Title: State Farm Mut. Auto. Ins. Co. v. Wyoming Ins. Dept

State: wyoming

Issuer: Wyoming Supreme Court

Document:

State Farm Mut. Auto. Ins. Co. v. Wyoming Ins. Dept1990 WY 57793 P.2d 1008Case Number: 89-144Decided: 05/31/1990Supreme Court of Wyoming
STATE FARM MUTUAL 
AUTOMOBILE INSURANCE COMPANY AND STATE FARM FIRE AND CASUALTY COMPANY, 

APPELLANTS 
(PETITIONERS),

v.

WYOMING INSURANCE 
DEPARTMENT,

 APPELLEE (RESPONDENT).

Appeal from the District 
Court, Laramie County, Nicholas Kalokathis, J.

Rodger McDaniel 
of McDaniel & Tiedeken Law Offices, Cheyenne, for 
appellants.

Joseph B. Meyer, 
Atty. Gen., Hugh Kenny and David K. Gruver, Asst. Attys. Gen., for 
appellee.

Before 
CARDINE, C.J., THOMAS, URBIGKIT and MACY, JJ., and ROONEY, J., 
Retired

ROONEY, Justice, 
Retired.

[¶1]      This appeal is 
from the district court's denial of a challenge by appellants to Section 6 of a 
regulation promulgated by the appellee, which section prohibited use by an 
insurer of a non-OEM1 after market part in the repair of 
an automobile or in the estimate for such repair without the written consent of 
the insured to the use of such part.2 The regulation was issued after a 
public hearing, and appellants/insurance companies timely filed a petition for 
review in the district court. The resulting order of the district court upheld 
the regulation.

[¶2]      We 
affirm.

[¶3]      Appellants word 
the issues on appeal:

     "A. Does the Wyoming 
Insurance Department have statutory authority to regulate consumer choices 
between automobile parts manufactured by original manufacturers and those 
manufactured by non-original equipment manufacturers.

     "B. Does the 
regulation promulgated by the Insurance Department impair contractual 
obligations between the Appellant and its insureds.

     "C. Does the 
regulation bear enough of a reasonable relationship to its purpose to withstand 
due process scrutiny.

     "D. Is Section 6 of 
the regulation supported by substantial evidence in the hearing 
record."

[¶4]      Appellee words 
them:

     "I. Does the Wyoming 
Insurance Commissioner have statutory authority to regulate insurers' claims 
settlement practices?

     "II. Have appellants 
shown that Section 6 of the regulation impairs their contractual obligations in 
violation of Article 1, Section 35 of the Wyoming Constitution?

     "III. Is there a rational 
basis for the promulgation of Section 6 of the regulation?

     "IV. Must there be 
substantial evidence in an administrative record to support the adoption of a 
regulation?"

[¶5]      The standard 
provision of the insurance policies in question which is pertinent to this 
matter requires the insurer to

"pay to repair or replace 
the property or part with like kind and quality. If the repair or 
replacement results in better than like kind and quality, you must pay 
for the amount of the betterment." (Emphasis added.)

[¶6]      In their 
arguments, appellants approach the issues with the assumption that appellee is 
imposing the use of OEM parts upon the appellants and that the problem is 
not one of consumer protection but is one of market competition. Two large 
industries are involved: the automobile industry and the insurance industry, but 
also involved is the consumer-insured. In truth, Section 6 of the regulation 
does not impose any use. It gives a choice to the insured. It is 
concerned primarily with the protection of the insured. The insured's choices 
are not "regulated" as contended in appellants' wording of the first issue. The 
insured is only afforded an opportunity to accept a replacement part other than 
that designated in the insurance policy. His choice is similar to that made by 
any consumer on the basis of that contained on the labels of two competing 
products. Any marketing impact is incidental to protection of the insured and to 
fair and equitable performance under the insurance policies.

[¶7]      With reference to 
the specific issues:

FIRST ISSUE: STATUTORY 
AUTHORITY OF THE INSURANCE COMMISSIONER TO PROMULGATE SECTION 6 OF THE 
REGULATION

[¶8]      The authority of 
the Insurance Commissioner to promulgate Section 6 of the regulation can be 
found in more than one statute.

I

[¶9]      The district 
court found such authority in W.S. 26-13-102 "specifically as an unfair 
practice."3 The district court properly 
reasoned: 

     "The policy of 
insurance gives to an insured the right to a replacement part of like kind and 
quality. The issue is whether the replacement part is of like kind and quality 
with respect to the damaged part. Petitioners' argument means that an insured 
has no contractual right to insist upon OEM parts if a non-OEM part is of like 
kind and quality to the OEM part.

     "This result is not 
what the insurance contract provides. It does not say that an insured must 
accept a non-OEM part even if it is of like quality as an OEM part. To be sure, 
the policy promises the insured that he may have parts of like kind and quality 
as the damaged part. Nobody argues here that an OEM part is not of like 
kind and quality as the original equipment. If they do, the evidence of record 
falls short of compelling such a finding. Moreover, the evidence did not show 
that OEM parts amounted to a betterment within the meaning of the policy. 
The insured has a right to an OEM part even if it costs more, even if it is of 
like quality as a non-OEM part because it is not a betterment, but rather 
of like kind as the damaged original equipment.

     "The potential that an 
insurer may require an insured to accept a non-OEM part raises the prospect that 
an insured may be denied the benefit of his bargain. This threat when coupled 
with the evidence of record (which casts doubt upon whether OEM and non-OEM 
parts are truly of like kind and quality) empowers the commissioner to regulate. 
Section 6 is sustained as a valid exercise of the commissioner's rulemaking 
authority under W.S. § 26-13-102, specifically as an `unfair 
practice.'"

II

[¶10]   Another statute under which the 
Insurance Commissioner has authority to promulgate Section 6 of the regulation4 is W.S. 26-13-124. It sets forth 
fourteen practices as unfair methods of competition and unfair and deceptive 
acts.5 Appellants argue that since the use 
of non-OEM parts in repairs or in repair estimates is not itemized therein, such 
is not an unfair claims settlement practice.

[¶11]   Although not specifically itemized 
therein, the practice may result in a violation of subsection (a)(vi) thereof, 
i.e., "[n]ot attempting in good faith to effectuate * * * fair and equitable 
settlements of claims in which liability has become reasonably clear." The 
district court found that "there is substantial evidence of record to support a 
distinction between OEM and non-OEM parts." The record supports this finding. 
There would obviously be no "betterment" or "worsening" of value if an OEM part 
was used for estimate or replacement of the damaged OEM part. If the estimate or 
replacement was with a non-OEM part of greater value than the damaged part, the 
insured would be obligated under the contract to pay for the "betterment," but 
there is no requirement for payment by the insurer for the "worsening" of value 
if the non-OEM part was less than that of the damaged part. As reasoned by the 
district court, the situation is obviously one-sided. Thus, the claim settlement 
condition of the policy is not "fair and equitable." The evidence at the hearing 
illustrates the difficulty, if not the impossibility, to reach an agreement on 
the relative value of the OEM and the non-OEM parts. Section 6 of the regulation 
is a reasonable requirement for resolving the difficulty by allowing the insured 
to say "yes" or "no" to the use of non-OEM parts. It promotes "good faith to 
effectuate prompt, fair and equitable settlement of claims" per W.S. 
26-13-124(a)(vi).6

III

[¶12]   Beyond that, appellants acknowledge 
that the Insurance Commissioner may determine a "practice not enumerated in" 
W.S. 26-13-1247 to be an unfair or deceptive 
practice. Appellants refer to W.S. 26-13-1028 in this connection as restricting 
the authority of the Commissioner with reference to unfair or deceptive acts or 
practices to those which are either "defined in this article" or "determined 
pursuant to this article." Appellants then conclude that W.S. 26-13-1169 is that referred to in W.S. 
26-13-10210 as the only method to "determine 
pursuant to this article" the existence or non-existence of the deceptive acts 
or practices, and that the Commissioner did not employ the procedure referred to 
in W.S. 26-13-116 in connection with this matter.

[¶13]   A hearing was held on this issue. 
Appellants took part in the hearing with full knowledge of the content of the 
proposed regulation. The procedure here used was in substantial compliance with 
that required by W.S. 26-13-116. Therefore, appellants' argument for requiring 
exact itemization of the protected practice in W.S. 26-13-124 before the 
Commissioner can declare it to be an unfair or deceptive act or practice is a 
fallacious argument and W.S. 26-13-116 gives the Commissioner authority to 
promulgate Section 6 of the regulation.

IV

[¶14]   Not only was the procedure used 
here sufficiently within that required by W.S. 26-13-116(a), and not only could 
the action be taken pursuant to the authority enumerated in W.S. 26-13-102 and 
in W.S. 26-13-124(a)(vi), even if not itemized in W.S. 26-13-116(a), but the 
authority of the Insurance Commissioner to promulgate Section 6 of the 
regulation is also contained in W.S. 26-2-109(a)(iv) and (v), in W.S. 26-2-110 
and W.S. 16-3-101(b)(ix). W.S. 26-2-109(a) reads in pertinent part:

"(a) The Commissioner 
shall:

* * * * * *

"(iv) Execute the duties 
imposed upon him by this code;

"(v) Have the powers and 
authority expressly conferred upon him by or reasonably implied from this 
code[.]" (Emphasis added.)

[¶15]   W.S. 26-2-110(a) reads:

     "Subject to the 
requirements of the Wyoming Administrative Procedure Act [§§ 16-3-101 through 
16-3-115], the commissioner may make reasonable rules and regulations necessary 
to carry out any provision of this code [title 26]. No rule or regulation shall 
extend, modify or conflict with any law of this state or the reasonable 
implications thereof."

[¶16]   W.S. 16-3-101(b)(ix) reads in 
pertinent part:

"(b) As used in this act 
[Wyoming Administrative Procedures Act]:

* * * * * *

"(ix) `Rule' means each 
agency statement of general applicability that implements, interprets and 
prescribes law, policy * * *."

[¶17]  The nature of insurance requires that it 
be extensively regulated. W.S. 26-1-101, et seq. does so, and in doing so, 
reflects such requirement. That "reasonably implied" from any powers 
specifically given the Commissioner by "this code" authorizes Section 6 of the 
regulation. There is a reasonable possibility that the replacement of an OEM 
part with a non-OEM part could result in less than that required by the policy, 
i.e., with a part not of "like kind and quality." Section 6 of the regulation 
reasonably requires notice to the insured of this possibility and allows him to 
accede to or reject the possibility. It is in conformity with the purpose of 
statutory regulation of insurance transactions.

V

[¶18]   Finally, appellants recognize the 
authority of the Insurance Commissioner to approve the insurance policies used 
in Wyoming. W.S. 26-15-110(a) provides in pertinent part:

     "No basic insurance 
policy * * * shall be delivered or issued for delivery in this state unless the 
form is filed with and approved by the commissioner."

[¶19]   The policies with which we are here 
concerned contain the language requiring the insurer to pay to repair or replace 
the property with "like kind and quality." (Emphasis added.) Although the 
parties hereto argue at length with reference to the relative quality of 
the OEM and non-OEM parts, the word "kind" also has pertinence. It can mean "a 
specific variety, type or brand," or it can mean "a fundamental nature or 
quality" - "an equivalent of that offered or received." See Black's Law 
Dictionary at 782 (1979) and Webster's Third International Dictionary at 1243 
(1966). In issuing Section 6 of the regulation, the Commissioner is specifying 
the meaning approved by him for the ambiguous word "kind," i.e., that it had the 
meaning of a specific variety or brand, and that the insured could waive the 
provision of the policy requiring replacement by, or payment per an estimate on, 
the specific brand. In other words, Section 6 was only clarifying that which the 
Commissioner did when he exercised his authority under W.S. 26-15-110(a) to 
approve the policy - a clarification clearly within the Commissioner's 
power.

[¶20]   In summary, promulgation of Section 
6 of the regulation was a reasonable exercise of the authority given to the 
Commissioner by the indicated statutes. It set forth a reasonable requirement 
furthering the purpose of the Insurance Code, i.e., to assure fair and equitable 
insurance transactions. 

SECOND ISSUE: IMPAIRMENT 
OF CONTRACTUAL OBLIGATIONS BY SECTION 6 OF THE REGULATION

[¶21]   Article 1, Section 35 of the 
Wyoming Constitution provides:

"No ex post facto law, 
nor any law impairing the obligation of contracts, shall ever be made."11

[¶22]   Again, the constitutionality of 
Section 6 of the regulation under Article 1, Section 35 of the Wyoming 
Constitution can rest on more than one rationale.

I

[¶23]   Section 6 of the regulation does 
not impair a contractual obligation. Obviously, such section is not an 
impairment on insurance policies issued subsequent to the effective date of the 
regulation, i.e., subsequent to July 1988. See cases under 16A Am.Jur.2d, 
Constitutional Law, § 689 (1979). That section reads:

     "Although a statute 
tending to impair the obligation of a contract is inoperative as to contracts 
existing at the time of its passage, it may nevertheless be valid and operative 
as to future contracts. The provision of the Constitution which declares that no 
state shall pass any law impairing the obligation of contracts does not apply to 
a law enacted prior to the making of a contract the obligation of which is 
claimed to be impaired, but only to a statute of a state enacted after the 
making of the contract. The obligation of a contract cannot properly be said to 
be impaired by a statute in force when the contract was made, for in such cases 
it is presumed that it was made in contemplation of the existing law. The state, 
therefore, may legislate as to future contracts as it sees fit, and accordingly, 
if a law is prospective only, it is - so far as the guaranty of obligation of 
contracts is concerned - valid."

See also 
Application of Hagood, 356 P.2d 135, 138 (Wyo. 1960).

[¶24]   Most automotive insurance contracts 
are for a six month term. Accordingly, only a limited number of claims, if any - 
those made under policies in force on the effective date of the regulation - are 
subject to appellants' position on this issue. With reference to the limited 
number of claims made under policies in force prior to the effective date of the 
regulation, there is no impairment since Section 6 of the regulation did 
not change the vested rights - the duties and obligations of the parties - which 
existed prior to enactment of Section 6 of the regulation. The contract required 
appellants to replace the part with, or estimate the value of it on, one of 
"like kind and value." Section 6 of the regulation does not change this 
requirement. If anything, it relaxes the obligation of the appellants by 
allowing replacement by, or estimate on, a part of a different kind ("kind" 
meaning "brand") with consent of the insured. Section 6 of the regulation 
clarifies the language of the contract. It does not change such language. Thus, 
it does not "impair" the contract obligations.

[¶25]   Without consideration of the words 
"like kind" and directing attention only to the words "like value," the evidence 
at the hearing reflects the difficulty in determining the relative value between 
the OEM part and the non-OEM part. Appellants' contention is that only it should 
determine whether or not the replacing non-OEM part is of equal, greater or less 
value than the replaced OEM part. Section 6 of the regulation simply places that 
decision with the insured along with the ability to waive any difference if one 
exists. Such furthers a fair and equitable settlement of a claim, and it 
provides for the receipt by the insured of the benefit of his bargain, as noted 
by the district court.

II

[¶26]   Section 6 of the regulation is 
reasonable exercise of the police power of the State for the promotion of the 
safety and welfare of those subject to its jurisdiction. As such, it cannot 
constitute an impairment of contracts. 

     "The police power can 
be generally described as a government's ability to regulate private activities 
and property usage without compensation as a means of promoting and protecting 
the public health, safety, morals and general welfare. See Weber v. City of 
Cheyenne, 55 Wyo. 202, 97 P.2d 667, 670 (1940). * * *

* * * * * *

     "The legitimate 
objectives of the police power are loosely characterized as being public in 
nature and the potential range is very broad. See Hawaii Housing Authority v. 
Midkiff, 467 U.S. 229, 104 S. Ct. 2321, 81 L. Ed. 2d 186 (1984); Berman v. Parker, 
348 U.S. 26, 75 S. Ct. 98, 99 L. Ed. 27 (1954)."

Cheyenne Airport 
Board v. Rogers, 707 P.2d 717, 726-27 (Wyo. 1985). See citations in 16A C.J.S., 
Constitutional Law, § 322 (1984), the introductory paragraph of which 
reads:

     "The state, through 
its legislature or other properly authorized agency, can prescribe reasonable 
regulation within the scope of its police power for the conduct of corporate 
business without impairing the obligation of contracts as they appear in the 
charters or franchises of the corporations to which they apply."

And see 
citations in 16A Am.Jur.2d, supra at § 405, which reads in part:

     "The contract clause 
of the Constitution does not restrict the power of the state to legislate in the 
interest of the morals, health, and safety of the public, notwithstanding that 
one or more of these factors may be involved in contracts of various kinds. 
Rights and privileges arising from contracts are subject to regulation for the 
protection of the public health, safety, and morals, in the same sense and to 
the same extent as is all property, whether owned by natural persons or 
corporations. Indeed, the principle is frequently stated that all contracts are 
made subject to the paramount authority of the state to safeguard the vital 
interests of its people, and all contracts made with reference to any matter 
that is subject to regulation under the police power must be understood as made 
in reference to the possible exercise of that power. It follows that not all 
police legislation which has the effect of impairing a contract is obnoxious to 
the constitutional prohibition as to impairment; a statute passed in the 
legitimate exercise of the police power will be upheld by the courts, although 
it incidentally destroys existing contract rights. Thus, the economic interests 
of the state may justify the exercise of its protective power notwithstanding 
interference with existing contracts. The underlying principle is that if the 
legislature has no power to alter its police laws when contracts will be 
affected, then the most important and valuable reforms may be precluded by the 
simple device of entering into contracts for the purpose of doing that which 
otherwise may be prohibited; the authority of the legislature, in the exercise 
of its police powers, cannot be limited or restricted by the provisions of 
private contracts between individuals, or between individuals and 
corporations."

[¶27]  The nature of the insurance business 
makes regulation of it more necessary than is required for many other 
businesses. It is extensively regulated under the police power in Wyoming 
through statute12 and through delegation of such 
power to appellee13 as reflected supra under 
the first issue. That Section 6 of the regulation is a reasonable 
exercise of the police power is also reflected supra under the first 
issue. As noted supra, the district court found that "there is 
substantial evidence of record to support a distinction between OEM and non-OEM 
parts." The potential for substitution of an inferior part in repair, or in an 
estimate for repair of a vehicle, makes Section 6 of the regulation reasonable. 
It promotes and protects the safety and welfare of the insured. It promotes 
proper performance under the contract, i.e., receipt by the insured of the 
benefit of his bargain. It does not prevent the use of non-OEM parts, but allows 
their use only with the consent of the insured. Even if not of the same "kind" 
(brand), the insured can consent to use of the non-OEM part thereby expressing 
belief of its material soundness, of its fit, of its ability to resist rust, 
etc. Section 6 of the regulation is a reasonable exercise of police power for 
the safety and welfare of the insured-consumer.

THIRD ISSUE: REASONABLE 
RELATIONSHIP BETWEEN SECTION 6 OF THE REGULATION AND ITS PURPOSE

[¶28]   That previously said with reference 
to the first two issues reflects that Section 6 of the regulation does have a 
"rational connection between the facts found and the choice made." It is 
"reasonably directed to the accomplishment of the purposes." It thus satisfies 
the "necessary element of due process of law."

[¶29]   Appellants cite Burlington Truck 
Lines, Inc. v. United States, 371 U.S. 156, 168, 83 S. Ct. 239, 9 L. Ed. 2d 207 
(1962); Motor Vehicle Manufacturers Association v. State Farm Mutual Automobile 
Insurance Company, 463 U.S. 29, 103 S. Ct. 2856, 77 L. Ed. 2d 443 (1983) and 2 
Am.Jur.2d, Administrative Law § 303 (1962) with reference to those requirements, 
but appellants argue the applicability of the requirements only on the basis 
that Section 6 of the regulation is no more than "an interference in market 
decisions between OEM and non-OEM parts." The authorities cited by appellants 
require the administrative rule to be "reasonable." The reference to 2 
Am.Jur.2d, supra, concerns the reasonable requirement. It is followed by 
§ 304, which reads:

     "The requirement of 
reasonableness of an administrative regulation means no more and no less than 
that the regulation must be based upon reasonable grounds - that is, it must be 
supported by good reasons. The reasonableness of rules and regulations, and 
exemptions therein, is determined by their relationship to the statutory scheme 
they are designed to supplement, protect, and enforce. Reasonableness is 
determined in view of the stated objectives of the legislation, and if a 
regulation is within the purpose of the statute it is reasonable.

     "Whether a regulation 
is reasonable depends on the character or nature of the condition to be met or 
overcome, and the nature of the subject matter of a rule may affect its 
reasonableness. Thus, the regulation of certain activities involving mere 
privilege, such as the sale of intoxicating liquor or the conduct of horse 
racing, is accorded liberal judicial support, and the court is slow to find such 
regulations unreasonable.

     "An administrator has 
a large range of choice in determining what regulations or standards should be 
adopted. It is not necessarily a valid objection to his choice that another 
choice could reasonably have been made, that experts dis[a]greed over the 
desirability of a particular standard, and that some other method of regulation 
would have accomplished the same purpose and would have been less onerous. It is 
enough that the administrator has acted within the statutory bounds of his 
authority, and that his choice among possible alternatives adopted to the 
statutory end is one which a rational person could have made.

     "In order to set aside 
a regulation, it must be clearly unreasonable. If reasonable minds may well be 
divided on the question, the administrator must be upheld. It must be shown that 
no reasonable administrator would have made such a regulation and that it is so 
lacking in reason that it is essentially arbitrary."

 

[¶30]   As set out supra under the 
first two issues, Section 6 of the regulation is primarily directed to 
protection of the insured, to allow the insured to receive the benefit of his 
bargain, to further define the ambiguous word "kind" in the policy as approved 
by the Commissioner, and to promote the safety and welfare of the public. As 
such, it has a reasonable relation to the purpose for which made.

FOURTH ISSUE: SUBSTANTIAL 
EVIDENCE TO SUPPORT SECTION 6 OF THE REGULATION

[¶31]   Although appellants listed this 
issue in their brief, they did not present any argument with reference to it. We 
will not consider issues not supported by proper citation of authority or by 
cogent argument. Trout v. Wyoming Oil and Gas Conservation Commission, 721 P.2d 1047 (Wyo. 1986); Elder v. Jones, 608 P.2d 654 (Wyo. 1980); Armed Forces 
Cooperative Insuring Association v. Department of Insurance, 622 P.2d 1318, 1331 
(Wyo. 1980) appeal dismissed 454 U.S. 1130, 102 S. Ct. 985, 71 L. Ed. 2d 284 
(1982).14

[¶32]   Affirmed.

URBIGKIT, Justice, 
dissenting.

[¶33]   However characterized, this case 
questions the statutory right and economic propriety of the recently departed 
Insurance Commissioner's intervention in behalf of franchised car dealerships 
who sell replacement parts provided by original car manufacturers. This appeal 
does not involve identity of original part fabricator since most parts would 
never have been produced by the vehicle manufacturer. This appeal also does not 
involve consumer protection or issues of safety, to which I am a fervent 
subscriber, it speaks to oleomargarine-fair trade type industry protectionist 
action of government which flowered and generally disappeared in the time of the 
1930's, now about sixty years ago. Implicit also is the absolute axiom of 
inevitable economics, that there is no free lunch: what you get or what costs 
more carries a due bill for full payment.

[¶34]   This record reveals that within a 
national effort in separate states by legislative or administrative action, 
franchised automobile dealerships and the major car manufacturers, e.g., Nissan, 
Toyota, Ford, General Motors and Chrysler, have authored a campaign to reduce 
competition from suppliers of car repair replacement parts distributed outside 
of their franchise system. The Wyoming Automobile Dealers Association directed 
this attack by requesting intervention by the Wyoming Insurance Commissioner. 
Clearly, consumer disturbance did not author the effort; it was the special 
interest group which was disturbed by parts market competition as also involving 
the interest, to some degree, of some body shops who were affected adversely by 
reduction in repair billings with lower parts cost.

[¶35]   The cost of elimination of 
competition will inevitably be charged against the insurance policyholder since 
generalized cost increases are inevitably laid upon purchasers of the product. 
In this case, it is the physical damage coverage policyholders and may or may 
not also include the liability insured motor vehicle owners.1 No one questions the significant 
economics involved or that this "cosmetic part" issue is directed towards fair 
trading the automobile manufacturer supplied replacement part into a higher 
priced product for which cost the insurance company and its policyholder will 
ultimately be charged. Unfortunately, the Insurance Commissioner, who did not 
understand insurance agency administration in more ways than this, brought his 
office into the economic fray in favor of the automobile dealers against other 
"impact part" suppliers at the ultimate cost exposure of the entire insurance 
coverage purchaser.

[¶36]   The after-market part, which is 
otherwise labeled as an impact part in the litigation, is described in the 
proposed regulation to mean "sheet metal or plastic parts which generally 
constitute the exterior of a motor vehicle, including inner and outer panels." 
It is one of the curiosities of the subject that what is included is not 
determined and what is not included is interesting. One description describes 
inclusion to the cosmetic covering of the operational vehicle. Clearly included 
are the fenders, doors, hood and quarter panels. Not so clearly included or 
excluded is the rear deck lid. By definition, the grill may or may not be 
included, but the headlights are not. Likewise not included is any part of the 
drive train, including specifically tires and front end steering parts. General 
Motors Corporation would include the bumper by notation in some literature, but 
no other source seems to include the bumpers. The definition itself of sheet 
metal or plastic could well describe the bumper on some vehicle models, but 
normally, and hopefully not, on most.

[¶37]   Clearly not included are the 
operational parts of the vehicle like dash, windshield, seats, motor, radiator 
and drive train as only the shell parts which are subject to first damage by 
impact. Next to be recognized is that the definition of the market part does not 
define manufacturer as distinguishable from supplier. The differences, of 
course, exist between the automobile companies, defined for these purposes as 
the entity that assembles and resells a completed vehicle. How much of the 
constituent body parts are actually produced by that entity and how many are 
acquired from independent source subcontractors/suppliers is totally unadvised. 
The scenario is described in General Motors Corporation literature 
as:

For models still in 
production, GM generally produces sheet metal replacement parts in the same 
plant, or buys it from the same supplier, as the original vehicle. 
After the model run, about 80% of the sheet metal production is turned 
over to outside suppliers who use GM tool, know GM specifications, certify 
to GM quality standards, assure timely delivery and are cost-competitive with 
other bidders. GM suppliers prove themselves to our standards through frequent 
audits, and in the quality of the products they provide.

(Emphasis 
added.)

[¶38]   Although OEM supposedly applies to 
original equipment manufacture, in application it applies to the assembler or 
car builder and has no necessary relevance to the actual entity that may have 
fabricated the part. A non-OEM (non-original equipment manufacturer) is not a 
company other than the entity from whom the car manufacturer may have acquired 
the part; it is any vendor other than the car producer which sells replacement 
parts outside of the franchised dealership. Source of supply for part 
manufacture is not necessarily relevant. A non-OEM parts fabricator may, in 
some cases, be the same producer who supplied the parts for the original car 
production as the initial supplier.

[¶39]   There is another anomaly. A 
substantial part of impact replacement parts come from wrecked vehicles. Used 
body parts also have a highly favorable pricing structure and, in quality, may 
often be superior to the so-called new OEM supplied items. Used parts are not 
subject to the regulatory provisions in the Insurance Commissioner's enactment. 
For example, a fender (or bumper for this writer's 1975 Pontiac Ventura) would 
most unlikely come from whatever entity produced that item originally. If the 
"new" part is available from a dealership at all today, it would be highly 
unlikely that it would come from the 1975 plant which fabricated the original 
item. Out-sourcing is the mode today and certainly so for post-production 
replacement part acquisition. The heart of this litigation is not sources of 
fabrication; it is monopoly in distribution. It is that competition against 
which the Insurance Commissioner seeks to intervene.2

[¶40]   The monopoly maintenance agenda of 
the franchise car dealerships and car manufacturers arrives with an aura of 
authenticity. The message is "tell your customer-insured that you will pay for 
what you sell, no matter what the price, so that he has a choice for the higher 
priced item." Unfortunately, the intended message is postured to get your 
money's worth, if more expensive, whether or not better or more 
usable.

[¶41]   In this statistic society of which 
we now march for government supervision and regulatory control, I resent this 
additional adventure which will only affect a higher cost to the consuming 
public. It must first be made absolutely clear in today's manufacturing, 
assembling and distribution environment that quality maintenance in this 
controversy is almost a non-existent factor. The insurance company has an equal 
responsibility whether the part is supplied through a franchised dealer, comes 
from another supply network, or, like replacement organs of modern medicine, 
comes from a compatible donor. The only real valuable "guaranty" provided to the 
insured is furnished by reputable body shops and a reliable insurance company. 
An ill-fitted quarter panel or a rusted out fender skirt will never reach any 
realistically maintainable claim against the car manufacturer or its overseas 
parts supplier with any greater reliability than will be the case as to the 
non-OEM part, whether fabricated in Taiwan or St. Louis.

[¶42]   Within this economic environment, I 
disagree with the majority about existent statutory authority to justify this 
price fixing regulation and reject sufficiency of the evidence to sustain any 
exercised administrative agency discretion. In historical perspective, Wyoming, 
like many states, tried this route for both fair trade legislation and 
oleomargarine control. From these efforts, both precedent and history reveal 
that this type of economic protectionism is invalid in application, 
unsustainable in concept, and improper in adaptation when provided by 
prohibitive regulation. The majority ignores this historical basis in its 
present decision and now attempts to retrace past anti-competition legislation 
judicial failures.

[¶43]   First addressed was the fair trade 
laws which became the mode to limit economic competition as flowered in most 
jurisdictions during the depression of the 1930's. Wyoming's effort was 
addressed in comprehensive detail by Chief Justice Blume in State v. Langley, 53 
Wyo. 332, 84 P.2d 767 (1938), finding "ruinous" competition to be an evil, the 
police power authority of the legislature to prohibit was authenticated by the 
decision. Fair trade as then applied only really lasted until Bulova Watch Co. 
v. Zale Jewelry Co. of Cheyenne, 371 P.2d 409 (Wyo. 1962) when the successor 
litigation found the parallel act unconstitutional as an improper delegation of 
legislative power when offending the required due process protection and beyond 
the police power of the state.3

[¶44]   The majority conceptually 
postulates approval of the dealership fair trade regulation on implied statutory 
authority and reasonably exercised discretion. I would find premise and 
conclusion in the majority decision to be faulty in both regards on both issues. 
To be recognized initially is that only those powers expressly conveyed by the 
legislature are granted to the administrative agency. Hupp v. Employment Sec. 
Com'n of Wyoming, 715 P.2d 223 (Wyo. 1986). Here first, the majority's source of 
statutory authority without supporting precedent is extracted from the insurance 
deceptive practices statutes, W.S. 26-13-101 through 26-13-118. There are two 
problems with application of this chapter and, particularly, W.S. 26-13-102 
specifically cited. In initial misadaptation, these statutes are authored to 
control insurance selling practices and have nothing at all to do with property 
damage adjusting activities. We are not authorized to ignore clear statutory 
language in order to apply legislatively provided provisions to situations that 
do not reasonably fall within the ambient of the enactment. Matter of Abas, 701 P.2d 1153 (Wyo. 1985), overruled on other grounds sub nom. Parnell v. State ex 
rel. Wyoming Worker's Compensation Div., 735 P.2d 1367 (Wyo. 1987).

[¶45]   The second fallacy is in finding 
authorization for the adaptation of regulations which do not exist in the cited 
statutes. Tri-County Elec. Ass'n, Inc. v. City of Gillette, 525 P.2d 3 (Wyo. 
1974). Unquestionably, the Insurance Commissioner has no inherent or common law 
power. Brasel & Sims Const. Co., Inc. v. State Highway Com'n of Wyoming, 655 P.2d 265 (Wyo. 1982). The regulated and prohibited transactional activities are 
enunciated in the statute and the remedy provided to the administrative agency 
is a cease and desist process. Nothing is statutorily stated about fair trading 
a particular supplier of replacement parts and nothing is stated authorizing 
adoption of implementing or amendatory regulations to enforce the specific 
prohibitions provided in statutory text. No statutory extension without explicit 
authorizing provision can justify this stretch to validate administrative agency 
rule adaptation where express authority has previously been required by our 
strict construction precedent. McNeill v. Park County School Dist. No. 1, 635 P.2d 818 (Wyo. 1981); Tri-County Elec. Ass'n, Inc., 525 P.2d  at 9. Consequently, 
the statutory citation by the majority is erroneous in two regards. First, the 
subject addressed by the cited statute is different, and secondly, authorization 
for regulatory implementation of the statutory prohibition stated is not 
provided and particularly so to add criminal penalties to a cease and desist 
enforcement provision. It is the regulation that must be reconciled with 
authenticating statute and not the statute to be reconciled with the 
administrative regulation. The regulation must be consistent with the statute in 
addressing the same subject, if it does. In this case, the adopted regulation 
finds no proper or even actual parentage in the enacted statute. Gudmundson v. 
State, 763 P.2d 1360 (Alaska App. 1988).

[¶46]   The second statute cited by the 
majority is the recently enacted Wyo. Sess. Laws ch. 43 (1986), the unfair 
claims settlement practices statute, W.S. 26-13-124. This statute at least 
relates to the subject of adjustment and claim settlement.4 That statute identifies fourteen 
prohibited activities, none of which relate to controlling supplies of 
replacement parts. Although quoted and cited by the majority, the statute 
provides no authorization for the adaptation of implementing regulations by the 
Insurance Commissioner to supplement the stated explicit prohibitions clearly 
enumerated. Again, nothing in that statute, its stated purpose or text indicates 
authorization for control of source of repair parts by designating a vendor or, 
for that matter, the part fabricator. No criminal provision was provided in the 
session law enactment. Crimes can only be created by the legislature, Baum v. 
State, 745 P.2d 877 (Wyo. 1987), since the state has no common law offenses. 
W.S. 6-1-102.

[¶47]   We have recently restated the 
guiding mandate:

[T]his court cannot 
constructively expand statutory powers conferred upon an agency by the 
legislature, and the statutes which create and delegate authority * * * must be 
construed strictly with any reasonable doubt as to the existence of regulatory 
power resolved against the exercise of such power.

Matter of 
Mountain States Tel. and Tel. Co., 745 P.2d 563, 568 (Wyo. 1987). By Matter of 
Mountain States Tel. and Tel. Co., we demonstrated a disinclination to expand 
statutes to justify expensive regulatory authority, which was in that case to 
regulate the publication of an advertising directly. Conversely here, the 
majority now implies a rule making authority completely independent of statutory 
justification to control source of supply of certain repair parts chargeable in 
cost to the insurance carrier which may have written physical damage coverage 
for a particular vehicle.5 

[¶48]   I am further unable to follow an 
attribution of W.S. 26-13-116 which is the administrative enforcement section to 
authorize adoption of self-standing regulations.6 It is suggested that the majority 
misreads the statutory enforcement provision speaking in terms of cease and 
desist to be a delegation of power rule adoption provision. Furthermore, W.S. 
26-13-102 does not add justification as statutory authority to adopt 
rules involving fair trading parts suppliers to franchised dealerships. The 
additional citation of W.S. 26-13-106 within the provence of a cease and desist 
proceeding adds no further substance to any contention of statutory 
authority.

[¶49]   Not finding adequately stated 
authority for the particular type of rule adaptation within Chapter 13 of the 
Wyoming Insurance Code, W.S. 26-13-101 to 26-13-124, the majority then reaches 
for outside authority granted to the Insurance Commissioner to supplement the 
explicit statutory provisions to justify this adoption of his own wash list of 
adjusting requirements, including fair trading parts suppliers. That resource is 
claimed from within the general authority provided by W.S. 26-2-110 and 
16-3-101. Unfortunately, it is perceived that the reasoning used has gone around 
in a circle and provided no statutory authority for adoption of a source consent 
repair part provision to fair trade in favor of one supplier or to create 
administratively criminal offenses. There simply is no effectuating statute 
granting authority to the administrative agency to augment or amend what the 
legislature has done or not done in express prohibition.7

[¶50]   Lacking definable statutory 
authority, cause remains to address the exercised discretion and rule adaptation 
as if that authority did exist. To properly understand this litigation, it is 
necessary to reflect that impact parts (however they may be defined) in number, 
constitute only a small portion of the number of assembled items constituting 
the motor vehicle. Secondly, the record reflects testimony that this particular 
appellant, as a major in automobile insurance, started using non-OEM parts two 
years earlier and that only seven percent of their appraisals included these 
items. The factual significance demonstrated is that competition reduces price 
and monopoly increases price.8 Availability and possible use is 
the critical factor in pricing moderation.

[¶51]   Why then does administrative agency 
exercised discretion properly run to require the preferential use of a more 
expensive installation and to enforce disclosure by a criminal sanction?9 The majority here hangs argument not on 
equivalency of quality, but on characterized "like kind." The only "like kind" 
fender for the mythical 1975 Pontiac Ventura would be one produced by the 
identical supplier for the original car manufacturer, whether affiliated or 
subcontractor. The odds of acquiring a fender for the Pontiac Ventura produced 
by the same factory existent fifteen years ago is, at best, accidental. Today, 
if repairs were required to a 1985 Jeep Waggoneer, Chrysler, as the supplier, 
would likely not have the same fabricator as did American Motors only five years 
ago. The same Mexican, Asian, European or even American plant could have 
supplied OEM parts for the Waggoneer as would supply non-OEM parts today. It is 
a well known fact in the automobile industry that at least in times past better 
cars of identical models came from different factories when compared between 
factory A and factory B and some part fabricators provided a substantially 
better product than others who may have been producing the "identical" or "like 
kind" item.10 Unfortunately, nothing provided in 
the contested regulation, Section 6, serves to assure that use of the same "kind 
of part" will provide one identically fabricated or provide increased safety or 
welfare.11 Here again, the American industry 
group seeks assistance of the government to provide competitive advantage from 
the pressures of a free economy. I might still be concerned constitutionally if 
the legislature accepted such a 1930 challenge to address a 1990 world economy. 
However, that is not this case where this public official, who was not elected, 
undertook this special interest market management by self-standing 
administrative regulation.

[¶52]   "When exercising its police powers, 
the State must act reasonably and cannot, under the guise of such powers, impose 
unreasonable or arbitrary regulations." Big Piney Oil & Gas Co. v. Wyoming 
Oil and Gas Conservation Com'n, 715 P.2d 557, 563 (Wyo. 1986).

[¶53]   I respectfully dissent from any 
judicial approval of this non-legislatively authorized Insurance Commissioner 
regulation. 

EXHIBIT

EFFECTS OF PRICE COMPETITION CRASH 
PART PRICES COMPARISON*

OEM VS. AFTERMARKET

                  
KEYSTONE            
HILLARD           
                OEM List

            
            
LIST                  
LIST               
1986       
1985        1984              
1983

MUSTANG ('79-'85)    FENDER               
$73.00              
$70.52             
$82.00 $82.00 $82.90              
$148.15

ARIES (1981)            FENDER 
              
$77.00              
$65.09              
$86.50 $86.50 $180.16             
$221.08

OMNI (1983)             FENDER 
               
$67.00              
$64.93              
$75.50 $75.50 $75.50               
$140.20

SENTRA ('82-'85)      FENDER                
$106.00             
$56.32              
$67.50 $125.62 $136.30            
$112.22

COROLLA (1981)     FENDER                 
$71.00              
$58.96              
$61.38 $79.27 $116.89             
$116.89

            

* SOURCE = THE MOTOR CRASH ESTIMATING 
GUIDE

EXHIBIT 
II

EFFECT OF LACK OF 
COMPETITION CRASH PART PRICES COMPARISON*

OEM VS. 
AFTERMARKET

KEYSTONE 
HILLARD

OEM 
LIST

LIST                         
BODYSHOP LIST     BODYSHOP             
1986                        
1985       
1984                        
1983

CAPRICE 
                 
FRONT 

('80-'85) 
                  
DOOR SHELL          
$ ____                   
$ ____     $ ____ 
         $ ____                
$725.00                   
$637.00   $608.00                   
$593.00

CITATION 
                
FRONT 

('80-'85) 
                  
DOOR SHELL          
 $ ____                    
$ ____     $ 
____       
$ ____                   
$576.00                   
$506.00   $483.00                   
$471.00

MONTE 
CARLO       FRONT 

('81-'85) 
                  
DOOR SHELL          
$ ____                     
$ ____     $ 
____      $ ____                   
$581.00                   
$511.00   $488.00                   
$476.00

DEVILLE 
                 
FRONT 

('80-'84) 
                  
DOOR SHELL          
$ ____                     
$ ____     $ 
____       
$ ____                   
$725.00                   
$637.00   $608.00                   
$593.00

 

·        
SOURCE = THE 
MOTOR CRASH ESTIMATING GUIDE

 

FOOTNOTES

1 The term "non-OEM" 
refers to after market parts manufactured by someone other than the original 
manufacturer of the vehicle part.

2 Section 6 of the 
regulation provides:

"Consent. No 
insurer shall directly or indirectly require the use of non-OEM after market 
parts in the repair of an automobile nor shall any insurer accept any estimate 
or authorize any repair of an automobile unless the consumer is advised that he 
or she is not required to accept non-OEM after market parts in the repair of the 
vehicle and consents in writing to the use of those parts before repairs are 
made."

3 W.S. 26-13-102 
provides:

"No person shall engage 
in this state in any trade practice which is defined in this article or as is 
determined pursuant to this article to be an unfair method of competition or an 
unfair or deceptive act or practice in the business of insurance."

4 The district court's 
judgment will be affirmed on appeal if sustainable on any legal ground appearing 
in the record. Ely v. Kirk, 707 P.2d 706 (Wyo. 1985); People v. Fremont Energy 
Corp., 651 P.2d 802 (Wyo. 1982).

5 W.S. 26-13-124 
provides:

"(a) A person is 
considered to be engaging in an unfair method of competition and unfair and 
deceptive act or practice in the business of insurance if that person commits or 
performs with such frequency as to indicate a general business practice any of 
the following unfair claims settlement practices:

"(i) Misrepresenting 
pertinent facts or insurance policy provisions relating to coverages at 
issue;

"(ii) Failing to 
acknowledge and act reasonably promptly upon communications with respect to 
claims arising under insurance policies;

"(iii) Failing to adopt 
and implement reasonable standards for the prompt investigation of claims 
arising under insurance policies;

"(iv) Refusing to pay 
claims without conducting a reasonable investigation based upon all available 
information;

"(v) Failing to affirm or 
deny coverage of claims within a reasonable time after proof of loss statements 
have been completed;

"(vi) Not attempting in 
good faith to effectuate prompt, fair and equitable settlements of claims in 
which liability has become reasonably clear;

"(vii) Compelling 
insureds to institute litigation to recover amounts due under an insurance 
policy by offering substantially less than the amounts ultimately recovered in 
actions brought by such insureds;

"(viii) Attempting to 
settle a claim for less than the amount to which a reasonable person would have 
believed he was entitled by reference to written or printed advertising material 
accompanying or made part of an application;

"(ix) Attempting to 
settle claims on the basis of an application which was altered without notice 
to, or knowledge or consent of, the insured;

"(x) Making claims 
payments to insured or beneficiaries not accompanied by a statement setting 
forth the coverage under which the payments are being made;

"(xi) Making known to 
insured or claimants a policy of appealing from arbitration awards in favor of 
insured or claimants for the purpose of compelling them to accept settlements or 
compromises less than the amount awarded in arbitration;

"(xii) Delaying the 
investigation or payment of claims by requiring an insured, claimant or the 
physician of either to submit a preliminary claim report and then requiring the 
subsequent submission of formal proof of loss forms, both of which submissions 
contain substantially the same information;

"(xiii) Failing to 
promptly settle claims, where liability has become reasonably clear, under one 
(1) portion of the insurance policy coverage in order to influence settlements 
under other portions of the insurance policy coverage; or

"(xiv) Failing to 
promptly provide a reasonable explanation of the basis in the insurance policy 
in relation to the facts or applicable law for denial of a claim or for the 
offer of a compromise settlement."

6 See supra note 
5.

7 See supra note 
5.

8 See supra note 
3.

9 W.S. 26-13-116 provides 
in pertinent part:

"(a) If the commissioner 
believes that any person in conducting an insurance business in this state is 
engaging in any method of competition or in any act or practice, not defined in 
this chapter, which is unfair or deceptive and that a proceeding by him in 
respect thereto would be in the public interest, after a hearing in which the 
person charged receives a notice of the hearing and of the charges against him, 
the commissioner shall make a written report of his findings of fact relative to 
the charges and serve a copy thereof upon the person and any intervenor at the 
hearing."

10 See supra note 
3.

11 A similar provision is 
contained in Article 1, Section 10 of the United States 
Constitution:

"No 
State shall * * * pass any * * * Law impairing the Obligation of 
Contracts."

12 See Title 26, Insurance 
Code, i.e., W.S. 26-1-101 through 26-41-103.

13 2 Am.Jur.2d, 
Administrative Law, § 298 (1962) states:

"An act of an 
administrative agency which is legislative in character and has the force of a 
statute is subject to the same tests as to its validity as an act of the 
legislature intended to accomplish the same purpose, whether such acts are rules 
or regulations, or general orders. This is true of regulations or orders in the 
exercise of the police power, in conflict with federal law, impairing the 
obligation of contract, or involving penalties or criminal liability. Thus there 
are applicable the rules in regard to presumption of validity and partial or 
entire invalidity; and, just as in individual cases hardship and loss may flow 
from legislative acts which are nevertheless valid, so administrative 
regulations may also operate."

14 In addition to noting 
this fact, appellee referred to the holding in Tri-State Generation and 
Transmission Association, Inc. v. Environmental Quality Council, 590 P.2d 1324 
(Wyo. 1979) to the effect that the substantial evidence test does not apply to 
rule making decisions.

 

FOOTNOTES for the 
Dissent

1 Attached as appendices 
are two exhibits found in the record reflecting the price competition feature in 
cost, where Exhibit I, "Alternative Market Pricing," reduced the OEM list price 
and, in the second case, Exhibit II, where the competition did not exist, a 
regular price increase occurred.

It 
is absurd to contend or conclude that the contested regulation is not a pricing 
accelerator resulting in increased cost to the user. If the price of the Mustang 
fender used is OEM costing $148 instead of the competitive item of $82, the 
insurance policy purchasers will inevitably pay the increased cost which is 
decreed by anti-competition administrative regulation. If the OEM price is about 
the same as its competitor, certainly neither the insurance company nor its 
ultimately responsible insured would care if the local distributorship was the 
vendor.

If 
the marketing management concept of consumer behavior has validity, the insured 
will request the more expensive item as a normalized reaction. Avoidance of cost 
containment in elimination of competitive supply poses four unpleasant results 
which were minimally, if at all, addressed by the Insurance Commissioner's 
action. First, cost of insurance coverage will inevitably be increased and 
specifically for some rated renewal policies which could include that specific 
individual insured. Secondly, body shop and carrier warranty of repair is 
subverted by the required use of a one-source part which may be good, bad or 
indifferent in quality. Third, incidental cost increases in repair for 
individual vehicles mean more total loss incurrences since the vehicle may be 
rendered economically non-repairable. Fourth, and most significantly, policy 
holder attitude in loss adjustment is directly related to post-loss insurance 
policy renewal. Some policy holders, inopportunely and without recognizing the 
risk involved, will request the most expensive repair parts as a question of 
obtaining a bargain and then find out at the expiration of the policy term that 
their insurance coverage will not be renewed.

2 There is a third anomaly 
presented in Section 4 of the regulation as a non-appealed issue which, in term, 
applies to both the automobile manufacturer and the third-party parts supplier. 
That section states:

Section 4. 
Identification. All after market parts, which are subject to this regulation and 
manufactured after the effective date of this regulation, shall carry sufficient 
permanent identification so as to identify its manufacturer. Such identification 
shall be accessible to the extent possible after installation.

(Emphasis 
added.)

By 
its specific terms, the provision does apply to both OEM and non-OEM supplies 
and, according to the record, is impossible to enforce in either case. The 
problems derived from differentiation between manufacturer and supplier was well 
addressed in the record and additionally noted in communication between a 
representative of the Governor's office and personnel in the Insurance 
Department where the basic authority for the imposed regulation was questioned. 
The actual fabricator of any replacement impact part (or non-impact part), 
whether OEM or non-OEM, could obviously have been located in Mexico, Europe or 
many places in the Asian rim countries.

3 The first statute, as a 
selling below cost civil and criminal restraint, remains in present Wyoming law. 
See W.S. 40-14-107 through 40-14-116, as continued from adoption as Wyo. Sess. 
Laws ch. 73 (1937). Two appellate efforts at enforcement, Civic Ass'n of Wyoming 
v. Railway Motor Fuels, 57 Wyo. 213, 116 P.2d 236 (1941) and Eckdahl v. Hurwitz, 
56 Wyo. 19, 103 P.2d 161 (1940), failed and no recognizable effort at 
enforcement as well as the companion petroleum products discrimination statute, 
W.S. 40-14-117 through 40-14-121, can be found or is known to have existed in 
the past forty years. The exceptions of selling perishables or depreciated 
quality and opportunity to meet legal prices of competitors in this mass media 
selling era probably explains the dampened prosecutorial enthusiasm. See the 
listed exception in W.S. 40-14-110. Overtly, the minimum pricing statute has no 
realistic sustained validity in the present economy of this state.

The 
second statute established is Wyo. Sess. Laws ch. 58 (1937), for fair trade was 
interred on a constitutional infirmity by this court in Bulova Watch Co., 371 P.2d 409. The third Wyoming legislative effort to favor a particular market and 
control availability or price was the oleomargarine legislation which the court 
considered in Ludwig v. Harston, 65 Wyo. 134, 197 P.2d 252 (1948), as originally 
enacted as Wyo. Sess. Laws ch. 137 (1931). The oleomargarine legislation 
involving color prohibition and excise tax price application also had a short 
shelf life when repealed by Wyo. Sess. Laws ch. 38 (1949) and Wyo. Sess. Laws 
ch. 117 (1951). See Note, The Changing Oleomargarine Picture and Wyoming, 3 
Wyo.L.J. 217 (1949).

The 
1989 effort of car manufacturers and franchised automobile dealerships proceed 
for a virtual recreation of the economically and politically discredited fair 
trades and oleomargarine legislation of the decade, sixty years now past. The 
difference is here that a state industry regulatory agency through the Insurance 
Commissioner, without explicit statutory authority, is the source of the 
regulatory constraints and not the popularly elected state 
legislature.

4 This statute provides 
persuasion that the earlier statute relating to the subject of sales technique 
did not constitute a broad authorization for the Insurance Commissioner to adopt 
regulations on this dissimilar subject. Otherwise, there was no need for the 
legislature to enact the very specific provisions included as statutorily 
itemized prohibitions.

5 W.S. 26-13-124 includes 
provisions which involve both first party and third party adjusting and 
settlement conduct. The presently contested regulation in the Section 6 consent 
requirement apparently relates only to first party relationship, namely 
adjustment with the insured. However, its language becomes cloudy in text even 
though the ten-point type declaration found in Section 6(b) ascribes notation on 
the insured's estimate and not necessarily one prepared for a third party 
liability claimant. An interesting problem is created if the exception exists 
that the insurance code has been extended to only provide criminal penalties 
enforceable against the body shop when any estimate is prepared for an insured 
and not a claimant by failure to comply with the ten-point declaration criteria 
of Section 6 of the Insurance Commissioner's regulation. It is additionally not 
clear that the disclosure requirement for any estimate to be prepared for an 
insured is limited only to the impact replacement part within the broad 
terminology used in subsections (a) and (b) of Section 6.

6 W.S. 26-13-116 
states:

(a) If the commissioner 
believes that any person in conducting an insurance business in this state is 
engaging in any method of competition or in any act or practice, not defined in 
this chapter, which is unfair or deceptive and that a proceeding by him in 
respect thereto would be in the public interest, after a hearing in which the 
person charged receives a notice of the hearing and of the charges against him, 
the commissioner shall make a written report of his findings of fact relative to 
the charges and serve a copy thereof upon the person and any intervenor at the 
hearing.

(b) If the commissioner's 
report charges a violation of this chapter and if the method of competition, act 
or practice is not discontinued, the commissioner, through the attorney general, 
at any time after service of the report, may cause an action to be instituted to 
enjoin and restrain the person from engaging in the method, act or practice. In 
the action the court may grant a restraining order or injunction upon any just 
terms, but the people of this state are not required to give security before the 
issuance of the order or injunction. If a stenographic record of the proceedings 
in the hearing before the commissioner is made, a certified transcript thereof 
including all evidence taken and the report and findings shall be received in 
evidence in the action.

(c) If the commissioner's 
report made under subsection (a) of this section or order on hearing made under 
W.S. 26-2-128 does not charge a violation of this chapter, then any intervenor 
in the proceedings may appeal within the time and in the manner provided in W.S. 
26-2-129(b).

Conversely, the 
enforcement provision in the regulation, Section 7, states:

Any individual, firm or 
corporation who shall violate any of the provisions of these After Market Parts 
Regulations shall be punishable in accordance with W.S. 26-1-107.

W.S. 26-1-107, as a 
criminal statute, provides:

(a) Each violation of 
this code [title 26] for which a greater penalty is not provided by another 
provision of this code or by other applicable laws of this state, in addition to 
any applicable prescribed denial, suspension or revocation of certificate of 
authority or license, is a misdemeanor punishable upon conviction by a fine of 
not more than one thousand dollars ($1,000.00), or by imprisonment in the county 
jail for not more than six (6) months, or both. Each violation is a separate 
offense.

(b) Any person who 
violates any provision of this code, any lawful rule or final order of the 
commissioner or any final judgment or decree made by any court, upon the 
commissioner's application, shall pay a civil penalty in an amount the 
commissioner determines of not more than two thousand five hundred dollars 
($2,500.00) for each offense, or twenty-five thousand dollars ($25,000.00) in 
the aggregate for all such offenses within any three (3) month period. In the 
case of individual agents or adjusters, the civil penalty shall be not more than 
five hundred dollars ($500.00) for each offense or five thousand dollars 
($5,000.00) in the aggregate for all such offenses within any three (3) month 
period. The penalty shall be collected from the violator and paid by the 
commissioner, or the appropriate court, to the state treasurer to the credit of 
the general fund.

(c) Before the 
commissioner imposes a civil penalty, he shall notify the person, agent or 
adjuster accused of a violation, in writing, stating specifically the nature of 
the alleged violation and fixing a time and place, at least ten (10) days from 
the date of the notice, when a hearing of the matter shall be held. After 
hearing or upon failure of the accused to appear at the hearing, the 
commissioner shall determine the amount of the civil penalty to be imposed in 
accordance with the limitations expressed in subsection (b) of this section. 
Each violation is a separate offense.

(d) A civil penalty may 
be recovered in an action brought thereon in the name of the state of Wyoming in 
any court of appropriate jurisdiction, and the court may review the penalty as 
to both liability and reasonableness of amount.

(e) The provisions of 
this section are in addition to and not instead of any other enforcement 
provisions contained in this code.

The 
administrative regulation apparently attempted to substitute the criminal 
penalty for the cease and desist provisions expressly provided by 
statute.

7 From a statutory 
adoption perspective, the imposed regulation has no greater validity than would 
a regulation that the automobile insurance carrier shall not provide physical 
damage or comprehensive coverage for any Pontiac Ventura that is older than 
fifteen years or that the insurance company is not required to pay for a part 
available for sale by a franchised dealership unless priced no more than parts 
or equipment equal in workmanship no matter where acquired from any other 
supplier. If the damaged battery was a Delco, could no other battery of whatever 
higher price be supplied? A more pertinent regulation would address pricing and 
parts used if repair was made by the franchised dealer's garage. Obviously, fair 
trading regulatory gambits can go any direction the political powers of the 
particular moment might justify.

8 The responsibility for 
monopoly maintenance is no different than those considerations reflected by the 
United States Supreme Court in Burlington Truck Lines, Inc. v. United States, 
371 U.S. 156, 166-67, 83 S. Ct. 239, 9 L. Ed. 2d 207 (1962) (footnotes omitted), 
which stated:

[T]he choice * * * may 
not be automatic; it must be rational and based upon conscious choice that in 
the circumstances the public interest is "adequate, economical and efficient 
service" outbalances whatever public interest there is in protecting existing 
carriers' revenues in order to "foster sound economic conditions * * 
*."

There are no findings and 
no analysis here to justify the choice made, no indication of the basis on which 
the Commission exercised its expert discretion. We are not prepared to and the 
Administrative Procedures Act will not permit us to accept such adjudicatory 
practice.

Here lies a further 
anomaly. It is not suggested that the non-OEM parts are more frequently 
installed than used parts nor that other automobile parts do not involve a 
measurably greater portion of the market than impact parts. This litigation is 
logically confined by a rule of economics within a specified but otherwise 
undistinguishable market that competition reduces price and monopoly increases 
price. The supposition is for the economic interest when they can get government 
to provide a monopoly for what they may distribute, that non-competitive 
opportunity will serve well in profitability and particularly so if the monopoly 
product is needed and otherwise non-available.

9 Cf. Motor Vehicle Mfrs. 
Ass'n of United States, Inc. v. State Farm Mut. Ins. Co., 463 U.S. 29, 103 S. Ct. 2856, 77 L. Ed. 2d 443 (1983), which considers exercised discretion to deny 
implementing safety equipment manufacturing requirements for the motor vehicle. 
In Motor Vehicle Mfrs. Ass'n of United States, Inc., the insurance company stood 
on the side of safety against the resistance of the vehicle manufacturers when 
the administrative agency failed to exercise proper discretion in rescinding 
vehicle manufacturer requirements for installation of safety equipment. The 
action here is not less arbitrary and capricious where again directed to 
maximize manufacturer profits at the cost of the automobile user.

10 Also, at least in times 
past, it was at least considered in the automobile repair rebuilding and 
insurance industries that what is now designated as OEM were sometimes original 
rejects when set aside in the assembly line for fault or misfit. When, as here, 
"quality" looses pertinence for adaptation of the artificial characterization of 
"like kind," value and sufficiency are expressly ignored. Brand and kind and not 
comparative value and usefulness becomes the validating difference for 
justification of the higher price.

The 
significance of impact parts to automobile insurance is self-evident. Normally, 
most damage is to the impact parts first, although radiators and windshields do 
not fall far behind. Why the classification of impact parts has discriminatory 
justification is not explained in testimony or present majority decision. The 
differentiation totally lacks validity when questioning inclusion or exclusion 
of a hood and possibly a deck lid, while the radiator, a head light, the water 
pump and the front end axle and steering mechanism are excluded.

11 I have another problem 
with the contested regulation which is ill-considered in briefing and in the 
majority opinion. Section 6 has two regulatory subjects - insurers and 
automobile repair companies - against whom criminal punishment can jointly or 
alternatively be assessed. The general criminal provision of the Wyoming 
Insurance Code, W.S. 26-1-107, is brought into a statutory cease and desist 
process by administrative agency regulations to create crimes which may have 
been committed not only by the insurer, but also by the body shop which makes 
repair estimates and may then sometimes complete repair. The entire subject of 
equal and equivalent substitution is implicated by the created criminal 
regulatory enactment. The body shop provides both the disclosure and subsequent 
part installation compliance or non-compliance. For example, lesser cost part 
substitution with or without kick back to the insured is apparently involved in 
prohibitory purview.

Automobile repair parts 
(impact or otherwise) are used by body shops; estimates are prepared by the body 
shop and used by the insurance company. Consequently, the Wyoming Insurance Code 
is supplemented or expanded by administrative regulation to overtly create 
crimes which may be committed not only within the regulated insurance industry, 
but also the unregulated "individual, firm or corporation" which expansively 
includes the body shop and its personnel.