IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 07-30482

JAMES J. DONELON, 

COMMISSIONER OF INSURANCE 

FOR THE STATE OF LOUISIANA

Plaintiff-Appellant,

v.

LOUISIANA DIVISION OF ADMINISTRATIVE LAW 

THROUGH ITS DIRECTOR, ANN WISE

Defendant-Appellee.

Appeal from the United States District Court 

for the Middle District of Louisiana

Before JONES, Chief Judge, and DAVIS and GARZA, Circuit Judges.

EDITH H. JONES, Chief Judge:

James J. Donelon, Commissioner of Insurance for the State of Louisiana,

challenges the district court’s dismissal of his declaratory judgment action

attacking the constitutionality of LA.REV.STAT. ANN. § 49:992(B)(2). He argued

that under 18 U.S.C. § 1033, he is the sole authority in Louisiana who may

regulate which individuals may engage in the insurance business. Section

49:992(B)(2), he contends, is unconstitutional because it allows judges in the

Louisiana Division of Administrative law to overturn his decisions and,

therefore, violates both the Commerce and Supremacy Clauses. The district

United States Court of Appeals

Fifth Circuit

F I L E D

March 28, 2008

Charles R. Fulbruge III

Clerk
No. 07-30482

1 See 18 U.S.C. § 1033(e)(1)(A).

2 THE MCCARRAN-FERGUSON ACT, 15 U.S.C. § 1101, et seq. reserves insurance

regulation to the states.

2

court dismissed the case on grounds of Eleventh Amendment sovereign

immunity. Because we conclude that Donelon lacks standing to bring this cause

of action, we affirm. 

BACKGROUND

Congress enacted 18 U.S.C. § 1033 as part of the “Violent Crime Control

and Law Enforcement Act of 1994” (“the Act”) which included criminal and civil

enforcement provisions aimed at white-collar and insurance fraud. Engaging in

the insurance business with a prior felony conviction, making false material

statements, and embezzlement are among insurance-related crimes defined by

the statute. Id. Section 1033(e)(2) allows a person who has been convicted of

any offense enumerated in the statute, as well as “any criminal felony involving

dishonesty or a breach of trust,”1to engage in the insurance business only if the

person has the written consent of “any insurance regulatory official authorized

to regulate the insurer.” This is the only portion of § 1033 that discusses state

regulatory authorities. The statute does not give states or state insurance

officials any specific guidance as to how the waivers are to be granted or denied,

nor does it define “insurance regulatory official.” Because states are the primary

regulators of the insurance industry,2enforcing the statute is their

responsibility.

Appellant Donelon is Louisiana’s Commissioner of Insurance. His office

and the Louisiana Department of Insurance (“DOI”) are creations of the 1974

Louisiana Constitution. See LA. CONST. art. IV, §11. An enabling statute directs

the commissioner to administer the state insurance code. See LA. REV. STAT.

ANN. § 22:2(A)(1) (2007). Pursuant to the code, an applicant for licensure must
No. 07-30482

3

In creating the DAL, “the legislature decided to transfer [the administrative law

judges] previously employed by the various agencies to a central division to remove the [ALJs]

from the direct influence of the agency heads and to give them a measure of independence.”

Wooley v. State Farm Fire & Cas. Ins. Co., 893 So. 2d 746, 767 (La. 2005).

4 The legislature specifically excludedsome agencies from the DAL’s reach;the DOI was

not one of them. See LA. REV. STAT. ANN. § 49:992(D)(1–8).

3

have “the written consent of the commissioner pursuant to 18 U.S.C. § 1033" in

order to obtain a license. LA. REV. STAT. ANN. § 22:1136(A)(7) (2007).

In 1996, the Louisiana legislature created the Division of Administrative

Law (“DAL”). The DAL has the authority to review administrative decisions of

other departments3 and serves as the final, neutral arbiter of claims of citizens

aggrieved by administrative orders of executive agencies, including the DOI.4

DAL decisions are effectively unappealable. See LA. REV. STAT. ANN.

§ 49:992(B)(2) (“Upon the issuance of such a final decision or order, the agency

or any official thereof shall comply fully with the final order or decision of the

[ALJ].”). Donelon believes this process violates the federal Constitution and

laws, usurping his authority as commissioner.

TheLouisiana Supreme Court rejected a contention that the DAL violated

the Louisiana constitution. See Wooley, 893 So.2d at 762. Donelon then filed

suit in November 2006, seeking a declaration that LA. REV. STAT. ANN.

§ 49:992(B)(2) is unconstitutional and conflicts with § 1033. The district court

dismissed the action for lack of subject-matter jurisdiction, concluding that the

DAL, as an arm of the state, had sovereign immunity from suit and that none

of the exceptions to sovereign immunity applied. Donelon timely appealed.

DISCUSSION

We review de novo a district court’s dismissal for lack of subject-matter

jurisdiction. Meyers ex rel. Benzing v. Texas, 410 F.3d 236 (5th Cir. 2005);

United States v. Tex. Tech Univ., 171 F.3d 279, 288 (5th Cir. 1999). Although the

parties’ briefing in this court addressed only the issue of sovereign immunity, we
No. 07-30482

4

are obliged also to consider threshold questions of justiciability such as standing.

Because Donelon’s alleged lack of standing was a legal issue briefed to the

district court, we are not proceeding sua sponte when we consider it.

In order to have standing to sue in a federal court, a plaintiff must bring

a “case or controversy.” U.S. CONST. art. III. This requires more than an

abstract legal dispute. Allen v. Wright, 468 U.S. 737, 754 (1984). “To meet the

standing requirements of Article III, ‘[a] plaintiff must allege personal injury

fairly traceable to the defendant’s allegedly unlawful conduct and likely to be

redressed by the requested relief.’” Raines v. Byrd, 521 U.S. 811, 818–19 (1997)

(quoting Wright, 468 U.S. at 751). Put another way, the plaintiff must establish

a “personal stake”in the dispute and that the injury is particularized to him. Id.

at 819; see also Baker v. Carr, 369 U.S. 186, 204 (1962). The injury cannot be

one suffered by the citizens at large. Finch v. Miss. St. Med. Ass’n, 585 F.2d 765,

771 (5th Cir. 1978).

The Supreme Court has held that state officials lack standing to challenge

the constitutional validity of a state statute when they are not adversely affected

by the statute, and their interest in the litigation is official, rather than

personal. See County Court of Braxton County v. West Virginia ex rel. Dillon,

208 U.S. 192, 197 (1908). In another context, the Supreme Court made it clear

that courts should not pass upon the constitutionality of a statute “upon

complaint of one who fails to show that he is injured by its operation. . . . Thus,

the challenge by a public official interested only in the performance of his official

duty will not be entertained.” Ashwander v. Tenn. Valley Auth., 297 U.S. 288,

348 (1936).

In Finch, this court rejected the claimed standing of the Governor of

Mississippito challenge a state law whose enforcement, he believed, would cause

him to violate his oath to uphold the Constitution. See Finch, 585 F.2d at 773.

The court observed:
No. 07-30482

5 Finch recognized that the Supreme Court had previously concluded that school board

officials had standing to challenge a state statute requiring school districts to purchase and

loan textbooks to students in enrolled in parochial schools. See Bd. of Educ. of Cent. Sch. Dist.

No. 1 v. Allen, 392 U.S. 236, 241 n.5 (1968). But Finch explained that later standing decisions

limited Allen and that Allen was factually distinct. Finch, 585 F.2d 773–74; see also 13A

Wright & Miller, FEDERAL PRACTICE & PROCEDURE § 3531.11 (stating that federal circuit

courts have recognized that Allen’s holding has been undermined by the Court’s more recent

standing decisions).

6 The opinion laboriously, and not very convincingly distinguished the long line of cases

holding that a political subdivision did not have standing to sue the parent state that created

it. See Brockette, 588 F.2d at 1067–68; cf. Town of Ball v. Rapides Parish Policy Jury, 746 F.2d

1049, 1051 n.1 (5th Cir. 1984) (noting general rule that political subdivisions have no standing

to invoke the Contract Clause or the Fourteenth Amendment in opposition to the will of their

creator, and citing long line of cases illustrating the rule). Although some circuits have

followed a per se rule that political subdivisions may not sue their parent states under any

constitutional provision, that is not the rule in this circuit. See Brian P. Keenan, Note,

Subdivisions, Standing, and theSupremacy Clause: Can a Political Subdivision Sue Its Parent

State Under Federal Law?, 103 MICH. L. REV. 1899, 1902 (2005).

5

The mental disposition of the Governor is all that gives him cause

to complain; were he to change his mind tomorrow and decide,

rightly or wrongly,thatthe state statute is valid, he would no longer

have any interest in the case. He has no personal stake in the

outcome of this case; he will not be affected favorably by a decision

that the statute is unconstitutional nor adversely by a decision that

it is valid.

Id. at 774.5

Shortly after Finch, this court took the anomalous, if not unique, position

that a political subdivision might have standing to challenge state laws that

allegedly violate the Supremacy Clause.6 See Rogers v. Brockette, 588 F.2d 1057

(5th Cir. 1979). In Brockette, a local school district sued Texas state educational

authorities because a Texas statute required it to participate in an otherwise

voluntary federal school breakfast program. Id. at 1059. The court concluded

the district had standing, in part, because it alleged that Congress made the

districtthe proper body to decide some significant questions under the breakfast

program. Id. at 1062.
No. 07-30482

7 Cf. Allen, supra, note 5. 

6

Butfor an important distinction made by that court, Brockette bears some

similarity to the case here. The court distinguished, for purposes of standing,

between political subdivisions and state agencies. The court stated:

Some state agencies may well be so closely identified with the state

government, and so thoroughly controlled by the body they are

suing thatthe litigation amounts to a suit by the state againstitself;

such a suit lacks the live adversariness we must find before we can

entertain a case.

Id. at 1065. Thus, when a state is essentially suing itself, there is no “case or

controversy.” Id. The court concluded that political subdivisions like the school

district were sufficiently independent of the state “to ensure that suit between

them [would] be a genuinely adversary contest.” Id.

Similarly, the Seventh Circuit holds that a suit involving a state official

challenging the constitutional validity of another state actor’s decisions under

state law is “clearly outside the cognizance of the federal courts.” Cronson v.

Clark, 810 F.2d 662, 664 (7th Cir. 1987). The court went on to state that the

typical subjects of injury — deprivation of liberty and property — “do not

encompass the interest of a public official in being allowed to act to the full

extent of what he conceives to be his powers under state law. The federal courts

do not sit to resolve intramural disputes among state officials over the bounds

of their authority under state law.” Id. at 665.

Here, Donelon has no “personal stake” in this litigation. Rather, he seeks

to exercise what he believes are the full extent of his official powers under

federal and state law. There is no claim that he suffers any personal injury

when an ALJ overturns one of his decisions regarding 18 U.S.C. § 1033 waivers.

Nor is there a claim that he will be expelled from office or lose public funding if

he complies with Louisiana law.7 As in Finch, he is merely suing to ensure
No. 07-30482

7

Louisiana law conforms to his opinion of what federal law requires. And

although this court held in Brockette that a political subdivision could bring a

Supremacy Clause challenge to a state law in federal court, Donelon’s position

as the head of a state agency creates a situation where the state is essentially

suing itself. The dispute between Donelon and the DAL is decidedly

“intramural.” Cronson, 810 F.2d at 665. Thus, there is no Article III case or

controversy.

Because Donelon lacks standing to sue, the district court’s dismissal for

lack of federal jurisdiction is AFFIRMED.