Court Opinion

ID: 9746123
Source: CourtListenerOpinion
Date Created: 2023-08-27 14:00:30.026317+00
Date Added: 2024-06-11T07:25:09.176765
License: Public Domain

BAMATTRE-MANOUKIAN, J., Dissenting.
I agree with my colleagues that, so far as relevant to Associated Aviation Underwriters’ assertion that its age-based discrimination was consistent with sound insurance underwriting practice, the Insurance Commissioner may be deemed to have far more expertise than the Fair Employment and Housing Commission (FEHC). I also acknowledge the possibility that FEHC involvement in claims such as Claude J. Wilson’s would introduce an undesirable element of uncertainty into insurance underwriting. For both reasons, I believe it might well be preferable to permit, or even to require, the FEHC to defer to the Insurance Commissioner on this narrow issue. But I find no provision in the law for such deferral. The only issue before us is whether the FEHC had jurisdiction to address Wilson’s claim, and this issue must be resolved not on the basis of my perception of what might be a desirable result but rather by construction and application of relevant statutes. On the basis of my understanding of the statutes I cannot agree that the FEHC lacked jurisdiction. I therefore respectfully dissent from my colleagues’ conclusion that the superior court’s judgment must be reversed.
As a general rule an administrative agency’s jurisdiction is controlled by the underlying constitutional or statutory provisions. (Cf. Larson v. State Personnel Bd. (1994) 28 Cal.App.4th 265, 273-274 [33 Cal.Rptr.2d 412].) The FEHC’s jurisdiction of Unruh Civil Rights Act claims is controlled by statute, and in the abstract the statutory analysis is straightforward:
The Government Code declares an Unruh Civil Rights Act violation to be an “unlawful practice.” (Gov. Code, § 12948.) The Department of Fair Employment and Housing is authorized “[t]o receive, investigate, and conciliate” complaints of such unlawful practices. (Id. § 12930, subd. (f)(1).) If the Department of Fair Employment and Housing (DFEH) cannot eliminate *1226the unlawful practice by less adversarial means, it is authorized by Government Code section 12965 to issue a written accusation which charges the accused respondent with the unlawful practice. By explicit statutory provision the FEHC “shall hold hearings on accusations issued pursuant to Section 12965 and shall determine the issues raised therein.” (Id. § 12967.) Thus, in the abstract, once a claimant has filed an Unruh Civil Rights Act complaint with the DFEH and the DFEH has issued an accusation against the respondent, the FEHC has a statutory duty—and thus, necessarily, jurisdiction—to hear the accusation and to determine whether the respondent has in fact unlawfully discriminated against the claimant.
As I view it, the narrow question in this case is whether the circumstances that the respondent is a provider of aviation insurance, and that it allegedly discriminated on the basis of the claimant’s age, should alter the abstract analysis.
In simplified overview the short answer would appear to be that these facts should not alter the analysis, because Proposition 103 seems to make clear that the business of insurance is subject to, and several California cases have stated or assumed that arbitrary age-based discrimination is proscribed by, the Unruh Civil Rights Act.
Associated Aviation Underwriters (AAU) does not and cannot deny that it discriminated on the basis of Wilson’s age. It relies primarily on the principle that only an unjustifiable and therefore arbitrary age-based discrimination will violate the Unruh Civil Rights Act (cf., e.g., Starkman v. Mann Theatres Corp. (1991) 227 Cal.App.3d 1491, 1496 [278 Cal.Rptr. 543]; Sargoy v. Resolution Trust Corp. (1992) 8 Cal.App.4th 1039, 1043 [10 Cal.Rptr.2d 889]), and on its premise that discrimination on the basis of age is an essential and legitimate element of aviation insurance underwriting and therefore justifiable in that context. “Underwriting” is a label commonly applied to the process, fundamental to the concept of insurance, of deciding which risks to insure and which to reject in order to spread losses over risks in an economically feasible way. (Cf. Group Life & Health Ins. Co. v. Royal Drug Co. (1979) 440 U.S. 205, 211-213 [59 L.Ed.2d 261, 268-270, 99 S.Ct. 1067]; cf. also 1 Couch, Insurance (3d ed. 1995) § 1.9, p. 1-16; for examples of the breadth sometimes given the label, see Ins. Code, §§ 769.81, subd. (d) and 791.02, subd. (a).)
The limited record before us gives me no comprehensive insight into AAU’s underwriting practices, or those of the insurance industry generally, with respect to aviation insurance, and no basis on which to evaluate the *1227reasonableness of those practices. Intuitively, nevertheless, it seems clear to me that in particular circumstances a pilot’s age could have a rational bearing on an aviation insurer’s objective assessment of a risk it is asked to insure.
But the plausibility of AAU’s premise does not, in and of itself, support a conclusion that the FEHC lacks jurisdiction to determine whether, in this case, AAU in fact followed sound and reasonable underwriting practices. AAU’s argument that Wilson’s age was legitimately relevant to AAU’s definition of the risks AAU would insure for National Vitamin begs the only question before us, which is whether the FEHC was empowered to consider this argument on its merits.
In my view we could conclude that the FEHC lacked jurisdiction to reach the merits only if it were to appear, as a matter of law, that AAU’s age-based discrimination could not in any circumstances have violated the Unruh Civil Rights Act. I cannot justify such a conclusion.
I do not find in the record, or in the parties’ arguments, any persuasive reason to declare an unqualified exemption from the Unruh Civil Rights Act for age-based discrimination in any process an insurer may choose to label as underwriting. The label itself provides no assurance that in a particular case the insurer in fact followed sound and reasonable underwriting practices when it discriminated on the basis of age. Nor, for want of any comprehensive exposition in the record as to what AAU’s underwriting policy or practice was or how it could be justified, can I conclude that this is a case in which “the policy or practice of a business establishment is valid on its face because it bears a reasonable relation to commercial objectives appropriate to an enterprise serving the public.” (Harris v. Capital Growth Investors XIV (1991) 52 Cal.3d 1142, 1165 [278 Cal.Rptr. 614, 805 P.2d 873].)
Accordingly AAU is obliged to rely on its assertion that as a matter of statutory construction the Unruh Civil Rights Act does not apply to age-based discrimination in aviation insurance underwriting. If valid, such an assertion would support a conclusion, as a matter of law, that AAU’s age-based discrimination could not have violated the Unruh Civil Rights Act, and therefore that there could be no colorable accusation of an Unruh Civil Rights Act violation to which FEHC jurisdiction could attach. I therefore respectfully disagree with my colleagues’ conclusion that the assertion need not be reached. But, having reached it, I would conclude that the assertion is not valid.
The FEHC itself provided the foundation for AAU’s assertion by expressing doubt that by Proposition 103 the electorate “meant to subject age-based *1228decisions in the insurance industry to Unruh Civil Rights Act scrutiny.” In this court AAU has built upon the FEHC’s doubt.
AAU points out that age is not among the categories of discrimination— such as race, color, or national origin—explicitly enumerated in the Unruh Civil Rights Act, although it is now generally acknowledged that an age category has been functionally appended to the Unruh Civil Rights Act by judicial decision. (Cf. Marina Point, Ltd. v. Wolfson (1982) 30 Cal.3d 721, 726 [180 Cal.Rptr. 496, 640 P.2d 115, 30 A.L.R.4th 1161]; O’Connor v. Village Green Owners Assn. (1983) 33 Cal.3d 790, 792 [191 Cal.Rptr. 320, 662 P.2d 427]; Park Redlands Covenant Control Committee v. Simon (1986) 181 Cal.App.3d 87, 93-94 [226 Cal.Rptr. 199]; Starkman v. Mann Theatres Corp., supra, 227 Cal.App.3d at p. 1496; Sargoy v. Resolution Trust Corp., supra, 8 Cal.App.4th at p. 1043; see Koire v. Metro Car Wash (1985) 40 Cal.3d 24, 37, 38 [219 Cal.Rptr. 133, 707 P.2d 195]; cf. also Sunrise Country Club Assn. v. Proud (1987) 190 Cal.App.3d 377, 381, 382 [235 Cal.Rptr. 404]; Warfield v. Peninsula Golf & Country Club (1995) 10 Cal.4th 594, 607-609, 623, fn. 11 [42 Cal.Rptr.2d 50, 896 P.2d 776].) Noting that age discrimination was not explicitly mentioned in Proposition 103 or its ballot arguments, the FEHC thought it “quite possible” that the drafters of the proposition were unaware of the judicially constructed age category. On this basis AAU argues that the drafters, and implicitly the electorate, “never intended [Proposition 103] to prohibit insurers from using age as a factor in . . . evaluating risks.”
AAU’s argument founders on the rule that, in the construction of an initiative measure, the electorate “is presumed to be aware of existing laws and judicial construction thereof.” (In re Lance W. (1985) 37 Cal.3d 873, 890, fn. 11 [210 Cal.Rptr. 631, 694 P.2d 744]; cf. also In re Harris (1989) 49 Cal.3d 131, 136 [260 Cal.Rptr. 288, 775 P.2d 1057]; Hill v. National Collegiate Athletic Assn. (1994) 7 Cal.4th 1, 23 [26 Cal.Rptr.2d 834, 865 P.2d 633].) Although presumptions of this kind are not conclusive (cf. Harris v. Capital Growth Investors XIV, supra, 52 Cal.3d at p. 1156), I believe in this instance that the electorate should be deemed to have been aware that the Unruh Civil Rights Act had been judicially construed to extend to age discrimination, and to have intended that the Unruh Civil Rights Act be applied to the insurance industry as so construed.
I would not attach dispositive significance to the Legislature’s apparent decisions to omit age from enumerations of categories of proscribed discrimination with respect to life and disability (Ins. Code, § 10140) and certain casualty (id. § 679.71) insurance, or to permit consideration of age (id. *1229§ 11624, subd. (a)(4)) or to establish special age-related education programs (id. § 11628.3) for certain purposes related to automobile insurance. I note that the Insurance Code also incorporates a number of explicit proscriptions on age discrimination in other specified circumstances. (Cf., e.g., id. §§ 406.2, 663.5, 785 et seq., 10194.7, subd. (a)(1), 10194.8, 10233.2, 10291.5, subd. (b)(9).) None of these Insurance Code provisions or omissions appears to me to rebut the electorate’s patent determination that the Unruh Civil Rights Act, inferably as judicially construed, also should apply to the insurance industry.
My colleagues refer to the Unruh Civil Rights Act’s provision that Civil Code section 51 “shall not be construed to confer any right or privilege on a person which is conditioned or limited by law . . . .” It may be that, when the merits of Wilson’s claim are reached, it will appear that AAU’s age-based discrimination in this case was in fact a rational application of sound underwriting principles and therefore permissible, and that in this sense Wilson’s asserted right to be wholly free of any age discrimination whatsoever should be deemed “conditioned or limited by law.” But the merits of Wilson’s claim are not before us. Neither AAU nor my colleagues cite, nor do I find, any provision of law which in the abstract would condition or limit Wilson’s right to be treated fairly by AAU.
On the basis of a conclusion that AAU’s refusal to provide coverage if Wilson were the pilot in command was “clearly an underwriting decision made on the basis of risk evaluation,” my colleagues suggest that Wilson’s claim was within the jurisdiction of the Insurance Commissioner, under the McBride-Grunsky Regulatory Act of 1947 as amended (Ins. Code, §§ 1850.4-1860.3, hereafter McBride-Grunsky Act), to “review the manner in which ... [an underwriting] rule has been applied with respect to the insurance afforded to” the complainant. (Ins. Code, § 1858, subd. (a).) My colleagues’ point, as I understand it, is that the Insurance Commissioner should be deemed to have exclusive jurisdiction of Wilson’s claim.
I cannot agree. Even were I to assume that AAU’s refusal was a legitimate “underwriting decision,” and also that it reflected application of the kind of “underwriting rule” (Ins. Code, § 1858, subd. (a)) to which the McBrideGrunsky Act (a legislative scheme addressed to casualty insurance rates and ratemaking) would apply, the fact the Insurance Commissioner might have jurisdiction for purposes of the McBride-Grunsky Act would not preempt the jurisdiction of the FEHC for purposes of the Unruh Civil Rights Act. The two statutes, as I read them, serve purposes which are not mutually exclusive: While the McBride-Grunsky Act empowers the Insurance Commissioner to regulate rates and ratemaking for the ultimate benefit of consumers *1230of insurance services, the Unruh Civil Rights Act seeks to serve a broader societal interest in freedom from invidious discrimination in various business contexts (including the insurance industry). The Unruh Civil Rights Act is supplemented by both regulatory and remedial provisions; the McBrideGrunsky Act provides only regulatory jurisdiction and gives the Insurance Commissioner no power to redress perceived injury to an individual complainant whether by monetary damages or otherwise. To conclude that the Insurance Commissioner’s jurisdiction of any allegedly discriminatory insurance underwriting practice should be exclusive of the FEHC’s Unruh Civil Rights Act jurisdiction would be to preclude individual administrative remedies the Legislature patently intended to make available to Unruh Civil Rights Act claimants. A more satisfactory reading of the two statutes, I submit, would be that the Insurance Commissioner and the FEHC may have concurrent jurisdiction over a complaint such as Wilson’s.
To support its own argument that the McBride-Grunsky Act “completely preempts the field” of age-based discrimination in casualty insurance underwriting, AAU quotes the act’s provisions that “[n]o act done, action taken or agreement made pursuant to the authority conferred by this chapter shall constitute a violation of or grounds for prosecution or civil proceedings under any other law of this State heretofore or hereafter enacted which does not specifically refer to insurance” (Ins. Code, § 1860.1), and that “[t]he administration and enforcement of this chapter shall be governed solely by the provisions of this chapter. . . .” (Id., § 1860.2). In my view these provisions neither reach the sort of arbitrary misuse of age criteria the Unruh Civil Rights Act proscribes—and which the McBride-Grunsky Act surely does not authorize—nor preclude a conclusion that administrative jurisdiction to enforce the Unruh Civil Rights Act remains in the FEHC. Karlin v. Zalta (1984) 154 Cal.App.3d 953, 973-974 [201 Cal.Rptr. 379], on which AAU relies, predated Proposition 103; the passage AAU quotes dealt not with the kind of underwriting decision AAU assertedly made but rather with ratemaking.
To support their conclusion that a claim such as Wilson’s would be within the exclusive jurisdiction of the Insurance Commissioner, my colleagues observe that Proposition 103 does not explicitly state that alleged Unruh Civil Rights Act violations by insurers are within the jurisdiction of the FEHC. I would not consider the omission significant. The substance of the current statutory scheme of administrative jurisdiction of Unruh Civil Rights Act claims (with concomitant remedial powers) was compiled in the Government Code, from earlier enactments in other codes, in 1980 (Stats. 1980, ch. 992), eight years before the electorate enacted Proposition 103, and the electorate may be presumed to have been aware of the Government Code *1231provisions. (Cf. In re Lance W., supra, 37 Cal.3d at p. 890, fn. 11; cf. also In re Harris, supra, 49 Cal.3d at p. 136.) Neither the placement of the electorate’s reference to the Unruh Civil Rights Act in the Insurance Code, nor the fact that Proposition 103 did explicitly provide procedures for addressing allegations (unrelated to the Unruh Civil Rights Act) of excessive, inadequate, or unfairly discriminatory rates, appears to me to support an inference that the electorate intended in insurance cases to shift administrative jurisdiction of Unruh Civil Rights Act complaints from the FEHC to the narrower regulatory authority of the Insurance Commissioner. A better inference, it seems to me, would be that the electorate intended an Unruh Civil Rights Act claimant such as Wilson to have access to the same administrative remedies made available through the FEHC to other Unruh Civil Rights Act claimants and, accordingly, that the electorate intended that not only the Unruh Civil Rights Act itself but also its existing enforcement mechanisms be applicable to the insurance industry.
My colleagues suggest—and I agree—that the Insurance Commissioner has, and that the FEHC may not have, the expertise necessary to evaluate Wilson’s allegations of discriminatory insurance practices. I am willing to accept the FEHC’s acknowledgment that “the appropriate use of age criteria in the insurance industry is an area in which this Commission does not have any particular expertise or experience,” as well as its assumption that the Insurance Commissioner “may have some expertise in the appropriate use of age-based generalizations in the insurance industry.”
But I respectfully submit that the question of relative expertise is, again, irrelevant to the question whether, under the pertinent statutes, the FEHC has jurisdiction to hear and decide Wilson’s claim.
The FEHC took the position that it could not “extend jurisdiction” over the DFEH accusation based on Wilson’s complaint absent “clear precedent or precise statutory language clarifying the issue of when the Unruh Civil Rights Act prohibits insurance companies from using age as a condition of insurability.” The superior court responded, in essence, that the FEHC was empowered to consider Wilson’s case, and to find an Unruh Civil Rights Act violation if (but only if) the FEHC concluded that the AAU’s age-based discrimination could not be justified by public policy and legitimate business reasons.
I believe that the superior court’s advice, although broad and general in terms, was valid. That the FEHC might understandably regard the nuances of insurance underwriting as difficult would not serve to distinguish the FEHC from this or any other court, or any other agency, that from time to time *1232finds itself constrained, in the exercise of its clear jurisdiction, to decide a hard case: Once its jurisdiction is established, ordinarily the tribunal must simply do the best it can. Had Wilson chosen to lodge his complaint with a court (under Civ. Code, § 52) rather than with the DFEH, the court might properly have deferred its consideration of the underwriting issues to the Insurance Commissioner under the so-called “primary jurisdiction doctrine.” (Farmers Ins. Exchange v. Superior Court (1992) 2 Cal.4th 377, 386-401 [6 Cal.Rptr.2d 487, 826 P.2d 730].) But a court that invokes the primary jurisdiction doctrine does not thereby deny its own jurisdiction: It simply abates the exercise of its jurisdiction, temporarily, to obtain the benefit of administrative expertise. And in any event there appears, regrettably, to be neither precedent nor a workable mechanism for similar deference between administrative agencies.
In its decision the FEHC suggested that “[t]he insurance industry routinely uses age-based classifications in determining whether to insure various risks, and how much to charge for insurance,” and expressed the concern that “[ajsserting jurisdiction over this case could suggest that these longstanding practices are universally unacceptable.” I find no rational basis for the FEHC’s concern. On the merits of an Unruh Civil Rights Act claim of age-based discrimination, the FEHC’s proper function is to search for unreasonable and thus unjustifiable discrimination. Although assertion of Unruh Civil Rights Act jurisdiction probably would, and certainly should, chill improper underwriting practices, an insurer whose age-based discriminations are soundly based in legitimate underwriting rules and policies should have no cause for alarm.
At the same time I recognize that exercise of jurisdiction by the FEHC in cases such as this might tend to jeopardize a desirable uniformity in the application of regulatory laws to insurance underwriting rules and practices. But the solution to such problems must necessarily come from the Legislature or, perhaps, from the electorate. The limitations of this court’s judicial role do not permit it to rewrite a legislative scheme simply because some other scheme would appear to be more sensible. Under the law as I understand it, the FEHC has jurisdiction of Wilson’s claim. Accordingly I would affirm the judgment of the superior court.
The petition of respondent Claude J. Wilson for review by the Supreme Court was denied October 2, 1996. Mosk, J., and Kennard, J., were of the opinion that the petition should be granted.