FARMERS INSURANCE EXCHANGE et al., Petitioners, v. THE SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent; THE PEOPLE, Real Party in Interest.
No. S016912
Supreme Court of California
Apr. 6, 1992.
2 Cal. 4th 377
Barger & Wolen, Richards D. Barger, Royal F. Oakes, Larry M. Golub and Linda C. Johnson for Petitioners.
No appearance for Respondent.
John K. Van de Kamp and Daniel E. Lungren, Attorneys General, Andrea Sheridan Ordin, Chief Assistant Attorney General, Michael J. Strumwasser, Fredric D. Woocher and Herschel T. Elkins, Assistant Attorneys General, Albert Norman Sheldon, Ronald A. Reiter and M. Howard Wayne, Deputy Attorneys General, for Real Party in Interest.
Gary T. Yancey, District Attorney (Contra Costa), Gary E. Koeppel, Deputy District Attorney, Gail K. Hillebrand, Nettie Y. Hoge, Paul E. Lee and Robert Fellmeth as Amici Curiae on behalf of Real Party in Interest.
OPINION
LUCAS, C. J.—The People, through the Attorney General (real party in interest), filed suit against various insurers (petitioners) under the Unfair Practices Act (
We conclude that in the absence of legislation clearly addressing whether a court may exercise discretion under the primary jurisdiction doctrine, a court may exercise such discretion and may decline to hear a suit until the administrative process has been invoked and completed. We hold that prior resort to the administrative process is required in the circumstances of this case and that the trial court abused its discretion in concluding otherwise.
I. Facts and Procedure
The People filed a two-count complaint alleging petitioners violated sections 1861.02 and 1861.05, enacted by the voters in November 1988 as part of Proposition 103, by refusing to offer a “Good Driver Discount policy” to all eligible applicants.
In their first cause of action, the People claim that since November 1989, petitioners have violated the above provisions by: (i) refusing to offer and
Under the first cause of action the People seek an order pursuant to
The second cause of action—which is the subject of this proceeding—incorporates the allegations of the first count, and asserts: “The violations of sections 1861.02 and 1861.05 as set forth above constitute unlawful and unfair business practices, in violation of Business and Professions Code section 17200.”
Under the second cause of action the complaint seeks the injunctive relief described above pursuant to
Petitioners demurred to both causes of action on the ground, inter alia, that the People‘s suit was precluded by their failure to pursue and exhaust administrative remedies. The trial court sustained the demurrer as to the first cause of action (the Insurance Code claim), concluding that under County of Los Angeles v. Farmers Ins. Exchange (1982) 132 Cal.App.3d 77, 85-87, the People were barred from proceeding because they failed to exhaust administrative remedies available under the Insurance Code. The People do not contest this ruling.1
As to the second cause of action (the Business and Professions Code claim), however, the court overruled the demurrer, concluding that under
Petitioners sought a writ of mandate in the Court of Appeal challenging the propriety of this latter ruling. In an unpublished opinion, the Court of Appeal agreed with the trial court. It reasoned that “exhaustion of administrative remedies” is not required before an action under section 17200 of the Business and Professions Code may be prosecuted because (i) the People‘s second cause of action seeks a remedy that is “merely cumulative” to administrative remedies sought in the first count, and (ii) the courts can more promptly resolve the issues in this case than can the Insurance Commissioner.
As noted, we conclude prior resort to the administrative process is appropriate in these circumstances, and we therefore reverse the decision of the Court of Appeal.
II. The Statutory Schemes
A. The Unfair Practices Act
The Unfair Practices Act is found in
Section 17205 of the Business and Professions Code states: “Unless otherwise expressly provided, the remedies or penalties provided by this chapter are cumulative to each other and to the remedies or penalties available under all other laws of this state.” (Italics added.) Section 17204 of the Business and Professions Code authorizes the Attorney General to prosecute an action to enjoin violations of section 17200 of the Business and Professions Code. Finally, Business and Professions Code section 17206 provides for a $2,500 civil penalty for each violation of section 17200.
B. The McBride Act
As modified by the voters through the initiative process, and by the Legislature through various amendments, the McBride Act presently is found in sections 1851 through 1861.16 of the Insurance Code.
1. Provisions for Administrative Hearings and Judicial Review
Section 1858 establishes an administrative scheme under which “[a]ny person aggrieved by any rate charged, rating plan, rating system, or underwriting rule . . . may” file a complaint with the Insurance Commissioner. (
Section 1858.1 sets out procedures for the Commissioner‘s investigation and resolution of the complaint. If the Commissioner determines there is “good cause” to believe an insurer‘s rating scheme fails to comply with the requirements of the chapter, he or she “shall give notice in writing to that insurer, stating therein in what manner and to what extent that noncompliance is alleged to exist and specifying therein a reasonable time . . . in which that noncompliance may be corrected, and specifying therein the amount of any penalty that may be due. . . .” (
Section 1858.2 sets out procedures for public hearings on disputed issues and requires the Commissioner to issue a decision within 60 days after
Finally, section 1858.6 provides for judicial review following “[a]ny finding, . . . ruling or order made by the commissioner under this chapter . . . in accordance with the provisions of the
2. Relevant Substantive Provisions
Various substantive sections of the McBride Act were significantly augmented and altered by the voters in November 1988. (See CalFarm Ins. Co. v. Deukmejian (1989) 48 Cal.3d 805.) The following sections are relevant here:
Section 1861.02, subdivision (b)(1) (hereafter section 1861.02(b)(1)), provides, inter alia, that all persons who meet specified criteria set out in section 1861.025 “shall be qualified to purchase a Good Driver Discount policy from the insurer of his or her choice.” Section 1861.02, subdivision (b)(2) (hereafter section 1861.02(b)(2)), requires that the “rate charged for a Good Driver Discount policy shall . . . be at least 20% below the rate the insured would otherwise have been charged for the same coverage.” Under subdivision (c) of section 1861.02 (hereafter section 1861.02(c)), “[t]he absence of prior automobile insurance coverage, in and of itself, shall not be a criterion for determining eligibility for a Good Driver Discount policy, or generally for automobile rates, premiums, or insurability.” Finally, section 1861.05, subdivision (a) (hereafter section 1861.05(a)) states, “[n]o rate shall be approved or remain in effect which is . . . unfairly discriminatory or otherwise in violation of this chapter.” (As noted above, the People claim petitioners have violated all four provisions since November 1989.)3
The voters in 1988 also repealed various sections that had previously exempted the business of insurance from this state‘s antitrust laws (see
III. The Primary Jurisdiction Doctrine
A. Development of the Doctrine
The judicially created doctrine of “primary jurisdiction” (also referred to as the doctrine of “prior resort”4 or “preliminary jurisdiction”5), originated in Texas & Pac. Ry. v. Abilene Cotton Oil Co. (1907) 204 U.S. 426 (hereafter Abilene), and as explained below, most of the development of the doctrine has occurred in the federal courts.
1. Abilene
In Abilene, supra, 204 U.S. 426, a shipper sued a railroad in state court under the common law to recover alleged unreasonable amounts charged for transporting interstate freight. Such common law suits had been regularly entertained before enactment of the Interstate Commerce Act (Commerce Act) and creation of the Interstate Commerce Commission (ICC) in 1887. (204 U.S. at p. 436.) Under the Commerce Act, Congress granted the ICC power to hear such complaints by shippers, and to order reparations to those injured. (Id., at p. 438.) Despite provisions of the Commerce Act allowing a litigant to elect between administrative enforcement of statutory rights and judicial enforcement of common law rights,6 the high court declined to allow the common law suit in the first instance. Instead, it ruled that in order to promote uniformity and
The court concluded that the act should be construed to allow only those judicial actions that seek “redress of such wrongs as can, consistently with the context of the act, be redressed by courts without previous action by the Commission, and, therefore, does not imply the power in a court to primarily hear complaints concerning wrongs of the character of the one here complained of.” (Abilene, supra, 204 U.S. at p. 442; see also id., at p. 446.)7
2. Merchants
The doctrine of Abilene, supra, 204 U.S. 426, was refined and clarified in Merchants, supra, 259 U.S. 285, another case in which a shipper attempted to press suit against a railway to recover asserted overcharges. Justice Brandeis, speaking for the court, allowed the state court suit to proceed because the issue presented in that case—i.e., the proper interpretation of a tariff—was one of law and neither involved disputed facts, nor required the exercise of expertise possessed by the ICC. The court explained, “Preliminary resort to the Commission [is necessary when] . . . the enquiry is essentially one of fact and of discretion in technical matters; and uniformity can be secured only if its determination is left to the Commission. Moreover,
3. Western Pacific
In a third railroad shipping case, United States v. Western Pac. R. Co. (1956) 352 U.S. 59 (hereafter Western Pacific), the shipper (the United States government) filed suit in the Court of Claims to recover alleged overcharges. The issue presented was similar to that in Merchants, supra, 259 U.S. 285, i.e., the construction of a railroad tariff. Specifically, the question posed was whether shipments of steel bomb cases filled with napalm gel should be classified as “incendiary bombs” (subject to a high first-class tariff rate) or merely “gasoline in steel drums” (subject to a lower, fifth-class rate).
The high court considered the factors articulated in Abilene, supra, 204 U.S. 426, and Merchants, supra, 259 U.S. 285, i.e., (i) “the desirable uniformity which would obtain if initially a specialized agency passed on certain types of administrative questions” (Western Pacific, supra, 352 U.S. at p. 64), and (ii) the need to secure “the expert and specialized knowledge of the agencies involved.” (Ibid.) The court asserted that the term “incendiary bomb,” as used in the tariff regulations, posed a question of construction that “involves factors ‘the adequate appreciation of which’ presupposes an ‘acquaintance with many intricate facts of transportation’ possessed by the ICC. (Western Pacific, supra, 352 U.S. at p. 66, quoting Merchants, supra, 259 U.S. at p. 291.) Accordingly, the court concluded, “in the circumstances here presented the question of tariff construction, as well as that of the reasonableness of the tariff as applied, was within the exclusive primary jurisdiction of the Interstate Commerce Commission.” (Western Pacific, supra, 352 U.S. at p. 63.)
4. Nader
A more recent high court case illustrates both procedural and substantive aspects of the primary jurisdiction doctrine. In Nader v. Allegheny Airlines (1976) 426 U.S. 290 (hereafter Nader), the plaintiff filed a common law tort action for fraudulent misrepresentation
The United States District Court entertained the suit and entered judgment for the plaintiff, but the United States Court of Appeals for the District of Columbia, applying the primary jurisdiction doctrine, reversed and remanded for administrative findings on, inter alia, the common law claim. It took judicial notice that the Civil Aeronautics Board (Board) was then considering the same challenges to carriers’ overbooking practices in an ongoing rule-making proceeding, and held that before the plaintiff would be allowed to proceed with his misrepresentation action, the Board should be allowed to consider whether the challenged practices fell within its power to investigate complaints and issue cease-and-desist orders. (Nader v. Allegheny Airlines, Inc. (D.C.Cir. 1975) 512 F.2d 527, 546.) Accordingly, the court of appeals instructed the district court to stay further action on the plaintiff‘s misrepresentation claim pending the outcome of the rule-making proceeding. (Id., at p. 552.)8
The high court reversed. Initially, it observed that there was no “irreconcilable conflict between the statutory scheme and the persistence of common-law remedies . . . ,” (Nader, supra, 426 U.S. 290, 299) and that “[u]nder the circumstances, the common-law action and the statute . . . may coexist.” (Id., at p. 300.)
The court then proceeded to apply the primary jurisdiction doctrine. It noted that under the administrative scheme at issue, individual consumers were “not even entitled” to initiate proceedings before the Board. (Nader, supra, 426 U.S. at p. 302.) The fact that the plaintiff in the case before it had no authority to bring an administrative action,
B. The Primary Jurisdiction and Exhaustion Doctrines Compared
Petitioners assert throughout their briefs that the People should be required to “exhaust” their administrative remedies before pursuing their civil action in this case. As suggested above and explained below, the applicable principle in this case is the primary jurisdiction doctrine, not the exhaustion doctrine.
Petitioners’ mischaracterization is understandable because courts have often confused the two closely related concepts (see, e.g., 2 Cooper, supra, at pp. 572-573). “Both are essentially doctrines of comity between courts and agencies. They are two sides of the timing coin: Each determines whether an action may be brought in a court or whether an agency proceeding, or further agency proceeding, is necessary.” (Schwartz, Administrative Law (1984) § 8.23, p. 485.)
In Western Pacific, supra, 352 U.S. 59, the high court explained: “‘Exhaustion’ applies where a claim is cognizable in the first instance by an administrative agency alone; judicial interference is withheld until the administrative process has run its course. ‘Primary jurisdiction,’ on the other hand, applies where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body; in such a case the judicial process is suspended pending referral of such issues to the administrative body for its views.” (Id., at pp. 63-64, italics added; see also Schwartz, supra, § 8.23 at p. 486 [“Exhaustion applies where an agency
As noted above, count 1 of the People‘s complaint presented a question of exhaustion of administrative remedies; the People attempted to litigate Insurance Code claims over which the Insurance Commissioner has been given exclusive jurisdiction without first invoking and completing the available administrative process set out in the Insurance Code. (See ante, p. 382, fn. 1.) By contrast, count 2 of the complaint—the only count before us now—presents a different issue. The Business and Professions Code claim in count 2 is “originally cognizable in the courts,” and thus it triggers application of the primary jurisdiction doctrine.
C. Policy Considerations Underlying the Primary Jurisdiction and Exhaustion Doctrines
The policy reasons behind the two doctrines are similar and overlapping. The exhaustion doctrine is principally grounded on concerns favoring administrative autonomy (i.e., courts should not interfere with an agency determination until the agency has reached a final decision) and judicial efficiency (i.e., overworked courts should decline to intervene in an administrative dispute unless absolutely necessary). (See 2 Cooper, supra, at p. 573; Schwartz, supra, § 8.30 at p. 503; Koch, Administrative Law and Practice (1985) § 10.22, p. 177.) As explained above, the primary jurisdiction doctrine advances two related policies: it enhances court decisionmaking and efficiency by allowing courts to take advantage of administrative expertise, and it helps assure uniform application of regulatory laws. (See Western Pacific, supra, 352 U.S. at pp. 64-65; 2 Cooper, supra, at p. 563; Schwartz, supra, § 8.24 at pp. 487-488; Koch, supra, § 10.23 at pp. 179-180; Modjeska, Administrative Law Practice and Procedure (1982) p. 204.)
No rigid formula exists for applying the primary jurisdiction doctrine (Western Pacific, supra, 352 U.S. 59, 64). Instead, resolution generally hinges on a court‘s determination of the extent to which the policies noted above are implicated in a given case. (Ibid.; 2 Cooper, supra, at pp. 564-570, and cases discussed.) This discretionary approach9
IV. Whether the Legislature has Precluded Application of the Primary Jurisdiction Doctrine in Actions Filed Under Section 17200 of the Business and Professions Code
The People suggest that the Legislature, by establishing “cumulative” administrative (
Contrary to the People‘s suggestions, we do not view the cited cases as addressing the primary jurisdiction doctrine. All three cases applied the exhaustion of remedies doctrine, and not the primary jurisdiction doctrine.11
If the Legislature establishes a scheme under which a court is prohibited from exercising discretion under the doctrine of primary jurisdiction, a court must honor the legislative scheme, and may not decline to adjudicate a suit on the basis that available administrative processes should first be invoked and completed. If, however, the Legislature does not preclude a court from exercising its discretion under the primary jurisdiction doctrine, a court may do so and, in appropriate cases, may decline to adjudicate a suit until the administrative process has been invoked and completed.
Accordingly, the threshold question we must decide is whether the Legislature established a scheme that precludes a court from exercising discretion under the primary jurisdiction doctrine. For the reasons set out below, we conclude the legislative scheme at issue here does not address the primary jurisdiction issue, and a court thus is free to exercise its discretion to determine whether to stay proceedings in this suit pending action by the Insurance Commissioner.
The People assert that section 1861.03, subdivision (a) (which, as noted above,14 provides that the insurance industry is subject to, inter alia,
We agree that section 1861.03 does not condition a suit under
The People advance a similar argument with respect to
We base our construction of section 17205 of the Business and Professions Code not merely on the language of that section viewed in isolation, but on the scheme of the Unfair Practices Act as a whole. As noted above, section 17200 of the Business and Professions Code defines “unfair competition” very broadly, to include “anything that can properly be called a business practice and that at the same time is forbidden by law.” (Barquis, supra, 7 Cal.3d 94, 113.) Because it sweeps so broadly, the Unfair Practices Act applies to many situations in which no administrative process is available to address the challenged practice. Thus there is nothing from which we can conclude that the Legislature intended to preclude a court presented with a suit under the Unfair Practices Act from exercising discretion under the primary jurisdiction doctrine, in situations in which the practice challenged is one over which an administrative agency may also exercise jurisdiction. Instead, as with section 1861.03, subdivision (a), we conclude the Unfair Practices Act, and Business and Professions Code section 17205 in particular, discloses no legislative intent to preclude a court from exercising discretion under the primary jurisdiction doctrine before entertaining a civil action under section 17200 of the Business and Professions Code. It follows that we may consider whether to stay judicial proceedings pending action by the Insurance Commissioner in this case.
V. Recent Application of the Primary Jurisdiction Doctrine
Recently we applied primary jurisdiction principles in Rojo v. Kliger (1990) 52 Cal.3d 65 (Rojo), in which the plaintiff asserted (i) statutory violations of the Fair Employment and Housing Act (
We held prior resort to the administrative process unnecessary for two reasons. First, we explained, “the FEHA does not have a ‘pervasive and self-contained system of administrative procedure’ [citation] for general regulation or monitoring of employer-employee relations so as to assess or prevent discrimination or related wrongs in the employment context. . . .” (Rojo, supra, 52 Cal.3d at pp. 87-88.) Second, “the factual issues in an employment discrimination case [are not] of a complex or technical nature beyond the usual competence of the judicial system.” (Id., at p. 88.) We concluded, “[w]ith all due respect to the expertise and efficiency the [administrative agency] bring[s] to bear in investigating and determining statutory discrimination cases, and the salutary effect [it has] on the settlement and disposition of such cases, these are not cases having such a paramount need for specialized agency fact-finding expertise as to require [prior resort to and] exhaustion of administrative remedies before permitting an aggrieved person to pursue his or her related nonstatutory claims and remedies in court.” (Ibid.)
VI. Application of the Primary Jurisdiction Doctrine in This Case
Our analysis in Rojo, supra, 52 Cal.3d 65, informs the result in this case. First, as explained above (ante, pp. 384-385), the Insurance Commissioner has at his disposal a “pervasive and self-contained system of administrative procedure” (Rojo, supra, at p. 87) to deal with the precise questions involved herein.
Second, and more important, based on the allegations in the People‘s complaint, there is good reason to require that these administrative procedures be invoked here. As we explain below, we conclude that considerations of judicial economy, and concerns for uniformity in application of the complex insurance regulations here involved, strongly militate in favor of a stay to await action by the Insurance Commissioner in the present case.
In Rojo, supra, 52 Cal.3d 65, we reasoned that in light of the nature of the common law action involved in that case, the agency had no special expertise that would warrant prior resort to its procedures. By contrast, other
The People assert the claims at issue here “involve relatively simple factual determinations which do not require the detailed examination of experts within the Department of Insurance.” To support this view of their complaint, they assert, for the first time in briefs filed in this court, that their action is in reality one to preclude Farmers Insurance Exchange from referring persons who meet the criteria for a Good Driver Discount policy to Mid-Century Insurance Company, a “substandard” insurer that is part of the Farmers Group, but which charges rates “substantially higher” than Farmers for the same coverage.16
We cannot accept the People‘s recharacterization of their complaint. The complaint filed in superior court makes no mention of any alleged improper referral plan between Farmers and Mid-Century, and, although it was clearly possible for the People to do so,17 the complaint does not on its face allege the factual claim that the People now advance. Instead, the complaint tracks17
We conclude that in determining whether it is appropriate to issue a stay of judicial proceedings in order to permit administrative action under the primary jurisdiction doctrine, we must confine our analysis to the complaint as written. A review of the allegations in the People‘s complaint demonstrates the “paramount need for specialized agency fact-finding expertise” in this case. (Rojo, supra, 52 Cal.3d at p. 88.)
The gravamen of the People‘s action under
First, in determining eligibility for Good Driver Discount policies,
Similarly, the determination of whether a given Good Driver Discount policy comports with the “20 percent discount” provision of the statute also calls for exercise of administrative expertise preliminary to judicial review. Inevitably, analysis of the People‘s claim will require “a searching inquiry into the factual complexities of [automobile] insurance ratemaking and the conditions of that market during the turbulent time here involved.” (Karlin v. Zalta, supra, 154 Cal.App.3d 953, 983.) To address the People‘s claim, one must inquire into the insurer‘s ratemaking process in order to determine what the rate would be for a given driver without the discount. Thereafter one must discern whether the rate offered on a given Good Driver Discount policy is 20 percent below what the insured would otherwise have been charged. As we have observed, the question of insurance rate regulation has “traditionally commanded administrative expertise applied to controlled industries.” (Chicago Title Ins. Co. v. Great Western Financial Corp. (1968) 69 Cal.2d 305, 323 [70 Cal.Rptr. 849, 444 P.2d 481].)
There is no reason to conclude otherwise in the present case; we think it is plain that a court attempting to determine whether a given Good Driver Discount policy meets the statutory 20 percent discount requirements should have the benefit of the Insurance Commissioner‘s expert assessment of that issue. In addition, we note that
Finally, and for the same reasons, the determination whether petitioners employed rates that are “unfairly discriminatory” also calls for exercise of administrative expertise preliminary to judicial review. In practice, resolution of the “unfairly discriminatory rate” question will turn in many instances on determination of the above discussed rate-setting provisions of
Accordingly, we reject the People‘s assertion that because eventual recourse to the courts is likely in this case, nothing is to be gained by requiring prior resort to the administrative process involved here. As we said in Westlake Community Hosp. v. Superior Court (1976) 17 Cal.3d 465, 476 [131 Cal.Rptr. 90, 551 P.2d 410], “even if . . . ultimate resort to the courts [is] inevitable [citation], the prior administrative proceeding will still promote judicial efficiency by unearthing the relevant evidence and by providing a record which the court may review.” In addition, we reject any suggestion that the interests of justice militate against a requirement of prior resort in this case. (See ante, pp. 391-392, fns. 9 & 10.) The People do not assert that the administrative remedies available from the Insurance Commissioner are “inadequate,” and we dismiss as unsupported conjecture the suggestion that prior resort to the administrative process will unduly delay or frustrate resolution of the issues presented in the People‘s complaint.
The cases cited by the People (People v. McKale, supra, 25 Cal.3d 626; People v. Los Angeles Palm, Inc. (1981) 121 Cal.App.3d 25 [175 Cal.Rptr. 257]; and People v. Casa Blanca Convalescent Homes, Inc. (1984) 159 Cal.App.3d 509 [206 Cal.Rptr. 164, 53 A.L.R.4th 661]) do not require a contrary result. In McKale, supra, 25 Cal.3d 626, we held that although a specific statutory remedy existed for a violation of the Mobilehome Park Act (
Finally, we reject the People‘s unsupported and novel claim that because the Attorney General is the chief law enforcement officer of the state, actions filed by him should not be subject to the primary jurisdiction doctrine. The reasons supporting the doctrine apply to private citizens and the Attorney General alike, and the two classes of plaintiffs should be treated equally. The primary jurisdiction doctrine evolved for the benefit of courts and administrative agencies, and unless precluded by the Legislature, it may be invoked whenever a court concludes there is a “paramount need for specialized agency fact-finding expertise.” (Rojo, supra, 52 Cal.3d at p. 88.)20
VII. Conclusion
We conclude, based on the complaint as it stands, that a paramount need for specialized agency review militates in favor of imposing a requirement of prior resort to the administrative process, and as noted above we reject any suggestion that the interests of justice militate against application of a prior resort requirement in this case.
Accordingly, the judgment of the Court of Appeal is reversed with directions to issue a writ of mandate directing the superior court to stay judicial proceedings in this case and retain the matter on the court‘s docket pending proceedings before the Insurance Commissioner (see, e.g., Tank Car Corp. v. Terminal Co., supra, 308 U.S. 422, 432-433 [84 L.Ed. 361, 370]; Shernoff v. Superior Court, supra, 44 Cal.App.3d 406, 408-409), and to closely monitor the progress of the administrative proceedings to ensure against unreasonable delay of the People‘s civil action (see, e.g., Shernoff v. Superior Court, supra, 44 Cal.App.3d 406, 408; Red Lake Band of Chippewa Indians v. Barlow (8th Cir. 1988) 846 F.2d. 474, 476-477; see generally Rohr Industries v. Wash. Metro Area Transit Auth. (D.C.Cir. 1983) 720 F.2d 1319, 1326-1327 [232 App.D.C. 92]).
Panelli, J., Kennard, J., Arabian, J., Baxter, J., and George, J., concurred.
MOSK, J.—I dissent. California has never recognized the doctrine of primary jurisdiction, and prior authority in this state is in conflict with that concept. Even if this court should decide at some time to judicially legislate that theory, the facts involved in this case, and the dilatory result, do not justify its application. Finally, there are sound reasons of policy for holding that the question whether petitioners violated the Unfair Practices Act (
I
No decision in this state has ever forthrightly applied the doctrine of primary jurisdiction, and the three California cases to which the majority refer and attempt to distinguish are in direct conflict with that doctrine. (City of Susanville v. Lee C. Hess Co. (1955) 45 Cal.2d 684 [290 P.2d 520] (Susanville); Scripps etc. Hospital v. Cal. Emp. Com. (1944) 24 Cal.2d 669 [151 P.2d 109, 155 A.L.R. 360] (Scripps); McKee v. Bell-Carter Olive Co. (1986) 186 Cal.App.3d 1230 [231 Cal.Rptr. 304] (McKee).)1 Each holds that in a situation like the matter before us, in which a litigant is afforded the choice whether to bring a proceeding before an administrative body or to file an action in court, the litigant may choose either remedy, and is not required to resort initially to the agency for the vindication of his or her rights. The holdings in these cases are in direct conflict with the majority‘s determination that a court has discretion whether or not to exercise jurisdiction under these circumstances.
The majority opinion declares that the three cases cited applied “the exhaustion of remedies doctrine, and not the primary jurisdiction doctrine.” I disagree with this characterization of the cases. In fact, all three cases refused to apply the exhaustion doctrine because the Legislature had given the aggrieved party a choice of remedies. As the majority opinion concedes, the exhaustion doctrine applies when the administrative agency alone has initial jurisdiction to hear the matter. In all three cases cited above—as well as in the present case—both the agency and a court had such power, and therefore the exhaustion doctrine did not apply. The majority simply refuse to adhere to the prevailing theory on which those cases were decided, i.е., that it is for the litigant to choose which forum to utilize in these circumstances.
The opinion attempts to distinguish Scripps on the ground that it did not “address the primary jurisdiction question” because it failed to decide whether a court has authority to exercise its discretion to stay judicial proceedings pending action by an administrative agency. In fact, the Scripps court‘s holding can only be read as prohibiting the exercise of such discretion. After stating the rule that a litigant may choose the forum in which to bring the action if the Legislature has provided alternative remedies, Scripps declares that “it is not for the courts to add conditions to the exercise of [the right to bring an action in court] which are not imposed by the statute.” (Scripps, supra, 24 Cal.2d at p. 674.) I cannot read this holding as anything but a determination that a court does not have the power to require a litigant to first resort to an administrative remedy when a statute provides a choice whether to do so or to bring a court action.
As for Susanville, which the majority attempt to distinguish on the same ground as Scripps, it holds that the rule requiring exhaustion of administrative remedies has “no application” if the aggrieved person is granted alternative remedies and elects to use judicial means. (Susanville, supra, 45 Cal.2d at p. 689.) This amounts to a determination that a court cannot compel a litigant to resort to the process of an administrative agency if one has been granted the right to sue in court.
The majority state, regarding McKee, that they do not to read the opinion in that case as suggesting that the availability of cumulative remedies bars
The only case cited by the majority which they claim applied the doctrine of primary jurisdiction in California is Rojo v. Kliger (1990) 52 Cal.3d 65 [276 Cal.Rptr. 130, 801 P.2d 373] (Rojo). However, as the majority must recognize, Rojo refers not to that doctrine but to exhaustion of remedies. There, the plaintiffs filed a civil action seeking damages for employment discrimination. We held that they should not be required to exhaust their remedies before the Fair Employment and Housing Commission, employing reasoning generally used to determine whether a party should be required to exhaust administrative remedies. (See e.g., Karlin v. Zalta (1984) 154 Cal.App.3d 953, 983 [201 Cal.Rptr. 379].)
If it should be deemed advisable to adopt a judge-made doctrine of primary jurisdiction in this state, the majority should state forthrightly that they do so, instead of futilely attempting to distinguish cases which are incompatible with the existence of that doctrine.
II
Even if the primary jurisdiction principle should become applicable in California, it would not apply under the circumstances of this case.
The majority state several grounds for requiring the People to bring this proceeding before the Insurance Commissioner. First, relying on the reasons advanced in Rojo, they assert that here, unlike in that case, the administrative agency has “a ‘pervasive and self-contained system of administrative procedure’ to deal with the precise questions involved herein.” In support of this proposition, they cite sections of the
Once the question of fault is decided, it is necessary to ascertain whether the required discount has been afforded. The majority assert that this determination calls for a “searching inquiry into the factual complexities of [automobile] insurance ratemaking.” I disagree. The issue here is not whether the insurer charged a reasonable rate or one which complies with statutory requirements for such a rate, but whether the rate charged is below what the insurer would have charged without the discount. The answer to that is clear under the circumstances of this case. No determination whether the discount was afforded is required by either the Insurance Commissioner or a court because it is undisputed that the “good driver” discount provisions have not been implemented. It follows that the rate charged is in excess of the rate which would have been charged without the discount.
The majority claim also that uniformity of decision will be enhanced by an administrative determination of the issues raised in the People‘s complaint before a court attempts to grapple with “such a broad-ranging and technical question of insurance law.” But the question whether a driver is entitled to a “good driver” discount under the guidelines adopted by the commissioner involves the application of those guidelines to the circumstances of a particular case. I fail to see how uniformity of decision will be promoted by a preliminary determination of the issue by the commissioner since the fault of each driver depends on the facts relating to a specific
III
Furthermore, there are persuasive policy reasons which militate against application of the primary jurisdiction doctrine in this case.
First, it will not promote judicial economy. In Rojo, we reasoned that a determination by the administrative agency of the issues raised in the complaint would have no beneficial impact on the judicial system because the case must in any event still enter the “judicial pipeline.” (Rojo, supra, 52 Cal.3d at p. 88.) This rationale also applies here. If, as occurred in Shernoff v. Superior Court, supra, 44 Cal.App.3d 406, the Insurance Commissioner declines to exercise his jurisdiction to decide the issues raised in this proceeding—as he indicates he is likely to do by his support of the Attorney General herein—the courts will not receive the assistance from administrative determination of the issues which the majority claim as the justification for application of the primary jurisdiction doctrine.
Moreover, as we also observed in Rojo, requiring the agency to decide the matter would limit the resources available to it for resolution of cases within its jurisdiction. It is no secret that the Insurance Commissioner is understaffed and overburdened with litigation relating to Proposition 103. The Department of Insurance agrees. It supports the position of the People in this case on the ground that the Insurance Commissioner cannot reasonably be expected to respond to all allegations of violations of the Unfair Practices Act, and that requiring the exhaustion of administrative remedies would weaken or destroy the effectiveness of remedies granted thereunder.
By providing in Proposition 103 that both the Insurance Commissioner and the People should have the power to enforce the “good driver” provisions, the voters clearly intended that the People have the right to obtain an expeditious determination before a court whether an insurer is complying with those provisions. They did not contemplate dilatory proceedings and successive decisions on the same issue by the Insurance Commissioner and subsequently by the courts. The holding of the majority violates this intent.
Finally, the opinion dismisses summarily as “unsupported conjecture” the claim that prior resort to the administrative process will unduly delay or frustrate resolution of the issues presented by the People. As the majority concede, however, expense to litigants and delay are factors which militate against application of the doctrine. (See United States v. McDonnell Douglas Corp. (8th Cir. 1984) 751 F.2d 220, 224; Miss. Power & Light Co. v. United Gas Pipe Line Co. (5th Cir. 1976) 532 F.2d 412, 419; cf. Rojo, supra, 52 Cal.3d 65, 88.)
It is now three and one-half years since Proposition 103 was enacted, and the voters are still waiting for the enforcement of the discount insurers are required to afford to good drivers. The majority fail to justify the significant and unnecessary delay which their holding is certain to cause in the enforcement of this key provision of Proposition 103.
I would affirm the judgment of the Court of Appeal.