National Market Reports, Inc. v. Brown

• Citation: 443 F. Supp. 1301
• Decision Date: 18 January 1978
• Docket Number: No. CA 76-0411,CA 76-0411
• Court: U.S. District Court — Southern District of West Virginia
• Parties: NATIONAL MARKET REPORTS, INC., Plaintiff, v. Donald W. BROWN, the Insurance Commissioner of West Virginia, Defendant.

443 F. Supp. 1301

NATIONAL MARKET REPORTS, INC., Plaintiff, v. Donald W. BROWN, the Insurance Commissioner of West Virginia, Defendant.

No. CA 76-0411, CH.

United States District Court, S. D. West Virginia, Charleston Division.

January 18, 1978.

COPYRIGHT MATERIAL OMITTED

Herbert W. Bryan, Charleston, W. Va., Robert A. Saltzstein, William L. Fallon, Stephen M. Feldman, Wyatt & Saltzstein, Washington, D. C., for plaintiff.

William D. Highland, Asst. Atty. Gen., Chauncey H. Browning, Jr., Atty. Gen., Charleston, W. Va., for defendant.

Before FIELD, Senior Circuit Judge, HALL, Circuit Judge, and KNAPP, Chief District Judge.

FIELD, Senior Circuit Judge:

National Market Reports, Inc. (NMR), which publishes and distributes nationally a "Red Book" of used car values, brought this action to enjoin the operation, enforcement or execution of Section 33, Article 6, Chapter 33 of the Code of West Virginia (as amended, 1976), which provides:

Value of motor vehicles involved in claim.

Insurance companies doing business in this State shall use the most recent publication of the "official used car guide" published by the national automobile dealers association as a guide for setting the minimum value of any motor vehicle involved in a claim settlement arising from a motor vehicle accident.¹

Plaintiff alleges, and has submitted affidavits to show, that prior to the statute's enactment and effective date of May 27, 1976, a number of West Virginia insurers purchased the NMR "Red Book" as a guide for determining the value of motor vehicle accident settlements in the state.² But because this recent statute mandates the use by state insurers of the rival National Automobile Dealers Association publication as a settlement guide, it is claimed that the use of plaintiff's "Red Book" has diminished in West Virginia; that many West Virginia subscriptions have been and will be cancelled; and that these continuing losses cannot legally be visited upon the plaintiff because the statute itself is unconstitutional.

The complaint asks that § 33-6-33 be declared void; that the defendant State Insurance Commissioner and those over whom he has official control, be enjoined from giving any effect to the statute; and that damages in the amount of $50,000 plus costs and attorney's fees be levied against the defendant. The jurisdiction of this court is invoked under 28 U.S.C. § 1331 (federal question), 28 U.S.C. § 1332 (diversity of citizenship), and 28 U.S.C. § 1343 (civil rights). An application to convene a three-judge court pursuant to 28 U.S.C. §§ 2281 (repealed, 1976) and 2284 (since amended) was granted.³

NMR advances three legal theories to support its claim that § 33-6-33 is invalid. One is that the statute contravenes the free speech guarantee of the First Amendment to the United States Constitution as applied to the states through the Fourteenth. The other two involve claimed conflicts between § 33-6-33 and the Constitution of West Virginia.⁴ The case is now before us upon the motion of the State Insurance Commissioner to dismiss the complaint.

Having considered both the motion to dismiss and the arguments and affidavits submitted in opposition thereto, we decline to entertain the claims that § 33-6-33 conflicts with the State constitution, and dismiss both of them without prejudice to plaintiff's right to reassert them in an appropriate State forum. Upon the claim that the statute violates the Federal Constitution, we enter summary judgment for the defendant.

I

It is apparent from the complaint and the affidavits submitted by NMR that, even if true, the facts alleged and sworn to fall far short of demonstrating the invalidity of § 33-6-33 under the First and Fourteenth Amendments to the Constitution of the United States. Consequently, we reject the plaintiff's claims, inter alia, that the statute constitutes an invalid prior restraint, is overbroad and impermissibly vague, has a "chilling effect" on protected speech, and constitutes "censorship" of plaintiff's publication.

We agree, of course, that NMR's publication constitutes speech within the meaning of the First Amendment. Cf. Bates v. State Bar of Arizona, 433 U.S. 350, 363, 97 S.Ct. 2691, 53 L.Ed.2d 810 (1977); Smith v. California, 361 U.S. 147, 150, 80 S.Ct. 215, 4 L.Ed.2d 205 (1959). But the trouble we have with plaintiff's federal claim is that, assuming that § 33-6-33 absolutely forbids any insurers doing business in West Virginia from using any publication other than the National Automobile Dealers Association's guide in setting the value of motor vehicle accident claim settlements, at the most the statute results in an infringement upon plaintiff's profits, not its First Amendment rights.

Simply put, under no reasonable construction does § 33-6-33 prohibit NMR from publishing its "Red Book" or distributing it in West Virginia. Nor are insurers prohibited from or punished for purchasing the publication or reading it. The statute does not purport to dictate or regulate the contents of the "Red Book", and since the statute does not outlaw any manner of speech, it cannot be said that it does so in a vague or "overbroad" way. In fact, upon careful reflection we conclude that this is not a First Amendment case at all.

True, plaintiff may find a less enthusiastic market for its publication among the state's insurers (as opposed to the members of the general public, bankers, and others to whom it sells)in the wake of the statute, but "not every action by the government which affects the press violates the first amendment." P.A.M. News Corp. v. Butz, 168 U.S.App.D.C. 376, 381, 514 F.2d 272, 277 (1975). "The inquiry for First Amendment purposes is not concerned with economic impact; rather, it looks only to the effect of this statute upon freedom of expression." Young v. American Mini Theatres, Inc., 427 U.S. 50, 78, 96 S.Ct. 2440, 2456, 49 L.Ed.2d 310 (1976) (Powell, J., concurring). Since we find no such effect, the federal claim must be dismissed.

II

Federal courts have an obligation to determine questions of their own jurisdiction sua sponte. Atlas Life Insurance Co. v. W. I. Southern, Inc., 306 U.S. 563, 59 S.Ct. 657, 83 L.Ed. 987 (1939). Thus, although the defendant's motion to dismiss does not challenge the basic authority of this court to adjudicate the claims of conflict between § 33-6-33 and the Constitution of West Virginia,⁵ we decline for two reasons to entertain the objections to the statute which rely solely upon state law: (1) such claims do not fall within the mandatory statutory grant of original subject matter jurisdiction to the federal courts, and (2) the particular non-federal claims asserted in this case are not appropriate subjects for adjudication under the theory of pendent federal jurisdiction.

We are unaware of any federal statute which empowers, much less obligates, a federal district court to hear plaintiff's state law complaints. Standing alone, an attack upon a state statute on the sole ground that it violates state law is clearly not contemplated by the Congressional grant of either "federal question" jurisdiction, 28 U.S.C. § 1331, or "civil rights" jurisdiction, 28 U.S.C. § 1343. Nor is it of consequence that plaintiff has alleged diversity of citizenship between NMR and the defendant State Insurance Commissioner. Where, as here, a state officer is sued merely as the representative or the "arm or alter ego" of the State, for diversity purposes the action is treated as one against the State. See Moor v. County of Alameda, 411 U.S. 693, 717-721, 93 S.Ct. 1785, 36 L.Ed.2d 596 (1973); O'Neill v. Early, 208 F.2d 286 (4 Cir. 1953).⁶ The diversity statute, 28 U.S.C. § 1332, neither sanctions suit against a state nor contemplates that a state is a "citizen" within the meaning of the statutory term. Postal Telegraph Co. v. Alabama, 155 U.S. 482, 487, 15 S.Ct. 192, 39 L.Ed. 231 (1894).⁷

Of course, the federal courts may exercise an auxiliary power, not strictly dependent upon the various jurisdictional statutes, to decide questions of state law which admittedly do not meet the subject matter requisites set forth by Congress. Under the doctrine of "pendent jurisdiction," an otherwise noncognizable claim that a state statute is void by reason of its conflict with a state constitution may be entertained in a federal forum if it arises from a nucleus of operative facts common to an entertainable, contemporaneous claim under federal law over which the court does have jurisdiction. United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966). The doctrine is one of discretion however, "not of plaintiff's right," and the power it confers "need not be exercised in every case in which it is found to exist." Id. at 726, 86 S.Ct. at 1139. Because NMR alternatively asserts that § 33-6-33 is void under the Federal Constitution, and since its state and federal claims arise from common facts, we have considered the propriety of adjudicating, as ancillary to the First Amendment issue, the questions raised under the Constitution of West Virginia. However, established guidelines for the exercise of this jurisdictional discretion compel us to decline to consider plaintiff's non-federal claims.

First, while we have doubts as to whether even the federal claim is of sufficient substance to vest this court with original jurisdiction and to require the convening of three judges under the applicable law, those doubts are resolved in plaintiff's favor in light of the absence of any apparent precedent of a controlling nature. See Hagans v. Lavine, 415 U.S. 528, 534-543, 94 S.Ct. 1372, 39 L.Ed.2d 577 (1974). But it does not follow from this acknowledgment of jurisdiction to decide the federal claim under 28 U.S.C. §§ 1343 and 2281 that the state constitutional law issues may tag along. To the contrary, in Gibbs the Court cautioned that although a federal claim may be substantial enough to confer jurisdiction upon the court, it can nonetheless...