Travelers Health Association v. FTC, 15743.

• Decision Date: 13 January 1959
• Docket Number: No. 15743.,15743.
• Citation: 262 F.2d 241
• Parties: TRAVELERS HEALTH ASSOCIATION, Petitioner, v. FEDERAL TRADE COMMISSION, Respondent.
• Court: U.S. Court of Appeals — Eighth Circuit

262 F.2d 241 (1959)

TRAVELERS HEALTH ASSOCIATION, Petitioner, v. FEDERAL TRADE COMMISSION, Respondent.

No. 15743.

United States Court of Appeals Eighth Circuit.

January 13, 1959.

C. C. Fraizer, Lincoln, Neb. (T. J. Fraizer and Fraizer & Fraizer, Lincoln, Neb., on the brief), for petitioner.

James E. Corkey, Asst. General Counsel, Federal Trade Commission, Washington, D. C. (Earl W. Kintner, General Counsel, and J. B. Truly, Alvin L. Berman, Edwin S. Rockefeller and Frederick H. Mayer, Attorneys, Federal Trade Commission, Washington, D. C., on the brief), for respondent.

Clarence S. Beck, Atty. Gen. of the State of Nebraska, and Ralph D. Nelson, Asst. Atty. Gen. of the State of Nebraska, filed brief for the State of Nebraska, as Amicus Curiæ, in support of petitioner. Joinders in the Amicus Curiæ brief of the State of Nebraska with respect to the question of the jurisdiction of the Federal Trade Commission were filed by the following: Bruce Bennett, Atty. Gen., for the State of Arkansas; John J. Bracken, Atty. Gen., of the State of Connecticut; Richard W. Ervin, Atty. Gen., for the State of Florida; Eugene Cook, Atty. Gen., for the State of Georgia; Norman A. Erbe, Atty. Gen., for the State of Iowa; Jo M. Ferguson, Atty. Gen., and Earle V. Powell, Asst. Atty. Gen., for the Commonwealth of Kentucky; Jack P. F. Gremillion, Atty. Gen., for the State of Louisiana; Rufus D. Hayes, Baton Rouge, La., Comm. of Ins. of the State of Louisiana; Frank F. Harding, Atty. Gen., for the State of Maine; C. Ferdinand Sybert, Atty. Gen., for the State of Maryland; Thomas M. Kavanagh, Atty. Gen. of the State of Michigan; Fred M. Standley, Atty. Gen., for the State of New Mexico; Louis J. Lefkowitz, Atty. Gen., of the State of New York; Leslie R. Burgum, Atty. Gen., for the State of North Dakota; T. C. Callison, Atty. Gen., for the State of South Carolina; E. R. Callister, Atty. Gen., for the State of Utah; Frederick M. Reed, Atty. Gen., for the State of Vermont; Kenneth C. Patty, Atty. Gen., for the Commonwealth of Virginia; Stewart G. Honeck, Atty. Gen., of the State of Wisconsin; Thomas O. Miller, Atty. Gen., for the State of Wyoming; Duke W. Dunbar, Atty. Gen., of the State of Colorado.

Whitney North Seymour, New York City, and Simpson, Thacher & Bartlett, New York City, filed brief for The Health Insurance Ass'n of America, amici curiæ.

Before SANBORN, JOHNSEN and VOGEL, Circuit Judges.

SANBORN, Circuit Judge.

Travelers Health Association, of Omaha, Nebraska, by a petition to review, challenges the validity of a cease and desist order of the Federal Trade Commission dated December 20, 1956. The order was based upon a determination by the Commission (1) that it had jurisdiction to regulate the advertising practices of the petitioner in the promotion and sale, by mail, of insurance against disability caused by sickness, and (2) that certain of the petitioner's practices were false, misleading and deceptive within the meaning of the Federal Trade Commission Act, 15 U.S.C. § 45, 15 U.S.C.A. § 45. The order under review prohibited the petitioner from carrying on the practices found by the Commission to be unlawful.

The petitioner contended before the Commission, and contends here: 1. That the Commission was precluded by the McCarran-Ferguson Act, 15 U.S.C. § 1011-1015, 15 U.S.C.A. § 1011-1015, from regulating the advertising practices of the petitioner, since its insurance business was subject to State laws "which relate to the regulation * * * of such business."¹ 2. That none of the advertising practices proscribed by the Commission was false, misleading or deceptive.

The case was first argued and submitted to this Court on November 13, 1957. Decision was deferred pending the disposition by the Supreme Court of the cases of American Hospital & Life Insurance Co. v. Federal Trade Commission, 5 Cir., 243 F.2d 719, and National Casualty Company v. Federal Trade Commission, 6 Cir., 245 F.2d 883, to review which the Supreme Court granted certiorari on November 12, 1957. 355 U.S. 867, 78 S.Ct. 119, 2 L.Ed.2d 73. In those cases, it was held by the respective Courts of Appeals that, because of the McCarran-Ferguson Act, the Federal Trade Commission had exceeded its jurisdiction in attempting to regulate the advertising practices of the insurers there involved. A reversal of those decisions would have settled the problem of the Commission's jurisdiction in its favor in the instant case. However, on June 30, 1958, the Supreme Court, in a Per Curiam opinion, affirmed the judgments in both cases. Federal Trade Commission v. National Casualty Co., and Federal Trade Commission v. American Hospital and Life Insurance Co., 357 U.S. 560, 78 S.Ct. 1260, 2 L.Ed.2d 1540. In its opinion, the Supreme Court said of the McCarran-Ferguson Act (at pages 562-563 of 357 U.S., at page 1261 of 78 S.Ct.):

"* * * An examination of that statute and its legislative history establishes that the Act withdrew from the Federal Trade Commission the authority to regulate respondents\' the insurers\' advertising practices in those States which are regulating those practices under their own laws."

At our direction, the question of the Commission's jurisdiction over the advertising practices of the petitioner in the instant case was reargued and the case finally submitted on September 13, 1958.

The obvious purpose of the McCarran-Ferguson Act was to remove the cloud cast by the case of United States v. South-Eastern Underwriters Association, 322 U.S. 533, 64 S.Ct. 1162, 88 L.Ed. 1440, upon the right of the States to continue to regulate and to tax interstate insurance business under their own laws, as they had done for some seventy-five years. The history and effect of the Act has already been adequately explained. See Prudential Insurance Co. v. Benjamin, 328 U.S. 408, 429-431, 66 S.Ct. 1142, 90 L.Ed. 1342; Maryland Casualty Co. v. Cushing, 347 U.S. 409, 413, 74 S. Ct. 608, 98 L.Ed. 806; North Little Rock Transportation Co., Inc. v. Casualty Reciprocal Exchange, 8 Cir., 181 F.2d 174, 176; American Hospital & Life Insurance Co. v. Federal Trade Commission, 5 Cir., 243 F.2d 719; National Casualty Company v. Federal Trade Commission, 6 Cir., 245 F.2d 883, 887-888; Securities and Exchange Commission v. Variable Annuity Life Ins. Co. of America, D.C.D.C., 155 F.Supp. 521, 527.

The petitioner asserts that its insurance business, including its advertising practices, is regulated by State law within the meaning of the McCarran-Ferguson Act, and that, under Section 2 (a) and (b) of the Act, the Commission is clearly without authority to do any additional or supplemental regulating of petitioner's advertising practices.

The Federal Trade Commission contends that the Supreme Court, in its decision of June 30, 1958, in the National Casualty Company and American Hospital & Life Insurance Co. cases, merely held that the States possess ample means to regulate insurance advertising disseminated by companies licensed to do business in those States and represented by agents located within their boundaries; that the Court expressly refrained from ruling upon the applicability of the McCarran-Ferguson Act to the mail order insurance business; that no amount of State regulation of insurance advertising can effectively stop the influx into a State of deceptive advertising material mailed by an out of State company doing a mail order insurance business; that, under the proviso of Section 2(b) of the McCarran-Ferguson Act, the Federal Trade Commission Act is applicable to the petitioner's advertising practices; and that the Commission has jurisdiction.

The Supreme Court, in its opinion of June 30, 1958, in the National Casualty Company and American Hospital & Life Insurance Co. cases, decided no more than it was required to decide, and confined its opinion to the exact factual situation presented. That court, as the Commission says, was dealing with the advertising practices of insurers operating through agents in States in which the insurers were licensed. In the instant case the petitioner is licensed only in the States of Nebraska and...