State Farm Mut. Auto. Ins. Co. v. Low
| Citation | 112 Cal.Rptr.2d 574,92 Cal.App.4th 1169 |
| Decision Date | 17 October 2001 |
| Docket Number | No. A093193.,A093193. |
| Court | California Court of Appeals |
| Parties | STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY et al., Plaintiffs and Appellants, v. Harry LOW, as Insurance Commissioner, etc., et al., Defendants and Respondents; Southern Christian Leadership Conference of Greater Los Angeles, Inc. et al., Interveners and Respondents. |
Heller Ehrman White & McAuliffe LLP, La Jolla, Paul Alexander, Vanessa Wells, Victoria Collman Brown, Palo Alto, for Plaintiffs and Appellants.
Bill Lockyer, Attorney General, Randall P. Borcherding, Supervising Deputy Attorney General, Kristian D. Whitten, Deputy Attorney General, for Defendants and Respondents.
Mark Savage, San Francisco, Thorn Ndaizee Meweh, for Interveners and Respondents.
Proposition 103, an initiative measure enacted in 1988, made fundamental changes in the regulation of automobile and other types of insurance in this state, but left many of the details of its implementation to regulations promulgated by the Insurance Commissioner (Commissioner). (See generally, Calfarm Ins. Co. v. Deukmejian (1989) 48 Cal.3d 805, 258 Cal. Rptr. 161, 771 P.2d 1247; 20th Century Ins. Co. v. Garamendi (1994) 8 Cal.4th 216, 32 Cal.Rptr.2d 807, 878 P.2d 566; Spanish Speaking Citizens' Foundation, Inc. v. Low (2000) 85 Cal.App.4th 1179, 103 Cal.Rptr.2d 75.) This appeal concerns one such regulation, California Code of Regulations, title 10, section 2646.6.1
The regulation requires specified insurers to file annually with the Department of Insurance (Department) a "Community Service Statement," reporting certain information for each ZIP code in which the insurer sells insurance or maintains agents. (§ 2646.6, subds.(a), (b).) Subdivision (c) of section 2646.6 makes those statements available for public inspection under Insurance Code section 1861.07. State Farm attacks the validity of subdivision (c) and argues that some of the information in its community service statement is a privileged trade secret exempt from public disclosure.2
We conclude that the Commissioner did not exceed his statutory authority in promulgating section 2646.6, subdivision (c). We also conclude that regardless of whether State Farm's community service statements contain trade secrets, section 2646.6, subdivision (c) and Insurance Code section 1861.07 make those statements available for public inspection, and they are not protected from disclosure by the California Public Records Act (Gov.Code, § 6250 et seq.) (Public Records Act) and Evidence Code section 1060.
Proposition 103 began with a declaration of findings that "[e]normous increases in the cost of insurance have made it both unaffordable and unavailable to millions of Californians," and that "existing laws inadequately protect consumers and allow insurance companies to charge excessive, unjustified, and arbitrary rates." The initiative's stated purpose included protecting consumers from arbitrary insurance rates and practices, encouraging a competitive insurance marketplace, and ensuring that insurance is fair, available, and affordable for all Californians. The initiative also expressly directed that its terms are to be liberally construed and applied so as to fully promote its underlying purpose. (Stats.1988, pp. A-276, 290, §§ 1, 2, 8.)
Among its terms, Proposition 103 added article 10 to chapter 9 of part 2 of division 1 of the Insurance Code (article 10). The article, consisting of Insurance Code sections 1861.01 through 1861.14, required an immediate reduction of insurance rates and also instituted a prior approval system under which the Commissioner must approve an insurer's rate before its use. (Ins.Code, § 1861.01.) Insurance Code section 1861.05 articulated the substantive standard for prior approval, stating in subdivision (a): "No rate shall be approved or remain in effect which is excessive, inadequate, unfairly discriminatory or otherwise in violation of this chapter."
The article requires auto rates to be based on an insured's driving safety record, number of miles driven annually, years of driving experience, and other factors approved by the Commissioner. (Ins. Code, § 1861.02.) It also prohibits certain unfair insurance practices and makes the insurance industry subject to the Unruh Civil Rights Act (Civil Code, §§ 51-53) and the state's antitrust and unfair business practices laws (Bus. & Prof.Code, § 16600 et seq.). (Ins.Code, § 1861.03.) In addition, the article contains several general provisions regarding public notice, including Insurance Code section 1861.07, which declares: "All information provided to the commissioner pursuant to this article shall be available for public inspection, and the provisions of Section 6254(d) of the Government Code and Section 1857.9 of the Insurance Code shall not apply thereto."
The details of implementing Proposition 103 by promulgating rules and regulations have been left to the Commissioner. (Calfarm Ins. Co. v. Deukmejian, supra, 48 Cal.3d at p. 824, 258 Cal.Rptr. 161, 771 P.2d 1247; 20th Century Ins. Co. v. Garamendi supra, 8 Cal.4th at p. 245, 32 Cal.Rptr.2d 807, 878 P.2d 566.) We are concerned in this appeal with a regulation promulgated in 1996, which requires certain insurers to file annually with the Department a "Community Service Statement," reporting specified information for each ZIP code in which the insurer sells insurance or maintains agents. That information includes the number of offices, agents, claims adjusters, direct mail or telephone solicitations for new insurance business, agents and claims adjusters conversant in a language other than English, applications for each line of insurance, and applications for which the insurer declined to provide coverage, as well as the race or national origin and gender of each applicant for insurance. (§ 2646.6, subd. (b)(2)(8).)
The community service statement must also divulge for each ZIP code "the total earned exposures and total earned premiums, and the total number of exposures new, exposures canceled and exposures non-renewed," stated separately for various types of coverage. The parties refer to this information as "Record A data." (§ 2646.6, subds.(a), (b)(1).)3 An "earned exposure" is the unit insured; for example, under an automobile policy, each insured auto is an earned exposure.
The regulation requires the Commissioner to issue an annual "Report on Underserved Communities," designating by ZIP code the communities that the Commissioner finds underserved by the insurance industry based on criteria set forth in the regulation. (§ 2646.6, subd. (c).) The report must also list certain information for each insurance company doing business in the state, including the number and percentage of total exposures the company has in force insuring risks in the underserved communities and in all other communities. (§ 2646, subd. (e)(1).)
In addition to mandating the annual report of aggregate data, subdivision (c) of section 2646.6 makes community service statements available for public inspection under Insurance Code section 1861.07.
In December 1999, State Farm filed this action for declaratory and injunctive relief against David "Birny" Birnbaum, the Commissioner, and the Department of Insurance. The complaint alleged that in response to a request under the Public Information Act, the Department had "inadvertently" disclosed to Birnbaum information in State Farm's 1998 community service statement that constituted a privileged trade secret. State Farm sought an injunction restraining Birnbaum from using or disclosing that information, among other relief.
The Southern Christian Leadership Conference of Greater Los Angeles, Inc., and Consumers Union of U.S., Inc. (Interveners) successfully requested leave to intervene in the action. Their complaint in intervention sought a declaration that community service statements submitted by insurers under the regulation are subject to public inspection and not exempt from public disclosure. State Farm subsequently amended its complaint, alleging more precisely that its record A data is trade secret information and seeking to restrain the Commissioner from releasing any information submitted pursuant to section 2646.6 under a claim of confidentiality or trade secret privilege.
The trial court dismissed the action as against Birnbaum and ordered entry of judgment in his favor after granting his special motion to strike under Code of Civil Procedure section 425.16. State Farm filed a notice of appeal from that judgment, but later abandoned the appeal.
The Commissioner moved for summary judgment, arguing that section 2646.6 is a valid regulation implementing Insurance Code section 1861.07, that State Farm's submission of its community service statement was voluntary because the regulations provide for alternatives to the filing of such statements, that State Farm waived any trade secret protection by filing its community service statement, and that State Farm had no standing to assert an exemption from disclosure under the Public Records Act.
Interveners also moved for summary judgment. They reiterated the Commissioner's standing argument, and they urged that section 2646.6, Insurance Code section 1861.07, and the Public Records Act each require public disclosure of State Farm's record A data and that the data is not exempt from disclosure under the Public Records Act. They argued in the alternative that State Farm's record A data is not a trade secret.
The trial court granted both motions, reasoning that the Commissioner and the Department did not exceed their powers in promulgating the regulation and that the community service statements are public records subject to public inspection. In its order granting summary judgment for Interveners, the court also found that there was no triable issue of material fact,...
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Farmers Ins. Exchange v. Low
...not tend to conceal fraud or otherwise work injustice." 8. This court respectfully disagrees with State Farm Mutual Automobile Ins. Co. v. Low (2001) 92 Cal.App.4th 1169, 112 Cal.Rptr.2d 574 which concluded that there are no exemptions from disclosure for information included in Article 9. ......