Allstate Insurance Company v. Lanier
Decision Date | 27 May 1966 |
Docket Number | No. 10192.,10192. |
Citation | 361 F.2d 870 |
Parties | ALLSTATE INSURANCE COMPANY, Government Employees Insurance Company, Nationwide Mutual Insurance Company, North Carolina Farm Bureau Mutual Insurance Company, and State Farm Mutual Automobile Insurance Company, Appellants, v. Edwin S. LANIER, Commissioner of Insurance for the State of North Carolina, and T. Wade Bruton, Attorney General of the State of North Carolina, Appellees. |
Court | U.S. Court of Appeals — Fourth Circuit |
Howard Adler, Jr., Washington, D. C. (Herbert A. Bergson, Donald L. Hardison, Washington, D. C., and J. Melville Broughton, Jr., and Broughton & Broughton, Raleigh, N. C., and Bergson & Borkland, Washington, D. C., on brief), for appellants.
Charles D. Barham, Jr., Asst. Atty. Gen. of North Carolina (Thomas Wade Bruton, Atty. Gen. of North Carolina, on brief), for appellees.
Before SOBELOFF, BOREMAN and BRYAN, Circuit Judges.
The State of North Carolina maintains a system of automobile insurance regulation under which uniform rates and standards are promulgated upon the initiative of a rating bureau composed of all the insurance companies, whose proposals are then finally approved, modified or disapproved by the Commissioner of Insurance. North Carolina Gen. Stats. §§ 58-246 to 58-248.8 (1965). All companies selling insurance must adhere to the established rates and standards as a condition of doing business in the State. Deviations from the prescribed rates are permitted with the approval of the Insurance Commissioner, but since a 1961 amendment to the Act, his authority is restricted to authorizing upward deviations only. See id. § 58-248.2, 1961 North Carolina Session Laws, Ch. 1006. Thus, the individual companies are effectively precluded from competing through offering lower premium rates, although they may still offer dividend return features, improved services, etc.
Appellants, five large insurance companies doing 29% of the total business in North Carolina, filed suit in the District Court for the Eastern District of North Carolina to obtain a judgment declaring the statute invalid insofar as it restricts competition by prohibiting the offering of lower premium rates. They alleged that the North Carolina statute had been pre-empted by the provisions of the Sherman Act, 15 U.S.C.A. §§ 1-7 (1958), and the McCarran-Ferguson Act, 15 U.S.C.A. §§ 1011-1015 (1958).1 On cross-motions for summary judgment, the District Court dismissed the complaint on the ground that since the rating bureau was established and administered under the active supervision of the State, it was not subject to attack under the federal antitrust laws, which condemn only private noncompetitive activities. We think this ruling was correct.
In Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), the Supreme Court held that the antitrust laws were inapplicable to an agricultural proration program which, while restricting competition among raisin growers and maintaining minimum prices, was established and actively supervised under the California Agricultural Prorate Act.
317 U.S. at 350-351, 63 S.Ct. at 313. (Emphasis added.)
The District Court's finding in the present case that the North Carolina rating bureau was operated under the active supervision of the State is not challenged in this court,2 and we find no merit in the distinction suggested by appellants between the injunction sought in Parker v. Brown and the declaration of preemption sought here. The central question in both cases is whether a program of regulation established and actively supervised by a state is subject to the antitrust laws. Absent congressional action departing from the rule of Parker v. Brown, the North Carolina statutory plan is clearly valid.3
Nothing in the 1945 McCarran-Ferguson Act or its legislative history suggests a limitation upon the principle of Parker v. Brown. The statute was passed in response to the Supreme Court's decision in United States v. South-Eastern Underwriters Assoc., 322 U.S. 533, 64 S.Ct. 1162, 88 L.Ed. 1440 (1944) (hereafter SEUA), upholding an indictment against a group of private insurance companies charged with employing boycotts, coercion and intimidation to further a conspiracy to maintain noncompetitive premium rates. Because of earlier court decisions indicating that insurance was not part of commerce for the purpose of state regulation,4 there was widespread fear that the SEUA case might endanger state autonomy in the regulation and taxation of the insurance business.
Section 2(a) of the Act reinforces this precept by expressly subjecting insurance companies to state regulation,5 and section 2(b) provides that unless a federal statute is made specifically applicable to the insurance business, it shall not "invalidate, impair or supersede" any state insurance law.6 And while the antitrust laws were made applicable by section 2(b) to insurance companies,7 the debates explicitly recognized the continuing vitality of Parker v. Brown and of state created and state supervised rating bureaus like the one now under consideration.8
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