ERIE INSURANCE EXCHANGE; ERIE INSURANCE COMPANY; ERIE INSURANCE PROPERTY & CASUALTY COMPANY; ERIE FAMILY LIFE INSURANCE COMPANY; ERIE INSURANCE COMPANY OF NEW YORK; FLAGSHIP CITY INSURANCE COMPANY v. THE MARYLAND INSURANCE ADMINISTRATION; KATHLEEN A. BIRRANE
No. 23-1958
UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT
June 18, 2024
PUBLISHED. Arguеd: May 7, 2024. Affirmed by published opinion.
Before GREGORY, HEYTENS, and BENJAMIN, Circuit Judges.
ARGUED: Alex Jonathan Brown, SHAPIRO SHER GUINOT & SANDLER, Baltimore, Maryland, for Appellants. John Van Lear Dorsey, MARYLAND INSURANCE ADMINISTRATION, Baltimore, Maryland, for Appellees. ON BRIEF: Michael S. Bullock, SHAPIRO SHER GUINOT & SANDLER, Baltimore, Maryland, for Appellants. Anthony G. Brown, Attorney General, Betty S. Diener, Assistant Attorney General, OFFICE OF THE ATTORNEY GENERAL OF MARYLAND, Baltimore, Maryland, for Appellees.
An insurance company is facing an enforcement action by а state regulatory agency. Asserting the agency has violated state and federal law and thus tainted the upcoming administrative proceeding, the company asked a federal district court to step in. But “the normal thing to do when federal courts are asked to enjoin pending proceedings” like these is “not to issue such injunctions.” Younger v. Harris, 401 U.S. 37, 45 (1971). Like the district court, we see no reason to depart from that norm here. We thus affirm the district court‘s dismissal of the insurance company‘s complaint.
I.
In 2021, the Maryland Insurance Administration (MIA) opened “two separate administrative investigations” into Erie Insurance Company after receiving complaints that Erie was “engaged in racial and geographic discrimination.” JA 9-10. The first investigation broadly examined Erie‘s “market conduct.” JA 10. The second investigation focused on the “specific . . . allegations” in the individual complaints. Id. The two investigations were handled by different divisions within the MIA.
Between 2021 and 2023, the MIA repeatedly advised Erie that the individual complaints investigation “was subject to a de facto ‘stay,’ or on hold, pending completion of the” market conduct investigation. JA 10. Still, Erie provided written responses to three sets of questions about the individual complaints investigation while the market conduct investigation “was in full swing.” JA 11. Erie also understood that there would be “further discussions and interviews” with the MIA about the individual complaints investigation once the market conduct investigation was finished. Id.
A few months later, the division responsible for the individual complaints investigation issued “four public Determination Letters” that Erie had violated the state‘s insurance laws. JA 12. Those letters referenced documents obtained by the MIA as part of the market conduct investigation, for which the MIA had not issued a report or determination letter.
Erie exercised its statutory right to a hearing on all four determination letters, and thе MIA granted each request. In its initial letters granting the hearing requests, the MIA said that the materials “that were considered as part of the complaint investigation process w[ould] be submitted to the hearing officer to become part of the evidentiary file” but that Erie could “object to having a document accepted as evidence” by filing an objection with the hearing officer “before the hearing.” JA 199-206. In a follow-up letter sent after Eriе filed this lawsuit, the MIA said it would not send the documents to the hearing officer before the hearing and would instead submit evidence during the hearing itself.
Shortly after the MIA granted its requests for administrative hearings, Erie sued the MIA and its commissioner in federal district court, asserting due process claims under
The district court convened a teleconference, during which it set a hearing on Erie‘s motion and directed the parties to submit prе-hearing briefs “on Younger and Burford abstention,” as well as “any other briefing re the motion.” JA 3. After reviewing the submitted materials, the court determined no hearing was necessary because “the issues raised can be resolved on the parties’ submissions alone.” JA 228. The court said it was “going to abstain from exercising jurisdiction under both the Burford and Younger abstention doctrines,” “deny the PI Motion on grounds of abstention,” and “dismiss the complaint without prejudice.” JA 246; see JA 255 (order dismissing complaint without prejudiсe).
II.
Erie first asserts that the district court committed reversible error by denying its motion for a preliminary injunction without holding a hearing on that motion. That
“The traditional office of a preliminary injunction is to protect the status quo and to prevent irreparable harm during the pendency of a lawsuit” so as “to preserve the court‘s ability to render a meaningful judgment on the merits.” United States v. South Carolina, 720 F.3d 518, 524 (4th Cir. 2013) (quotation marks removed); see Di Biase v. SPX Corp., 872 F.3d 224, 230 (4th Cir. 2017) (describing the purpose of a preliminary injunction as “protect[ing] the status quo and prevent[ing] irreparable harm during the pendency of a lawsuit“). But a preliminary injunction plays no role in preserving the status quo once a lawsuit has reached final judgment, and this lawsuit ended the moment the district court dismissed Erie‘s complaint. Accord Mount Graham Red Squirrel v. Madigan, 954 F.2d 1441, 1450 (9th Cir. 1992) (dismissing appeal from denial of preliminary injunction as moot where the district court later enterеd summary judgment against the party whose motion was denied). Erie also has not asked this Court to grant an injunction pending its appeal of the district court‘s dismissal order. See
True, it does not appear that the defendants ever formally moved to dismiss Erie‘s complaint under
Finally, as much as Erie‘s briefs can be read as suggesting that a district court must always conduct an evidentiary hearing or make findings of fact before dismissing a complaint based on abstention, that argument fails. Both the Supreme Court and this one have affirmed district court decisions that abstained under
III.
We turn to the merits of the district court‘s abstention ruling. Because the district court dismissed Erie‘s complaint, we must assume the truth of Erie‘s well-pleaded “factual allegations.” Kugler, 421 U.S. at 125 n.5. We review the district court‘s ultimate decision to abstain “for abuse of discretion,” while remembering that “whether a case satisfies the basic requirements of abstention constitutes a legal question subject to de novo review.” VonRosenberg v. Lawrence, 781 F.3d 731, 734 (4th Cir. 2015) (brackets and quotation
A.
Like all abstention doctrines, Younger abstention “is an exception to the general rule that federal courts must decide cases over which they have jurisdiction.” Air Evac EMS, Inc. v. McVey, 37 F.4th 89, 96 (4th Cir. 2022). That flavor of abstention is based on two deep-rooted concеpts. The first comes from traditional equity practice—the idea that “courts of equity should not act” to restrain another proceeding “when the moving party has an adequate remedy at law and will not suffer irreparable injury if denied equitable relief.” Younger, 401 U.S. at 43-44. The second and “even more vital consideration” is “the notion of ‘comity,‘” including the “belief that the National Government will fare best if the States and their institutions are left free to perform thеir separate functions in their separate ways.” Id. at 44.
Although the Younger doctrine can be intricate, many of its components are not in dispute here. To begin, Erie does not challenge the district court‘s conclusion that the type of state proceedings it asked the district court to enjoin are “quasi-criminal” and thus “fall within” a “categor[y]” that can “trigger Younger abstention.” Sprint Commc‘ns, Inc. v. Jacobs, 571 U.S. 69, 79 (2013). Erie also does not contest the district court‘s determination that two of the three “additional factors” needed for Younger abstention to apply to proceedings like these are present. Id. at 81.
B.
Younger only permits abstention in deference to proceedings that will “provide[] an adequate opportunity to raise constitutional challenges.” Air Evac, 37 F.4th at 93. As the party asking a federаl court to intervene, Erie bears “the burden” of showing that it lacks such an opportunity here because “state procedural law bar[s] presentation of its claims.” Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 14 (1987) (alterations removed). Because this question implicates “whether the district court had authority to abstain,” we review this issue de novo. Johnathan R. by Dixon, 41 F.4th at 327 n.3 (emphasis removed). Like the district court, we conclude Erie failed to carry its burden.
Erie‘s argument stumbles right out of the gate. Maryland‘s highest court has hеld “that the MIA is . . . fully competent to address issues regarding the constitutionality of statutes or ordinances, whether as applied or on its face.” United Ins. Co. of Am. v. Maryland Ins. Admin., 144 A.3d 1230, 1240 n.10 (Md. 2016). Under Maryland law, then, Erie is free to raise its federal law claims in the administrative hearings that it has already
Erie responds that its opportunity to raise constitutional claims during the hearing itself will come too late. We find its arguments unpersuasive.
To begin, Erie insists that the MIA has already violated its statutory and constitutional rights by first considering and later including confidential information in its publicly issued determination letters. The purpose of an injunction, however, is to prevent future harms rather than redress those that have already occurred. See generally City of Los Angeles v. Lyons, 461 U.S. 95, 105-11 (1983). True, Erie seeks an order directing the MIA to withdraw its already issued letters. But there is nothing preventing Erie from seeking such relief from the hearing officer and the Maryland courts.
Erie also asserts that “even transferring the” underlying administrative materials “to the hearing officer will, in and of itself, create new, irreparable injury” by exposing its private information “to the general public” in violation of some combination of Maryland statutory law, longstanding Maryland administrative practice, and its federal constitutional rights. Eriе Br. 29. This is so, Erie says, because Maryland law requires the hearing officer “to make the MIA‘s entire file part of the hearing record,” which will then expose the information to broad scrutiny via “civil litigation, subpoenas to the hearing officer and Public Information Act requests.” Id.
That argument fails too. Even if Erie correctly describes how proceedings before the hearing officer typically work, Maryland law provides mechanisms that permit it to
Erie counters that Maryland law only gives the hearing officer “the option of using” those various privacy-protecting tools and says it needs federal court intervention to ensure “certainty against public disclosure.” Erie Reply Br. 13-14. That argument gets the principles of “Our Federalism” reflected in Younger backwards. 401 U.S. at 44. Younger is grounded on the “assump[tion]” that “absen[t] . . . unambiguous authority to the contrary,” “state procedures will afford an adequate remedy.” Pennzoil Co., 481 U.S. at 15 (emphasis added). This is particularly so when, as here, “a litigant has not attempted to presеnt” its “federal claims” to a state-provided adjudicator before seeking federal court intervention. Id.
Still, Erie worries that the hearing officer might improperly decline to protect the
C.
Even when “the basic requirements” for Younger abstention are present, there are a few carefully limited circumstances where a district court “may disregard Younger‘s” otherwise-ironclad “mandate.” VonRosenberg, 781 F.3d at 734 (first quote); Nivens II, 444 F.3d at 241 (second quote). As with other “decision[s] rest[ing] on evaluation of equitable considerations or other traditionally discretionary factors,” Lord & Taylor, LLC v. White Flint, L.P., 780 F.3d 211, 217 (4th Cir. 2015), we review a district court‘s bottom-line judgment about whether any of these “exceptions” apply for abuse of
Erie faults the district court for not addressing each of what it says are “five separate, dispositive exceptions” to Younger abstention. Erie Br. 42. But it is the district court, not Erie, that has the law right. Under this Court‘s precedent, there are ”three exceptions to the court‘s duty to abstain,” Air Evac, 37 F.4th at 96 (emphasis added); accord Kugler, 421 U.S. at 124 (listing same three exceptions), and the district court acknowledged each of them in rejecting Erie‘s arguments.
On appeal, Erie primarily invokes the third Younger exception, which covers “extraordinary сircumstances or unusual situations.” Air Evac, 37 F.4th at 96. In essence, Erie argues that—rather than follow its normal procedure and allow the investigation to unfold—the MIA, under the direction of a new Governor “who has made addressing racial discrimination a priority,” “bowed to political pressure” from the NAACP. Erie Br. 19, 34. As support, Erie points to the sequence of events between the filing of the complaints against it in 2021 and the publication of the determination letters in 2023. Erie asserts the MIA‘s actions violated the Maryland Insurance Code and deprived it of an adequate opportunity to participate in the investigation. This, Erie says, reveals the MIA‘s bias against it, and creates an “actual impediment to” MIA‘s “ability to address the federal issues” in the administrative proceedings. Air Evac, 37 F.4th at 100. Like the district court, we reject that argument.
Erie also cites Gibson v. Berryhill, 411 U.S. 564 (1973), but that decision does not help it either. In Gibson, the Supreme Court affirmed a district court‘s decision not to abstain under Younger where a board “composеd solely of optometrists in private practice” aimed “to revoke the licenses of all optometrists in the State who were employed by business corporations.” 411 U.S. at 578. Citing two previous decisions, the Court reiterated “that those with [a] substantial pecuniary interest in” a legal proceeding “should not adjudicate” it. Id. at 579.
Despite admitting that this case—unlike Gibson—presents no allegations “of bias due to” a regulator‘s “pecuniary interests,” Erie insists that abstention is unwarranted becаuse “[t]he regulators here are alleged to be biased” for non-pecuniary reasons. Erie
In Kugler, a state court judge asserted he could not get a fair trial in New Jersey state court because the State‘s “Chief Justice and other members of the [state] Supreme Court” played a direct role in coercing his grand jury testimony. 421 U.S. at 121. Because the district court had dismissed the complaint under
Turning its attention from claims of bias back to the hearing procedures, Erie insists there is no way to avoid due process problems because “the hearing оfficer will be irreparably tainted by [the officer‘s] review of the confidential and privileged” materials that Erie thinks are inadmissible and must be protected. Erie Br. 42. But the only authorities Erie cites to support that striking assertion are non-controlling and far afield, and a moment‘s reflection reveals why Erie‘s argument must be wrong. Trial judges and other adjudicators constantly resolve questions about whether materials are privileged or otherwise inadmissible, аnd they must often see the underlying information in making such determinations. Yet no one thinks that this fact, standing alone, is enough to require their disqualification under the Due Process Clause. Indeed, even a trial judge who “was reversed in earlier rulings” is not “disqualified from sitting in a retrial.” Withrow v. Larkin, 421 U.S. 35, 49 (1975) (quotation marks removed).
That argument also fails to convince. For one thing, the only decision that Erie cites in support of this argument addressed a different issue—whether state enforcement proceedings that are alleged to be preempted by federal law may be enjoined despite Younger—and it left that question undecided. See New Orleans Pub. Serv., Inc. v. Council of City of New Orleans (NOPSI), 491 U.S. 350, 367 (1989). And even if the MIA violated the law in issuing the determination letters, the Supreme Court has made clear that previous “error[s]” of “state or federal law” do not, on their own, justify diverging from ordinary abstention principles. Hicks v. Miranda, 422 U.S. 332, 352 (1975). Were it otherwise, “the rule of Younger v. Harris” could easily “be swallowed up by its exception.” Id. What matters is that, even if Erie is right about what happened in the past, “we cannot conclusively say” “without further factual inquiry” that future proceedings will not afford it constitutionally adequate process. NOPSI, 491 U.S. at 367. “[A]nd what requires further factual inquiry can hardly be deemed ‘flagrantly’ unlawful for purposes of a threshold abstention determination.” Id. For this reason too, the district court committed no reversible
* * *
The district court‘s judgment is
AFFIRMED.