Barnett Bank Marion County v. Nelson
| Citation | 116 S.Ct. 1103,134 L.Ed.2d 237,517 U.S. 25 |
| Decision Date | 26 March 1996 |
| Docket Number | 941837,941614 |
| Parties | BARNETT BANK OF MARION COUNTY, N.A., Petitioner, v. Bill NELSON, Florida Insurance Commissioner, et al |
| Court | United States Supreme Court |
A 1916 federal law (Federal Statute) permits national banks to sell insurance in small towns, but a Florida law (State Statute) prohibits such banks from selling most types of insurance. When petitioner Barnett Bank, a national bank doing business in a small Florida town, bought a state licensed insurance agency, respondent State Insurance Commissioner ordered the agency to stop selling the prohibited forms of insurance. In this action for declaratory and injunctive relief, the District Court held that the State Statute was not pre-empted, but only because of the McCarran-Ferguson Act's special insurance-related anti-pre-emption rule. That rule provides that a federal law will not pre-empt a state law enacted "for the purpose of regulating the business of insurance"—unless the f ederal statute "specifically relates to the business of insurance." 15 U.S.C. § 1012(b) (emphasis added). The Court of Appeals affirmed.
Held: The Federal Statute pre-empts the State Statute. Pp. __-__.
(a) Under ordinary pre-emption principles, the State Statute would be pre-empted, for it is clear that Congress, in enacting the Federal Statute, intended to exercise its constitutionally delegated authority to override contrary state law. The Federal and State Statutes are in "irreconcilable conflict," Rice v. Norman Williams Co., 458 U.S. 654, 659, 102 S.Ct. 3294, 3298-3299, 73 L.Ed.2d 1042, since the Federal Statute authorizes national banks to engage in activities that the State Statute expressly forbids. Thus, the State's prohibition would seem to "stan[d] as an obstacle to the accomplishment" of one of the Federal Statute's purposes, Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 404, 85 L.Ed. 581, unless, as the State contends, Congress intended to limit federal permission to sell insurance to those circumstances permitted by state law. However, by providing, without relevant qualification, that national banks "may . . . act as the agent" for insurance sales, 12 U.S.C. § 92, the Federal Statute's language suggests a broad, not a limited, permission. That this authority is granted in "addition to the powers now vested . . . in national [banks]," ibid. (emphasis added), is also significant. Legislative grants of both enumerated and incidental "powers" to national banks historically have been interpreted as grants of authority not normally limited by, but rather ordinarily pre-empting, contrary state law. See, e.g., First Nat. Bank of San Jose v. California, 262 U.S. 366, 368-369, 43 S.Ct. 602, 602-603, 67 L.Ed. 1030. Where, as here, Congress has not expressly conditioned the grant of power upon a grant of state permission, this Court has ordinarily found that no such condition applies. See Franklin Nat. Bank v. New York, 347 U.S. 373, 74 S.Ct. 550, 98 L.Ed. 767. The State's argument that special circumstances surrounding the Federal Statute's enactment demonstrate Congress' intent to grant only a limited permission is unpersuasive. Pp. __-__.
(b) The McCarran-Ferguson Act's anti-pre-emption rule does not govern this case, because the Federal Statute "specifically relates to the business of insurance." This conclusion rests upon the Act's language and purposes, taken together. The word "relates" is highly general; and in ordinary English, the Federal Statute—which focuses directly upon industry-specific selling practices and affects the relation of insured to insurer and the spreading of risk—"specifically" relates to the insurance business. The Act's mutually reinforcing purposes—that state regulation and taxation of the insurance business is in the public interest, and that Congress' "silence . . . shall not be construed to impose any barrier to [such] regulation or taxation," 15 U.S.C. § 1011 (emphasis added)—also support this view. This phrase, especially the word "silence," indicates that the Act seeks to protect state regulation primarily against inadvertent federal intrusion, not to insulate state insurance regulation from the reach of all federal law. The circumstances surrounding the Act's enactment also suggest that the Act was passed to ensure that generally phrased congressional statutes, which do not mention insurance, are not applied to the issuance of insurance policies, thereby interfering with state regulation in unanticipated ways. The parties' remaining arguments to the contrary are unconvincing. Pp. __-__.
43 F.3d 631 (CA 11 1995), reversed.
On Writ of Certiorari to the United States Court of Appeals for the Eleventh Circuit.
Nathan Lewin, Washington, DC, for petitioner.
Richard P. Press, for the United States as amicus curiae, by special leave of the Court.
Daniel Y. Sumner, Ja cksonville, FL, for state respondents.
Ann M. Kappler, Washington, DC, for private respondents.
The question in this case is whether a federal statute that permits national banks to sell insurance in small towns pre-empts a state statute that forbids them to do so. To answer this question, we must consider both ordinary pre-emption principles, and also a special federal anti-pre-emption rule, which provides that a federal statute will not pre-empt a state statute enacted "for the purpose of regulating the business of insurance"—unless the federal statute "specifically relates to the business of insurance." McCarran-Ferguson Act, 15 U.S.C. § 1012(b) (emphasis added). We decide that the McCarran-Ferguson Act's special anti-pre-emption rule does not govern this case, because the federal statute in question "specifically relates to the business of insurance." We conclude that, under ordinary pre-emption principles, the federal statute pre-empts the state statute, thereby prohibiting application of the state statute to prevent a national bank from selling insurance in a small town.
In 1916 Congress enacted a federal statute that says that certain national banks "may" sell insurance in small towns. It provides in relevant part:
"In addition to the powers now vested by law in national [banks] organized under the laws of the United States any such [bank] located and doing business in any place [with a population] . . . [of not more than] five thousand . . . may, under such rules and regulations as may be prescribed by the Comptroller of the Currency, act as the agent for any fire, life, or other insurance company authorized by the authorities of the State . . . to do business [there], . . . by soliciting and selling insurance . . . Provided, however, That no such bank shall . . . guarantee the payment of any premium . . . And provided further, That the bank shall not guarantee the truth of any statement made by an assured [when applying] . . . for insurance." Act of Sept. 7, 1916 (Federal Statute), 39 Stat. 753, 12 U.S.C. § 92 (emphases changed).
In 1974 Florida enacted a statute that prohibits certain banks from selling most kinds of insurance. It says:
"No [Florida licensed] insurance agent . . . who is associated with, . . . owned or controlled by . . . a financial institution shall engage in insurance agency activities. . . ." Fla. Stat. Ann. § 626.988(2) (Supp.1996) (State Statute).
The term "financial institution" includes
"any bank . . . [except for a] bank which is not a subsidiary or affiliate of a bank holding company and is located in a city having a population of less than 5,000 . . . ." § 626.988(1)(a).
Thus, the State Statute says, in essence, that banks cannot sell insurance in Florida—except that an unaffiliated small town bank (i.e., a bank that is not affiliated with a bank holding company) may sell insurance in a small town. Ibid.
In October 1993 petitioner Barnett Bank, an "affiliate[d]" national bank which does business through a branch in a small Florida town, bought a Florida licensed insurance agency. The Florida State Insurance Commissioner, pointing to the State Statute, (and noting that the unaffiliated small town bank exception did not apply), ordered Barnett's insurance agency to stop selling the prohibited forms of insurance. Barnett, claiming that the Federal Statute pre-empted the State Statute, then filed this action for declaratory and injunctive relief in federal court.
The District Court held that the Federal Statute did not pre-empt the State Statute, but only because of the special insurance-related federal anti-pre-emption rule. The McCarran-Ferguson Act, which creates that rule, says:
"No act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance, or which imposes a fee or tax upon such business, unless such Act specifically relates to the business of insurance. . . ." McCarran-Ferguson Act (or Act), § 2(b), 59 Stat. 34, 15 U.S.C. § 1012(b).
The District Court decided both (1) that the Federal Statute did not fall within the McCarran-Ferguson Act's exception because it did not "specifically relat[e] to the business of insurance"; and (2) that the State Statute was a "law enacted . . . for the purpose of regulating the business of insurance." Barnett Banks of Marion County, N.A. v. Gallagher, 839 F.Supp. 835, 840-841, 843 (M.D.Fla.1993) (internal quotation marks omitted). Consequently, the McCarran-Ferguson Act, in the District Court's view, instructs courts not to "constru[e]" the Federal Statute "to invalidate" the State Statute. 15 U.S.C. § 1012(b). The Eleventh Circuit Court of Appeals, for similar reasons, agreed that the Federal Statute did not pre-empt the State Statute. Barnett Bank of Marion County, N.A. v. Gallagher, 43 F.3d 631, 634-637 (1995).
We granted certiorari due to uncertainty among lower courts about...
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