Ali Ekhlassi v. National Lloyds Insurance Company

This case presents a clear and acknowledged conflict over an important question of statutory construction under the National Flood Insurance Act of 1968. Under the Act, FEMA allows private insurers to issue flood-insurance policies in their own names that are underwritten by the federal government. While these companies issue most federal flood-insurance policies, FEMA also issues its own policies directly under the program. Section 4072 of the Act provides that federal courts have “original exclusive jurisdiction” over actions “against the Administrator” when the Administrator disallows a claim, but it does not likewise provide exclusive jurisdiction over suits against private insurers. The Act further defines the “Administrator” as “the Administrator of [FEMA],” not private insurers acting on FEMA’s behalf, and the governing regulations confirm that private carriers defend their own lawsuits in their own capacity, and “the Federal Government is not a proper party defendant in any lawsuit arising out of such policies.” Despite this clear text, multiple circuits, including the Fifth Circuit below, have held that Section 4072 applies to suits against private carriers because such suits are “functionally” against FEMA, who ultimately foots the bill. In so holding, these courts expressly rejected the Seventh Circuit’s contrary holding, which itself rejected an earlier Third Circuit decision reaching the opposite conclusion. In a concurrence below, Judge Haynes explained she was bound by Fifth Circuit authority, but otherwise would side with the Seventh Circuit’s plain-text approach over other circuits’ “counter-textual” analysis. The question presented is: Whether Section 4072’s provision of “exclusive” federal jurisdiction applies to suits against private insurers. (I)