DORIS A. CARRUTHERS, Complainant

VS.

PRUDENTIAL INSURANCE COMPANY OF AMERICA, Respondent.

CONCLUSION OF LAW

The complaint was timely filed, processed and the issues in the complaint are properly before the Commissioners.

ISSUE I - DOES THE INSURANCE DIVISION OF THE IOWA DEPARTMENT OF COMMERCE HAVE EXCLUSIVE JURISDICTION OVER UNFAIR OR DISCRIMINATORY POLICIES/PRACTICES IN INSURANCE?

Respondent claims that Iowa Code Chapter 507B regulates trade practices in the business of insurance in accordance with the mandates of the McCarran-Ferguson Act, 15 U.S.C. §1011 et seq. Respondent claims further that since the conduct of Respondent is not proscribed by Chapter 507B, Complainant has failed to state a claim upon which relief can be granted.

It is agreed that the trade practices in the business of insurance are regulated by Chapter 507B. It is disagreed that Complainant has failed to state a claim upon which relief can be granted. Iowa Code section 601A.16(l) mandates that a person claiming to be aggrieved by an unfair or discriminatory practice initially seek administrative relief by filing a complaint with the Iowa Civil Rights Commission. Complainant Carruthers claims to be aggrieved by an unfair or discriminatory act of Prudential. She has filed a complaint with the Iowa Civil Rights Commission as is her right and the act she must do to initially seek administrative relief for discriminatory acts covered by Iowa Code Chapter 601A. Carruthers is alleging discrimination in public accommodation. which is under the jurisdiction of the Commission.

IT IS concluded that the insurance division of the Iowa Department of Commerce does not have exclusive jurisdiction over unfair or discriminatory policies/practices in insurance.

ISSUE II - IS PRUDENTIAL INSURANCE COMPANY OF AMERICA A PUBLIC ACCOMMODATION UNDER IOWA CODE CHAPTER 601A?

1. Iowa Code section 601A.2(10)(1985) provides the following definition:

"Public accommodation" means each and every place, establishment, or facility of whatever kind, nature, or class that caters or offers services, facilities, or goods for a fee or charge to nonmembers of any organization or association utilizing the place, establishment, or facility provided that any place, establishment, or facility that caters or offers services, facilities, or goods to the nonmembers gratuitously shall be deemed a public accommodation if the accommodation receives governmental support or subsidy. Public accommodation shall not mean any bona fide private club or other place, establishment, or facility which is by its nature distinctly private, except when such distinctly private place, establishment, or facility caters or offers services, facilities, or goods to the nonmembers for fee or charge or gratuitously, it shall be deemed a public accommodation during such period.

"Public accommodation" includes each state and local government unit or tax-supported district of whatever kind, nature, or class that offers services, facilities, benefits, grants or goods to the public, gratuitously or otherwise. This paragraph shall not be construed by negative implication or otherwise to restrict any part or portion of the pre-existing definition of the term "Public accommodation".

A breakdown of the essential elements of a public accommodation follows:

a. "each and every place, establishment, or facility"

b. "of whatever kind, nature, or class"

c. "that caters or offers services, facilities, or goods for a fee or charge"

d. "to nonmembers of any organization or association utilizing the place, establishment, or facility"

There is only one exception to the "each and every"--the one providing for "distinctively private" places, establishments, or facilities. Prudential does not claim to fall under this exception, nor do they.

Prudential is an establishment, a place of business and fixtures and by this definition a "place." Among many others, Prudential leases or owns property where it conducts its business in Ottumwa, Iowa. Black's Law Dictionary 920 (rev. 5th ed. 1979). "Facility" is something ... that is built, installed, or established to serve a particular purpose. Webster's New Collegiate Dictionary 406 (1980). Prudential has been established for among other purposes, the specific purpose of a mutual life insurance company. It is a facility included in the broad coverage of "whatever kind, nature, or class. * It is not necessary that Prudential be all three, i.e., a place and an establishment and a facility. The Iowa Supreme Court in Cerro Gordo Cty. Care Face v. Iowa Civil Rights Comm'n., 401 N.W.2d 192, 197 (Iowa 1987), ruled that the word "or" meant "alternative".

However, in United States Jaycees and Iowa Jaycees v. ICRC, 427 N.W.2d 450 (Iowa 1988), the Iowa Supreme Court reversed the Commission interpretation of its statute and ruled that 'place" meant a "physical environment" and that "establishment" meant "place" and that "facility" was "something (as a hospital, machinery, plumbing) that is built, constructed, installed or established to perform some particular function or to serve or facilitate some particular end." They concluded that the ordinary usage of these terms connates a "spatial dimension." The Court further concluded that although the Iowa Jaycees maintained an office - a physical facility - there was no allegation of discrimination in the use of that facility. Based on this reasoning, the Ottumwa office of Prudential - a physical facility - would be covered if a protected class would be denied use of that physical facility, but the service provided inside would not be covered because there was no spatial dimension to those services.

It is concluded that the Jaycee's decision is not controlling in this case because the service provided by Prudential is very different. The Jaycees are a membership organization. It is, therefore, concluded that Prudential Insurance Company of America is a public accommodation under Iowa Code 601A.

ISSUE III. DOES PRUDENTIAL'S POLICY OF DENYING INSURANCE TO PERSONS WHOSE PRINCIPAL SOURCE OF INCOME IS PUBLIC ASSISTANCE HAVE A DISPARATE IMPACT ON WOMEN?

The evidence is clear that Prudential's policy of denying insurance to persons whose principal source of income is public assistance does have a disparate impact on women.

IV. WAS CARRUTHERS DAMAGED BY THAT POLICY?

The evidence supports the conclusion that Carruthers was damaged by that policy. On January 14, 1985, she applied for insurance [See finding of fact #5, Complainant's Exhibit 4]. Prudential should process her application as of that date, with the specific provisions requested in that application, pay all premiums to date of the final decision in this case so that all benefits of the policy will be as they would have been if the application had been accepted. Furthermore, the policy of denying insurance to persons whose principal source of income is public assistance should be deleted and such persons should be allowed to carry insurance with Prudential based on the same considerations as persons whose principal source of income is not public assistance. This change of policy should take effect immediately and proof of the change should be submitted to the Commission within 60 days of the date of this order.

It is further recommended that Carruthers should be awarded attorney fees and costs in the amount of:

Fees: $5,000.00

Costs: $ 656.55

based on Affidavits submitted at the Hearing on March 1. 1988 and received by the Commission on April 15, 1988.

The motion by Respondents for costs and attorney fees is denied. There is no statutory authority for such awards.