TRAVELERS HEALTH ASSOCIATION, Petitioner, v. FEDERAL TRADE COMMISSION, Respondent.
No. 15743.
United States Court of Appeals Eighth Circuit.
Jan. 13, 1959.
262 F.2d 241
James E. Corkey, Asst. General Counsel, Federal Trade Commission, Washington, D. C. (Earl W. Kintner, General Counsel, and J. B. Truly, Alvin L. Berman, Edwin S. Rockefeller and Frederick H. Mayer, Attorneys, Federal Trade Commission, Washington, D. C., on the brief), for respondent.
Clarence S. Beck, Atty. Gen. of the State of Nebraska, and Ralph D. Nelson, Asst. Atty. Gen. of the State of Nebraska, filed brief for the State of Nebraska, as Amicus Curiae, in support of petitioner. Joinders in the Amicus Curiae brief of the State of Nebraska with respect to the question of the jurisdiction of the Federal Trade Commission were filed by the following: Bruce Bennett, Atty. Gen., for the State of Arkansas; John J. Bracken, Atty. Gen., of the State of Connecticut; Richard W. Ervin, Atty. Gen., for the State of Florida; Eugene Cook, Atty. Gen., for the State of Georgia; Norman A. Erbe, Atty. Gen., for the State of Iowa; Jo M. Ferguson, Atty. Gen., and Earle V. Powell, Asst. Atty. Gen., for the Commonwealth of Kentucky; Jack P. F. Gremillion, Atty. Gen., for the State of Louisiana; Rufus
Whitney North Seymour, New York City, and Simpson, Thacher & Bartlett, New York City, filed brief for The Health Insurance Ass‘n of America, amici curiae.
Before SANBORN, JOHNSEN and VOGEL, Circuit Judges.
SANBORN, Circuit Judge.
Travelers Health Association, of Omaha, Nebraska, by a petition to review, challenges the validity of a cease and desist order of the Federal Trade Commission dated December 20, 1956. The order was based upon a determination by the Commission (1) that it had jurisdiction to regulate the advertising practices of the petitioner in the promotion and sale, by mail, of insurance against disability caused by sickness, and (2) that certain of the petitioner‘s practices were false, misleading and deceptive within the meaning of the Federal Trade Commission Act,
The petitioner contended before the Commission, and contends here: 1. That the Commission was precluded by the McCarran-Ferguson Act,
The case was first argued and submitted to this Court on November 13, 1957. Decision was deferred pending the disposition by the Supreme Court of the cases of American Hospital & Life Insurance Co. v. Federal Trade Commission, 5 Cir., 243 F.2d 719, and National Casualty Company v. Federal Trade Commission, 6 Cir., 245 F.2d 883, to review which the Supreme Court granted certiorari on November 12, 1957. 355 U.S. 867, 78 S.Ct. 119, 2 L.Ed.2d 73. In those cases, it was held by the respective Courts of Appeals that, because of the McCarran-Ferguson Act, the Federal
“* * * An examination of that statute and its legislative history establishes that the Act withdrew from the Federal Trade Commission the authority to regulate respondents’ [the insurers‘] advertising practices in those States which are regulating those practices under their own laws.”
At our direction, the question of the Commission‘s jurisdiction over the advertising practices of the petitioner in the instant case was reargued and the case finally submitted on September 13, 1958.
The obvious purpose of the McCarran-Ferguson Act was to remove the cloud cast by the case of United States v. South-Eastern Underwriters Association, 322 U.S. 533, 64 S.Ct. 1162, 88 L.Ed. 1440, upon the right of the States to continue to regulate and to tax interstate insurance business under their own laws, as they had done for some seventy-five years. The history and effect of the Act has already been adequately explained. See Prudential Insurance Co. v. Benjamin, 328 U.S. 408, 429-431, 66 S.Ct. 1142, 90 L.Ed. 1342; Maryland Casualty Co. v. Cushing, 347 U.S. 409, 413, 74 S.Ct. 608, 98 L.Ed. 806; North Little Rock Transportation Co., Inc. v. Casualty Reciprocal Exchange, 8 Cir., 181 F.2d 174, 176; American Hospital & Life Insurance Co. v. Federal Trade Commission, 5 Cir., 243 F.2d 719; National Casualty Company v. Federal Trade Commission, 6 Cir., 245 F.2d 883, 887-888; Securities and Exchange Commission v. Variable Annuity Life Ins. Co. of America, D.C.D.C., 155 F.Supp. 521, 527.
The petitioner asserts that its insurance business, including its advertising practices, is regulated by State law within the meaning of the McCarran-Ferguson Act, and that, under Section 2 (a) and (b) of the Act, the Commission is clearly without authority to do any additional or supplemental regulating of petitioner‘s advertising practices.
The Federal Trade Commission contends that the Supreme Court, in its decision of June 30, 1958, in the National Casualty Company and American Hospital & Life Insurance Co. cases, merely held that the States possess ample means to regulate insurance advertising disseminated by companies licensed to do business in those States and represented by agents located within their boundaries; that the Court expressly refrained from ruling upon the applicability of the McCarran-Ferguson Act to the mail order insurance business; that no amount of State regulation of insurance advertising can effectively stop the influx into a State of deceptive advertising material mailed by an out of State company doing a mail order insurance business; that, under the proviso of Section 2(b) of the McCarran-Ferguson Act, the Federal Trade Commission Act is applicable to the petitioner‘s advertising practices; and that the Commission has jurisdiction.
The Supreme Court, in its opinion of June 30, 1958, in the National Casualty Company and American Hospital & Life Insurance Co. cases, decided no more than it was required to decide, and confined its opinion to the exact factual situation presented. That court, as the Commission says, was dealing with the advertising practices of insurers operating through agents in States in which the insurers were licensed. In the instant case the petitioner is licensed only in the States of Nebraska and Virginia. It
The Nebraska “Unfair Competition and Trade Practices” Act of 1947 (Secs.
At the time the Commission entered the order under review, the Nebraska Act did not expressly authorize the Director of Insurance to deal with unfair and deceptive trade practices engaged in, in other states, by an insurer domiciled in Nebraska. That, we think, is of no substantial consequence. The validity of the order under review depends upon the law presently applicable. A substantial change in applicable law, occurring after the entry of an order or judgment, which alters the rule governing a case will ordinarily be given effect on review. See and compare, Trapp v. Metropolitan Life Insurance Co., 8 Cir., 70 F.2d 976, 982, and cases cited. Moreover, we think the Director of Insurance of Nebraska at all times here involved had the power to regulate the practices of the petitioner in the solicitation of insurance in Nebraska and other states.
It must be kept in mind that the business of the petitioner was all done at or from its home office in Omaha. There its solicitation material originated and was mailed; there the applications for insurance induced by solicitation were received; there all policy contracts were written; and there all premiums were paid. With every activity of the petitioner, in the conduct of its business, subject to the supervision and control of the Director of Insurance of Nebraska, we think that the petitioner‘s practices in the solicitation of insurance by mail in Nebraska or elsewhere reasonably and realistically cannot be held to be unregulated by State law.
In our opinion, there is no controlling distinction between the instant case and the National Casualty Company and American Hospital & Life Insurance Co. cases. We think that the advertising practices of the petitioner are regulated by State law within the letter and spirit of the McCarran-Ferguson Act, and that the Act has placed such practices beyond the regulatory power of the Commission.
The order under review is vacated on the ground that the Federal Trade Commission is, and was, without authority to regulate the practices of the petitioner in soliciting insurance.
VOGEL, Circuit Judge (dissenting).
I do not dispute the majority‘s contention that “A substantial change in applicable law, occurring after the entry of an order or judgment, which alters the rule governing a case will ordinarily be
Notes
“That the Congress hereby declares that the continued regulation and taxation by the several States of the business of insurance is in the public interest, and that silence on the part of the Congress shall not be construed to impose any barrier to the regulation or taxation of such business by the several States.
“Sec. 2 (a) The business of insurance, and every person engaged therein, shall be subject to the laws of the several States which relate to the regulation or taxation of such business.
“(b) No Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance, or which imposes a fee or tax upon such business, unless such Act specifically relates to the business of insurance: Provided, That after June 30, 1948, the [Sherman] Act, * * * the Clayton Act, and * * * the Federal Trade Commission Act * * * shall be applicable to the business of insurance to the extent that such business is not regulated by State law.”