Rouse v. Springer ( 2010 )

  •                     UNITED STATES DISTRICT COURT
                        FOR THE DISTRICT OF COLUMBIA
    RALPH ROUSE, JR.,             )
              Plaintiff,          )
              v.                  )     Civil Action No. 06-2088 (RWR)
    JOHN BERRY, et al.,           )
              Defendants.         )
                        MEMORANDUM OPINION AND ORDER
         Plaintiff Ralph Rouse, Jr. brings claims against the
    Director1 of the Office of Personnel Management (“OPM”), and Long
    Term Care Partners, LLC (“LTC Partners”), alleging that they
    violated § 501 and § 504 of the Rehabilitation Act, codified
    respectively at 29 U.S.C. § 791 and 29 U.S.C. § 794, when Rouse
    was denied the opportunity to participate in the Federal Long
    Term Care Insurance Program (“LTCIP”).   The Director and LTC
    Partners have moved to dismiss the complaint under Federal Rule
    of Civil Procedure 12(b)(6), asserting that 1) Rouse has failed
    to plead a claim upon which relief can be granted under § 501
    because he has not alleged sufficient facts to show that the
    benefits plan is a subterfuge for discrimination, and that 2)
    Rouse, as a government employee, cannot bring a claim under
    § 504.   OPM and LTC Partners’ motions to dismiss will be granted
           John Berry is substituted for Linda Springer under Fed.
    R. Civ. P. 25(d).
    in part and denied in part because Rouse has pled sufficient
    facts to allege a claim plausibly entitling him to relief under
    § 501, but he cannot bring a claim under § 504 since he is a
    federal employee.
           Rouse, an employee of the Department of Health and Human
    Services, applied for long term care insurance through the LTCIP.
    (Second Am. Compl. ¶¶ 6, 13, 15.)       LTCIP is sponsored by OPM and
    administered by LTC Partners.    (Id. ¶ 14.)    Rouse has paraplegia
    and uses a push wheelchair to assist with walking.      (Id. ¶¶ 11-
    12.)    He revealed this use in his LTCIP application.    (Id. ¶ 16.)
    The application form stated that an affirmative response to the
    question of whether he used a medical device, aid, or treatment,
    such as a wheelchair, would make him ineligible “for any of the
    insurance options under this program shown in Part F of [the]
    form.”    (Id.)   Rouse submitted his application and later received
    a letter from LTC Partners denying his coverage because of his
    wheelchair use.    (Id. ¶¶ 15, 17.)     Rouse brings his action under
    both § 501 and § 504 of the Rehabilitation Act, claiming that the
    defendants unlawfully discriminated against him because of his
    disability when they rejected his LTCIP application.
           The OPM Director and LTC Partners have moved to dismiss the
    complaint under Fed. R. Civ. P. 12(b)(6), arguing that Rouse has
    failed to allege sufficient facts that demonstrate that the
    administration of the plan was a subterfuge to evade the purposes
    of the Rehabilitation Act under § 501, and that federal employees
    are prohibited from bringing claims under § 504.   (OPM’s Mem. in
    Supp. of Renewed Mot. to Dis. (“OPM’s Mem.”) at 7, 16; LTC
    Partners’ Mem. in Supp. of Renewed Mot. to Dis. (“LTC Mem.”) at
    8, 14.)   Rouse argues that he has pled all the facts necessary to
    state a claim under § 501 and that, as a “participant in a
    program or activity conducted by an Executive agency[,]” he also
    has a cognizable claim under § 504 even though he is a federal
    employee.   (Pl.’s Mem. in Opp’n to Def. John Berry’s Renewed Mot.
    to Dis. (“Pl.’s OPM Opp’n”) at 7, 11-12 (internal quotation marks
    omitted); Pl.’s Mem. in Opp’n to Def. LTC Partners’ Renewed Mot.
    to Dis. at 7-8.)
         Section 501 provides a cause of action for federal employees
    alleging disability discrimination under the Rehabilitation Act,
    Taylor v. Small, 
    350 F.3d 1286
    , 1291 (D.C. Cir. 2003), while
    § 504 “prohibits a federal agency or a federally funded program
    from denying benefits to handicapped individuals solely on the
    basis of their disability.”    Modderno v. King, 
    871 F. Supp. 40
    42 (D.D.C. 1994).   The standards under Title I of the Americans
    with Disabilities Act of 1990 (“ADA”) apply when determining
    whether § 501 and § 504 of the Rehabilitation Act have been
    violated in a complaint alleging employment discrimination.    See
    29 U.S.C. § 791(g) (applying ADA standards to complaints alleging
    “nonaffirmative action employment discrimination”); 29 U.S.C.
    § 794(d).   Under Title I of the ADA, “[n]o covered entity shall
    discriminate against a qualified individual on the basis of
    disability in regard to job application procedures, the hiring,
    advancement, or discharge of employees, employee compensation,
    job training, and other terms, conditions, and privileges of
    employment.”2    42 U.S.C. § 12112(a).
    I.   SECTION 501
         Federal Rule of Civil Procedure 8(a)(2) requires that a
    complaint contain only “a short and plain statement of the claim
    showing that the pleader is entitled to relief[.]”     Fed. R. Civ.
    P. 8(a)(2).     There is ordinarily no need for a plaintiff to plead
    detailed factual allegations, as the rule simply “‘contemplate[s]
    [a] statement of circumstances, occurrences, and events in
    support of the claim presented[.]’”      Bell Atl. Corp. v. Twombly,
    550 U.S. 544
    , 555 n.3 (2007) (quoting 5 C. Wright & A. Miller,
    Federal Practice and Procedure § 1202, at 94 (3d ed. 2004)).     A
    plaintiff is not required to plead in his complaint all elements
    of a prima facie case, or “plead law or match facts to every
    element of a legal theory.”    Miller v. Insulations Contractors,
           Discrimination includes “participating in a contractual or
    other arrangement or relationship that has the effect of
    subjecting a covered entity’s qualified applicant or employee
    with a disability to the discrimination prohibited by this
    subchapter[.]” 42 U.S.C. § 12112(b)(2).
    608 F. Supp. 2d 97
    , 106 (D.D.C. 2009) (quoting Krieger v.
    211 F.3d 134
    , 136 (D.C. Cir. 2000) and citing
    Swierkiewicz v. Sorema N.A., 
    534 U.S. 506
    , 511 (2002)) (internal
    quotation marks and citation omitted).       “[O]nce a claim has been
    stated adequately, it may be supported by showing any set of
    facts consistent with the allegations in the complaint.”
    Twombly, 550 U.S. at 563.     Accord, Aktieselskabet AF 21. Nov.
    2001 v. Fame Jeans Inc., 
    525 F.3d 8
    , 15 (D.C. Cir. 2008).       But
    see Tooley v. Napolitano, 
    586 F.3d 1006
    , 1007 (D.C. Cir. 2009)
    (declining to reject or address the government’s argument that
    Ashcroft v. Iqbal, 
    129 S. Ct. 1937
     (2009), invalidated
    Aktieselskabet).   A complaint should contain enough factual heft
    to show an entitlement to relief.       Twombly, 550 U.S. at 557.
    That is, a complaint needs to plead “only enough facts to [nudge]
    a claim to relief . . . across the line from conceivable to
    plausible[.]”   Id. at 570.    “Determining whether a complaint
    states a plausible claim for relief will . . . be a context-
    specific task that requires the reviewing court to draw on its
    judicial experience and common sense.”       Iqbal, 129 S. Ct. at
         In the context of a fairly straightforward employment
    discrimination complaint, plaintiffs traditionally have not been
    subject to a heightened pleading standard.       Swierkiewicz, 534
    U.S. at 512.3   The D.C. Circuit has long recognized the ease with
    which a plaintiff claiming employment discrimination can survive
    a Rule 12(b)(6) motion to dismiss for failure to state a claim
    upon which relief may be granted.     “‘Because racial
    discrimination in employment is a claim upon which relief can be
    granted, . . . “I was turned down for a job because of my race”
    is all a complaint has to state to survive a motion to dismiss
    under [Rule] 12(b)(6).’”   Potts v. Howard Univ. Hosp., 258 Fed.
    Appx. 346, 347 (D.C. Cir. 2007) (quoting Sparrow v. United Air
    Lines, Inc., 
    216 F.3d 1111
    , 1115 (D.C. Cir. 2000)).      Rouse raises
    a straightforward federal employee discrimination claim,4 and the
    question is whether his § 501 claim pleads enough facts to set
    forth a plausible claim.
           Indeed, Twombly explicitly disavowed any retreat from
    Swierkiewicz, see Twombly, 550 U.S. at 569-70, and Iqbal did not
    even discuss Swierkiewicz, much less disavow it.
           The factual context of Rouse’s complaint presents no
    complexities such as a Sherman Act conspiracy class action
    complaint alleging certain anti-competitive parallel conduct but
    no factual context suggesting agreement as distinct from
    identical independent action, Twombly, 550 U.S. at 548-49, or a
    damages claim under Bivens v. Six Unknown Fed. Narcotics Agents,
    403 U.S. 388
     (1971), that high officials entitled to assert a
    qualified immunity defense directed plaintiff’s detention
    purposefully on account of his race and religion in violation of
    clearly established law under the Free Exercise Clause of the
    First Amendment and the Due Process Clause of the Fifth
    Amendment. Iqbal, 129 S. Ct. at 1943-45, 1948.
         Despite its general intention to prohibit employment
    discrimination against disabled individuals as expressed in Title
    I of the ADA, Congress created an exception so that organizations
    can sponsor or provide bona fide benefit plans not subject to
    state insurance laws even if they offer different terms to
    disabled individuals.   42 U.S.C. § 12201(c)(3) (stating that
    Title I shall not be construed to prohibit or restrict “a person
    or organization covered by this chapter from establishing,
    sponsoring, observing, or administering the terms of a bona fide
    benefit plan that is not subject to State laws that regulate
    insurance”).5   This exception, commonly referred to as a safe
    harbor provision, allows a bona fide benefits plan to exist even
    if it would otherwise violate the ADA.   However, the exception
    does not allow an organization to administer a benefits plan that
    is “used as a subterfuge to evade the purposes” of the ADA in
    preventing employment discrimination based on disability.    42
    U.S.C. § 12201(c).
         The D.C. Circuit has looked to Pub. Employees Ret. Sys. of
    Ohio v. Betts, 
    492 U.S. 158
    , 165 (1989), superceded by statute,
    Older Workers Benefit Protection Act of 1990, Pub. L. No. 101-
    433, 104 Stat. 978, as recognized in EEOC v. Aramark Corp., Inc.,
           The parties agree that of the three exceptions in 42
    U.S.C. § 12201(c), exception (c)(3) applies to LTCIP, which is
    not subject to state laws. (OPM’s Mem. at 7; Pl.’s OPM Opp’n at
    208 F.3d 266
    , 271 (D.C. Cir. 2000), which involved a similar
    exception found in the Age Discrimination in Employment Act of
    1967, 81 Stat. 602, as amended, 29 U.S.C. § 621 et seq, for
    guidance when determining whether a plan is a subterfuge for
    discrimination.     Modderno v. King, 
    82 F.3d 1059
    , 1064 (D.C. Cir.
    1996) (applying Betts in the Rehabilitation Act context).
    Subterfuge is defined as “‘a scheme, plan, strategem, or artiface
    of evasion,’ which . . . connotes a specific ‘intent . . . to
    evade a statutory requirement.’”    Betts, 
    492 U.S. 158
    , 171 (1989)
    (quoting United Air Lines, Inc. v. McMann, 
    434 U.S. 192
    , 203
    (1977)).   A statutory requirement is evaded where there is
    “actual intent to discriminate in those aspects of the employment
    relationship protected” by the ADA.     Betts, 492 U.S. at 181;
    Aramark Corp., Inc, 208 F.3d at 271 (stating that “[u]nder the
    ADA, then, “subterfuge to evade” still requires intent”).     Betts
    concluded that “the provisions of a bona fide benefit plan [were
    exempt] so long as the plan [was] not a method of discriminating
    in other, non-fringe-benefit aspects of the employment
    relationship[.]”6    Betts, 492 U.S. at 177.   Examples of age-based
    discrimination in a non-fringe benefit aspect might include an
           Fringe benefits have been defined to include “‘medical,
    hospital, accident, life insurance and retirement benefits;
    profit-sharing and bonus plans; leave; and other terms,
    conditions, and privileges of employment.’” Krauel v. Iowa
    Methodist Med. Ctr., 
    95 F.3d 674
    , 679 n.6 (8th Cir. 1996)
    (quoting 29 C.F.R. § 1604.9).
    employer reducing salaries for all employees “while substantially
    increasing benefits for younger workers[,]” or “an employer
    adopt[ing] a plan provision formulated to retaliate against” an
    employee who filed a discrimination complaint.    Id. at 180.
         While Rouse must establish as part of his prima facie case
    that the safe harbor is merely a subterfuge, see Betts, 492 U.S.
    at 181, he need not plead every element of his prima facie claim
    to survive a motion to dismiss.    Swierkiewicz, 534 U.S. at 511
    (“This Court has never indicated that the requirements for
    establishing a prima facie case . . . also apply to the pleading
    standard that plaintiffs must satisfy in order to survive a
    motion to dismiss.”).   Therefore, a motion for summary judgment,
    and not a motion to dismiss, is the proper vehicle by which the
    defendants may raise their challenges to the sufficiency of
    Rouse’s showing of subterfuge.
         However, Rouse’s allegations must still give rise to an
    entitlement to relief in order to survive the motion to dismiss,
    meaning that he must have pled a factually plausible § 501 claim
    under the Rehabilitation Act.    “Under Title VII, the ADEA, and
    the Rehabilitation Act, the two essential elements of a[n
    employment] discrimination claim are that (i) the plaintiff
    suffered an adverse employment action (ii) because of the
    plaintiff’s race, color, religion, sex, national origin, age, or
    disability.”    Baloch v. Kempthorne, 
    550 F.3d 1191
    , 1196 (D.C.
    Cir. 2008).
         Rouse pled that he “received a letter from [LTC Partners],
    stating that he was denied coverage because he answered that he
    used a wheelchair[.]”    (Second Am. Compl. ¶ 17.)   This factual
    assertion plausibly alleges the adverse employment action prong
    of Rouse’s discrimination claim.    See Greer v. Paulson, 
    505 F.3d 1306
    , 1317 (D.C. Cir. 2007) (noting that a diminution in benefits
    qualifies as an adverse employment action).    It also satisfies
    the second material element of an employment discrimination claim
    –– that the defendant took action because of a prohibited
    consideration.    Unlike what the plaintiff pled in Iqbal, Rouse
    has not merely parroted the legal elements of the claim in his
    complaint.    He has made a factual allegation that provides
    independent corroboration of his belief that LTC Partners denied
    his coverage on the basis of his disability, and that allegation
    is entitled to a presumption of truth.    Cf. Twombly, 550 U.S. at
    555 (noting that “on a motion to dismiss, courts ‘are not bound
    to accept as true a legal conclusion couched as a factual
    allegation’” (quoting Papasan v. Allain, 
    478 U.S. 265
    , 286
    (1986))).7   Thus, Rouse has stated a claim of employment
    discrimination under § 501 of the Rehabilitation Act.
    II.   SECTION 504
          Section 504 of the Rehabilitation Act prohibits
    “discrimination . . . under any program or activity conducted by
    any Executive Agency[.]”    29 U.S.C. § 794(a).   The D.C. Circuit
    does not recognize a cause of action under § 504 for federal
    employees claiming employment discrimination.     Taylor, 350 F.3d
    at 1291 (“[B]ecause the Congress addressed discrimination against
    Government employees . . . in § 501, it is highly unlikely the
    Congress meant to address the subject again in § 504.”).     Rouse
    attempts to distinguish Taylor on the grounds that although he is
    a federal employee, he is also a potential participant in the
    long-term insurance benefit program, which is administered by
    OPM, an executive agency.    (Pl.’s OPM Opp’n at 6-7.)   This
    distinction, however, is unavailing, as Rouse’s entitlement to
    participate in the program stems entirely from his status as a
    federal employee.   Participation in the program is a benefit for
    OPM employees, and any disparate treatment in its administration,
    then, is employment discrimination.    Section 504 does not provide
    Rouse an “alternative route for relief under the Rehabilitation
           In any event, Rouse has pled sufficient facts in support
    of his claim of discrimination to satisfy any fair reading of
    pleading requirements articulated in Sparrow, Swierkiewicz,
    Twombly, or Iqbal.
    Act” for an employment discrimination claim.   Taylor, 350 F.3d at
    1291 (quoting Rivera v. Heyman, 
    157 F.3d 101
    , 104 (2d Cir.
    1998)).   Count II will therefore be dismissed.8
                           CONCLUSION AND ORDER
         Because Rouse has pled facts demonstrating that he suffered
    an adverse employment event because of his disability, he has
    established a claim under § 501 even without establishing that
    the administration of the benefits plan is a subterfuge for
    discrimination.   However, he cannot bring a claim under § 504
    because but for his status as a federal employee, he would not be
    eligible to participate in the benefits program.   Accordingly, it
    is hereby
         ORDERED that the OPM Director’s and LTC Partners’ motions
    [32, 33] to dismiss be, and hereby are, DENIED as to Counts I and
    III, and GRANTED as to Count II.   It is further
         ORDERED that the parties confer and file by February 12,
    2010 a joint status report and proposed order reflecting three
    mutually agreeable dates on which to hold a scheduling
           The defendants also argue that since Counts I and II must
    be dismissed, the request for a declaratory judgment in Count III
    based upon the violations alleged in Counts I and II must be
    dismissed. Since Count I survives, Count III will not be
    SIGNED this 29th day of January, 2010.
                             RICHARD W. ROBERTS
                             United States District Judge