Gerling Global Reins. Corp. v. Low

Decision Date07 February 2001
Docket NumberRE-INSURANCE,No. 00-16163,No. 00-16182,No. 00-16164,No. 00-16165,00-16163,00-16164,00-16165,00-16182
Citation240 F.3d 739
Parties(9th Cir. 2001) GERLING GLOBAL REINSURANCE CORP.OF AMERICA; GERLING GLOBAL REINSURANCE CORP. -U.S. BRANCH; GERLING GLOBAL LIFE REINSURANCE COMPANY; GERLING GLOBAL LIFE INSURANCE COMPANY; GERLING AMERICA INSURANCE COMPANY; and CONSTITUTION INSURANCE CORP., Plaintiffs-Appellees, v. HARRY W. LOW, <A HREF="#fr1-*" name="fn1-*">* in his capacity as the COMMISSIONER OF INSURANCE OF THE STATE OF CALIFORNIA, Defendant-Appellant. ASSICURAZIONI GENERALI, Plaintiff-Appellee, v. HARRY W. LOW, individually, and in his capacity as the INSURANCE COMMISSIONER for the STATE OF CALIFORNIA, Defendant-Appellant. WINTERTHUR INTERNATIONAL AMERICA INSURANCE COMPANY; WINTERTHUR INTERNATIONAL AMERICA UNDERWRITERS INSURANCE COMPANY; GENERAL CASUALTY COMPANY OF WISCONSIN; REGENT INSURANCE COMPANY; REPUBLIC INSURANCE COMPANY; SOUTHERN INSURANCE COMPANY; UNIGARD INDEMNITY COMPANY; UNIGARD INSURANCE COMPANY; and BLUE RIDGE INSURANCE COMPANY, Plaintiffs-Appellees, v. HARRY W. LOW, in his capacity as INSURANCE COMMISSIONER for the STATE OF CALIFORNIA, Defendant-Appellant. AMERICAN INSURANCE ASSOCIATION and AMERICANCOMPANY, Plaintiffs-Appellees, v. HARRY W. LOW, in his capacity as INSURANCE COMMISSIONER for the STATE OF CALIFORNIA, Defendant-Appellant
CourtU.S. Court of Appeals — Ninth Circuit

COUNSEL: Frank Kaplan, Alschuler Grossman Stein & Kahan, LLP, Los Angeles, California, Andrew W. Stroud, Mennemeier, Glassman & Stroud LLP, Sacramento, California, and Michael D. Ramsey, San Deigo, California, for the defendant-appellant.

Kenneth S. Geller, Mayer, Brown & Platt, Washington, D.C.; Linda Dakin-Grimm and John C. Ashby, Milbank, Tweed, Hadley & McCloy LLP, Los Angeles, California; Frederick W. Reif, Wilson, Elser, New York, New York, and Timothy P. Grieve, Stevens & O'Connell LLP, Sacramento, California; and Peter Simshauser, Skadden, Arps, Slate, Meagher & Flom, LLP, Los Angeles, California, for the plaintiffs appellees.

Daniel L. Siegel, Supervising Deputy Attorney General, State of California, Sacramento, California; Mark B. Stern and Douglas Hallward-Driemeier, Appellate Staff Civil Division, Department of Justice, Washington, D.C.; David A. Lash, Bet Tzedek Legal Services, Los Angeles, California; David O. Bucholz, Department of Justice, Civil Division, Washington, D.C.; and Daniel B. Price, Powell, Goldstein, Frazer & Murphy LLP, Washington, D.C., for the amici curiae.

Appeals from the United States District Court for the Eastern District of California William B. Shubb, District Judge, Presiding. D.C. No.CV-00-00506-WBS D.C. No. CV-00-00875-WBS D.C. No. CV-00-00779-WBS D.C. No. CV-00-00613-WBS

Before: Alfred T. Goodwin, Susan P. Graber, and Richard A. Paez, Circuit Judges.

OPINION

GRABER, Circuit Judge:

Plaintiffs are three insurance companies and one trade organization of insurance companies who do business in California. They sued the California Commissioner of Insurance (Commissioner) seeking declaratory and injunctive relief to bar enforcement of the Holocaust Victim Insurance Relief Act of 1999 (HVIRA), Cal. Ins. Code SS 13800-13807 (1999). The district court issued a preliminary injunction after ruling that Plaintiffs had established a likelihood of irreparable harm and a probability of success on the merits of the questions whether HVIRA violates the Commerce Clause and whether it violates the federal government's "foreign affairs" power. The Commissioner brings this appeal. We leave the preliminary injunction in place, but for reasons different than those expressed by the district court.

FACTUAL AND PROCEDURAL HISTORY

HVIRA requires insurers that do business in California and that sold insurance policies, in effect between 1920 and 1945 (Holocaust-era policies), to persons in Europe to file certain information about those policies with the Commissioner.1 Cal. Ins. Code S 13804(a). The reporting requirement also applies to insurance companies that do business in California and are "related" to a company that sold Holocaust-era policies, even if the relationship arose after the policies were issued. Id. A "related company" is any "parent, subsidiary, reinsurer, successor in interest, managing general agent, or affiliate company of the insurer." Id. S 13802(b). HVIRA requires the Commissioner to store the information in a public "Holocaust Era Insurance Registry." Id. S 13803. The Commissioner must "suspend the certificate of authority to conduct insurance business in the state of any insurer that fails to comply" with HVIRA's reporting requirements. Id.S 13806.

Plaintiffs filed four separate actions against the Commissioner, in which they sought to enjoin enforcement of HVIRA. The actions were brought by: (1) Gerling Global Reinsurance Corp. of America and its affiliates (collectively, Gerling), who are, according to their complaint,"arguably `affiliated' [with] . . . or `related[to]' " two German insurers that issued Holocaust-era policies; (2) American Insurance Association (AIA), a nonprofit trade association of insurers whose member-insurers are required to report under HVIRA, and American Re-insurance Company, a wholly owned subsidiary of a German corporation "that has investment interests in European insurance companies that do issue insurance policies"; (3) Winterthur International America Insurance Company, its affiliates, and numerous other insurance and underwriting companies (collectively, Winterthur), who are "arguably `related companies' . . . with more than forty insurance companies currently located in Europe"; and (4) Assicurazioni Generali (Generali), an Italian insurance company that issued Holocaust-era policies and currently does business in California. The district court determined that the four cases were "related" within the meaning of Eastern District of California Local Rule 123(a) and assigned the cases to the same judge, but did not consolidate them.

Plaintiffs sought declaratory and injunctive relief, claiming that HVIRA violates the Commerce Clause, the Due Process Clause, the Equal Protection Clause, and the foreign affairs power. Gerling also asked the court to review two statutes that were enacted at the same time as HVIRA: (1) California Code of Civil Procedure S 354.5 (1999), which allows California residents to bring claims for the payment of Holocaust-era insurance policies and extends the statute of limitations on such claims until December 31, 2010; and (2) California Insurance Code S 790.15 (1999), which requires the Commissioner to suspend the certificate of authority of any insurer who has failed to pay on valid Holocaust-era policies. The Commissioner filed a motion to dismiss in which he argued that Gerling did not have standing to challenge California Code of Civil Procedure S 354.5 or California Insurance Code S 790.15. The district court granted the motion, ruling that Gerling had not established an imminent threat of prosecution under those statutes. Gerling does not challenge that holding.

Plaintiffs all filed motions for a preliminary injunction. The district court granted their motions, holding that "plaintiffs have established a probability of success under the foreign affairs doctrine and the Commerce Clause." The court did not rule on Plaintiffs' other grounds for relief. The district court also held that Plaintiffs had established the likelihood of irreparable injury.

The Commissioner timely appealed the district court's orders in all four cases. We have jurisdiction under 28 U.S.C. S 1292(a)(1). Because these cases all involve the same legal issues, we consider them together.

STANDARD OF REVIEW

We review for abuse of discretion the grant of a preliminary injunction. FDIC v. Garner, 125 F.3d 1272, 1276 (9th Cir. 1997). A district court abuses its discretion if it bases its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence. Roe v. Anderson , 134 F.3d 1400, 1402 (9th Cir. 1998).

DISCUSSION
A. The Standard for Issuing a Preliminary Injunction

"To obtain a preliminary injunction, a party must establish either: (1) probable success on the merits and irreparable injury, or (2) sufficiently serious questions going to the merits to make the case a fair ground for litigation with the balance of hardships tipping decidedly in its favor." Baby Tam & Co. v. City of Las Vegas, 154 F.3d 1097, 1100 (9th Cir. 1998). The two alternatives represent two points on a sliding scale. Roe, 134 F.3d at 1402. The district court held that Plaintiffs' actions fell within the first category. The Commissioner does not dispute the district court's finding of irreparable injury; rather, he questions whether the district court abused its discretion in ruling that Plaintiffs established a probability of success on the merits.

The district court's reasoning implies that Plaintiffs demonstrated a probability of success on their claim that HVIRA is unconstitutional on its face. The court did not make individualized findings of irreparable injury, nor did it discuss either constitutional claim in the context of a particular Plaintiff. As presented in this appeal, Plaintiffs' challenges to HVIRA involve issues of law only.

B. The Commerce Clause Claim

As noted, the district court held that Plaintiffs established a probability of success that HVIRA violates the Commerce Clause. We disagree and hold that the district court based its conclusion on an erroneous view of the law.

1. The McCarran-Ferguson Act, 15 U.S.C. SS 1011-1014 (1945) (McCarran Act)

In United States v. South-Eastern Underwriters Ass'n, 322 U.S. 533, 553 (1944), the Supreme Court held that the "business of insurance" fell within Congress' power to regulate interstate commerce. That holding conflicted with the previous understanding of the relationship between the business of insurance and the Commerce Clause; before 1944, the Court had implied that the...

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25 cases
  • Gerling Global Reinsurance Corp. of America v. Low, 01-17023.
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • July 15, 2002
    ...insurance company that issued Holocaust-era policies and currently does business in California. Gerling Global Reins. Corp. of Am. v. Low, 240 F.3d 739, 742 (9th Cir.2001) (Gerling I), cert. dismissed, ___ U.S. ___, 122 S.Ct. 1907, 151 L.Ed.2d 961 Plaintiffs sought declaratory and injunctiv......
  • In re Assicurazioni Generali S.P.A. Holocaust Ins.
    • United States
    • U.S. District Court — Southern District of New York
    • September 25, 2002
    ...similar to the New York HVIA. See Gerling Global Reinsurance Corp. v. Low, 296 F.3d 832 (9th Cir.2002); Gerling Global Reinsurance Corp. v. Low, 240 F.3d 739 (9th Cir. 2001). Further, even if the HVIA were unconstitutional, it would still be a persuasive indication of this forum's public in......
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    • United States
    • U.S. District Court — Eastern District of California
    • July 3, 2006
    ...(Commerce Clause analysis focuses on whether the challenged statute is discriminatory in effect); Gerling Global Reinsurance Corp. of America v. Low, 240 F.3d 739, 746 (9th Cir.2001) (Commerce Clause seeks to prevent extraterritorial economic effects, not purposes). Alliance of Auto. Mfrs. ......
  • Gerling Global Reinsurance v. Garamendi
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    • U.S. Court of Appeals — Ninth Circuit
    • March 10, 2005
    ...of this case have been set forth by this court and by the Supreme Court in detail, see Gerling Global Reinsurance Corp. of Am. ("Gerling Global") v. Low, 240 F.3d 739, 754 (9th Cir.2001) ("Gerling I"); Gerling Global v. Low, 296 F.3d 832 (9th Cir.2002) ("Gerling II"); Am. Ins. Ass'n v. Gara......
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1 books & journal articles
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    • United States
    • Full Court Press Zalma on Property and Casualty Insurance
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    ...could consider whether plaintiffs were likely to succeed on their due process claim. Gerling Global Reinsurance Corp. of America v. Low, 240 F. 3d 739, 754 (2001). On remand, the District Court addressed two points. Although it held the Act to be within the State’s “legislative jurisdiction......

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