our first case for this morning is restoration risk retentions against that ye reinterpretation of wisconsin statute one hundred one point six five four to a full lies the plain language of that provision and discriminates against our g s in violation of the liability risk retention act of  hundred six i think it would be helpful to the court if you were to begin with the jurisdictional and mutinous issues we suggested you look at yesterday the first question in the court's order on friday asked about the finality of the lower court's ruling appellant contends that the december fifth two thousand and sixteen judgment was proper partial final finds that there was no just reason for delay but not needing more than that you know what i couldn't tell is what is the distinctive claim that's not interwoven with the rest of the case that still haunt district co that was resolved i mean you have to say more than there's no just reason for delay you really have to have a separate claim or you know you have to completely resolve issues with regard to one party and i couldn't tell those criteria fifty four yes your honor and i understand that that partial final judgment would be subject to abuse of discretion review and to the extent of this quo actually we have discretion to   constitutional claims in counts two through seven which should be deemed dismissed with prejudice ok that does take care of it if if you're making that stipulation now then at least we don't have to send out a problem we may have some other problems still to to address so that the taking them in order the second question was about diversity jurisdiction account would also concede that there was not diversity jurisdiction insofar as the director was sued in her official capacity  the third question concerned federal question jurisdiction and i overheard some clerks talking this morning it apparently of maybe your honor student received a copy of our twenty j letter until just this morning on the bench from lee came up here so you can address what you wish but we will we have not look at it but i apologize for that we filed that yesterday afternoon and accordance with circuit rule thirty four g so that i it's preempted by federal law how is that consistent with the supreme court's more recent decisions for example armstrong against exceptional child center where the court said you can't enjoin is unconstitutional state action under the supremacy clause at least not where did and not just kind of a naked supremacy clause argument your honor and that was a twenty fifteen supreme court decision under the medicaid act a different statute of course but the court has since one thousand nine hundred three tightened up on the ability of a federal court to enjoying a state statute and found that it was irrelevant whether the federal telecommunications act provided a private cause of action i don't know your honor and frankly i'm i'm not prepared to address the armstrong stiction four were the plan of sock declaratory relief against the state regulation and contend that the agency violated federal law which is precisely what the parent contends here the problem is  the the fact that you're really talking about defense preemption you're uta you don't want to be sued in wisconsin for violating the wisconsin insurance argy shareholder insureds cannot obtain the necessary certificate to perform their work in wisconsin and by design only  members are insured of our g s so it's not that we're afraid of being sued it's that we're being forced to go through all of the same regulations that admitted insurance license insurers in wisconsin are forced to go through and that would be state regulation that would be in violation of the preemption and in the florida statute i think i thought the problem here was a lot and i guess maybe i've got a little bit different take on it because you are not the target of the financial responsibility statute your potential customers are right in members because your job is your of your members don't have an incentive to fight this one at a time for you because they've got cheaper alternatives they can get a bond they can go to insure and other insurers right correct and so your problem is you need to be you need some sort of judicial relief if you're going to change the status quo brain correct ok i don't know if that fully answers the question but it's it's it's a little bit different from some of the other postures in which these problems are is correct because again by design only shareholder insureds can restoration argy can only insure its members and that's by design under the laura and so restoration  undertaken and that that state action is in violation of a federal statute correct here are why isn't this moot this isn't move your honor because the shortest answer your honor is the footnote ten in the alliance case out of the ninth circuit explain why various work arounds potential work arounds do not cure a discriminatory law but that there's a new law the june twenty seventeen amendments to this law which we certainly aren't going to do anything about but and i guess you've refused to submit any documentation about its application to  you but this new law seems to change quite significantly the regulatory regime in wisconsin your honor i don't again i would respectfully disagree that significantly change the the language authorized to do business is still in one or one six five four to a two and a but the only new language be to a to be told says that the applicant has enforce a policy of general liability insurance issued by and insure that is eligible to provide insurance as a surplus lines insured one or more states and i think our argy fits that description yet i know i would have two responses that one  the federal level pre amps all state law that would directly or indirectly regulate risk retention groups but it does it this says you can do business if you can give the depart and proof that you've got this surplus lines you insure insure in in force so i don't know why you you want there to be a problem is what it sounds like it's not that we want there to be a problem it's going through extra hoops that we should not have to go through under the in under the new under the twenty seventeen law aren't showing that we would be eligible to provide surplus lines insurance in one state and my second by i mean you're already showing them that you're organizing for a month but why is that a burden as opposed to going through all  weather argy could weather restoration argy could qualify as a surplus lines and one of the fifty states is irrelevant because that's an extra hoop that they would have to jump true that's not consistent with the laura laura preempts all state laws then chartering states have the authority to regulate the formation in the is there a question in the state of wisconsin as to whether these entities do fall under the surface lines  lines insurer in even one state in one or more states so as long as you can point to one state it looks like you qualify and even if somebody else didn't qualify you're not litigating somebody else's case you're litigating your case or do you have a dispute your honor we contend we do have a dispute because that's an extra hoop that we would have to jump through that would be discriminatory and you've already jumped through it perhaps if you're a surplus lines i'm sure well that my second point your honor was that the it actually highlights further that it's discriminatory in that they allow surplus lines but they're trying to exclude all our effect it looks like it relaxes it opens a new doors for you if it's the same work around in that we're not we're not permitted to operate in wisconsin as an r g b only if we can prove that we can operate as a surplus lines insure in some other state and and my contention is that that one is a it improper or work around that doesn't solve the discrimination problem process and i think it further shows discrimination in that the state of wisconsin trusts other states to ensure that surplus lines insurers are adequately protect consumers so let me put something to you and get your reaction to we have two very delicate questions of state law in a state regulated industry here the one you in the you in the panel just been talking about and the antecedent question of whether the commissioner's new interpretation of  wisconsin is correct or not why should we should discourage decide this those questions why don't we certify those to his conscience supreme court find out what wisconsin law his and then we can proceed with the preemption question you are i think that that would be one potential solution but the i think the federal court is the more proper venue to decide whether i read them a proper venue i mean you're here only because you raised two constitutional issues and now you're moving to kiss them goodbye i mean this is basically a state where well your honor we we we contend that there's federal question jurisdiction because we're seeking to enjoin a state regulation that's preempted by federal law i know that's your view and so a federal court would be the most proper venue for this suit so we could reserve assuming you were correct in your premise we can reserve the preemption question and just send over the question or construction state lot of state to the state court let them decide and depending on how they decided there might be a preemption question left over there might not be that's was wisconsin supreme court could decide that the in the new interpretation of one zero one six five four two a is improper and then there wouldn't be a preemption issue because it would go back to the interpretation that they had it here to for over twenty years which is more in line with the plain language and with the laura then your case just disappears you're happy right you w but what do you think should count under the federal statute is discrimination your honor that's an interesting question the eleventh circuit is the only circuit so far that  as held that there has to be some intense to discriminate we think the ninth circuit obviously has a better view that there's no indication anywhere in the war that congress was only interested in prohibiting facial or intentional discrimination i'm looking at what this court said in the op filmic mutual case where obviously congress gave a lot of attention to this to this particular carve out in the legislative history  and i'm trying to understand whether you think there's any provision in the wisconsin law that singles out our r g s as opposed to just out of state insurers for the special treatment for showing professional liability financial responsibility for for housing contractors well your honor i would say that it's discriminates against our g s in that it treats our g s as any unlicensed ensure and unlicensed i'm sure could include insurers that aren't license at all or are license in wisconsin but are g s under the laura are designed to be regulated under the laws of one state not fifty different states and so the whole purpose of the laura was to increase competition in the insurance industry by preempting state laws that would hinder the multistate operation of our  well maybe i'm a little slow but i'm not i'm not seeing discrimination against or g s as a class as distinct from out of state insur know you're right there discriminate against all out of state insurers which includes our g's which our position is under the loro we do not fit within the category of all on license because we are licensed and regulated  for months and there is no dispute that restoration argy has done everything to operate legally in wisconsin and has done so since two thousand and six is there any evidence of legislative or regulatory hostility to  s as a class i think the meekest brief pointed out that there's statistical evidence and less argy activity in wisconsin as a result of the well that you would expect that since but that doesn't amount to discrimination as a serial but there's not for example legislative hearings with people complaining about all these out of state origin is competing berg i do want to hear from you about jurisdiction but i'd actually like to start with the theme we were ending on or at least in part ending on which is protectionism on the part of wisconsin surely this federal statute of arrangement and wisconsin seems to been perfectly happy with these things for a decade or so until somebody woke up one day and decided that they weren't going to be ok after all i don't see  reason for wisconsin to be able to basically ignore the provisions of the l o r a well wisconsin is not ignoring the provisions of the author a good preamps most state regulation but it has a specific exception for financial responsibility laws that says actually really doesn't swamp the entire rule if you said well you know in order to in order to comply with our financial responsibility laws let's just take the your old regime you know you have to qualify as wisconsin insurer well that completely defeats the purpose of the l r a and seems that congress would not have written such an exception well so not at all the it's important to keep in mind that the law that we're talking about here is not a regulation of insurers it's a regulation of building contractors so it requires building contractors to demonstrate financial responsibility with an insurance policy and that insurance possibly saw policy has to come from a license insured so the only affect this has on risk retention groups is for one narrow type of insurance and only this first sort of narrow type of insurance so risk retention groups can still provide insurance in any other industry they can provide to the same industry above the minimum policy they just can't provide this one narrow type of insurance but that's their whole purpose the the whole business structure is to take people in a particular line of business pull together you know have the members create these funds basically  it's it's as though you're standing here and saying oh well never mind i'm putting them out of business you're putting this group out of business for wisconsin and you're carving wisconsin out from the entire rest of the country when the l r a seems to have a national approach and saying well vermont's regulating them that's got to be good enough or was concert surely the point of the l r i was not to allow insurance in the building contractor industry rest risk retention it was united to improve competition in the insurance market which i have to say is kind of a throwback compared to most markets in the united states sure so the point was to allow risk retention groups generally but congress thought in certain industries states have an interest insuring unit in ensuring that service providers are financially stable and so they allowed exceptions for those industries this is one of those industries where the state is determined that it's important for contractors to remain financially healthy there's a specific exception in federal law that says states are allowed to have financial responsibility laws that's exactly what this law is and it mirrors the language in the federal exception that's exactly what that you're reading it as though it's can be a global the actual language says states may require an r r g to submit proof of financial responsibility as a condition for conducting certain activities and in so doing to include or exclude one that goes on a risk retention group so that sounds to me like it needs to be a specific finding and he could be that somebody risk retention group is not financially sound and many other risk retention proops are it doesn't look to me like something that allows you to just say we're not doing our g s in the build industry or in the health care industry or in whatever so the fact that the specific exception uses singular nouns shouldn't have any weight and the reason is that the  singular nouns everywhere so the preemption provision itself says that states can't regulate or make unlawful a singular risk retention groups but it doesn't but but the broader reason to read a is though it means a an individual one is my first point that your reading of the exception erases the whole statute for certain section sectors and where it is where do we get this guidance from congress it doesn't  industry in a specific state that's exactly what congress wanted to authorize where do you get that from from the exception itself it's not for particular industries states are allowed to require financial responsibility and they can exclude risk retention group  risk retention groups not all risk retention sure but that means the reason it was written in the senior form is because these laws financial responsibility role laws are typically written that way right every single law and every one of the cases that we've cited is written exactly that way they require an insurance policy from a specific insurer and so when congress was thinking about those laws it naturally wrote the exception to mirror the way that those laws are written but it doesn't make sense to think that if wisconsin wants to say we want proof of financial responsibility you have some amount of assets or something maybe some groups will comply and others won't but why even well health care liability insurance i mean it was constant could multiply this on out to every industry well if you know that you have offered no limiting principle here if that happened i think you could have a different claim you could have some sort of purpose intentional discrimination claim with evidence that wisconsin has cut out every single industry but what congress wanted to allow was they wanted to allow states in particular industries to require financial responsibility and that's what they have that's what wisconsin has done in this case in one narrow particular industry risk retention groups this research center that can still provide insurance to building contractors in what else can it just be so well i mean that's not even in wisconsin it can still provide insurance to the building contractors just not sort of the minimum level of insurance that they need to this was not much of a considered holding in musser i disagree if it agrees with me or so both the eleventh circuit and this circuit have held that these types of laws are allowed the only case that has gone the other way is the ninth circuit's opinion and i think the reasoning is very flawed primarily because it relies primarily on the singular noun aspect and as i've explained i think that any way the rotter policy of encouraging competition in this industry i wouldn't say people are seizing on what this is mean or what is a mean let me ask you this question somewhat different angle is it your position that r r g itself qualifies as a surplus lines insurer in one or more states pursuant to the june twenty seventeen amendments so our position is that almost certainly they do but i don't know for sure because they have the information that i would need to decide that question so let me back up and explain surplus lines insurance is essentially any insurance placed with an unlicensed insured so states regulate typical insurance policies like automobile homeowners and the like but don't write regulate obscure forms like if you want to insure a resource or something and so they allowed unlicensed insurers to provide those rare types of insurance since there's not usually an in state market they have some basic eligib requirements for surplus lines insurance so wisconsin's requirements are you have to be domiciled somewhere you have to be authorized there and you have to have some basic capital requirements we know that they need one and two because those are also basic requirements to be a risk retention group but we don't know whether they meet the capital requirement so it's possible they don't have to do requirements stated in terms of the an amount of money or just well yes it's a default hundred million dollars fifteen but it can go down to as low as four point five i think if the it may be that you do have enough information i haven't but i didn't write i didn't look up from on statues the important point is even if they didn't meet wisconsin surplus last requirements they could meet any state in the country so pick the laxest the most permissive state and just show that you meet those surplus funds required so that's why i say it's almost certain that they meet some state in the country surplus lands cartman's but i don't know for sure so when the law changed i called them up and said congrats you win the case the law changed there's a new provision all you got to do is show pick a state and show us the one you qualify under and they said no thanks right they thought that was too burdensome they said right so so here's the puzzle if we knew for sure that the minute that they meet subsection be the new requirement then the case is definitely moot because they can get what they want and they ask for only perspective really if and there's a small possibility that they don't meet any state's surplus lines requirements then the case is definitely not moot because they might still win if they win one of their arguments under just states keep lists i mean just wisconsin for example keep a list of companies that somebody could check on a website or somewhere of companies in wisconsin that meet its surplus lines requirements not that i'm aware of i look for that but i couldn't find it so not been aware that this would just be lodged in the internal records of any given you know r r g or company or whatever right right so so that's the so that's the mootness puzzle i look for ways that this court has dealt with a situation like that where the other side has the information about that whether the case is moot i couldn't find any of the best solution that i could come up with and there might be problems with this would be for this court to order restorationist explain why it can't simply qualify under b as a good explanation if you want to decide the merits if it doesn't hold that it failed to meet its burden so that's sort of to me that takes us back to the jurisdictional question though if i were satisfied that we had jurisdiction and they waived diversity i think wisely and so we've and we're not talking about fifty four b anymore we have a finite judgment that would be just appellate jurisdiction anyway we're in the we're in the world of federal question jurisdiction if i thought we had federal question jurisdiction the kinds of things you're talking about seem to need to be the certainly federal question jurisdiction here i want to address armstrong which you raised earlier so so the issue in armstrong was the source of the right and the court rejected the idea that the source comes from the supremacy clause but the court held that federal courts have inherent equitable forty to decide and enjoying the preempted state law so when you read a quote from armstrong they said as as we have long recognized if injury individual claims federal law immunize a sim from state regulation the court may issue an injunction upon finding the state regulatory actions preempted and its lights ex parte which is what xabi delta airlines cited which is what the rise in maryland cited so i think even armstrong reaffirms the general principle that the court has asked will power to enjoin preempted laws i want to talk sort of briefly about hamilton's question or suggestion  that this is not a preemption defense i there actually isn't any possible way that i could think of that they could have raised the argument as a preemption defense because they're not even involved since the laws or regulation of building  the state denied a request from a particular building contractor restorationist wasn't even involved in an action so it could have the contractor was just seeking a license more or less it was just seeking yesterday and you had to show it had to show the financial responsibility of using an insurance policy right so restoration risk wasn't wasn't involved in that after it was denied now it wanted to raise its preemption claim the only way it can do it is to file an action which is more of an affirmative claim that in france and since it's an action for permission to do business in rise in maryland and illinois association so she issued a mortgage brokers all these courts have held repeatedly that federal courts have federal question jurisdiction to decide that sort of question exactly so we think there's definitely federal question jurisdiction but there's a significant movement problem as i've suggested this court could order them to explain why it's not moot and dismiss it on the grounds that they haven't met their burden to establish standing this court does that regularly or if it wished it could be a man to the district court for a finding is a district court going to be able to handle that question without resolving these issues of wisconsin law that judge ripple was talking about are we just going to move from one morass to another well i would i think the district court would do the same thing that i'm suggesting this court would do which would be just say the change in the law triggers restoration risk your burden to show us that you have an injury in fact so show the court that you can't just me be and if they can make that showing great we can move on to the merits if they can't then the case is moot that's why i suggested that this court could issue that order so we don't have to ping pong back and forth but if you want to be a man that's fine as well  on the merits of the state's interpretation of state law is certainly correct the phrase that we're talking about authorized to do business in this state has a very specific meaning in wisconsin law is applied to wisconsin insurers so just wisconsin not recognize that let's say if federally chartered corporation might be authorized to do business in wisconsin so phrase authorized to do business in the state as applied is a very specific meaning it means in wisconsin statutes so of course we recognize that risk retention groups are generally authorized by federal law but when that phrase is used in wisconsin statutes it means having a certificate of authority it's a very specific confused about your argument that this is just one sector because i can't find that in any of the language of anything you're relying on can't find what that where you were earlier being dismissive about their concerns because you said oh this is just buildings you know they can be risk retention groups for thousands of other sectors in wisconsin but if they're really not authorize you business in wisconsin they're not authorized to do business in wisconsin right so those are two different questions right the law that we're talking about is a specific building contractor law that says building contractors have to have an insurance policy from an insurer authorized to do business in the state that phrase when applied to insure has a very specific meaning it means and insure that's licen and so that the financial responsibility law as applied to building contractors means you need a license but there are there other ways that an insurance company that is chartered out of state can actually do business right now other than as quote authorized  flexibility when it comes to a specific insure that is applying to be a surplus lines i'm sure but the second section section b says that you simply have to be eligible doesn't actually have to say that you are authorized as a surplus  so there are some basic eligibility requirements and more and the basic lines barbecue you just have to be domiciled somewhere you have to be authorized there and some basic capital is those are wisconsin judge dillon in indiana and used to say three rules for these kinds of cases read the statute read the statute read the statute so yeah that's why we think they almost certainly qualify under some state's basic eligibility sir process requirements but we don't know because they have the information we we don't have access said i would ask this court not to certify the question to the wisconsin supreme court because we think the state law interpretation question is fairly simple and given the change in the law wisconsin has near zero interest in this case anymore  we think that they're authorized i called them and offered to let them apply and be authorized so it would be a huge waste of the state's time if we had to go back to the screen for it and litigate the meaning of state law we think it's relatively straightforward  the i want to make one final comment on the preemption claim the fact that the law has changed significantly undermines the discrimination argument so their theory previously was that the law was discriminatory because it only allows licensed insurers well now it doesn't now it allows the policy from either a license insured or any insured eligible anywhere as a surplus lines and sure so that's pretty it's hard to argue that that discriminates against thank you roger i'll just address that final point i think opposing counsel said that in the new the new statute shows that it's not discriminatory and i mentioned in my previous remarks i think it shows the exact opposite he mentioned that you know we only have to show by the most lax state's standards that we would satisfy as surplus lines again i think that undermines how discriminatory this is that would exclude all risk protection groups but wisconsin does trust other states even the most lax state to regulate surplus lines carriers and again those are the exact same hoops that run contrary to the the very purpose of the laura which was to minimize non dom ciliary states regulations if there aren't any other questions i want to address the mootness problem in light of what the state had to say the this again i think it's not due to because we don't need to jump through those hoops it's preempted by the laurel and if so what ho it and we need to say something about the exception to it because yes the lawry's there but the lawyer also has the language of the exception which might bring a hoop or two back into the question ok so the hoops your honor if i going to  and going through the process of showing that we would qualify as a surplus line and ensure an alaska or hawaii or whatever the most lax state is that would be an extra hoop that is not required of anyone else under one hundred one six five four two eight two a and the laura specifically pre amps all state laws that would directly or indirectly regulate risk retention groups except if an exception applies and this gets to chief judge what's question of the exception so the mussar court analyzed the exception and thirty nine zero five without regard to benefit of the adversarial process that issue was not debated but was not in dispute and in passing the court adopted the language of mirrors