Mears Transp. Group v. State

Decision Date11 October 1994
Docket Number93-2191 and 93-2608,Nos. 93-2080,s. 93-2080
PartiesMEARS TRANSPORTATION GROUP, Checker Cab Company of Orlando, Inc., City Cab Company of Orlando, Inc., Yellow Cab Company of Orlando, Inc., Mears Special Services, Inc., Airport Limousine Service of Orlando, Inc., and Paratransit Risk Retention Group of Maryland, Inc., Plaintiffs-Appellees, v. STATE of Florida, Defendant, Fred O. Dickinson, III, as Executive Director of the State of Florida Department of Highway Safety & Motor Vehicles, Defendant-Appellant. ASHTIN LEASING, INC., d/b/a Ace Metro Cab, d/b/a Gator Cab, and Paratransit Risk Retention Group of Maryland, Inc., Plaintiffs-Appellees, v. Fred O. DICKINSON, III, as Executive Director of the State of Florida Department of Highway Safety & Motor Vehicles, and individually, Defendant-Appellant.
CourtU.S. Court of Appeals — Eleventh Circuit

Harry F. Chiles, Ana C. Martinez, Asst. Atty. Gen., Florida Dept. of Legal Affairs Attorney General's Office, Richard Walter Thornburg, Dept. of Highway Safety & Motor Vehicle, Tallahassee, FL, for appellant in No. 93-2080.

Ellen Dollase Wilcox, Kansas City, MO, for amicus curiae National Assoc. of Insurance Commrs. David H. Reimer, Becker & Poliakoff, Ft. Lauderdale, FL, for Biscayne Ins., Transp. Cas. & Credit General.

Gregory A. Presnell, Julie J. Fitzpatrick, Akerman, Senterfitt & Eidson, Orlando, FL, for appellees in Nos. 93-2080, 93-2191 and 93-2608.

Philip C. Olsson, Olsson, Frank & Weeda, PC, Washington, DC, for amicus curiae National Risk Retention Assn.

Ana Cristina Martinez, Florida Dept. of Legal Affairs Attorney General's Office, Tallahassee, FL, for appellants in No. 93-2191.

Ana C. Martinez, Harry F. Chiles, Attorney General's Office Dept. of Legal Affairs, Tallahassee, FL, Manuel E. Oliver, Attorney General's Office, Tampa, FL, for appellants in No. 93-2608.

Appeals from the United States District Court for the Middle District of Florida.

Before BIRCH, Circuit Judge, and RONEY and CLARK, Senior Circuit Judges.

CLARK, Senior Circuit Judge:

Plaintiffs-appellees, for-profit passenger transportation companies and the risk retention group from which they purchase insurance, challenge the validity of Fla.Stat. ch. 324.031, which requires owners and operators of for-hire transportation vehicles to prove financial responsibility by maintaining certain specified insurance coverage. Specifically, plaintiffs-appellees contend that Fla.Stat. ch. 324.031 violates and is preempted by the federal Liability Risk Retention Act, 15 U.S.C. Sec. 3901-3906. On cross-motions for summary judgment, the district court agreed with plaintiffs-appellees and permanently enjoined enforcement of Fla.Stat. ch. 324.031. Because we find that Fla.Stat. ch. 324.031 is precisely the type of state law that Congress expressly excepted from the preemption provisions of the Liability Risk Retention Act, we reverse.

BACKGROUND FACTS

Plaintiffs-appellees Mears Transportation Group, Inc., ("Mears") and Ashtin Leasing, Inc., ("Ashtin") are for-hire passenger transportation companies. 1 Both Mears and Ashtin are members of and purchase insurance from plaintiff-appellee Paratransit Risk Retention Group of Maryland, Inc. ("Paratransit"). Plaintiffs-appellees challenge Fla.Stat. ch. 324.031, which is entitled, "Manner of proving financial responsibility." More specifically, they challenge the Florida legislature's 1992 amendment to this statute, Session Law 92-29. They contend that they are entitled to continue to prove financial responsibility as they did before the 1992 amendment.

Prior to the 1992 amendment, Fla.Stat. ch. 324.031 permitted the operator or owner of any vehicle, including for-hire passenger transportation vehicles, to demonstrate financial responsibility by posting a bond or deposit equal to the number of vehicles owned times $25,000, up to a maximum of $100,000; in addition, the statute required an owner or operator other than a natural person to maintain insurance providing coverage in excess of $25,000 combined single limits to a minimum of $100,000 combined single limits. 2 Thus, section 342.031 permitted owners of for-hire passenger transportation vehicles, such as Mears and Ashtin, to self-insure the first $25,000 of liability, with the bond or deposit available to insure payment of claims within this $25,000 layer of self-insurance. Mears and Ashtin both complied with section 324.031 by posting a $100,000 certificate of deposit with the State of Florida and by purchasing excess liability coverage from Paratransit. The Paratransit insurance provided coverage for liability in excess of $25,000 In 1992, the Florida legislature amended section 324.031 with Session Law 92-29. As amended, section 324.031 requires the owners and operators of for-hire passenger transportation vehicles to prove financial responsibility by maintaining insurance covering the first dollar of liability per accident up to $30,000 combined single limits; this insurance must be purchased from "an insurance carrier which is a member of the Florida Insurance Guaranty Association." 6 By so amending section 324.031, the Florida legislature sought to provide persons injured in for-hire passenger transportation vehicles with the protection of the state insurance guaranty fund. Thus, section 324.031 effectively (1) prevents the owners and operators of for-hire passenger transportation vehicles from self-insuring the first $30,000 in liabilities, and (2) precludes those insurance carriers that are not members of the Florida Insurance Guaranty Association ("FIGA") from providing the first $30,000 layer of insurance on for-hire passenger transportation vehicles; this set of non-member insurance carriers includes, among many others, 7 risk retention groups. 8 Owners and operators of for-hire passenger transportation vehicles may choose to purchase insurance coverage for liabilities in excess of the first $30,000; however, section 324.031 does not require or otherwise regulate such excess insurance coverage. 9

                for which both Mears and Ashtin were self-insured, up to $500,000 in the case of Mears and $300,000 in the case of Ashtin. 3  In 1991, Mears operated 502 vehicles; 4  thus, Mears had less than $200 per vehicle on deposit to insure payment of claims within the $25,000 layer of self-insurance.  Ashtin, which operated 72 units in 1992, 5 had less than $1400 per vehicle on deposit
                

After the Florida legislature passed Session Law 92-29, the Florida Department of Highway Safety and Motor Vehicles notified both Mears and Ashtin that their financial responsibility certificates would be canceled if they did not comply with Fla.Stat. ch. 324.031 as amended. Shortly thereafter, Paratransit, Mears, and the companies for which Mears oversees insurance needs 10 filed this lawsuit against Fred O. Dickinson, III, as Executive Director of the State of Florida Department of Highway Safety and Motor Vehicles. 11 Plaintiffs alleged that Fla.Stat. ch. 324.031 as amended was in conflict with the federal Liability Risk Retention Act, which exempts risk retention groups from certain state regulation. 12 The parties filed cross-motions for summary judgment on this issue. Relying on a provision in the Liability Risk Retention Act that exempts risk retention groups from state laws that "otherwise discriminate against a risk retention group or Thereafter, Paratransit and Ashtin filed a similar suit against Dickinson. Relying on the district court's decision in the Mears case, Paratransit and Ashtin sought to enjoin Dickinson from enforcing Fla.Stat. ch. 324.031 as amended against Ashtin. Upon joint stipulation of the parties, the district court entered summary judgment in favor of plaintiffs on their Liability Risk Retention Act claim and permanently enjoined Dickinson from enforcing Fla.Stat. ch. 324.031 against plaintiffs. 16 Dickinson appealed. The two appeals, from the district court's decision in the Mears case and from the district court's decision in the Ashtin case, were consolidated by order of this court.

                any of its members," 13 the district court concluded:  "Inasmuch as risk retention groups cannot belong to FIGA, and Session Law 92-29 requires for-hire passenger transportation businesses to use FIGA insurers to satisfy financial responsibility, the Session Law plainly discriminates against risk retention groups." 14  Relying on this finding of discrimination, the district court rejected plaintiffs' argument that financial responsibility laws, like Fla.Stat. ch. 324.031, were expressly excepted from the Liability Risk Retention Act's preemption provisions.  The district court entered summary judgment in favor of plaintiffs and permanently enjoined defendant from enforcing Fla.Stat. ch. 324.031 as amended against plaintiffs. 15  Dickinson appealed
                
DISCUSSION

The issue before us is whether Fla.Stat. ch. 324.031 as amended, which specifies the manner by which owners and operators of for-hire passenger transportation vehicles may prove financial responsibility, is preempted by the federal Liability Risk Retention Act. Because we find that Fla.Stat. ch. 324.031 as amended is precisely the type of state financial responsibility law that Congress expressly excepted from the preemption provisions of the Liability Risk Retention Act, we reverse.

The Liability Risk Retention Act did not always encompass motor vehicle liability insurance. As originally enacted in 1981, the Act was known as the "Product Liability Risk Retention Act of 1981" and was limited to product liability insurance. 17 The 1981 Act addressed the problems businesses were encountering in obtaining affordable product liability coverage. As the legislative history states, the purpose of the Act was to "reduce the problem of the rising cost of product liability insurance by permitting product manufacturers to purchase insurance on a group basis at more favorable rates or to self-insure through insurance...

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