Council of Ins. Agents & Brokers v. Molasky-Arman

• Decision Date: 10 April 2008
• Docket Number: No. 04-17271.,04-17271.
• Parties: COUNCIL OF INSURANCE AGENTS & BROKERS and Rebecca Restrepo, Plaintiffs-Appellees, v. Alice A. MOLASKY-ARMAN, in her official capacity as Nevada Commissioner of Insurance, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

522 F.3d 925

COUNCIL OF INSURANCE AGENTS & BROKERS and Rebecca Restrepo, Plaintiffs-Appellees, v. Alice A. MOLASKY-ARMAN, in her official capacity as Nevada Commissioner of Insurance, Defendant-Appellant.

No. 04-17271.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted October 19, 2006.

Filed April 10, 2008.

George H. Taylor and Robert Auer, Deputy Attorneys General of the State of Nevada, Carson City, NV, for the defendant-appellant.

Scott A. Sinder, Alysa N. Zeltzer, and Daniel S. Blynn, Collier Shannon Scott, PLLC, Washington, DC, for the plaintiffs-appellees.

Daniel F. Polsenberg, Lawrence Epstein, and Heidi Parry Stern, Beckley Singleton, Chtd., Las Vegas, NV, for the plaintiffs-appellees.

Appeal from the United States District Court for the District of Nevada; James C. Mahan, District Judge, Presiding. D.C. No. CV-02-00813-JCM.

Before: MELVIN BRUNETTI, DIARMUID F. O'SCANNLAIN, and STEPHEN S. TROTT, Circuit Judges.

BRUNETTI, Circuit Judge:

On cross-motions for summary judgment, the district court declared Nevada's "countersignature" statute, Nev.Rev.Stat. § 680A.300, unconstitutional, holding that it violates the Privileges and Immunities Clause of Article IV and the Equal Protection Clause of the Fourteenth Amendment. 358 F.Supp.2d 981, 982-83. The district court stayed its injunction pending appeal, and Defendant-Appellant Alice Molasky-Arman, Nevada Commissioner of Insurance (the Commissioner), now appeals. We have jurisdiction under 28 U.S.C. § 1291, and we affirm and remand.

I. Facts and proceedings below

Plaintiff-Appellee Council of Insurance Agents & Brokers (the Council) is a national trade association that represents more than 250 of the nation's largest commercial property and casualty insurance agencies and brokerage firms. The Council's members, which include corporations and partnerships rather than individuals, place over eighty billion dollars in insurance premiums annually, which constitutes more than seventy-five percent of the commercial marketplace. The majority of the Council's members sell insurance in more than one state, and in many cases in all fifty states, to large, sophisticated, commercial end-users that typically have multi-state exposures. Included in the Council's members are insurance agencies and brokerage firms based outside of Nevada that sell insurance in Nevada.

In this case, the Council challenges Nevada's "countersignature" statute, Nev. Rev.Stat. § 680A.300, which provides that no authorized insurer may make, write, place, or renew any insurance policy on persons, property, or risks in Nevada, "except through its duly appointed and licensed agents resident in [Nevada], any one of whom shall countersign the policy."¹ Despite this limitation on insurers, section 680A.300 guarantees the "free and unlimited right to negotiate insurance contracts by licensed nonresident agents or brokers outside [Nevada], if the policies, endorsements or evidence of those contracts covering properties or insurance interests in [Nevada] are countersigned by a resident agent. . . ." Finally, section 680A.300 requires that the countersigning agent be paid a commission of at least five percent of any resulting premium. In its complaint, the Council alleged that section 680A.300 violates the Constitution's Commerce Clause, Privileges and Immunities Clause of Article IV, and the Fourteenth Amendment's Equal Protection Clause.

The Commissioner promptly filed a motion for summary judgment and the Council filed a cross-motion for summary judgment. The district court denied both parties' motions without prejudice; and after expressing some doubt as to whether the Council had standing to assert its constitutional claims during a hearing on the parties' motions, the court granted the Council leave to amend its complaint. The Council did so, adding Plaintiff-Appellee Rebecca Restrepo (Restrepo) as co-plaintiff in its First Amended Complaint, in which the Council reasserts its equal protection and privileges and immunities claims.

Restrepo is a resident of California, is licensed to sell insurance in California, and is the Managing Director of the Sacramento office of ABD Insurance and Financial Services (ABD), a member of the Council. Restrepo is also licensed to produce and sell insurance in Nevada as a nonresident agent. In Nevada, the Commissioner issues licenses to nonresidents as producers of insurance if four requirements are satisfied. Nev.Rev.Stat. § 683A.271. The nonresident must be in good standing as a licensed resident in his home state, pay a prescribed fee, submit an application, and the nonresident's home state must issue nonresident licenses to Nevada residents pursuant to a substantially similar procedure.² In its First Amended Complaint, the Council alleges that section 680A.300 causes Restrepo to forfeit approximately $50,000 annually, and that she is suffering immediate injury and being deprived of significant rights.

Following discovery, the Commissioner renewed and supplemented her initial motion for summary judgment, and the Council renewed its motion for summary judgment and supplemented its initial motion with a motion for summary judgment on behalf of Restrepo. This time, the district court granted the plaintiffs' motion, concluding that "Restrepo has standing," that the Council "has representative standing to assert the underlying constitutional claims" of "its member firms and their officers, directors, principals, and employees," and that section 680A.300 "plainly draws a distinction between Nevada-licensed resident agents and brokers," for which "there is no legitimate rational basis." 358 F.Supp.2d at 982. Therefore, the district court held, section 680A.300 "violates the Privileges and Immunities Clause and Equal Protection Clause of the United States Constitution because it denies to Nevada-licensed nonresident insurance agents the same rights and privileges that are afforded to Nevada-licensed resident agents." Id. at 982-83. The district court enjoined the Commissioner from enforcing section 680A.300, but later stayed this injunction pending appeal. This appeal followed.

II. Standard of review

Reviewing de novo the district court's decision on cross-motions for summary judgment, we must decide whether the record, when viewed in the light most favorable to the non-moving party, shows that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Pocatello Educ. Ass'n v. Heideman, 504 F.3d 1053, 1056 (9th Cir.2007). We also review de novo whether the plaintiffs have standing, whether the plaintiffs' claims are moot, and the constitutionality of section 680A.300. See Get Outdoors II, LLC v. City of San Diego, 506 F.3d 886, 890(9th Cir.2007); Rosenbaum v. City and County of San Francisco, 484 F.3d 1142, 1152 (9th Cir.2007).

III. Discussion

A. Standing

The Commissioner first argues that Restrepo and the Council lack standing to challenge the constitutionality of section 680A.300. "Article III of the Constitution limits the `judicial power' of the United States to the resolution of `cases' and `controversies.'" Valley Forge Christian Coll. v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 471, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982). "[S]tanding is an essential and unchanging part of the case-or-controversy requirement of Article III." Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). "The doctrine of standing is based both on prudential concerns and on constitutional limitations on the jurisdiction of the federal courts." Doran v. 7-Eleven, Inc., 506 F.3d 1191, 1195 (9th Cir.2007). Here, the plaintiffs bear the burden of establishing standing's three constitutional requirements. Lujan, 504 U.S. at 561, 112 S.Ct. 2130. First, they must establish that they suffered an injury in fact, "an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical." Id. at 560, 112 S.Ct. 2130(citations, internal quotation marks, and footnote omitted). Second, they must establish "a causal connection between the injury and the conduct complained of." Id. Third, they must establish that it is "likely as opposed to merely speculative, that the injury will be redressed by a favorable decision." Id. at 561, 112 S.Ct. 2130 (citation and internal quotation marks omitted).

The district court concluded that Restrepo has standing because she has suffered, and continues to suffer, economic and other forms of injury because of the requirements imposed upon nonresident insurance agents by Nevada's countersignature law. 358 F.Supp.2d at 982. The Commissioner contends that Restrepo provided no evidence of actual economic injury, and specifically notes Restrepo's inability to firmly connect the amount of her compensation with the sale of products insuring Nevada risks. The Council argues that while Restrepo is a salaried employee, her overall compensation (which includes a bonus based on the growth and profitability of her office) is affected by section 680A.300's commission-splitting provision. In the end, we need not resolve the parties' dispute over Restrepo's alleged economic injury because on appeal the Council asserts an alternative injury, discriminatory administrative burdens placed on Restrepo because of her nonresident status. While the Commissioner argues that we should not consider this argument because the Council raises it for the first time on appeal, we may affirm summary judgment on any ground supported by the record. Doran, 506 F.3d at 1195 n. 1.

"It has long been clear that economic injury is not the only kind of injury that can support a plaintiff's standing." Vill. of Arlington Heights v. Metro. Hous. Dev. Corp., 429 U.S. 252, 262-63, 97 S.Ct. 555, 50 L.Ed.2d 450 (1977). "Impairments to constitutional rights are generally deemed adequate to...