*1 32133. No. Oct. [L.A. 1987.] al.,
M. L. KING et Plaintiffs and Appellants, MEESE, Director, al., and Respondents. GEORGE et Defendants *3 Counsel III, Blackwell, Salisbury M. Glover Lois Angela
Armando Menocal R. for Plaintiffs Appellants. James Wheaton Fenderson, Rosenbaum, Williams, Hoffman, Wesley D. Gary Mark
Paul Smith, Attorney, Harry Jr., Troy City B. Attorney Deputy City (Compton), of Plaintiffs K. as Amici Curiae on behalf and Gail Hillebrand Snyder M. Appellants. General, Henry Ullerich and Attorney G. Van Kamp, John K. de General, Defendants and Attorneys Foley, C. Deputy Christopher Respondents. Jr., Caso, Pierce, M. Roy Allen Zumbrun, Lee Anthony A. T.
Ronald Amerian, Horvitz, Horvitz, Ellis J. Katz, Olson, &Levy Munger, Tolies & O’Donnell, Gordon, Anne B. Abrahams, Pierce Peter O’Donnell & Roberts, and Allan Ides as Amici Curiae on behalf of Gail Ruderman Feuer Defendants and Respondents.
Opinion whether,
PANELLI, In thiscase we are called to determine upon J. the 1984 Financial Act allege, Responsibility Robbins-McAlister 1322), provi ch. when considered relation to the relevant (Stats. the Insurance Code to automobile fails to pertaining sions of due of law. For the rea adequate procedural drivers with process provide below we hold that concerns are without legally sons set forth merit, properly and are more addressed to the than to Legislature courts.
I. Legislative Framework
which,
1929,
a financial
like
responsibility
first enacted
law
California
followed,
“financially
all drivers to be
required
responsible”
that
those
any
insurance)
injury they
driving.
means of
caused while
(usually
However,
was
when the
requirement
triggered
enforcement
bodily injury,
accident
either
causing
property
at
in an
was
driver
fault
then,
$100
Even
there
$200).
amended to
was no
(later
in excess of
damage
if the driver was able to
bond
post
have insurance
to
failing
sanction for
Vehicles
to
(DMV)
of Motor
the
Department
an amount determined
a bond or provide
Failure to either
liability.
post
likely
to meet
sufficient
of driving privileges.
suspension
resulted
responsibility
of financial
proof
a substantive due
as against
1931,
constitutional
this law
In
we held
afford to comply
drivers could
not all
that
challenge,
process
specifically
drive but
could continue
wealthy drivers
law,
negligent
with the
and that
their licenses
could
drivers
affluent
but less
negligent
not so
In the financial responsibility whenever responsibility of financial of a bond or the posting filing proof or prop- bodily injury, in either resulting driver was involved in an accident to be held was $200, That too erty of fault. damage exceeding regardless purpose that the declaring constitutional in statute light of an uncodified drivers, insure but rather law was not so negligent much to deter harm not, everyone, negligent or to compensate was able 1, 1974, 1409, caused while ch. held constitutional driving. (Stats. § 416, 537].) Anacker v. Sillas 421-422 (1976) Cal.App.3d Cal.Rptr. were not many
In concerned that too motorists still Legislature, Financial financially Responsi- enacted the Robbins-McAlister responsible, enactments, bility Act to the (1984 Act). requirements prior addition act allows a of financial request responsibility officer peace proof violation. any alleged moving “whenever a notice to is issued” for appear Code, an infraction. (Veh. 16028.)1Failure to such is itself provide proof § However, financially if it was {Ibid.) actually is established that the driver written at the time in the lack of responsible question notwithstanding evidence, Code, If (e).) the citation will be subd. (Veh. dismissed. § from such is not the driver a fine proof forthcoming, subject ranging $100 Code, 16028, Moreover, $240. days subd. (Veh. (a).) within § conviction, the driver must financial provide responsibility proof (and maintain it for three years) suspended. the driver’s license will be Code, (Veh. 16034.) §
From the it foregoing, is clear that the Act increased significantly Now, time, need for insurance. for the first failure have written Nonetheless, evidence of financial responsibility is itself an full offense. implications of the financial responsibility laws cannot be understood with- out reference to the Insurance Code. *5 state,
California is, is a so-called rate” “open by rates are set insurers without prior or subsequent by approval the Insurance Commissioner Code, (Commissioner). (Ins. however, 1850.) This say, is not to that there § absolutely is of the regulation rates. California law does require “excessive, rates not be Code, inadequate unfairly discriminatory.” (Ins. 1852.) No rate is excessive “(1) unless: such rate is unreasonably high
§ the insurance provided and a reasonable degree competition does not exist in the area with to the respect classification to which such rate is (Ibid.) Risk classifications are applicable.” any based on permissible provides “(a) Every pertinent part: person Section 16028 a who drives motor vehicle re shall, quired registered by upon highway required peace to be . . . when this state pursuant (c) (d), responsibility provide officer financial for the subdivision evidence of (c) alleged . . . appear vehicle. Whenever a notice is violation of this issued [fl] code,. responsibility, .. the cited driver shall written evidence financial as defined furnish by issuing ... If the cited (b), upon request peace the citation. subdivision officer appear provide responsibility time the notice to is is driver fails to sued, evidence financial at the peace may appear for violation subdivision officer the driver a notice to issue (a)----” common, and the the most responsibility, There are but proof various forms of of financial verify here, that the insured is must one at issue is a The certificate certificate of insurance. $30,000 bodily inju- $15,000 bodily per accident injury, per person covered for not less than $5,000 Code, (b), 16056.) ry, per damage. (Veh. subd. property accident §§ Code, (i.e., actuarially sound),
reasonable and not prohibited, ground. (Ins. 1852, subd. the term (d).) Although “unfairly discriminatory” is not § defined in Insurance Code section section 11628 of that code prohibits by discrimination an insurer with regard to issuance of or the terms policies, “race, color, of such on the basis of policies, national language, religion, origin, ancestry, or location within the same area.” geographic “Geographic miles,” area” is defined as an area “not less than 20 and is made square up combining contiguous series of code zip statutory zones. Under the scheme, may different areas geographic differently. be treated Commissioner,
Although insurers need not file their rates with the nor rates, obtain the Commissioner approval may on his own initiative inves- Code, Moreover, rates. tigate (Ins. 12924.) a person objecting to a rate or § and, may classification file a with the complaint insurer if dissatisfied with Code, the insurer’s file a response, complaint with the (Ins. Commissioner. 1858.) § at his may,
The Commissioner option, dismiss the without complaint fact, In investigation. (Ibid.) routinely Commissioner does so if the fails to come within his A perceived jurisdictional com- complaint powers. routinely mon of a dismissed example complaint alleging one a refusal an to an If provide coverage applicant.2 insurer to the Commissioner does issue may hearings, findings, he hold assess investigate, public penalties. subject judicial (Ins. The decisions of the Commissioner review. Code, make a determination that the 1858.6.) Should the Commissioner § excessive, then the on complainant, request, rates are excessive or are not Code, In (Ins. 1858.7.) entitled such determination. to know the basis of § this once in the last decade has Com- regard, plaintiffs allege missioner declared a rate to be excessive. California, sources for the customary regular addition to *6 with, may
purchase most are familiar drivers of insurance which coverage Risk Plan insured Automobile Assigned the California through Code, (CAARP). is available (Ins. By 11620 et statute this seq.) plan § any in good driver unable otherwise insurance but who has been entitled to Code, 11620; faith to Admin. obtain it Cal. days. within the 60 past (Ins. § any may per opinion Commissioner is of the based on that an insurer refuse to insure Hence, missible may any geographic classification. in a policies an insurer decide not to write Code, area violating jurisdiction without the Insurance and so the Commissioner is without enjoin Presumably, authority conduct. though, to investi the Commissioner does have gate a claim that prohi insurers refusing policies are other to write on the basis of race or classification, bited pursuant to Insurance that under Insur Code section 11628. We also note 657, ance Code by section an applicant coverage entitled to a who is denied an insurer is statement of why reasons from the application rejected. insurer as to was 3, 8, required 5, All insurers Code, 2430.)3 art. tit. ch. subch. § the statuto- Code, offers CAARP 11620.) in the program. (Ins. participate § mo- and uninsured medical minimum optional rily plus required 2406-2408.) coverage. (CAARP, torist §§ hearings, after public by rates are set the Commissioner
The CAARP area). geographical (including on a number of classifications are based $600 no accidents drivers with between a rate differential of There is more twelve or those with years three in the last traffic violations $200.) was the differential (Prior during period.4 “points” those CAARP, (i.e., drivers” “good annual highest premium Under geographic rated youthful highest drivers in the zero is for points) for these The annual premium South Central Los (e.g., Angeles). areas $662. area who geographic in the rated highest For adult drivers drivers is $516. is CAARP provides have zero the annual points, premium deposit percent can be in five installments paid provided premium $2 install an additional fee per made. In order to use the installment plan charged. § 2443.1.) ment is (CAARP, state, by than offered
In most CAARP rates are those parts higher However, areas, voluntary insurers. in certain the area which including all reside less (South allegedly Central Los CAARP is Angeles), statewide, than non-CAARP expensive insurance. It appears approxi- mately 35 no percent those with CAARP insurance are drivers with points. is, entity
Being with CAARP placed really a “nondecision.” That Rather, plan “decides” to a driver in in the place the program. placement through results as a condition of being “unable to procure [insurance] is, ordinary means ordinary by means.” The inability to procure course, to refuse insurers the result of individual determinations made Hence, for CAARP eligibility provide coverage to the driver question. review. is not reviewable because there is no decision article, hereinafter denominated and are this are to references Code All Administrative number. section relevant CAARP followed example, For a first and vehicular offenses. accidents on based are accumulated Points *7 although moving a serious violation is val point, one generally moving violation $250 bodily injury property damage causing or over An accident points. ued at four period permissible for consideration of such years is the maximum points. Three worth two system. 2460.3(a).) (CAARP, penalty point § CAARP an event under
II. Background Litigation Factual and Procedural this The individual named plaintiffs this action are seven residents of South filed, Central Los At the Angeles.5 they time this action was ranged age from 19 to 73. were Most retired or but one was unemployed, employed $17,000 earning year. Some suffered from medical (none disabilities precluded driving), which and some relied driving go on to and from work or to the doctor. Some had been insured in the recent but not immedi- had ate while others not been insured. past, differences, above all of the named plaintiffs shared some Despite noted, all lived in common characteristics. As South Central Los previously had been involved an accident or None of them had a traffic Angeles. years last three or since started All have driving.6 violation within the to issue them a policy, had insurers and none had difficulty finding willing below those offered CAARP. found insurance at premiums them with bad drivers lump it was unfair to for insurance Plaintiffs felt that records, and driving charged their clean to be notwithstanding purposes Many result. could not afford as a insur- correspondingly higher premiums difficulty the CAARP paying ance CAARP or would even under the premiums. and “all others of the named
The action on behalf brought was do not have the re- situated,” drivers who similarly licensed specifically, who have been fined or and “all quired “insurance or of insurance” proof 16034. The class has lost their Vehicle Code licenses” section pursuant not been certified. Meese, former George
The defendants (in capacities) their official DMV, Smith, High- the California Director of James Commissioner Block, General, Patrol, way and Sherman Van Attorney John De Kamp, any private Sheriff of nor Los the Commissioner Angeles County. Neither insurer has action. been named a defendant in the party 13, 1985, and re-
Plaintiffs filed their Friday on complaint September quested a the 1984 temporary enjoining operation order restraining Discrimination, eighth plaintiff Against a coali named is the United Front Insurance organizations tion of fight against residents of Los “to automobile insurance discrimination Angeles.” years Three length generally required is the to retain data con of time that the DMV is Code, cerning (Veh. 12810.5.) plain a driver’s accidents or traffic Most infractions. §§ tiffs have significantly longer years. been “clean” drivers for than three *8 order, hearing set a but restraining issue the court refused to Act. The trial injunction. a preliminary motion for date for plaintiffs’ submitted injunction, plaintiffs their motion for preliminary In support to establish evidence tended This declarations and exhibits.7 a number of elsewhere insurers found automobile among competition the level of “mainstream” Most Angeles. Central Los lacking South the state was area, only in that or would to write refusing policies were allegedly insurers offer Many the insurers who did had insurance. already who insure those “sub-standard,” is, they special- said to be for the area were hence rates. Insurance charged highest risk customers and high ized available, except but did not discuss this plaintiffs option was also by mail no service or offices “provide through agents companies note that such insurance, servicing handling claims.” policies, acquiring submitted no evidence in motion. Defendants opposition plaintiffs’ However, may this court did the trial (as court) infer from enactment Legislature Act itself that the had harm determined that substantial drivers, caused not being by was uninsured were if their victims especially insured. themselves motion,
The trial court denied of hard- a balance finding favored ships defendants. Plaintiffs then of Appeal the Court petitioned supersedeas. That court subsequent denied We petition. granted review, to this Act. petition court for and stayed enforcement We also transferred the Appeal, Court of appeal, then before the pending this court.
III. Questions Presented attack limited by the scope our task not narrowed greatly by defendants. made by made plaintiffs, but concessions by also the various them- confined foremost, repeatedly First and and expressly whereby a mechanism By selves to providing two main legal theories: not to issue decision an insurer’s driver can (a) question challenge ability to drive effectively making thereof, policy (b) the rate due procedural drivers denying insurance, state on contingent having insurance, carry drivers effectively requiring law; process By and (2) be able to obtain or will will who insurers to decide allowing in mak- insurers guidelines adequate provide by failing objections defendants’ to the not address we do opinion, of our the remainder view of proffered evidence.
1226 its au- decision, unconstitutionally delegated has ing Legislature their the thority to insurers.8 First, they major points. on two
Similarly, defendants also concentrate we injunction the is from denial of appeal preliminary contend that since by reaching court the without solely balancing equities can affirm the trial Second, if even reach the they argue the claims. we plaintiffs’ merits involved, and that there is a due interest procedural process merits find standards, Act constitutional hence the CAARP meets all and 1984 constitutional.9 note, i.e., correctly stage
As defendants
at this
the proceedings,
injunction, the
preliminary
denial of a
trial court must be affirmed unless it
(IT
its
making
Corp. County
abused its discretion
determination.
35 Cal.3d
69
672
Imperial (1983)
Cal.Rptr.
121].)
P.2d
In
[196
discretion,
its
trial
must
exercising
the
court
consider “two interrelated
factors,”
the likelihood that
will
specifically,
plaintiffs
prevail on the merits
trial,
at
harm to
suffered by
and the
be
if the
comparative
plaintiffs
injunc
by
tion
not
harm to be suffered
against
(or
does
issue
defendants
this
if it
people
California)
(Id.
case the
State of
does.
at pp. 69-70.)
by
the harm to be
Although there is no data
caused
quantifying
issuing
there is
that the victims of accidents caused
injunction,
no doubt
if
victims
these
do not them-
greatly, especially
uninsured drivers suffer
Against that
coverage.
unquan-
selves have medical or uninsured motorist
harm,
on plaintiffs. Many
court
effect of the law
weighed
tified
the trial
and
undoubtedly
of the
were
faced
fines
threat-
members
class
putative
of their
actually
or
licenses.10Without
subjected
ened with
suspension
laws,
they
nor
responsibility
do
pre-1984
do
attack the
financial
contend
Plaintiffs
not
Moreover,
equal protection.
plain
or
process
Act
them substantive due
denies
that the
any
carrying out his duties or that
allege
improperly
Commissioner is
in
that the
tiffs do not
argue
do not
law. We
note that
failing
comply
with the
also
surer is
actually
Insurance Code section 1852. Plain
in violation of
“excessive”
rates are
defendants,
joined
insurers had been
Commissioner
various
if the
tiffs
that even
assert
persuasive,
power
would
without
legal propositions
we
found
we
even
insurer.
through a
directed at the Commissioner
decree
remedy the situation
responsibility
has no
strongly argue that the state
do not
part, defendants
their
9 For
constitutionally permissible
in a
manner
at rates set
all to insurance
duty
provide access
maintain, however,
strongly
They
capriciously).
do
arbitrarily
(i.e.,
nor
neither
state,
cognizable
“state
acts are not
acts”
their
an arm of
constitute
insurers do not
I,
or article
section
Constitution
the United States
Amendment
Fourteenth
under the
the California Constitution.
establishing the number of citations is
by plaintiffs as
quoted
statistics
We note that the
hearing
differentiate between those
did not
court’s
trial
prior
Act
to the
under the 1984
sued
buy
simply would not
it
and those who
obtain
or could not
who could
afford
even if
could
it.
afford
merits,
considering the trial court found that the balance of hardships
defendants,
favored
and therefore
the injunction.
denied
so,
doing
trial court considered the
reasoning
Michigan
Court in Shavers v.
Supreme
Kelly (1978)
However, the in Shavers is different from procedural posture strikingly Shavers, that in the instant In case. the law in a no-fault question, plan effect, which effectively all required carry drivers to had been in enforced, and years. for four and one-half the Michigan enjoin For court to contrast, enforcement would changed therefore have the status In the quo. Act had been in effect short time when the trial court heard Hence, bench, the preliminary injunction motion. an injunc- the case at tion would have maintained the status therefore conclude that quo. We reference to Shavers is of limited balancing-of-hard- value with to a regard ships analysis.
We conclude that the trial court did err insofar as it found that the However, analysis balance-of-hardships favored defendants. as previously stated, the trial court must also consider the likelihood of ultimate success on the merits in whether determining injunc to issue preliminary tion. Although consideration of this issue adjudication does not entail final of the ultimate rights controversy (Cohen v. Board Supervisors (1985) 277, 467, 40 Cal.3d Cal.Rptr. 707 P.2d it 840]), does affect the [219 is, showing necessary to a analysis. That the balancing-of-hardships more likely it is that ultimately will plaintiffs prevail, the less severe must the harm that allege injunction will occur the does not issue. This is maintains, alters, injunction true when the especially requested rather than Baking the status Co. v. Katz 68 Cal.2d quo. (Continental We believe it is the mix of Cal.Rptr. 889].) 439 P.2d these factors the trial in its exercise of discretion. guides court review, a preliminary On regard injunc trial court’s order analysis tion may balance-of-hardships be affirmed if the or plaintiffs’ either support ruling. (Cohen, likelihood of success considerations would alone However, 40 Cal. trial court supra, 3d at if the relies on pp. 286-287.) but one of the determine foregoing, the must whether reviewing court regardless conclusively the trial court’s determination
reliance supports considerations. remaining case, we Although the balance of favors defendants in this hardships trial say cannot that it tilts so in their favor that it sharply supports court’s order of the likelihood of on the mer- irrespective plaintiffs’ success its, where, here, the trial court’s order the motion had especially denying altering Normally, the effect of the status it would be quo. appropriate remand the case to trial court for consideration of the latter question. However, we argued, agree, have there exist no contested addition, necessary to resolve the case. In questions factual issues legal exhaustively briefed parties been numerous amici. light case, unusual, importance and the we take of these factors but reaching the merits resolving ourselves. practical, step
IV. Discussion A. Due Process. Procedural in that the conferred a privileges by
It well established California v. (Rios an Cozens important property right driver’s license constitute 299, 979]; P.2d Bell v. 499 Cal.Rptr. 792 Burson 7 Cal.3d (1972) [103 although 1586]), 91 S.Ct. not so 402 535 L.Ed.2d U.S. (1971) [29 analysis v. scrutiny (Hernandez a strict as to trigger a right fundamental Cal.Rptr. 30 Cal.3d Vehicles Motor Department criminal sanction any imposed P.2d that before 917]). It is clear equally fine, the state must such a responsibility, financial failure to establish Act, Moreover, a under the comply procedures. with a panoply Hence, at one adjudication. such an can after license level, be suspended imposed sanctions before process” there is “due ample lack of responsibility. financial too late. comes process foregoing
But it is that the contention plaintiffs’ they at moment, when theory, occurs critical according and are unable market tempt to obtain insurance from the private either to right they to do have a substantive so. Plaintiffs assert that from coverage obtain in the insurance market or to participate impaired cannot be which right insurance market and it is this a procedural procedural without Plaintiffs contend protection. decisionmaking process due right to examine and process challenge private insurers. N.W.2d Kelly, supra,
Plaintiffs’ finds in Shavers position support Shavers, legislatively 72. enact- Michigan Supreme In Court reviewed law, ed no fault their which all drivers to establish required financial in a motor vehicle. responsibility order to register operate most other financial re- respects, framework legislative encompassing sponsibility and insurance to that now regulation was similar generally place many California.11 Michigan respects also had a similar program to CAARP.
The Shavers court by its consideration that insurers were began holding instruments of the state in carrying Michigan’s policy, out no-fault hence acts insurers were state to be right acts. Since drivers had arbitrarily or insur- capriciously denied state actions the state-mandated ance fair (at rates), the court held that due equitable procedural process minimum, was required. At a meaning- the state to required provide ful way for drivers to an deci- challenge coverage rate-setting insurer’s sion. The court also Michigan went on to consider the effect of the risk but program, concluded that the did not cure the constitution- program al infirmity. Shavers,
Although defendants in the instant case attempt distinguish Thus, there is no reasoned way to do so. if we applied reasoning of that here, case we would be to find that compelled likely would prevail However, Shavers, on the merits. we are not persuaded by the reasoning *12 and decline to First, follow that case two crucial respects. we cannot that the agree acts of private insurers in setting rates or denying coverage Second, are state acts. because of the we foregoing, cannot concur in the Michigan court’s summary consideration rejection of the assigned risk program as a constitutional alternative to meeting due process require- ments.
We turn first to the state-action We question. have never held that a in a company competitive industry is a state agent, or that its decisions on how to price and market its product constituted state action.
To the contrary, only extreme cases of state pervasive regulation coupled with a state-guaranteed monopoly we equated decisions with state action.12 11 However, California, Michigan unlike required that all insurance approved by rates be its
insurance commissioner.
12 Gay
See
Law
(1979)
Students Assn. v.
Tel. & Tel. Co.
There are and services the use many products extinguishers as fire right, such enjoyment of a state-protected property gener The state or mufflers for cars. smog or control devices buildings, by the market ally rely supplied should be able to on such products ground become state on agents and the should not place, suppliers man or or the demand their expanded product state law has created Rather, it is the decision- encourages its use. when state law dated had a statute that which permits when making procedure question, law, common can that the decisions of private parties been prohibited Court (See Superior be considered state actions. potentially Garfinkle 265, 208, [holding 278-279 578 P.2d (1978) Cal.Rptr. Cal.3d [146 925] not authori nonjudicial statutory foreclosure is state action its despite v. Wells Bank 361-362 zation]; Kruger Fargo Cal.3d 441, 65 A.L.R.3d [refusing 521 P.2d to find that Cal.Rptr. 1266] a statutory right bank in of setoff constituted asserting action state action].)
Even the acts of insurers in rates and their though setting decisions actions, state as we have coverage already whether to not stated provide a license is state We the state’s decision a fine or action. impose suspend therefore, must, insure that due to this limited state process consider what arbitrarily capriciously. action is not performed insurance, access only way at guarantee contend that the Plaintiffs necessarily rates13), affordable is to not (although “fair and rates equitable” do strongly Defendants they request. provide procedural process carry drivers to by effectively requiring challenge contention available to drivers duty to make may the state have a However, they argue arbitrary capricious.14 in a nor manner that is neither We agree. the CAARP. duty through way that one to meet that *13 in whether deciding the CAARP We are that we must look to persuaded analy- As of our part process. the 1984 Act with due comports procedural sis, court of Michigan’s by the Shavers we take note the assessment (1) there was three problems: Risk That court identified Assigned program. than higher will the that “statutory charged a the rates presumption (Id. utility’s product. vestment; purchase monopolistic at public’s need the and the to foregoing might only companies possess the last attributes: 469-472.) Insurance pp. more, approach the situation de- buy product. Without that does to public’s need Gay Law Students. in scribed hearing approved process the same rates were after a due have conceded Plaintiffs effect, remedy. they have no would now in as are Watson, supra, 212 Cal. which concerned substan in reach this issue 14 Wedid not laws, plaintiffs quarrel responsibility and do not challenge the financial to process tive due in that case. the result 500.3365; M.S.A. M.C.L. in the open marketplace. rates for motorists § were by program rates set 89.); (2) 24.13365.” N.W.2d at (267 p. § as those found inadequacies the same and substantive subject procedural to way challenge to market; placement there was (3) in the private recited (Ibid.) Having rates.” higher its presumptively “with program was inad- concluded that the summarily program the court these problems, requirements. to meet due equate process proce- In whether easily. determining of CAARP as
We cannot dispose only look to is axiomatic that we it plaintiffs, dural due is afforded process Garfinkle, supra, state action. duty cognizable (See the asserted state Thus, if 281-282; 366-367.)15 11 Cal.3d at Kruger, supra, pp. Cal.3d at pp. satisfy duty, proce- its and that program
the state provides program Inasmuch as we then the action” is constitutional. durally “state adequate, the acts of private the Shavers (contrary court) determined actions, CAARP need not consider insurers do not constitute state we Rather, standing look to CAARP relation to insurance. we must process alone to determine whether it meets the due required procedural standards.
In is offered judgment, effectively our CAARP that insurance guarantees Further, requires available to all drivers in the state. CAARP eligible hearings. rates to be the Commissioner after program’s public set Code, 11620, CAARP, Thus, meet the (Ins. 2404.) plan place § § is, face, sound. state’s duty, procedurally asserted and the on its plan infirmity an burden is to establish therefore on the squarely plaintiffs burden, five argu- forth put CAARP. In attempting plaintiffs meet ultimately conclude We in Shavers). ments the three mentioned (including that none has merit. be used
First, designed originally was that CAARP allege plaintiffs are “pre- CAARP rates assert that a consequence, bad drivers. As support, point insurers.16 than those of private higher sumptively” Cal.App.3d Directors Applebaum Board cite 15 Plaintiffs public enterprises affected with a interest proposition that 831], Cal.Rptr. However, that and the law process. case akin to due a notion procedures,” provide “fair must only procedures” extend to mem that “fair make it clear it relies upon which article review entities, organizations. professional such as unions bership of work-related decisions hospital’s concerning a to a decisions has been extended the doctrine exception is that *14 Becker, Organization With a Public Interest & (Sloss privileges. doctor’s staff Affected Evolving Common Law Doctrine Contribution Tobriner’s and Its Members—Justice application to this case. no 99.) Applebaum has Hastings 29 L.J. “statutory certainly presumption” in California that note, no though, that there is 16 We market, voluntary in contrast to the described sit those in the higher than CAARP rates are Michigan. in uation Commissioner’s if in office: CAARP hearsay the words of an official the insurers, wrong.” is are of “something rates lower than those way it is but either accuracy the of plaintiffs’ premise, Defendants dispute drivers with CAARP are through that 35 of those insured agreed percent of the number drivers. Because good no and hence are points presumptively significantly CAARP premiums in the good program, of drivers 2460.3 (CAARP, and others.17 points differentiate between drivers with § assert, addition, as “something wrong,” plaintiffs even if is (g).) subd. Commissioner, may investigate private the who remedy through their if set in they are “excessive” or revise the rates rates to determine insurance that a “reasonable of showing degree CAARP. Plaintiffs have made some in Angeles] respect not exist Central Los with does competition [South Code, rate (Ins. 1852.) to which such is applicable.” the classification § necessary statutory to obtain relief showing That is half of the required the Commissioner.18 from
Second, claim that CAARP the driver vis-a-vis “stigmatizes plaintiffs on is a point evidence declaration opportunities.” future serves agent licensed insurance who the South Central by an experienced, However, that, that declaration does not show community. Angeles Los an insurer treats CAARP future insurance opportunities, of purposes Therefore, uninsured driver.19 we differently previously driver from stigma- in unconstitutional state-mandated find that CAARP results cannot tization. decision, explained change recent in Commissioner the his the In March surcharges premium drivers with designed “to double regulations [of CAARP was liability negligent on the increasing of automobile
points] place in costs order to change necessary This is also to reflect operator has traffic violations. who documented years changed past surcharges in when the haven’t been base fixed inflation because these plaintiffs’ much of account concern. explanation This takes into Before rates were increased.” insureds, rates, although CAARP increased changes adopted, paid all were base these effect, “good” drivers remained constant. In and “bad” differentiation between dollar each time that such decreased the base rates percentage between drivers in differential fully $200 drivers did spread between the best and worst reflect the prior ac creased. The Hence, plaintiffs cost insurance between them. were correct in as tuarial difference per bad drivers. That subsidized concern now less serting good drivers CAARP has force. suasive Commissioner, complaint joined pre with the nor him have not filed a in the plaintiffs As case, actually note, though, whether the rates excessive. We cannot determine sent we complaint County made in a filed with the Commissioner a claim was Los that such are, course, complaint. previously, also free to file a As here stated Angeles. Plaintiffs subject judicial review. final determination Commissioner’s declaration, it is placed in his states that he believes “unfair” him plaintiff, to be One drivers,” just CAARP, “lumped bad claims he is he he because where lives. where Moreover, “stigmatization.” brief as argument not set forth evidence was This out, percent point through good of those insured CAARP are driv themselves record, statistic, driving foregoing in rates based on and the differentiation it Given the ers. declaration, true, stigmatization. establishes that this cannot said *15 rates, Third, CAARP an- plaintiffs they cannot complain challenge other concern premium of the Shavers court. This is true on an individual However, basis at the insurance rate- time of unlike application. systems, so the setting application CAARP rate criteria are set out publicly, task and of rate is a classification to an individual premium ministerial scale, easily are set periodically verified On a rates applicant. larger by the hearings.20 ample process Commissioner after public Consequently, afforded with regard to CAARP rates and premiums.
Fourth, the CAARP is limited and plaintiffs note that under coverage they they they cannot choose their carrier. If desire additional must take out a with separate allegedly policy expensive supplemental true, another insurer. Even if required this additional insurance is not law, Further, and so the need to obtain it is purely self-imposed. reason, none,
specify no why inability we can discern to choose particular insurer infirm. renders CAARP This constitutionally allegation therefore can have no effect on constitutional challenge. Shavers,
Finally, as in cannot their plaintiffs complain challenge placement earlier, in CAARP. But as we noted there is no decision single consigning someone to that only individual of insurers program; decisions insure, refuse or to charge rates that the finds applicant unacceptable. Thus, such, plaintiffs’ objection is not to CAARP Commission- but to the er’s failure to police the of the private decisions and rate schedules insuring insurers. sum, state ac- because the constitute acts of insurers do not
tions, challenge plaintiffs have no to review or right due procedural process an insurer’s coverage premiums decision concerning the denial a license or charged. Although suspension state involved action is financial imposition responsibility, a fine for failure to establish duty to provide to a scope the state’s most extend duty can at alleged neither at rates that are plaintiffs with the amount of required provides that CAARP arbitrary nor conclude We therefore capricious. due comports procedural
required access to in a manner process.
B. Delegation Power. easily. They is dealt with con argument
Plaintiffs’ second more structure in California constitutes a delega- regulatory tend that the current purposes procedural process adequacy expressly of this suit the due 20 Plaintiffs concede rate-setting procedures. of the CAARP *16 1234 industry, deter- which authority
tion of to the legislative private CAARP) mines can who must resort (and who thus purchase maintain, is they rates a pay. delegation, and what must Such the exercise guide invalid unless clear standards accompanied by of limit discretion. safeguards the exercise delegated power, adequate However, delegation authority has found a of California great weight of associations where legislative to industrial power professional rules that acquired initiate or enact statutes such gave groups power had if the authority, even decision decisionmaking the force of law.21Other life, delegation. constituted a a on has not significant daily a impact person’s 224 Dist. (1964) The v. Hospital to the rule is Rosner Peninsula exception Rosner, an emer adopted 115 a hospital Cal.App.2d Cal.Rptr. 332]. [36 gency carry malpractice resolution all staff doctors to requiring coverage. he lacked such and refused staff to Dr. Rosner because privileges it effectively delegated The of because Court struck the resolution Appeal to the insurance of obtain staff privileges determination who could industry, or standards. safeguards and it so providing adequate did without However, decision also Rosner was in a later Court of rejected Appeal carry a concerning malpractice that all staff doctors medical requirement 144 (Wilkinson insurance. v. Community (1983) Madera Hospital court, on our relying 436 Cal.App.3d Cal.Rptr. 593].) Wilkinson [192 Inc., Holzheiser, 349, -Rosner 65 Cal.2d held post decision in Wilke & supra, really that the all. Insurance purported delegation was no at delegation always had been entitled to determine who would insure. companies entity anything rule a to do hospital’s way private “authorized at 445- already (144 pp. other than what it was entitled to do.” Cal.App.3d 446.) a not delegate
We
rule that
statute does
longstanding
adhere to
industry
authority
industry
empowers
unless it
legislative
merely
A
permits
force.
statute that
legal
to initiate
enact rules
21
Bayside
(1971)
Cal.App.3d 1
e.g.,
Supervisors
20
See
Timber Co. v. Board
[97
delegation-of-power
(Forest
be
Cal.Rptr.
in an unconstitutional
Practice Act resulted
431]
governed
lumbering
industry
all
in a
empowered
rules that
an
committee was
to initiate
cause
(1953) 40
county
Cleaners
regulation);
v.
region, preempting
State Board
Thrift-D-Lux
down,
theory, legislation
delegation
power
(striking
part on a
436
P.2d
Cal.2d
29]
[254
upon
prices binding
all members
organization to minimum
authorizing
professional
set
Cal.App.3d
Examiners
v.
Board
Barber
profession); Allen
California
Holzheiser,
368,
(same);
Dept.
Inc.
Alcoholic
Wilke &
Cal.Rptr.
V. Conclusion process all due We conclude that the Act with comports procedural Therefore, likely are not and delegation-of-power requirements. merits, for a the motion deny on the decision to
prevail and the trial court’s affirmed. preliminary injunction must be conclusion, position. insensitive to reaching plaintiffs’ this we are not with good
There a those complaint certain appeal plaintiffs’ records, in a more insurance if lived who could afford driving possibly area, they actually affluent are unable to obtain insurance in the area where li- relatively heavy live. As a face fines and consequence, they suspended annoy- minor censes for a otherwise be but a traffic infraction that would ance. that the lack There is also some force to concern persuasive might of procedural in the area of which safeguards rates, a and provide guaranty equitable that such insurance is offered at fair or obtain leads to a to afford feeling among those unable helplessness However, the Legislature, insurance. case should be made to their meets mini- system not to this court. So as the mandated long legislatively does, standards, look it we cannot mum due as we found procedural process judgment social Legislature’s behind enacted the replace the framework separation violation of the our To do so would be an egregious own. powers. the provisions enforcement of enjoining of December
Our order The order of 16035 is vacated. through Vehicle Code sections is affirmed. injunction for a denying preliminary the motion trial court foregoing consistent with the for further proceedings case is remanded opinion. *J., J., Kaufman, J., Feinerman, J.,
Lucas, (Robert), C. and Arguelles, concurred.
BROUSSARD, I reluctantly judgment sustaining J. concur a ruling denying preliminary injunction court’s to restrain enforcement trial Code, (Veh. legislation of the 1984 that driver 16028-16035) providing §§ moving violation cited for must that he has automobile provide proof review, liability insurance. When we granted raising this case as two we saw the extent that Rosner is foregoing, disapproved. 22 To inconsistent with it * Justice, Five, Presiding District, Appeal, Appellate Court of Second Division Chairperson of the Judicial Council. state, effectively having significant (1) constitutional issues: whether duty to assure liability made automobile had a insurance compulsory, nondiscri- such insurance available to all its drivers at reasonable was so, statutory and administra- rates1; the state’s minatory whether way on the duty. funny tive scheme fulfilled that But a thing happened was duty its to assure that dispute this forum. The state did not Instead, it maintained to all on a fair and reasonable basis.2 available obli- Risk fulfilled that (CAARP) Automobile Plan Assigned California insur- to show that attempt And on their made gation. plaintiffs, part, basis, on fair and reasonable ance was not available under CAARP was affordability any notion that to our disclaimed response questions of insurance the reasonableness assessing to be considered something *18 rates.
Instead, entire- on CAARP was based it turned out that attack program. risk ly concerning assigned on mistaken notions the but popular bad rec- for with assert that CAARP was intended drivers Plaintiffs ords,3 avail- insurance making when fact it serves the broader of purpose who, reason, insurance at anyone able to cannot obtain private records, that, they driving They good lower rates. assume with persons CAARP, challenge seek decision mistakenly were to and to relegated fact, decision; drivers which there no such assigned them to that fate. available, is not they turn to CAARP that insurance when discover that their assume Finally, or costs more CAARP insurance. than the basis of on CAARP rates are calculated unfairly are because high charges CAARP pool But drivers bad records. containing primarily with is inade- lower rates for If rate differential drivers with records. good Insur- before the quate, issue can be in rate-making proceedings raised pro- those ance review of judicial Commissioner (Commissioner) on ceedings. for a request failure of their plaintiffs’ attack on CAARP dooms But
preliminary injunction, and
below.
requires
ruling
us
affirm the
to
Kelley
Supreme
(1978)
Michigan
v.
72],
1 InShavers
This case arises to solve Legislature from the of the California attempt serious social into account problem—the taking uninsured driver—without an equally serious which make auto- problem—insurance pricing practices liability mobile of the urban many prohibitively expensive poor. The 1984 Vehicle Code sections 16028 Legislature through enacted violation, which provide that whenever a driver is cited for a moving he must provide of financial of the proof responsibility upon request citing $100 $240 officer. Violators are to a fine of subject and penalty.
Department of Motor DMV (hereafter Vehicles is notified department) conviction, unless, and must suspend driving violator’s privileges within 60 days, he provides financial stat- proof responsibility. Although utes provide alternative methods of financial demonstrating responsibility,4 the only practical method liability of an insurance purchase policy *19 coverage to or equal than greater statutory minimum.5
Since previous California responsibility law of financial required proof accident, only after an the new statute the enforcement radically accelerated of the financial substantially the responsibility requirements, increasing number of persons facing noncompliance revocation of their licenses for with those laws. all necessity Purchase of a for liability insurance became drivers, even those with no assets to personal protect. essential,
But as becoming insurance it was also many became for people more difficult increasingly to obtain. were companies Private insurance rates, to sell to residents of unwilling at least at affordable liability coverage, South a resident of Central Oakland.6 Often Los of Angeles portions (certificate 4 The sections 16053 of self proof may other forms in Vehicle Code of be found 16054.2, (a) (cash deposit insurance); (insurance bond); subdivision of policy 16054 $50,000 only be issued to fleet DMV). insurance can owners of with the The of self certificate 16054, 16053, in (a).) more The bond mentioned section subdivi (§ than 25 vehicles. subd. (a) surety person It that a can by any sion is in the state. is self-evident who not in fact sold liability required for minimum insurance is pay not afford dollars the several hundred 16054.2, $50,000 required section equally with the DMV as sub deposit unable to in cash is, fact, liability policy automobile insurance (a). Accordingly, purchase of an division compulsory. 5 $15,000" liability currently required coverage per person in The minimum insurance $5,000 Code, 16056, accident, $50,000 damage. (Veh. jured, property subd. per § (a).) 6 present Angeles, plaintiffs in the case all reside South Central Los The individual injunction evidentiary preliminary base their motion for record on which refers to 1238 at coverage, a could obtain
those areas with record perfect driving all, history a a other areas with only by more than resident some paying this nothing correct legislation accidents and violations. did problem. Central Los here are residents South individual seven has motion support Each submitted declarations
Angeles. declarations, collectively, explain these injunction; preliminary gave circumstances which rise to this action.8 Hill, old, unable to work years states that she is Plaintiff Benita drive to medical appoint- and must (lupus) because of medical condition Her an accident. traffic ticket been ments. She has never received a $485. companies sought private When she monthly income $1,050 $1,400, beyond far what she could afford. rates of annual quoted accident, 69, Dilworth, but no traffic has had age Plaintiff Lorene Dilworth, has Val who age V. lives her son La tickets. She a job paying both with them He completely driving supports clean record. the best presented $6.54 Association Automobile hour. The California per $3,030 $2,634 on an install- cash or company, offer cars. ment basis to insure the Dilworths’ two past for the Willie or accidents Henry, has had tickets age would $500 years. companies His income Most is under month. per present until the him insure because he had been without driving He discov- $1,200.) law went into at effect. (One company coverage offered cannot $481 but year, ered he could per obtain at coverage risk *20 afford it as this is income.9 equal to one month’s however, rates, of problem suggests that area. Statewide that the information on insurance Oakland, obtaining in other probably insurance at portions and affordable rates exists in of low-income urban areas. Note, Property For In discussion of a problem involving property similar see surance and the Cal.L.Rev. Study American So. Irresponsibility Ghetto: A in Social 218. higher 1985; The declarations generally refer to insurance rates are rates of current has, magnitude problem Pre the of the Ins. (See Dept. Ins. Auto anything, if become worse. 15, Survey (July 1987).) mium minimum survey gave policy providing example The of a coverage 45-year-old policy driving issued to a records. Such couple with clean married $1,500 $750 $1,000). cost from average would to of about Angeles (an in South Central Los $250 $400 $300 Redding. $150 It would cost from to Diego, San and from 1985, $481 territory. (Current 9 As of was the assigned lowest available for this risk rate higher.) applied rates are It their car who do not use males over over or females work, possible drive to some other completely driving have a is that clean record. It $481, re plaintiff's private could have rates assigned policies obtained than the risk for far less cited in their declarations. $996 has had month. He Wiley is retired on an income of per Lawrence get unable to years no tickets the last five and no accidents. He was at an risk coverage, assigned policy will forced to private purchase $648 $731. They
The facts. demonstrate declarations other recite similar driving Los with Angeles, good residents of South Central even those records, coverage. difficulty obtaining have considerable available, much very high, higher When is coverage price quoted such is state, the means of beyond than for other and often far prices parts but risk assigned program, Thus must resort applicant. applicants rates, rates, many those than are still while less prohibitive applicants.10 Commis-
Further ruling evidence this conclusion. supports rates, 20, 1986, sioner on risk filed observes that March “[f]or reasons, variety of are difficult times for of the insurance compa- these some liability nies insur- respect to the to offer automobile willingness basic ance, being are the urban areas. Some particularly agent appointments terminated, premi- have been and some underwriting tightened, standards um rates have quot- increased.” Plaintiffs’ a declaration counsel submitted Brookhard, Everett the Cali- ing chief Affairs Division of Consumer fornia Central Department of in South biggest Insurance: “The problem Los for Angeles system is the lack of a competitive market. distribution there, companies sales is direct sales large especially Allstate, While a such as State Farm companies. and Farmers insurance Ange- number of les, Los companies may actually rates South Central quote there, writing many actually fewer them were doing business rates, but policies They for South might Central Los Angeles residents. distribution there are no nor are the agents policies, authorized to write the they Additionally, even systems or claims the customers. there to service insur- rates, (e.g., prior restrictions published many so often impose those rates at ance quoted the insurance precludes application), Angeles Los Central in South inaccessible. A drivers ‘high percentage’ uninsured.” Central Los Ange- in South Davis, with offices agent Morris an insurance doing busi- companies 400 insurance les, over out of “Currently, *21 declared: liability 10 who will write California, approximately know of only I ness in whose and brokers for customers agents local through insurance policies higher private than The converse situation are much rates. assigned risk rates 10 Typically, assigned region— because rates are low for that Angeles arises not risk Los in South Central highest assigned territory risk rates—but because the territorial contrary, has that to the much less than the differences in assigned risk rates are territorial rates. differences in And, of compa- vehicles are in central Los these registered Angeles. south nies, as ‘sub-standard.’ virtually companies all are insurance denominated customers are This means that write for who companies specifically these customers, risk, is, to be the ‘sub-standard’ perceived greatest residing these rates. Customers companies charge highest therefore codes, stigmatized central Los are south certain Angeles, especially zip risks, and no acci- they’ve ‘sub-standard’ had violations moving even dents.”11 in South Central verify
A number of insurance rates exhibits high times as as rates other areas of the Angeles Los two to three state, often Angeles driver rates in Los exceed good with result drivers with bad records in other areas. charged rates of insurance companies Davis and others also of reluctance speak uninsured, a of particular who problem insure were persons previously compel per- since the the 1984 was to such legislation concern purpose difficulty persons with They speak sons to obtain insurance. also in later insurance. obtaining private risk insurance assigned experience Regulation Liability Automobile Insurance (2) Private by a Automobile liability provided primarily insurance California has less regula- market. California private, competitive, largely unregulated state, liability any tion of insurance than other and in automobile California is less insurance. than most regulated other forms law, regulatory McBride-Grunsky Act of principal Regulatory Code, (Ins. et enacts the minimal seq.) regulation required § California insurance from forms exempt governs federal antitrust law. It all liability of sion, automobile including principal provi- insurance.
section that “Rates provides shall not be excessive inade- or defined, as herein nor shall be No quate, unfairly discriminatory. fl|] be held (1) unreasonably rate shall excessive unless high such rate is insurance provided for the of competition reasonable does degree in the area respect not exist which rate is classification to such provision “unfairly discriminatory” No defines rates. Subdivi- applicable.” classify insurers to risks in effect probable sion accord with (d) permits hazard, losses, utilizing “individual location or experience, dispersion on other reasonable considerations.” or risk, ways, can obtain insurance in three explained that residents Davis companies charge companies,” mail. The substandard more and insurance “substandard through agents Companies operating “provide no service assigned risk rates. mail
than insurance, servicing policies, handling acquiring claims.” offices *22 to the insurer. complain A a rate or classification can person objecting to action, Code, he a request If insurer’s can 1858.) dissatisfied with the (Ins. § believes the If the Commissioner (Ibid.) before the Commissioner. hearing 1852, he may a violation section states cause to find complaint probable 1858.1, 1858.3), and findings (§ impose render hearings 1858.2), hold (§§ judicial to review. subject (Ins. decisions are 1858.4).12 His (§ sanctions Code, 1858.6.) § Commissioner, his nor do rates require file with the
Insurers do not rates Code, 1850.) Rates come (Ins. He or fix rates. is forbidden to set approval. § when, or sponte response complaint, to his sua attention from the insurer. The Commis- such information requests Commissioner insure, and authority complaints charging sioner asserts no over refusals to rejected are as unreasonably routinely that an insurer has refused insure beyond jurisdiction. an issue the Commissioner’s raising on file in action make it clear that South Central declarations this Los not a market. the Commissioner Angeles competitive Consequently is authority “unfairly has area are charged to determine whether rates Code, discriminatory” “unreasonably (Ins. 1852.) or Efforts to high.” § determination, however, obtain such a have failed. The Commissioner ap- actuarially is sound it cannot long to assume that so rate pears unfairly discriminatory unreasonably high.13 actuarially sound rate neces- that an assumption Commissioner’s can that it is argue One
sarily open challenge. a fair reasonable rate and in charging good use which result discriminatory to classifications unfairly bad drivers in others parts much more than in some areas drivers Exchange (1982) Angeles County Ins. Los Farmers As summarized power has to take Cal.Rptr. Commissioner correc Cal.App.3d “[T]he 879]: Code, (Ins. 1858.3); money necessary impose he can proper as he deems tive action § $1,000 aggregat comply up penalty to a total of and for each failure penalty not to exceed Code, $30,000 1858.3); specifying in re (Ins. he can issue an order what ing no than more § require compliance (Ins. time thereafter within a reasonable spects a violation exists Code, 1855.3, (b) (c)); penalties provided, may and in addition to other he subds. § revoke, authority part, respect an insurer in whole or certificate suspend or comply specified of insurance such order which fails to within the the class classes pursuant (Ins. limited such lawful order of the Commissioner to section 1858.3. time Code, 1858.4.)” § challenge the Angeles insurers’ claim that rates in Los are Plaintiffs South Central actu sound, contending arially that so little in that is now sold area the in Indeed, computations statistically considering and loss surers’ accident are reliable. disparity region, between rates and risk rates it is for that difficult believe actuarially The question inquiry that both sound. is one to be which would have tested however, stage litigation, rates at a trial on into the the merits. At this presented just insufficient evidence for us to that the insurers’ rates lack actuarial conclude ification.
1242 state; liability insurance at it could be considered unreasonable to price account, cannot and many affordability levels into afford. Rates which took residence, far to alleviate the weighted driving go record more than would caused problem by the financial laws.14 responsibility however, difficult The Commissioner’s for make it drivers practices, this challenge regulations, The Commissioner has issued no assumption. decisions, published how he or she determines stating explicitly whether a rate is reasonable nondiscriminatory.15 allege Plaintiffs routinely are complaints dismissed And the fate of hearing. without held, City of Los suit Angeles’s may shows that the result hearings when are unsuitable judicial be decision review.16 may actuarially justified 14 Thefact that current territorial rates be does not mean that a unsound, weight placed less on residence rate which would or would be unfair to residents Court, by explained Supreme discussing compa of low-risk territories. As United States ny requirement class, pay program longer more into a retirement that women because live as a always grouped, poorer insurance risks are the better risks subsidize the risks. “when healthy; Healthy persons subsidize medical benefits for the less unmarried workers subsidize eat, drink, workers; may persons or smoke to excess pensions of married who subsidize temperate. Treating more different profits persons whose habits are classes of pension practice though they purposes group of insurance is a common as were the same for risks flabby though they inherently and the fit as unfair. To insure the has never been considered alike; may treating nothing but men and women equivalent risks be more common than were (LosAngeles Dept. Wa ‘subsidy’ fair than the other.” than habit makes one seem less more 657, 666-667, 702, 710, L.Ed.2d 98 fns. omitted ter & Power v. Manhart 435 U.S. 1370].) S.Ct. 15 72, Michigan Supreme Court found state Kelley, supra, N.W.2d In Shavers part because constitutionally inadequate, in regulation “[t]he of automobile insurance rates ‘excessive, discriminatory’ unfairly rates is without statutory against inadequate structure Commissioner, legislatively sufficient by support clarifying with the definition, rules established 88.) (P. any history prior interpretation.” and without court Commission, County Angeles complaint the Insurance 1978 the of Los filed a with clas charging relating to territorial specified practices insurers two with unlawful following conclu public hearings sifications. The Commissioner and reached conducted sions: rating and credible “2. That the use of territorial a reasonable classification does constitute criterion, territorial finding approval of the but that this should not be considered a blanket by many industry. indi- presently ‘[Cjoncems expressed used the insurance classification express their sincere hearings to viduals who wrote to the Commissioners or testified at the heavily upon appear such costs to fall more and honest bewilderment about the fact that Department clearly deserving the' pay are well of further consideration least able to those inequities’; identify perceived these reasonably methodologies develop geographical rates achieve the used to “3. That the actuarially Angeles (County Los v. Farmers Ins. valid.” goals intended and therefore 77, 84-85, “Findings summarizing Exchange, Cal.App.3d the Commissioner’s supra, 20, 1979.) Dec. filed Recommendations” up- The trial court and the Commissioner. county against suit the insurers then filed demurrers, but leave to amend to the Commissioner without leave to amend as held county that the Appeal held ruling, the Court appeal On from the latter to the insurers. that the Commis- had not insisted remedies because it to exhaust its administrative had failed Commission, the Califor- the Insurance through from Apart proceedings *24 discriminatory remedy against provide judicial nia statutes Law Nondiscrimination The Auto Insurance Rosenthal-Robbins practices. on Code, to issue 11628 et refusal (Ins. seq.) prohibits § race, language, in cases for reasons comparable same conditions as other color, a geographic within ancestry, national or “location religion, origin, defined, not however, state of “a this portion This last as phrase area.” an manual rating in their square less than miles defined description shall not areas . . . in geographical insurer. Differentiation rates between interpreted discrimination.” been unfair Thus law has constitute differentials, are as uniform within rate so rates long authorize territorial Exchange, Ins. County Los Farmers (See Angeles blocks 20-square-mile 77, 20-square-mile provi- The of the result 84-85.) supra, Cal.App.3d effect of dis- have the practical can lines which sion is insurers draw of race. on basis between criminating applicants regu- administrative sum, and legislation in California the deficiencies case, however, one for very suitable is not a lation are apparent. present relief from Com- sought have not these deficiencies. Plaintiffs examining of remedies. missioner, of exhaustion and may questions thus encounter Commissioner as of the the absence Even from those apart questions, concerning the Com- information may deny the court litigant precise party uncertain to the the court and and leave policies missioner’s practices, of those policies in defense might advance reasons which he or she companies to include insurance as de- failure Finally, plaintiffs’ practices. are charging into whether insurers unfair limits judicial inquiry fendants 1852, of Insurance Code section or follow- discriminatory rates violation section 11628. violate which ing practices Assigned Risk Automobile Plan California Code section provides simply
Insurance that the Commissioner issue a reasonable plan for the approve “shall equitable apportionment, liability insurers admitted transact among of those applicants bodily injury property for automobile damages liability insurance who but faith entitled to unable good though procure such insurance are set ordinary methods.” Rates hearing. Commissioner after public rates are based on the sex, car, Current driver’s age, place use findings the specific render on practices sioner unlawful alleged original complaint. in the Cal.App.3d 87.) (132 We been informed about despite further And developments this suit. decision, in the reservations Commissioner’s 1979 noth- little or has done Commissioner ing pricing polices to curb heavily which “fall pay.” more on those able least residence. Drivers rates; with records good receive a small reduction in those with bad records a somewhat larger increase rates. classifications,
Although assigned risk rates also use territorial the impact of such classifications is much less than in rates. private Assigned risk rates for South Central Los run Angeles about percent average above the risk rates. The record does not contain exact equally information rates, about but comments in declarations and briefs that the suggest comparable figure for rates would exceed 100 It percent. is clear that for many drivers in South Central Los Angeles, many clean including *25 records, driving risk assigned rates are substantially less than available rates.17 risk assigned program does overcome some of the to objections private insurance regulation: assigned risk rates by are set the state after public hearing, available for public scrutiny, and subject judicial not, however, review. It does eliminate the fundamental faced problems residents of rates, South Central Los Angeles. Assigned risk like private rates, are loss, established on a basis of weighing revenue against expected with no consideration of affordability.18There be no appears to sense that driving record should be greater entitled to weight, or residence to lesser weight, result, than the actuarial would computations indicate. As a as- risk signed rates remain prohibitively many high residents urban rates, however, areas. Such are not properly subject to review in the present case, but should be challenged at the rate hearing determination before the Commissioner, or upon judicial review of his determination.19 17 person Plaintiffs a assert that insured program rejected under the charged is often or higher private companies rates when (collision he seeks additional compre liability coverage, coverage minimum). may hensive subject above the He also be to dis program crimination when he later tries to private coverage. leave the and obtain The Com discrimination, missioner has taken note of this philosophy nothing but true to the is un sound, actuarially only fair he which has ordered the insurers to desist from discrimination justification. if cannot show actuarial requested 18 In the insurers an increase in percent. risk rates of 60 The Com however, granted percent opinion, missioner a 20 increase. His makes no mention of affordability, rejects proposal but the insurers’ because it did not take account of investment income. appear hearing at the to set Amicus Consumers Union did the rates which took effect in evidence, January complains permitted put of 1987. It that while it was on its it was not permitted participate party as a and to cross-examine the insurers’ witnesses. Consumers simply Union further claims decision stated the the Commissioner’s alternatives and them, adopted considering one of Consumers Union’s contentions—a format which without impedes judicial very complaints review. The sound much like those raise about Commissioner action 1852. under section Proceedings Criminal and License Revocation (4) validity the facial upholds decision Although present crimi- its it not determine whether financial does responsibility legislation, If individual cases. validly applied nal and revocation can procedures a him fair upon a not available to defendant can that insurance was show afford, basis, he would have I would think at rates he could reasonable In In re Antazo an defense to criminal arguable proceeding. we held it uncon- 999], example,
Cal.3d 100 473 P.2d Cal.Rptr. a fine. pay not afford to stitutional to because he could imprison person against (a The fact its not discriminate poor that the statute on face did said, did not jail), rich man who the fine also we pay go refused would attack; the of the statute as applied foreclose a constitutional effect practical discriminate I reasoning, was to same would By on the basis of wealth. he can- question constitutionally can fine man because whether the state not afford to he cannot afford insur- buy the reason especially that, ance is he of the state part because of his race and lives in poverty, where areas. higher insurance rates are far than more affluent
The same
In Rios
concern arises
license revocation proceedings.
299,
979],
Cozens
P.2d
we observed
(1972)
This serious intended to compel previ- That statute was problem. a legal become by threatening the violator drivers to purchase uninsured ously fines driving yet with of his it did suspension privileges, nothing poor ensure insurance was available. Thus the the longer have law, insurance; option driving without must comply stop with driving, the consequences. whatever insurance, however, availability
The state’s program assuring has financial laws. kept responsibility problems its Certain pace affordability the failure to consider apparent: regulating private rates and risk setting rates; the failure to consider unfairness of charging driver good higher driving rates because of habits his poor neigh- bors; the injustice of boundaries which discriminate geographic against the deficiencies the Commissioner’s office which make it poor; procedural virtually challenge for an individual rates and terms impossible case, however, him. suitable present resolving offered not a one procedural those issues. Plaintiffs have limited their attack selected is- sues, or CAARP whether current rates are avoiding question justify a Nothing fair and reasonable. here would conclusion that presented facially the 1984 unconstitutional. Thus on the financial law is responsibility record I with the should sustain the trial majority before us concur we court’s preliminary injunction. ruling denying
Mosk, J., concurred.