« Ind. Law - Still more on: Indiana building codes, part of the Indiana Administrative Code, are not available online [Corrected] | Main | Ind. Law - "Police to go after unlicensed scooters" »

Wednesday, September 03, 2008

Ind. Decisions - Two Indiana decisions today from the 7th Circuit, including one from Circuit Judge Tinder

In Wayne David v. Indiana State Police (SD Ind. Judge McKinney), a 7-page opinion, Chief Judge Easterbrook writes:

Wayne Davis, a State Trooper in Indiana, resigned when 42 years old to take another job. Two months later he decided that he had made a mistake and asked for his old job back. The State Police said no, telling Davis that he was too old—for extroopers seeking reinstatement must “meet all the requirements for police employees as specified in . . . 240 IAC 1-4-3”. 240 Ind. Admin. Code §1-4-18(b)(4). Among the requirements in §1-4-3 is that the applicant be at least 21, and under 40, when hired. Davis contends in this suit that, by holding his age against him, Indiana violated the Age Discrimination in Employment Act, 29 U.S.C. §§ 621–33a. * * *

Davis does not contend that Indiana’s rules, which predate EEOC v. Wyoming, are “subterfuges” to evade the Act. Instead he contends that the decision not to rehire him is not one “pursuant to a bona fide hiring . . . plan”. His principal argument is that Indiana’s system is not “bona fide” because it is senseless; a fallback argument is that the decision not to rehire him, in particular, was not made “pursuant to” the state’s age limits. Indiana allows state troopers to work until age 65. Davis asks why a 2-month break in employment at age 42 should make him a pariah, when he would have been acceptable at age 43, 45, 50, 55, and 60 had he just stayed put. It is a good question, but not one for the federal judiciary. All §623(j)(2) requires is that the plan be “bona fide” and not a “subterfuge” to evade the ADEA. Whether a state’s plan is wise is not material to the application of §623(j)(2). A plan is “bona fide” when it is real rather than a fable spun for the occasion. Kopec, 193 F.3d at 901. * * *

When dismissing Davis’s complaint, the district court did not mention the requirement that the employer’s decision be “pursuant to” the plan; the judge asked only whether Indiana has a bona fide plan. Having a bona fide plan is not enough; that plan must be applied to yield the contested decision. * * *

Because this complaint was dismissed under Rule 12(b)(6), the record is silent on whether the state understands (and applies) 240 Ind. Admin. Code §1-4-18(b)(4) to permit exceptions to the maximum-age-at-rehire requirement. Davis is entitled to collect and present evidence on that question and to contend that, if the Indiana State Police sometimes rehires people at age 40 and above, the decision not to rehire him was not made “pursuant to” a bona fide plan.

The judgment of the district court is vacated, and the case is remanded for further proceedings consistent with this opinion.

In Dean Officer v. Chase Ins. (ND Ind., Judge Sharp), a 14-page opinion, Judge Tinder writes:
This case questions the validity under Indiana law of a suicide exclusion clause in a life insurance policy. Dean Officer (“Officer”), as the beneficiary of his wife’s life insurance policy, brought this suit against Chase Insurance Life & Annuity Company (“Chase”) to recover the face amount of the policy. The district court entered judgment in favor of Chase. We affirm. * * *

A. Insurance Contract Ambiguity. * * * Both parties agree that Indiana law applies here. Officer does not argue that Indiana law prohibits the exclusion of suicide under life insurance policies; Indiana has long permitted exclusions of this type. * * *

These two provisions are not in conflict, though. Chase could have used the same language in both provisions, but the fact that it used different language to express the amount of proceeds payable does not compel the conclusion that two otherwise unambiguous statements have become ambiguous.

B. Disproportionate Forfeiture. Officer argues that, if the exclusion is not ambiguous, then Indiana courts would find that it was a disproportionate forfeiture or an illegal penalty. He asserts that there is no rational relationship between the harm Chase suffered by the breach of the suicide clause and the $999,460 loss he will suffer by being repaid only the premiums. * * *

Chase is not seeking to escape its obligations under the policy; it tendered a check to Officer for the amount it owed. The suicide exclusion is not an unenforceable penalty and is subject to enforcement as expressed.

C. Substantial Performance. Officer also argues that the breach of the insurance contract was immaterial and the doctrine of substantial performance should prevent Chase from discharging its obligation to pay. He asserts that the suicide provision was 95% performed at the time of the breach and its purpose was effectuated because there was no evidence of fraud. * * *

Allowing Officer to recover would thwart the purpose of the exclusion. In any event, the doctrine of substantial performance is simply inapplicable here; an insured is not “performing” a life insurance contract by not committing suicide. We reiterate that “[i]f a plainly expressed exception, exclusion or limitation in an insurance policy is not contrary to public policy, it is entitled to construction and enforcement as expressed.” Boles, 481 N.E.2d at 1098 (emphasis added). Officer is entitled only to the amount of premiums paid.

D. Motion for Certification. Officer moved that we certify two questions to the Indiana Supreme Court pursuant to our Circuit Rule 52: whether the doctrines of illegal forfeiture and substantial performance apply to this insurance contract. * * *

We believe that the Indiana Supreme Court has “illuminate[d] a clear path,” Plastics Eng’g Co., 514 F.3d at 659, for us to confidently resolve Officer’s claim under Indiana law. As such, we decline to certify the questions. * * *

III. Conclusion. The district court properly concluded that the suicide limitation was valid and enforceable. We AFFIRM the district court’s judgment and DENY Officer’s motion for certification of questions to the Indiana Supreme Court.

Posted by Marcia Oddi on September 3, 2008 02:15 PM
Posted to Ind. (7th Cir.) Decisions