Alliance of Nonprofits for Ins., Risk Retention Grp. v. Kipper

• Decision Date: 08 April 2013
• Docket Number: 11–17871.,Nos. 11–16836,s. 11–16836
• Citation: 712 F.3d 1316
• Parties: ALLIANCE OF NONPROFITS FOR INSURANCE, RISK RETENTION GROUP, Plaintiff–Appellee, v. Scott J. KIPPER, Commissioner of Insurance of the State of Nevada, Defendant, and Department of Business and Industry, Division of Insurance; State of Nevada; Scott J. Kipper, Commissioner of Insurance of the State of Nevada, Defendants–Appellants. Alliance of Nonprofits for Insurance, Risk Retention Group, Plaintiff–Appellee, v. Scott J. Kipper, Commissioner of Insurance of the State of Nevada; Department of Business and Industry, Division of Insurance; State of Nevada, Defendants–Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

712 F.3d 1316

ALLIANCE OF NONPROFITS FOR INSURANCE, RISK RETENTION GROUP, Plaintiff–Appellee,

v.Scott J. KIPPER, Commissioner of Insurance of the State of Nevada, Defendant,andDepartment of Business and Industry, Division of Insurance; State of Nevada; Scott J. Kipper, Commissioner of Insurance of the State of Nevada, Defendants–Appellants.

Alliance of Nonprofits for Insurance, Risk Retention Group, Plaintiff–Appellee,

v.Scott J. Kipper, Commissioner of Insurance of the State of Nevada; Department of Business and Industry, Division of Insurance; State of Nevada, Defendants–Appellants.

Nos. 11–16836, 11–17871.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 11, 2013.

Filed April 8, 2013.

Catherine Cortez Masto, Attorney General, and Shane D. Chesney (argued), Senior Deputy Attorney General, Carson City, NV; Joanna N. Grigoriev (briefed and argued), Deputy Attorney General, Las Vegas, NV, for Defendants–Appellants.

Kimberly Maxson–Rushton (briefed and argued), Cooper Levenson April Niedelman & Wagenhein, P.A., Las Vegas, NV, for Plaintiff–Appellee.

Robert H. Myers, Jr. and Cindy Chang, Morris Manning & Martin, LLP, Washington, D.C., for Amici Curiae Captive Insurance Companies Association, National Risk Retention Association, Nevada Captive Insurance Association, and Vermont Captive Insurance Association.

Susan Stapp, Assistant Chief Counsel; Jill A. Jacobi (argued), Senior Staff Counsel, California Department of Insurance, San Francisco, CA, for Amicus Curiae California Insurance Commissioner Dave Jones.

Daniel Labrie, Housing Authority Risk Retention Group, San Francisco, CA, for Amicus Curiae Housing Authority Risk Retention Group, Inc.

Jan Holt, United Educators; Thomas W. Brunner, Lawrence H. Mirel, A. Xavier Baker, Wiley Rein LLP, Washington D.C., for Amicus Curiae United Educators Insurance, a Reciprocal Risk Retention Group.

Clifford Peterson and David Cassetty, Vermont Department of Banking, Insurance, Securities, and Health Care Administration, Montpelier, VT, for Amicus Curiae Vermont Department of Banking, Insurance, Securities, and Health Care Administration.

Robert M. McKenna, Attorney General; Marta U. DeLeon, Assistant Attorney General, Olympia, WA, for Amicus Curiae Washington State Insurance Commissioner Mike Kreidler.

Appeal from the United States District Court for the District of Nevada, James C. Mahan, District Judge, Presiding. D.C. No. 2:10–cv–01749–JCM–RJJ.

Before: JEROME FARRIS, SIDNEY R. THOMAS, and N. RANDY SMITH, Circuit Judges.

OPINION

N.R. SMITH, Circuit Judge:

The Liability Risk Retention Act (the “LRRA”) broadly preempts “any State law, rule, regulation, or order to the extent that such law, rule, regulation, or order would ... make unlawful, or regulate, directly or indirectly, the operation of a risk retention group.” 15 U.S.C. § 3902(a)(1). This provision preempts the Order of the Nevada Commissioner of Insurance (the “Commissioner”), which prohibited Alliance of Nonprofits for Insurance, Risk Retention Group (“ANI”) from writing “first dollar” liability policies in Nevada. Therefore, we affirm the district court's entry of declaratory and injunctive relief in favor of ANI. However, because the LRRA's preemption provision does not unambiguously confer a right to be free from state law that can be enforced under 42 U.S.C. § 1983, we vacate the fee award.

FACTS

ANI is a risk retention group (“RRG”),¹ chartered in Vermont. In 2001, ANI registered with the Division of Insurance of Nevada's Department of Business and Industry (the “Division”) to transact liability insurance in Nevada. By registering with the Division, ANI obtained a Certificate of Registration; however, the Division has not issued ANI a Certificate of Authority.²

As a registered insurer, ANI provided “first dollar, automobile liability coverage to its Nevada members.” “First dollar” insurance policies are “motor vehicle polices that are required by state law to comply with financial responsibility minimums.” For example, to register a vehicle in Nevada, state law requires the owner to obtain an insurance policy that covers, at a minimum, $15,000 per person, per accident; $30,000 per two or more persons, per accident; and $10,000 of property damage, per accident. Nev.Rev.Stat. § 485.185. A policy that meets these coverage requirements is a “first dollar” liability policy, because the first dollars paid out on a claim (up to the coverage limits) are paid out under the policy.

Under Nevada's Motor Vehicle Insurance and Financial Responsibility Act (“NMVIFRA”),³Nev.Rev.Stat. §§ 485.010–.420, automobile owners (who have registered their cars in the state) must obtain their first dollar liability policy from a provider who is “authorized to transact business” in Nevada. Id.§§ 485.185, .037(1), .055(1). Only insurers who possess a “certificate of authority” from the Commissioner are authorized to transact business in the state. Id. § 679A.030(1). ANI does not have such a certificate. As a result, in April 2010, the Nevada Department of Motor Vehicles (“DMV”) began denying vehicle registrations to vehicle owners who obtained their first dollar liability policies from ANI.

In May 2010, ANI sought a hearing before the Commissioner. Following the hearing, the Commissioner issued an Order prohibiting ANI from writing first dollar liability policies in Nevada. The Commissioner's Order contained the following relevant provision: ⁴

1. ANI shall, within sixty (60) days from the date of this Order, cease and desist writing first dollar or mandated motor vehicle financial responsibility insurance coverage, required by NRS 485.3091. ANI may directly write excess liability coverage; however, a fronting arrangement with an authorized insurer that holds a valid Nevada certificate of authority shall be required to provide first dollar or mandated motor vehicle financial responsibility insurance coverage, required by NRS 485.3091.

Primarily, the Commissioner enjoined ANI from writing first dollar liability insurance, because it did not possess a Certificate of Authority and, therefore, was not an “authorized insurer.” ⁵

ANI then filed this lawsuit, in the United States District Court for the District of Nevada, seeking declaratory and injunctive relief against the Commissioner and the Division of Insurance under 42 U.S.C. § 1983. The parties filed cross-motions for summary judgment. Ruling on the motions, the district court granted summary judgment to ANI in an order without any discussion. The relevant parts of the order state:

IT IS FURTHER ORDERED THAT Nev. R. Stat. 485.185, Nev R. Stat. 679A.030(1) and Nev. R. Stat. 687A.040 and related statutes and regulations of the State of Nevada are preempted by the [LRRA] pursuant to the Supremacy Clause of the Constitution, as applied to [ANI] insofar as they prohibit [ANI] from issuing first dollar automobile liability insurance policies in the State of Nevada.

IT IS FURTHER ORDERED THAT the phrase “authorized insurer,” as used in the Nev. R. Stat. 679A.030, shall be interpreted to include [RRGs] such as [ANI].

IT IS FURTHER ORDERED THAT defendants are permanently enjoined from enforcing Nev. R. Stat. 485.185, Nev. R. Stat. 679A.030(1) and Nev. R. Stat. 687A.040 and related statutes and regulations against members of [ANI], insofar as they prohibit [ANI] from issuing first dollar automobile liability insurance policies in the State of Nevada.

IT IS FURTHER ORDERED THAT [ANI] is entitled to a remedy under 42 U.S.C. § 1983 and, therefore is entitled to an award of attorney fees under 42 U.S.C. § 1988 to be set pursuant to FRCP 54.

As the prevailing party, ANI then requested $127,828.00 in fees and $4,643.41 in costs. In its request, ANI sought to recover fees and costs both for itself and for its amicus, the National Risk Retention Association (NRRA). For itself, ANI requested $83,572.50 in fees and $3,341.75 in costs. For the NRRA, ANI requested $44,255.50 in fees and $1,301.66 in costs. On November 2, 2011, the district court awarded ANI $86,914.25 in fees and costs, but only awarded costs to the NRRA in the amount of $1,301.66. The Commissioner then appealed.

On appeal, the Commissioner challenges both the grant of summary judgment and the award of attorneys' fees.⁶ The Commissioner argues that ANI was not entitled to declaratory or injunctive relief, because the LRRA does not preempt Nevada law. The Commissioner also argues that, even if the LRRA does preempt Nevada law, ANI was not entitled to attorneys' fees. We affirm the district court's entry of declaratory and injunctive relief, but vacate the fee award.

DISCUSSION

I. The district court correctly held that the LRRA preempts the Commissioner's Order.

We review the district court's grant of summary judgment to ANI, finding that the LRRA preempts the Commissioner's Order, de novo. Schmidt v. Contra Costa Cnty., 693 F.3d 1122, 1132 (9th Cir.2012). “In this case, there are no disputes about the material facts.” Samson v. City of Bainbridge Island, 683 F.3d 1051, 1057 (9th Cir.2012). Therefore, “the only question is the legal one of whether [the LRRA preempts Nevada law].” ⁷Id.

The LRRA broadly preempts “any State ... order to the extent that such ... order would ... make unlawful, or regulate, directly or indirectly, the operation of [an RRG].” 15 U.S.C. § 3902(a)(1). Here, the Commissioner's Order makes it unlawful for ANI, an RRG, to operate in Nevada, to the extent ANI sought to write first dollar liability insurance. Thus, the Order plainly fits within the scope of LRRA preemption. Because the Order fits within the scope of LRRA preemption, it is invalid unless one of the LRRA's exceptions from preemption applies.

Only one exception is relevant here.⁸Section 3905(d) saves from preemption state laws that “specify acceptable means of demonstrating financial responsibility where the State has required a demonstration of financial responsibility as a condition for obtaining a license or permit to undertake...