Document: 508 U.S. 491 113 S.Ct. 2202 124 L.Ed.2d 449 UNITED STATES DEPARTMENT OF the TREASURY and Mitchell A. Levine, Assistant Commissioner, Petitioners,v.George FABE, Superintendent of Insurance Ohio. No. 91-1513. Argued Dec. 8, 1992. Decided June 11, 1993. Syllabus * In proceedings under Ohio law to liquidate an insolvent insurance company, United States asserted that its claims as obligee on various company's surety bonds were entitled first priority 31 U.S.C. § 3713(a)(1)(A)(iii). Respondent Fabe, liquidator appointed by state court, brought a declaratory judgment action in Federal District Court establish such is governed statute ranks governmental behind (1) administrative expenses, (2) specified wage claims, (3) policyholders' (4) general creditors' claims. Fabe argued federal does not pre-empt because latter falls within 2(b) McCarran-Ferguson Act, which provides, inter alia: "No Act Congress shall be construed . supersede any enacted for purpose regulating business insurance. ." The court granted summary ground involve "business insurance" tripartite standard articulated Union Labor Life Ins. Co. v. Pireno, 458 119, 129, 102 3002, 3008, 73 647. Appeals disagreed and, reversing, held scheme regulates it protects interests insured. Held: escapes pre-emption extent policyholders, but designed further creditors other than policyholders. Pp. ____. (a) Act's primary was restore broad authority tax regulate industry response South-Eastern Underwriters Assn., 322 533, 64 1162, 88 L.Ed. 1440. (b) statute, "for insurance." Because phrase refers statutes aimed at protecting or regulating, directly indirectly, relationship between company SEC National Securities, Inc., 393 453, 460, 89 564, 568-69, 21 668, must yield conflicting furthers interests. Pireno support petitioner's argument contrary, since actual performance contract satisfies each prong test: terms policy facilitates transfer risk from insured insurer; central insurer insured; confined entirely entities industry. Thus, essential part integrally related contracts after bankruptcy, "enacted meaning 2(b). This plain reading comports with statute's purpose. (c) Petitioner's contrary interpretation based legislative history odds 2(b)'s language unravels upon close inspection. 2210-12. (d) preference accorded expenses administering insolvency proceeding reasonably necessary goal liquidation could even commence without payment costs. preferences conferred employees creditors, however, do escape their connection ultimate aim too tenuous. P. 939 F.2d 341 (CA 6 1991), affirmed part, reversed remanded. BLACKMUN, J., delivered opinion Court, REHNQUIST, C.J., WHITE, STEVENS, O'CONNOR, JJ., joined. KENNEDY, filed dissenting opinion, SCALIA, SOUTER, THOMAS, Robert Long, Jr., Washington, DC, petitioners. James R. Rishel, Columbus, OH, respondent. Justice BLACKMUN Court. 1 3713, accords respect bankrupt debtor's obligations. An confers only fifth company. Rev.Code Ann. 3903.42 (1989). pre-empts inconsistent unless exempt 59 Stat. 33, amended, 15 1011 et seq. order resolve this case, we decide whether establishing insurance," 1012(b). 2 We hold Accordingly, may effectively afford priority, over States, policyholders costs liquidation. But when attempts rank categories above those pressed free Act. 3 complex specialized structure regulation companies inception dissolution. proclaims, purpose, "the protection insureds, claimants, public generally." 3903.02(D). Chapter 3903 broadly empowers State's place financially impaired his supervision, into rehabilitation, last authorized finds insolvent, placement supervision rehabilitation would futile, "further transaction hazardous, otherwise, [the insurer's] public." 3903.17(C). As liquidator, take title all assets, 3903.18(A); collect invest moneys due insurer, 3903.21(A)(6); continue prosecute name suits legal proceedings, 3903.21(A)(12); reinsurance unearned premiums §§ 3903.32 3903.33; evaluate against estate, 3903.43; make payments claimants possible, 3903.44. It seems fair say effect empower operate ways one—the issuance new policies. 4 Pursuant statutory framework, Common Pleas Franklin County, Ohio, April 30, 1986, declared American Druggists' Company insolvent. directed liquidated, respondent, Ohio's Insurance, serve liquidator. immigration, appearance, performance, issued surety, excess $10.7 million proceedings. 3713(a)(1)(A)(iii), provides: "A claim Government paid person indebted act bankruptcy committed."1 5 Southern seeking designating insurance-liquidation Under noted above, federal, state, local governments are ranking creditors. 3903.42.2 scheme, rather governs anti-pre-emption provisions 1012.3 States. Relying divining what constitutes 647 (1982), considered three factors: 7 " 'first, practice has transferring spreading policyholder's risk; second, integral third, limited industry.' App. Pet. Cert. 36a (quoting U.S., S.Ct., 3008). 8 Reasoning possesses none these attributes, concluded 45a. 9 A divided reversed. (CA6 1991). Id., 350-351. Applying determined transfers spreads insolvency; involves maintain reliability contract; focuses diverting scarce resources liquidating entity away F.2d, 351-352.4 10 same test reach different result, one judge dissented. He reasoned insurers nothing effected means complete time entered; address insured, among left demise rights 353-354. 11 certiorari, --- ----, 112 1934, 118 541 (1992), conflict Courts question governing "law Act.5 II 12 Court's decision 1440 (1944). Prior decision, had been assumed "[i]ssuing commerce," Paul Virginia, 75 (8 Wall.) 168, 183, 19 357 (1869), subject regulation. enjoyed virtually exclusive domain industry." St. Fire & Marine Barry, 438 531, 539, 98 2923, 2928, 57 932 (1978). 13 emergence interconnected interdependent national economy, prompted more expansive jurisprudential image interstate commerce. intervening years, example, commerce encompasses movement lottery tickets State State, Lottery Case [Champion Ames], 188 321, 23 47 492 (1903), transport five quarts whiskey across lines private automobile, Simpson, 252 465, 40 364, 665 (1920), transmission electrical impulse wire Alabama Florida, Pensacola Telegraph Western Co., 96 1, 24 708 (1877). long before forced come decisions context. Underwriters, conducted substantial engaged thereby antitrust laws. naturally, widely perceived threat power To allay fears, moved quickly supremacy realm year Underwriters. 14 section makes mission very clear: "Congress hereby declares continued taxation several interest, silence impose barrier States." 1011. Shortly passage observed: "Obviously Congress' give existing future systems taxing Prudential Benjamin, 328 408, 429, 66 1142, 1154, 90 1342 (1946). achieved two ways. "was removing obstructions might thought flow [Congress'] own power, dormant exercised, except otherwise expressly provided itself legislation." 429-430, 1154-1155. second declaring affirmatively interest who engage 'shall to' laws states respects." 430, 1155. III "[T]he starting point case involving construction like itself." Group Health Royal Drug 440 205, 210, 99 1067, 1072, 261 (1979). Section invalidate, impair, specifically relates parties agree application "invalidate, supersede" "specifically relat[e] All us determine, therefore, 16 occasion construe once. On occasion, "Statutes [between insured], 'business insurance,' phrase. 568, 668 (1969). emphasized focus policyholders: 17 "The type issued, reliability, interpretation, enforcement—these core insurance.' Undoubtedly, activities relate so closely status reliable they placed class. whatever exact scope term, clear where was—it policyholder." Ibid. 18 Arizona merged received approval Director required law. Securities Exchange Commission sued rescind merger, alleging merger-solicitation papers contained material misstatements, violation that, insofar attempt protect shareholders, did fall also Director, granting approval, sure proposed merger "would 'substantially reduce security service rendered policyholders.' 462, 569. observed "clearly "paramount shareholders [was] perfectly compatible paramount policyholders," id., 463, 570, preclude securities present hand, there direct 1012(b), 20 Minimizing analysis petitioner invokes Those cases identified criteria, relevant determining constitute See 3008. Petitioner argues criteria. According petitioner, merely determines will paid, insurer. contends addresses defunct corporation. sure, prescribing setting rate charged read suggest writing contracts, opposed performance. "ancillary activities" affect enforcement contractual obligations enjoy exemption 134, n. 3011, 8. use peer review committee advise charges chiropractic services reasonable issue performed; dealt calculating fell contract's coverage. 130, 3009. found process "a matter indifference policyholder, whose concern why paid" (emphases original). 132, 3010. Similarly, Drug, insurer's agreements participating pharmacies provide benefits benefit promised Blue Shield cover cost prescription drugs $2 charge prescription. So promise kept, basically unconcerned arrangements made pharmacies." 213-214, 1074 (footnote omitted). 22 There can no doubt understood Drug. mere formalism. statement "transfer entered," 3009, presumes fact enforced. Without policy, all. Moreover, remaining prongs carry out ensuring despite bankruptcy. Both moreover, involved immunity located clause deal here clause, narrowly circumscribed. unambiguous: commits while exempts equate itself, urges do, words statute. refuse do.6 category consists possess "end, intention, aim" adjusting, managing, controlling Black's Law Dictionary 1236, 1286 (6th ed. 1990). necessarily just For reasons expressed believe "aimed regulating" contract, follows 25 Our stated intended objective regulatory accomplishes secondary goal, carve narrow 218, 18, 1076, 18. Cf. D. Howard, Uncle Sam versus Commissioners: Multi-Level Approach Defining "Business Insurance" Williamette L.Rev. (1989) (advocating clauses reflect dual purposes); Note, Definition After 80 Colum.L.Rev. 1475 (1980) (same). 26 Petitioner, comes play become liquidation, longer exists. disagree. distributes assets identical itself: And "mere matters form need detain us." 568. serves ensure if ultimately receive That policyholder creditor debtor relevant. IV 27 Finding little resorts history. relies principally single House Report: 28 "It intention enactment legislation clothe beyond prior Supreme Association case." H.R.Rep. 143, 79th Cong., 1st Sess., (1945). 29 From statement, "turn back clock" At time, maintains, have superseded 30 Even accept premise, far clear. bases Knott, 298 544, 56 902, 1321 (1936), disposition funds Florida Treasurer condition conducting State. Knott stands proposition pre-empted proffered analogy closer applied legislated 549-550, 905 ("But settled inchoate lien enough defeat [Federal Government's] priority. Unless either specific perfected favor priority"). reached result. See, e.g., Conway Imperial 207 La. 285, So.2d 151 (1945) (Louisiana providing deposited treasurer trust supersedes statute). More importantly, language. simply overrule quo. transformed landscape overturning normal rules pre-emption. Ordinarily, reverses imposing is, effect, clear-statement rule, rule requires otherwise. becomes apparent examine parts history.7 broke ground: "embod[ied] rejection concept outside laws—a prevailed decision." 220, 1077. 32 appears find origin "[t]he turn clock, assure dealing remain regulation." 459, referring underlying namely, extrapolate invitation detailed point-by-point comparison regime created existed before. impossible compare our world believed Commerce Clause. V 33 Of course, every redound enhancing argument, goes far: "But sense, some impact insurer." 216-217, 1075-1076. rejected notion indirect effects sufficient avoid 217, 1076.8 34 costs, commence. Langdeau 363 S.W.2d 327 (Tex.Civ.App.1962) (state according employee insurance). By clash priorities pronounced respective Code. Code's provisions—including severability—is addressed remand. Stanton Stanton, 421 7, 17-18, 95 1373, 1379, 43 688 (1975) (invalidating specifying greater age majority males females remanding determine applicable both groups law). 35 remanded consistent opinion. 36 ordered. 37 whom SOUTER THOMAS join, dissenting. 38 With respect, full recognition considers care difficult, I dissent 39 consider statutes, attempting given (1989), provides usual principles pre-emption, trumps Lime Avocado Growers, Inc. Paul, 373 142-143, 83 1210, 1217, 248 (1963). certain 34, alters primarily S.E.C. (1969), concludes portions saved right begin analysis. points out, precise provision disagree, precedent. 41 key term said end accomplished way, While noting unclear, passing concerned centers around agreement concerns underwriting risk, see G. Couch, Cyclopedia 1.3 (2d 1984), Keeton, 1.2(a) (1971), often recognized principle. 127, 3007, (1982); 211-212, 1073, 42 When applies holding bar, "performance contract," ante, ____, "policyholders claims," majority's reasoning, redounds ipso facto, discern powers reserved them I, reconcile precedents area reaches today. logical extension indeed it. function competing face, concentration protection, comprehensive generally, minimum interference prerogatives owners managers insurers." 3903.02(D) gives until today result alone qualified implicate "true risks, earmark Variable Annuity America, 359 65, 73, 79 618, 623, 640 (1959) increases probability insured's event insolvency. laws, "furthe[r] ________, speak embodied parties. Granting essence 44 Further, activity "relate[s] insurers," ibid., qualify constituting "core apparently agrees, facilitating assertion intuitive appeal, certainly vital financial strength solvency insurers. requiring ahead rest increase operate, definition, late day that. Instead state-imposed safety net my view, easily dismisses reason demise. Ante, Whereas relationship: insurance, proceeding. 45 share view characterize "empower[ing] [insolvent] policies." change cosmetic management. Once directs winding up begins. No policies issue, recalled settled. 3903.19. ongoing insurance; disbursement business' way Legislature deems equitable. careful note "did purport supreme companies." 568 (emphasis displace companies; class mean aspect transaction. 46 look conclude so, undercut holding, distinguish them. My disagreement turns 1012(b) follows: insurance: Provided, statutes] regulated Law." 48 used times insurers, allows constituted control issue. accepting respondent's suggestion, observes, "not circumscribed" clause. 49 true something mind distinction compel conclusion here. initial matter, unusual next. Such runs counter basic meaning. Sullivan Stroop, 496 478, 484, 110 2499, 2503, (1990); Atlantic Cleaners Dyers, 286 427, 433, 52 607, 608, 76 1204 (1932). maxims admit exceptions, obstacles adopting apply realm. First, discloses limit way. Indeed numerous opportunities contexts, never hinted changed suggestion Pireno's three-tier discredited citing contexts unrelated antitrust. instance, employed saving Employee Retirement Income Security Pilot Dedeaux, 481 41, 48-49, 107 1549, 1553, (1987); Metropolitan Massachusetts, 471 724, 742-743, 105 2380, 2390-2391, 85 728 (1985). 50 best viewed refinements tailored Although decided accordance exemptions narrowly, 126, 3007; 231, 1083, derived 51 examination reveals expand statements about Securities. reiterates principle identifies factors shed light task particular requisite considers: "first, fails Securities: removed distinct seeks contract. "by parties—the policy—and entered." prong, instead lurch. Finally, companies, including employees, stockholders, well government entities. 53 Quite apart relevance us, think most serious flaw analytic approach disclosed compromise reaches. (as facilitate claims) Government. level seem satisfying, (policyholder priority) (the Government's displaces claimants). equitable attractive should not. course many aspects businesses, may, not, precedents. instance authorizing official approve mergers acted "substantially 569, "[i]nequitable stockholders 457, 567. quite portion allowing "security functioned preserve business. contrast, explained, supra, 221 4, operates allocate ranked dead last. inquiry If chooses (and policyholder) 54 though underscore precludes procedures companies. prerogative emanate enact long-standing code. 109(b)(2), (d). errs applying traditional apply. reverse Appeals. syllabus prepared Reporter Decisions convenience reader. Detroit Lumber 200 337, 282, 287, 499. entirety, 3713 reads: "(a)(1) — "(A) "(i) property pay debts voluntary assignment property; "(ii) debtor, absent, attached; "(iii) committed; "(B) estate deceased custody executor administrator, debtor. "(2) subsection 11. "(b) representative (except trustee acting 11) paying debt liable unpaid Government." distribution set forth section. Every adequate retained members next payment. subclasses established be: Class 1. administration, following: "(1) preserving recovering Compensation liquidation; "(3) Any filing fees; "(4) fees mileage payable witnesses; "(5) Reasonable attorney's "(6) guaranty association foreign handling 2. Debts performed exceed thousand dollars represent complaint Officers directors lieu similar wages compensation employees. "(C) 3. losses incurred, third party liability bodily injury destruction tangible policies, association. life annuity death proceeds, investment values, treated loss loss, indemnification advantages recovered claimant, included class, recoverable discharge familial succession proceeds gratuities. employer gratuity. Claims nonassessable premium refunds. "(D) 4. "(E) 5. government. Claims, body penalty forfeiture, allowed pecuniary sustained act, transaction, forfeiture arose, occasioned thereby. remainder postponed division (H) "(F) 6. divisions (G) "(G) 7. Surplus contribution notes, obligations, refunds assessable Payments domestic mutual "(H) owners." 1012 "(a) therein, imposes fee business, 1948, July 2, 1890, known Sherman October 15, 1914, Clayton September 26, Trade One concurred separately modify longstanding, liquidations. 352. Compare Sixth Circuit litigation Gordon Department Treasury, 846 272 (CA4), cert. denied, 488 954, 109 390, 379 (1988), Idaho ex rel. Soward 858 445 (CA9 1988), 490 1065, 2063, 104 628 "runs meaning." Post, plausible actually explained contains word "purpose," significantly missing ignoring word, overlooks another maxim construction: "that 'give statute.' Moskal 498 103, 109-110, 111 461, 465-466, (1990), quoting Menasche, 348 528, 538-539, 513, 519-520, 615 (1955), Montclair Ramsdell, 147, 152, 391, 394, 431 (1883). Elaborating animating Senator Ferguson "What being commerce, relating now books wanted Congress, wisdom, reference enacting law." 91 Cong.Rec. 1487 later confirms "no should, implication, (statement Mr. Mahoney). assails ends, contending once enough. suggests "broad" sense "any precisely reject text, evidenced narrowness holding. Uncomfortable afforded complains, evidence "serious flaw." concedes package entirety. Given concession, dissent's insistence all-or-nothing flawed. adduces end. taken carefully parsed goals protected Supra, misinterprets pronouncement "compromise holding," post, forgetting severability

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