Johneveric Powell v. Zurich Services Corporation

Case: 16-60078 Document: 00513563167 Page: 1 Date Filed: 06/23/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
No. 16-60078
Fifth Circuit
FILED
Summary Calendar June 23, 2016
Lyle W. Cayce
JOHNEVERIC T. POWELL, Clerk
Plaintiff - Appellant
v.
ZURICH AMERICAN INSURANCE COMPANY,
Defendant - Appellee
Appeal from the United States District Court
for the Southern District of Mississippi
USDC No. 5:14-CV-115
Before KING, CLEMENT, and OWEN, Circuit Judges.
PER CURIAM:*
Plaintiff–Appellant Johneveric T. Powell filed suit against Defendant–
Appellee Zurich American Insurance Company, seeking damages related to
Zurich’s investigation and adjustment of Powell’s workers’ compensation
claims. Powell asserted several state tort claims and alleged racial
discrimination in violation of 42 U.S.C. §§ 1981 and 1982. Zurich filed for
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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summary judgment, arguing that California’s workers’ compensation statute
barred Powell’s state law claims and that Powell failed to make a prima facie
case of racial discrimination. Following Powell’s abandonment of his state law
claims, the district court granted Zurich’s motion for summary judgment,
dismissing Powell’s claims for racial discrimination for failing to make out a
prima facie case of discrimination. Powell now appeals. For the following
reasons, we AFFIRM the judgment of the district court.
I. FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff–Appellant Johneveric T. Powell’s suit arises out of a workers’
compensation claim he filed with Defendant–Appellee Zurich American
Insurance Company (Zurich). In 2012, Powell, an African-American male
residing in Mississippi, was working as a crew leader of a seismic crew for
Geokinetics, Inc., in southern California when he contracted
coccidiodomycosis, otherwise known as Valley Fever. Powell began
experiencing adverse symptoms in July 2012 and went to a number of doctors
in the months thereafter to diagnose and treat his medical condition.
Following the first diagnosis of his symptoms in November 2012, Powell filed
a workers’ compensation claim with Geokinetics related to his Valley Fever
symptoms and his inability to work as a result. The claim was forwarded to
Geokinetics’ compensation carrier, Zurich, which assigned the claim to its
Cordova, California, office and handled the claim pursuant to California law.
Zurich sent Powell a letter on December 13, 2012, requesting Powell’s medical
history to process his claim. Zurich sent another letter the next day informing
Powell that workers’ compensation benefits would be delayed because of the
need to secure medical records but that a decision would be made on or before
February 5, 2013. And on December 19, 2012, one of Zurich’s employees, Nick
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Lardie, called Powell regarding his claim as the Zurich employee assigned to
Powell’s file, Cristina Salas, was on vacation at the time. 1
Powell subsequently filed another workers’ compensation claim with
Zurich relating to a right iliac bone lesion injury. That claim was initially
denied by Zurich on the grounds that no medical evidence demonstrated that
the bone lesion was the result of Powell’s employment with Geokinetics or a
result of his Valley Fever. But Zurich later accepted the claim in June 2013
after medical evidence confirmed its relation to Powell’s Valley Fever. On July
24, 2013, Zurich informed Powell by letter that it would be paying him
temporary disability benefits on his workers’ compensation claims. Zurich
continued to pay Powell’s temporary disability benefits until Powell reached
the statutory limit of 104 weeks for such benefits in July 2014.
During the claims process, Zurich also received a report from one of
Powell’s physicians as to whether Powell should receive permanent disability.
Zurich objected to the physician’s determination on permanent disability and
requested that Powell complete a Qualified Medical Examination (QME),
under which three examiners from the medical unit of the California Workers’
Compensation Appeal Board would determine Powell’s permanent disability
status. 2 Although Powell did not complete a QME and Zurich did not pay him
permanent-total disability benefits prior to Powell filing suit, Powell began
receiving permanent-temporary disability benefits from Zurich in July 2014.
Powell filed suit against Zurich on December 9, 2014, asserting a number
of state tort law claims and claims under 42 U.S.C. §§ 1981 and 1982. As
relevant to his civil rights claims and the instant appeal, Powell alleged that,
1 Salas thereafter was the Zurich employee who dealt with Powell’s workers’
compensation claim.
2 California law permits insurance carriers to request such a medical evaluation where
there is a delay in determining a claim based on available medical evidence. See Cal. Code
Regs. tit. 8, § 9812(g)(3).
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during his conversation with Lardie on December 19, 2012, Lardie ridiculed
Powell’s attempts to explain his exposure to Valley Fever after Powell informed
Lardie of his research that Valley Fever had a higher prevalence among
African-Americans. In particular, Powell alleged that at one point Lardie
referred to it as a “black man’s disease” and remarked that “I hope you don’t
think I’m going along with this stuff about a disease that blacks get, so you
stay down in Mississippi, getting a check and not having to work.” Powell
alleged that this incident, subsequent delays in receiving his workers’
compensation benefits from Zurich, and denials of prescribed medical
treatments by Zurich were the product of intentional racial discrimination
against Powell as an African-American. Zurich denied the allegations of racial
discrimination and, following discovery, moved for summary judgment on
September 25, 2015.
In its motion for summary judgment, Zurich sought dismissal of Powell’s
state tort claims on the grounds that the California Workers’ Compensation
Act provided the exclusive remedy as to an employee’s right to recover workers’
compensation from an insurance carrier. As to Powell’s racial discrimination
claims, Zurich asserted that, even if Powell’s evidence were viewed in the light
most favorable to him, Powell had failed to demonstrate a prima facie case of
discrimination. Zurich argued that Powell failed to show that any of Zurich’s
decisions were racially motivated or that they impaired a right under 42 U.S.C.
§ 1981(b) because Powell received the benefits that he was entitled to receive.
Zurich also argued that Powell failed to demonstrate intentional
discrimination, as his evidence consisted of two statements allegedly made by
Lardie. Zurich further argued that Powell’s Valley Fever claims were never
denied, Powell had been paid out on some of his benefits, and any delay in
benefits was supported by a legitimate, non-discriminatory reason—Zurich
lacked the necessary medical evidence and its claims personnel had no
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experience dealing with claims for Valley Fever. Powell subsequently filed an
opposition motion, conceding therein summary judgment on his state tort law
claims. In his opposition motion, Powell argued that his evidence of
substandard service and maltreatment, together with his testimony regarding
the racially charged nature of alleged comments by Lardie, made a prima facie
showing that Zurich intentionally discriminated against him on the basis of
race. Powell also argued that Zurich failed to show a legitimate, non-
discriminatory reason for the denial because Zurich never provided certain
medically prescribed treatments for Valley Fever and because Lardie’s
discussion of Powell’s race during their December 2012 conversation raised a
genuine issue that any proffered non-discriminatory reason was pretextual.
The district court granted Zurich’s motion for summary judgment on
January 25, 2016. Noting that the state law claims had been abandoned by
Powell in his opposition motion, the district court held that Powell failed to
show a genuine issue for trial under 42 U.S.C. §§ 1981 and 1982. As to the
§ 1981 claim, the district court held that Powell failed to make out a prima
facie case of discrimination because he failed to show that he was subject to
intentional discrimination or that he had lost any additional benefits as a
result of discrimination. As to the § 1982 claim, the district court interpreted
§ 1982 as only applying to denials of renting or purchasing property, and
Powell’s complaint did not allege a denial or deprivation of real property. The
district court entered its final judgment that same day, dismissing Powell’s
claims with prejudice. Powell timely appealed.
II. STANDARD OF REVIEW
We review a grant of summary judgment de novo, applying the same
standard as the district court. Rogers v. Bromac Title Servs., L.L.C., 755 F.3d
347, 350 (5th Cir. 2014). Summary judgment is proper “if the movant shows
that there is no genuine dispute as to any material fact and the movant is
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entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A genuine
dispute of material fact exists “if the evidence is such that a reasonable jury
could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). However, “[a] mere scintilla of evidence will not
preclude granting of a motion for summary judgment.” Schaefer v. Gulf Coast
Reg’l Blood Ctr., 10 F.3d 327, 330 (5th Cir. 1994) (per curiam). “We construe
all facts and inferences in the light most favorable to the nonmoving party
when reviewing grants of motions for summary judgment.” Dillon v. Rogers,
596 F.3d 260, 266 (5th Cir. 2010) (quoting Murray v. Earle, 405 F.3d 278, 284
(5th Cir. 2005)).
III. RACIAL DISCRIMINATION UNDER 42 U.S.C. §§ 1981 AND 1982
On appeal, Powell argues that the district court erred when it held that
he failed to demonstrate a prima facie case of discrimination under 42 U.S.C.
§ 1981, asserting that he demonstrated all three elements necessary for a
prima facie case. He also argues that the district court erred when it dismissed
his claim under 42 U.S.C. § 1982 because § 1982 applies to deprivations of
personal property as well as real property and his right to recover benefits
under a workers’ compensation insurance contract involves a personal
property right. 3 Without deciding whether Powell alleged the violation of a
property right protected under § 1982 or the denial of a right protected under
3 Stressing the express language of 42 U.S.C. § 1982, Powell notes that it applies to
deprivation of personal property as well as real property on the basis of race:
All citizens of the United States shall have the same right, in every State and
Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease,
sell, hold, and convey real and personal property.
42 U.S.C. § 1982 (emphasis added). Powell argues that he has a right to collect workers’
compensation benefits under contract by suit and that this constitutes a “chose in action,”
which is a form of personal property not reduced to possession. However, we need not and
do not address this argument in light of Powell’s inability to demonstrate an intent to
discriminate by Zurich.
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§ 1981, 4 we find that Powell failed to allege a prima facie case of discrimination
because he failed to establish, by a preponderance of the evidence, that Zurich
had intent to discriminate against him on the basis of race.
We have repeatedly noted that “[i]n cases arising under 42 U.S.C. § 1981,
the plaintiff must prove discriminatory intent.” Mason v. United Air Lines,
Inc., 274 F.3d 314, 318 (5th Cir. 2001). “A cause of action upon [42 U.S.C. §]
1982 likewise requires an intentional act of racial discrimination by a
defendant.” Vaughner v. Pulito, 804 F.2d 873, 877 (5th Cir. 1986). But, we
have held that, in the absence of direct evidence of discriminatory intent, a
plaintiff may proffer circumstantial evidence of discrimination “under the
McDonnell Douglas burden-shifting framework.” Dunaway v. Cowboys
Nightlife, Inc., 436 F. App’x 386, 390 (5th Cir. 2011) (unpublished); see
generally McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). “Under this
framework, the plaintiff must first create a presumption of intentional
discrimination by establishing a prima facie case.” Dunaway, 436 F. App’x at
390. A prima facie case of discrimination requires a plaintiff to “establish ‘(1)
that [he] is a member of a racial minority; (2) that [the defendant] had intent
to discriminate on the basis of race; and (3) that the discrimination concerned
one or more of the activities enumerated in the statute.’” Arguello v. Conoco,
4 While we hold that Powell failed to show intentional discrimination, we note that,
even assuming that he demonstrated intentional discrimination, there would still be a
question of whether he made out a prima facie case under 42 U.S.C. §§ 1981 and 1982. Powell
does not point to, and we are unaware of, any application of these statutes in the context of
an insurance contract and workers’ compensation benefits. It also is unclear whether there
has been a deprivation of personal property under § 1982 or that Powell has been denied “the
enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship” to
demonstrate a violation of the right “to make and enforce contracts” under § 1981. Although
there was a delay in Zurich’s payment of benefits, Powell ultimately received temporary-total
and permanent-temporary disability benefits from Zurich. And while Zurich has yet to pay
permanent-total disability benefits, it has never stated that it will not pay these benefits. See
Morris v. Dillard Dep’t Stores, Inc., 277 F.3d 743, 751 (5th Cir. 2001) (noting in the context
of a § 1981 claim that “a plaintiff must establish the loss of an actual, not speculative or
prospective, contract interest”).
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Inc., 330 F.3d 355, 358 (5th Cir. 2003) (quoting Morris, 277 F.3d at 751). A
plaintiff must make this “prima facie case of discrimination by a
preponderance of the evidence.” LaPierre v. Benson, 86 F.3d 444, 448 (5th Cir.
1996). While this burden is not onerous, it requires a plaintiff to demonstrate
acts that “if otherwise unexplained are more likely than not based on the
consideration of impermissible factors.” Furnco Const. Corp. v. Waters, 438
U.S. 567, 577 (1977). “If the plaintiff establishes a prima facie case of
discrimination, the burden then shifts to the [defendant] to produce evidence
that its actions were justified by a legitimate, nondiscriminatory reason.”
Raggs v. Miss. Power & Light Co., 278 F.3d 463, 468 (5th Cir. 2002). Upon
production of such evidence, “the burden then shifts back to the plaintiff to
show by a preponderance of the evidence that the [defendant]’s
nondiscriminatory explanation is pretextual.” Id. 5
We cannot conclude that Powell showed by a preponderance of the
evidence that Zurich had the intent to discriminate against him on the basis of
his race. Powell does not point to direct evidence of a discriminatory motive in
the instant case. See Stanstad v. CB Richard Ellis, Inc., 309 F.3d 893, 897 (5th
Cir. 2002) (“Direct evidence is evidence that, if believed, proves the fact of
5 While we have frequently applied this burden-shifting framework to claims of racial
discrimination under 42 U.S.C. § 1981, see Wesley v. Gen. Drivers, Warehousemen & Helpers
Local 745, 660 F.3d 211, 213 (5th Cir. 2011), our precedent is unclear as to whether it applies
to claims of racial discrimination under 42 U.S.C. § 1982. Cf. Daniels v. Advantage Rent-A-
Car Inc, 80 F. App’x 936, 939 (5th Cir. 2003) (per curiam) (unpublished) (assuming, without
deciding, that the framework applied). Other circuits, however, have analyzed
discrimination claims arising under 42 U.S.C. § 1982 using this framework. See Koorn v.
Lacey Twp., 78 F. App’x 199, 207 (3d Cir. 2003) (unpublished); Selden Apartments v. U.S.
Dep’t of Hous. & Urban Dev., 785 F.2d 152, 159 (6th Cir. 1986). And we have frequently
interpreted the two statutes in tandem, recognizing that “[s]ections 1981 and 1982 are
similar in language, legislative history, and purpose.” Woods-Drake v. Lundy, 667 F.2d 1198,
1200 n.3 (5th Cir. 1982). Assuming, without expressly deciding, that this framework applies,
we find—for the reasons herein—that Powell fails to demonstrate direct evidence of intent to
discriminate or even a prima facie case of racial discrimination under the McDonnell Douglas
framework.
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discriminatory animus without inference or presumption.”). Rather, he argues
that the alleged comments made by Lardie, coupled with his substandard
service and maltreatment by Zurich, are circumstantial evidence that
demonstrates an intent to discriminate. However, Powell’s evidence does not
demonstrate that any delay or non-receipt of benefits was “more likely than
not based on the consideration of impermissible factors.” Furnco, 438 U.S. at
577. Powell’s evidence requires a number of inferential leaps to find an intent
to discriminate on the part of Zurich, particularly given that an employee other
than Lardie handled most of Powell’s claim, Zurich was within its statutory
rights to require medical evidence and investigate Powell’s claim, and Powell
ultimately received benefits. Furthermore, we have previously observed in
other cases of discrimination that such stray discriminatory remarks without
proximate relation to an allegedly discriminatory decision will not suffice to
show discriminatory intent. See Rubinstein v. Adm’rs of Tulane Educ. Fund,
218 F.3d 392, 400 (5th Cir. 2000) (finding that isolated remarks by one
committee member did not demonstrate discriminatory intent).
Powell nonetheless argues that his case is akin to that of the plaintiffs
in Arguello where the court found that the second element of the prima facie
case was satisfied when the plaintiffs experienced discriminatory remarks and
substandard service from a retail employee. Arguello, 330 F.3d at 358. We
disagree and find Arguello inapposite. Unlike in that case, where the plaintiffs
faced a number of unprompted racist remarks and obscenities, Lardie’s alleged
statements were prompted by Powell’s discussion of Valley Fever’s prevalence
among African-Americans and were not the sort of crude remarks at issue in
Arguello. And the substandard treatment faced by the plaintiff in Arguello
(locking the plaintiffs out of the store and tampering with their goods) had no
nondiscriminatory basis. Id. at 357. Here, the alleged substandard treatment
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by Zurich (not paying for certain procedures or delaying benefits) was justified
by Zurich’s need to investigate Powell’s claim and obtain medical evidence.
Even assuming that Powell established a prima facie case of
discrimination, we would conclude that his 42 U.S.C. §§ 1981 and 1982 claims
fail because Powell failed to rebut Zurich’s legitimate, non-discriminatory
reasons for delaying his receipt of benefits—namely the need for Zurich to
obtain medical evidence and the unfamiliarity of Zurich employees with Valley
Fever. See Gilbert v. Donahoe, 751 F.3d 303, 311 (5th Cir. 2014) (“Under our
precedent, we may ‘affirm on any ground supported by the record, including
one not reached by the district court.’” (quoting Ballew v. Cont’l Airlines, Inc.,
668 F.3d 777, 781 (5th Cir. 2012)). We have noted that “[a] plaintiff can
establish pretext ‘either through evidence of disparate treatment or by showing
that the [defendant]’s proffered explanation is false or ‘unworthy of credence.’”
Nasti v. CIBA Specialty Chems., 492 F.3d 589, 593 (5th Cir. 2007) (quoting
Laxton v. Gap Inc., 333 F.3d 572, 578 (5th Cir. 2003). But Powell adduced no
evidence of disparate treatment of similarly situated individuals who sought
benefits. Moreover, Powell’s argument that Lardie’s comments during the
December 2012 phone call demonstrated pretext is a recitation of his prima
facie case, not rebuttal evidence of pretext. See Raggs, 278 F.3d at 468
(“[E]vidence of pretext is not enough where the plaintiff has created only a
weak issue of fact as to whether the [defendant]’s reason is untrue.”) Because
Powell failed to demonstrate that Zurich intentionally discriminated against
him on the basis of race, we hold that the district court did not err in granting
summary judgment for Zurich on Powell’s claims under 42 U.S.C. §§ 1981 and
1982.
IV. CONCLUSION
For the foregoing reasons, we AFFIRM the judgment of the district court.
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