Council of Ins. Agents v. Juarbe-Jimenez

Decision Date30 March 2006
Docket NumberNo. 05-2607.,05-2607.
CourtU.S. Court of Appeals — First Circuit
PartiesCOUNCIL OF INSURANCE AGENTS & BROKERS, Plaintiff, Appellee, v. Dorelisse JUARBE-JIMÉNEZ, in her official capacity as the Puerto Rico Commissioner of Insurance, Defendant, Appellant.

Rosa Elena Pérez-Agosto, Assistant Solicitor General, Office of the Solicitor General, Department of Justice, Commonwealth of Puerto Rico, with whom Salvador Antonetti-Stutts, Solicitor General, and Mariana D. Negrón-Vargas, Deputy Solicitor General, were on brief, for appellant.

Scott A. Sinder, with whom Alysa N. Zeltzer, Daniel S. Blynn, Collier Shannon Scott, PLLC, and Guillermo Ramos Luiña were on brief, for appellee.

Before SELYA, Circuit Judge, HANSEN,* Senior Circuit Judge, and LYNCH, Circuit Judge.

LYNCH, Circuit Judge.

This appeal arises from the entry of an injunction based on a finding of facial unconstitutionality of provisions of the Puerto Rico Insurance Code which impose restrictions on the ability of nonresident licensed insurance agents and brokers to participate in the Puerto Rico insurance market, thus advantaging resident agents and brokers.

The suit was brought by the Council of Insurance Agents and Brokers, an association. The defendant Puerto Rico Commissioner of Insurance moved for summary judgment on the ground that the Council lacked standing, and the Council filed a cross-motion for summary judgment. The district court, in a thoughtful opinion, denied the Commissioner's motion and granted the Council's, holding that the Council had standing, that the challenged provisions were unconstitutional, and that declaratory and injunctive relief were warranted. See Council of Ins. Agents & Brokers v. Juarbe-Jiménez, 363 F.Supp.2d 47 (D.P.R.2005).

On appeal, the Commissioner does not challenge the ruling that the statutes are unconstitutional under the Privileges and Immunities Clause (although she does question the language of the injunction). At the heart of her appeal is her argument that the Council lacked standing to raise its challenge in the first place. We disagree, and we affirm.

I.

The provisions challenged in this case are P.R. Laws Ann. tit. 26, §§ 329 and 927 (2003), which have the effect of requiring the business of insurance in Puerto Rico to be done by using agents resident in Puerto Rico. Section 329 provides that "[n]o insurer shall effectuate any direct insurance upon or relative to any person, property, or other subject of insurance resident, located, or to be performed in Puerto Rico, except through a licensed agent of such insurer residing in Puerto Rico."1 P.R. Laws Ann. tit. 26, § 329(1). Furthermore, under § 329(2), all such policies and contracts must be countersigned by the insurer's manager, general agent, or authorized agent, who must reside in Puerto Rico.2

Section 927 prohibits nonresident agents and brokers from soliciting insurance and inspecting risks in Puerto Rico. Id. § 927(1). It allows nonresident agents and brokers to place insurance upon subjects located or to be performed in Puerto Rico only if the insurance was "directly procured from the insured outside of Puerto Rico," id., or if the nonresident agent or broker places the insurance "through a resident agent or broker of Puerto Rico, and in an insurer authorized to transact insurance in Puerto Rico," id. § 927(2). Countersigning can be done only by resident agents authorized by the insurer. Id. § 927(3).

The Council filed suit, arguing that these provisions violated both the Privileges and Immunities Clause, U.S. Const. art. IV, § 2, cl. 1, and the Equal Protection Clause, id. amend. XIV, § 1, because they gave local insurance agents and brokers an unfair competitive advantage over nonresident agents and brokers (even though the nonresident agents and brokers are licensed to sell insurance in Puerto Rico). The Council alleged that it represents hundreds of insurance agencies and brokerage firms; that its "member agencies and brokerages and their officers, directors, principals, and employees are located/reside outside of Puerto Rico but sell insurance in . . . the Commonwealth"; that its members and their individual associates,3 some of whom are licensed in Puerto Rico, "are suffering immediate injury and are being deprived of significant rights" because of the challenged laws; and that one of the Council's central purposes is to protect the interests of its members and their individual associates. The Council sought declaratory and injunctive relief.

The Commissioner alleged in her answer that the Council lacked standing. She later moved for summary judgment on the same ground. Her argument was that the Council had not demonstrated that any of its members had suffered an injury in fact, which meant it had not shown that at least one of its members would otherwise have standing to sue in its own right, which meant the Council's claim of associational standing must fail.

The Council then filed a cross-motion for summary judgment and submitted a memorandum in opposition to the Commissioner's motion for summary judgment. The Council asserted that at least some of its entity members had standing to sue in their own right, on the ground that entity employers may assert the constitutional rights of their employees where violation of those rights adversely affects the financial interests or patronage of the business. The Council attached a declaration by Ken A. Crerar, the Council's President, which we describe in more detail below.

The Commissioner replied, arguing, inter alia, that the Council had not shown that any one of its members "as such" was licensed as a nonresident agent or broker in Puerto Rico. Therefore, she argued, none of the entity members could engage in the insurance business in Puerto Rico through its individual associates (even if the individual associates were licensed and could have acted in Puerto Rico on their own behalf), and none could have suffered any injury as a result of the challenged laws. The Commissioner did not argue that she needed discovery on this matter. See Fed.R.Civ.P. 56(f). Nor did she argue that she had proof that none of the Council's members could have suffered injury.

The Council responded, attaching a supplemental declaration of Crerar, also described below.

The district court denied the Commissioner's motion and granted the Council's cross-motion for summary judgment. See Council of Ins., 363 F.Supp.2d at 56. The court determined that the Council's members had third-party standing to assert the claims of their individual associates, reasoning that "the employers have suffered injury in fact of thousands of dollars in lost revenues," the employers' relationship with their employees made them effective advocates of the employees' interests, and the employees were ill-situated to press their own rights here. Id. at 53. The court concluded that the Council had associational standing to assert the rights of its members, and since the members had standing to assert the rights of their individual associates, the Council had standing to assert the individual associates' rights. Id. at 54.

As to the constitutionality of the challenged provisions, the district court determined that "the countersignature requirement for nonresidents" violated the Privileges and Immunities Clause. Id. at 55. It did not reach the equal protection question. Id. at 56. The judgment repeated the final language of the court's opinion and order:

[T]he countersignature requirements of. . . §§ 329 and 927 are unconstitutional to the extent that they deny Puerto Rico-licensed nonresident insurance agents the same rights and privileges that they afford Puerto Rico-licensed resident agents. The . . . Commissioner. . . is enjoined from denying to Puerto Rico-licensed nonresident agents the same rights and privileges possessed by Puerto Rico-licensed resident agents under the governing statutes.

Id.

The Commissioner moved for reconsideration of the standing issue and for clarification of the judgment. The Council opposed this motion, and it was denied.

II.

We review de novo a district court's rulings on cross-motions for summary judgment, see Calero-Cerezo v. U.S. Dep't. of Justice, 355 F.3d 6, 19 (1st Cir. 2004), and (usually) its conclusions about standing, see Donahue v. City of Boston, 304 F.3d 110, 115 (1st Cir.2002). We may affirm the summary judgment order on any ground justified in the record, even if our rationale differs from the district court's. Houlton Citizens' Coal. v. Town of Houlton, 175 F.3d 178, 184 (1st Cir. 1999).

The litany on summary judgment is familiar. Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Once the party moving for summary judgment "has asserted that no genuine issue of material fact exists," the party opposing summary judgment has the burden of pointing to "specific facts demonstrating that there is, indeed, a trialworthy issue." Calero-Cerezo, 355 F.3d at 19. We agree with the district court that the Commissioner not only failed to justify her own motion, but also failed to oppose adequately the Council's motion.

The general standing inquiry involving any plaintiff focuses on "whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues"; it involves both "constitutional limitations on federal-court jurisdiction and prudential limitations on its exercise." Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975). The constitutional constraints are designed to ensure compliance with Article III's "case or controversy" requirement; they require that the plaintiff allege a sufficient personal stake in the outcome...

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