-
ing. In all other respects, we affirm the rulings and judgment of the
district court.

AFFIRMED IN PART, VACATED IN PART,
AND REMANDED

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