Gerling Global Reinsurance v. Garamendi

• Citation: 400 F.3d 803
• Decision Date: 10 March 2005
• Docket Number: No. 04-15455.,No. 04-15332.,04-15332.,04-15455.
• Parties: GERLING GLOBAL REINSURANCE CORPORATION OF AMERICA, U.S. Branch; Gerling Global Life Reinsurance Company; Gerling Global Life Insurance Company; Gerling America Insurance Company; Constitution Insurance Company; Revios Reinsurance Canada, Ltd.; Revios Reinsurance U.S., Inc.; Assicurazioni Generali s.p.a.; American Insurance Association; American Re-Insurance Company, Plaintiffs-Appellants, and Winterthur International America Insurance Company; Winterthur International America Underwriters Insurance Company; General Casualty Company of Wisconsin; Regent Insurance Company; Republic Insurance Company; Southern Insurance Company; Unigard Indemnity Company; Unigard Insurance Company; Blue Ridge Insurance Co., Plaintiffs, v. John GARAMENDI, in his capacity as the Insurance Commissioner of the State of California, Defendant-Appellee. American Insurance Association; American Re-Insurance Company, Plaintiffs-Appellants, v. John Garamendi, in his capacity as the Insurance Commissioner of the State of California, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

400 F.3d 803

GERLING GLOBAL REINSURANCE CORPORATION OF AMERICA, U.S. Branch; Gerling Global Life Reinsurance Company; Gerling Global Life Insurance Company; Gerling America Insurance Company; Constitution Insurance Company; Revios Reinsurance Canada, Ltd.; Revios Reinsurance U.S., Inc.; Assicurazioni Generali s.p.a.; American Insurance Association; American Re-Insurance Company, Plaintiffs-Appellants, and Winterthur International America Insurance Company; Winterthur International America Underwriters Insurance Company; General Casualty Company of Wisconsin; Regent Insurance Company; Republic Insurance Company; Southern Insurance Company; Unigard Indemnity Company; Unigard Insurance Company; Blue Ridge Insurance Co., Plaintiffs, v. John GARAMENDI, in his capacity as the Insurance Commissioner of the State of California, Defendant-Appellee.

American Insurance Association; American Re-Insurance Company, Plaintiffs-Appellants, v. John Garamendi, in his capacity as the Insurance Commissioner of the State of California, Defendant-Appellee.

No. 04-15332.

No. 04-15455.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted December 13, 2004.

Filed March 10, 2005.

Charles A. Rothfeld, Mayer, Brown, Rowe & Maw, LLP, Washington, DC, for the plaintiffs-appellants.

Frank Kaplan, Alschuler Grossman Stein & Kahan, LLP, Santa Monica, CA, for the defendant-appellee.

Appeal from the United States District Court for the Eastern District of California, William B. Shubb, Chief Judge, Presiding. D.C. Nos. CV-00-00506-WBS, CV-00-00613-WBS/JFM.

Before: GOODWIN, GRABER, and PAEZ, Circuit Judges.

Opinion by Judge Goodwin; Concurrence by Judge Graber

GOODWIN, Senior Circuit Judge.

This case returns to our calendar for the fourth time following its journey to the Supreme Court. Plaintiffs, three insurance companies and one insurance trade association, originally brought this action against the California Commissioner of Insurance ("Commissioner") seeking to bar the enforcement of the Holocaust Victim Insurance Relief Act of 1999 ("HVIRA"), Cal. Ins.Code §§ 13800-13807 (1999). That statute requires the disclosure of certain information pertaining to Holocaust-era insurance policies written in Europe. Following the Supreme Court's disposition of the case in their favor, plaintiffs sought attorney's fees in this court. We remanded the fees question to the district court, which denied the request. The appealable order was appealed.

This appeal presents two principal questions. First, did the district court err when it held that plaintiffs were not prevailing parties within the meaning of 42 U.S.C. § 1988? Second, do the foreign affairs power of the Executive branch and the related executive agreements between the United States, Germany, Austria, and France create private rights within the meaning of 42 U.S.C. § 1983?

We hold that plaintiffs are prevailing parties and are thus entitled to an award of a reasonable attorney's fee. Because we hold that plaintiffs are prevailing parties, we do not reach the question whether executive actions under the foreign affairs power create justiciable private rights. Therefore, under the authority of Maher v. Gagne, 448 U.S. 122, 100 S.Ct. 2570, 65 L.Ed.2d 653 (1980), we remand to the district court for a determination of the proper fee.

I. Factual Background and Procedural History

Because the facts of this case have been set forth by this court and by the Supreme Court in detail, see Gerling Global Reinsurance Corp. of Am. ("Gerling Global") v. Low, 240 F.3d 739, 754 (9th Cir.2001) ("Gerling I"); Gerling Global v. Low, 296 F.3d 832 (9th Cir.2002) ("Gerling II"); Am. Ins. Ass'n v. Garamendi, 539 U.S. 396, 123 S.Ct. 2374, 156 L.Ed.2d 376 (2003), we recount only the basic procedural history here.

Plaintiffs brought this action seeking declaratory and injunctive relief from the enforcement of HVIRA, claiming that the statute violated the Commerce Clause, Due Process Clause, foreign affairs power, and other constitutional provisions. The district court concluded that plaintiffs "demonstrated a probability of success on the merits that the HVIRA is unconstitutional in violation of the federal foreign affairs power and a violation of the Commerce Clause." Gerling Global v. Quackenbush, 2000 WL 777978, *13 (E.D.Cal. June 9, 2000). After finding that the balance of irreparable harm favored the plaintiffs, the district court granted a preliminary injunction and enjoined the enforcement of HVIRA and its implementing regulations. Id. at *13-14.

The Commissioner appealed and we reversed, leaving the preliminary injunction in place. We remanded the case to the district court to consider plaintiffs' due process claims. Gerling I, 240 F.3d at 754.

On remand, the district court granted plaintiffs' motion for summary judgment and permanently enjoined the Commissioner from enforcing HVIRA, holding that "[b]y mandating license suspension for non-performance of what may be impossible tasks without allowing for a meaningful hearing, HVIRA deprives plaintiffs of a protected property interest without affording them due process of law." Gerling Global v. Low, 186 F.Supp.2d 1099, 1113 (E.D.Cal.2001).

The Commissioner again appealed the district court decision. During the pendency of that appeal, the plaintiffs filed a motion with the district court seeking attorney's fees under 42 U.S.C. § 1988. The district court denied the motion, and plaintiffs timely appealed.

In Gerling II, we reversed the district court and held that HVIRA did not violate plaintiffs' due process rights, the Commerce Clause, the foreign affairs power, the Bill of Attainder Clause, the Contract Clause, the Equal Protection Clause, or the Fourth Amendment. 296 F.3d 832. We concluded that plaintiffs were not "prevailing parties" under 42 U.S.C. § 1988 and therefore were not entitled to attorney's fees. Id. at 851.

The Supreme Court granted certiorari. Am. Ins. Ass'n v. Low, 537 U.S. 1100, 123 S.Ct. 817, 154 L.Ed.2d 768 (2003). The grant of certiorari "encompassed three of the questions addressed [in Gerling I and Gerling II]: whether HVIRA intrudes on the federal foreign affairs power, violates the self-executing element of the Foreign Commerce Clause, or exceeds the State's `legislative jurisdiction.'" Am. Ins. Ass'n, 539 U.S. at 413 n. 7, 123 S.Ct. 2374. The Court reversed this court's judgment, holding that HVIRA was pre-empted by Executive Branch authority over foreign policy. Id. at 420, 123 S.Ct. 2374. The Court did not address the Commerce Clause and Due Process Clause issues. Id. at 413 n. 7, 123 S.Ct. 2374 ("Because we hold that HVIRA is preempted under the foreign affairs doctrine, we have no reason to address the other questions.").

Following the Court's decision, plaintiffs sought attorney's fees and moved this court for supplemental briefing and oral argument. We transferred the fee issue to the district court for consideration on a factual record. Gerling Global v. Low, 339 F.3d 1078 (9th Cir.2003) ("Gerling III").

The district court declined to award fees because it concluded that the foreign affairs power did not implicate "a right, privilege, or immunity secured by the Constitution or laws of the United States" and therefore could not form the basis of a 42 U.S.C. § 1983 claim.

II. The Prevailing Party Determination

The Civil Rights Attorney's Fee Award Act of 1976 provides, in relevant part: "In any action or proceeding to enforce a provision of [42 U.S.C. § 1983], the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee as part of the costs." 42 U.S.C. § 1988(b). 42 U.S.C. § 1983, in turn, protects against the "deprivation of any rights, privileges, or immunities secured by the Constitution and laws." The first issue is whether plaintiffs constitute "prevailing parties."

The Supreme Court has summarized the "prevailing party" determination as follows:

[T]o qualify as a prevailing party, a civil rights plain tiff must obtain at least some relief on the merits of his claim. The plaintiff must obtain an enforceable judgment against the defendant from whom fees are sought, [Hewitt v. Helms, 482 U.S. 755, 760, 107 S.Ct. 2672, 96 L.Ed.2d 654 (1987)], or comparable relief through a consent decree or settlement, Maher v. Gagne, 448 U.S. 122, 129, 100 S.Ct. 2570, 65 L.Ed.2d 653 (1980). Whatever relief the plaintiff secures must directly benefit him at the time of the judgment or settlement. See Hewitt, [482 U.S. at 764, 107 S.Ct. 2672] ... In short, a plaintiff `prevails' when actual relief on the merits of his claim materially alters the legal relationship between the parties by modifying the defendant's behavior in a way that directly benefits the plaintiff.

Farrar v. Hobby, 506 U.S. 103, 111-12, 113 S.Ct. 566, 121 L.Ed.2d 494 (1992). We hold that plaintiffs are prevailing parties in this litigation. Plaintiffs not only obtained "some" relief on the merits of their claim, they received all of the relief they sought in their lawsuit — a permanent injunction enjoined the enforcement of HVIRA. Clearly, the ruling of the Supreme Court modified the Commissioner's behavior by "materially alter[ing] the legal relationship between the parties." See id.

The second issue is whether the plaintiffs prevailed under a fee-generating legal "right." The Supreme Court decided for the plaintiffs relying on the implied preemption of HVIRA by the foreign affairs power of the Executive branch. The Commissioner argues that, because the Supreme Court ruled in favor of plaintiffs on a ground not covered by § 1983, the plaintiffs are not § 1988 prevailing parties. We are thus faced with the question whether a court, in an action containing both fee-supporting § 1983 claims and a claim which may not independently support a fee award, may deprive plaintiffs of attorney's fees by grounding its ruling on the non-fee-generating claim. Answering this question in the...