Court Opinion

ID: 9846456
Source: CourtListenerOpinion
Date Created: 2023-09-24 03:41:22.471854+00
Date Added: 2024-06-11T09:19:32.075948
License: Public Domain

*285MOSK, J.
I concur in the judgment.
I also generally concur in the majority opinion prepared by Justice Baxter. Its reasoning is substantially sound. Its result is unquestionably correct. On two points, however, I would take a different approach.
I
First, unlike the majority, I would declare that the statement in Chicago Title Ins. Co. v. Great Western Financial Corp. (1968) 69 Cal.2d 305, 322-323 [70 Cal.Rptr. 849, 444 P.2d 481] (hereafter sometimes Chicago Title), is dictum, not holding, and unsound dictum at that. As the majority themselves clearly show, this language has caused mischief in the past. It should not be allowed to retain any vitality for the future.
“The Cartwright Act,” stated the Chicago Title court, “is similar in spirit and substance to that federal legislation encompassed by the Sherman (15 U.S.C.A. §§ 1-7) and Clayton Acts (15 U.S.C.A. §§ 12-27). Private individuals, businesses or corporations have, in the absence of express statutory authority, no standing to enforce such regulatory statutes. (Cf. Show Management v. Hearst Publishing Co., 196 Cal.App.2d 606, 612-616 [16 Cal.Rptr. 731]; West Coast Poultry Co. v. Glasner, 231 Cal.App.2d 747 [42 Cal.Rptr. 297]; Hudson v. Craft, 33 Cal.2d 654 [204 P.2d 1, 7 A.L.R. 696].) The Cartwright Act however follows federal policy which expressly contemplates private civil litigation based upon statutes regulating antitrust and unfair trade practices, including illegitimate pricing practices. (Bus. & Prof. Code, §§ 17040-17051 [sic: these provisions belong to the Unfair Practices Act, not the Cartwright Act].)
“These statutes and the common law which once constituted the ‘protection of the public against combinations in restraint of the insurance trade’ (Speegle v. Board of Fire Underwriters, 29 Cal.2d 34, 45 [172 P.2d 867]) are now expressly superseded and contravened by the specific provisions of the Insurance Code. Counts three (secret rebate), four (discriminatory pricing) and seven (unlawful rebate) clearly concern the regulation of rates charged by title insurers and title companies, and rate regulation has traditionally commanded administrative expertise applied to controlled industries. (Ins. Code, §§ 12404-12412; County of Placer v. Aetna Cas. etc. Co., 50 Cal.2d 182 [323 P.2d 753]; Division of Labor Law Enforcement v. Moroney, 28 Cal.2d 344 [170 P.2d 3].) Count three, for instance, is based upon a statute *286(Bus. & Prof. Code, § 17045) aimed at preventing a distributor from discriminating between customers, but fails to allege facts from which a court might properly infer that the prices charged by Security [a title insurer defendant] or Summit [a title company defendant] differ from customer to customer, and is thus defective. (Federal Automotive Services v. Lane Buick Co., 204 Cal.App.2d 689 [22 Cal.Rptr. 603].) Count four, presumably based on the same facts, charges that the discount constitutes a sale of title insurance below cost which is an infraction only if done ‘for the purpose of injuring competitors’ (Bus. & Prof. Code, §§ 17043, 17049), but a court is not the appropriate initial arbiter of factors involved in insurance costs. Count seven implies that Sherwood (an escrow company [defendant]) acts as ‘agent’ for real property owners with whom title insurers and title companies are prohibited from splitting fees and that because Summit is controlled by identical interests, the receipt of a title policy from Security at a discount constitutes an illegal rebate (Ins. Code, § 12404) to Sherwood. The statutory framework, however, specifically contemplates a division of fees between title insurers and title companies which shall be proper unless the method used constitutes such fee divisions ‘illegal.’ (Ins. Code, §§ 12412, 12404.5, 12405.7.) It is not clear from the facts alleged that the discount rendered would or should be considered illegal by the insurance commissioner, or that the practice of extending secret rebates or engaging in unreasonably low or discriminatory pricing policy is followed by the defendants, or any of them.
“[T]he factual allegations, as illustrated, fail in each instance to support the charge. Just as the earlier counts state facts insufficient to establish proscribed conduct on the parts of the alleged actors and thus cannot reach their purported conspirators, so the final counts charging antitrust infringements fall for similar reasons.” (Chicago Title Ins. Co. v. Great Western Financial Corp., supra, 69 Cal.2d at pp. 322-323, italics added and brackets without enclosed material deleted.)
In my view, Chicago Title’s statement is dictum, indeed unsound dictum. On this point, I adopt the analysis that Justice Benson set out in his opinion for the Court of Appeal below, which I quote in full.
“Defendants’ challenge to the Cartwright Act claims ultimately rests on a single sentence in Chicago Title Ins. Co. v. Great Western Financial Corp. (1968) 69 Cal.2d 305, 322 [70 Cal.Rptr. 849, 444 P.2d 481]: ‘These statutes and the common law which once constituted “the protection of the public against combinations in restraint of the insurance trade” (Speegle v. Board of Fire Underwriters, 29 Cal.2d 34, 45 [172 P.2d 867]) are now expressly superseded and contravened by the specific provisions of the Insurance *287Code.’ After scrutinizing this statement in context, we have concluded that Chicago Title is neither compelling nor persuasive authority for a rule holding the Cartwright Act superseded by the [Unfair Insurance Practices Act or] UIPA.
“The quoted statement is dictum. Dictum is the ‘statement of a principle not necessary to the decision.’ (People v. Squier (1993) 15 Cal.App.4th 235, 240 [18 Cal.Rptr.2d 536], internal quotation marks omitted.) The holding of Chicago Title is that the complaint failed to adequately plead the elements of a Cartwright Act cause of action, or any other claim. The court undertook a painstaking count-by-count analysis of the complaint, identifying numerous factual and legal deficiencies.[1] If the Supreme Court had believed that the statutes cited by the plaintiffs (including the Cartwright Act) were superseded by the Insurance Code, there would have been no occasion for this discussion. But the court explicitly identified factual insufficiency as the ‘determinative’ issue.[2]
“Dictum, of course, is not controlling authority even when it emanates from the Supreme Court. (Grange Debris Box & Wrecking Co. v. Superior Court (1993) 16 Cal.App.4th 1349, 1358 [20 Cal.Rptr.2d 515]; cf. Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455 [20 Cal.Rptr. 321, 369 P.2d 937]; Brown v. Kelly Broadcasting Co. (1989) 48 Cal.3d 711, 734-735 [257 Cal.Rptr. 708, 771 P.2d 406].) Nonetheless it ‘carries persuasive weight and should be followed where it demonstrates a thorough analysis of the issue or reflects compelling logic.’ (Grange, supra, at p. 1358 . . . .) Chicago Title’s statement concerning Insurance Code exclusivity satisfies neither of these requirements.
“Like most of the opinion in Chicago Title, the quoted statement was authored by a Court of Appeal and ‘adopted’ by the Supreme Court. (69 *288Cal.2d at p. 311.) This in itself does not warrant lessened deference, but the statement also betrays a certain lack of authorial attention. To begin with, it confuses the Cartwright Act with the [Unfair Practices Act]. The subject dictum is immediately preceded by a citation to Business and Professions Code sections 17040-17051. (69 Cal.2d at p. 322.) These statutes are part of the [Unfair Practices Act] and not, as the author of the dictum seemed to believe, the Cartwright Act. (See ibid.; cf. id. at pp. 315, 322 [correctly defining ‘Cartwright Act’]; Food & Agr. Code, §§ 66524, 65521 [same]; Speegle v. Board of Fire Underwriters [(1946)] 29 Cal.2d [34,] 42 [172 P.2d 867] [same]; cf. Bus. & Prof. Code, § 17000 [defining ‘Unfair Practices Act’].) The statement that ‘these statutes’ have been superseded by the Insurance Code is thus burdened with a glaring anomaly.
“Moreover, the court never identified any provision of the Insurance Code which ‘expressly superseded and contravened’ any other statute. In particular, the opinion never mentioned the UIPA. Instead it cited certain provisions of the Insurance Code involving the regulation of title insurance rates. (Chicago Title Ins. Co. v. Great Western Financial Corp., supra, 69 Cal.2d at pp. 322-323, citing Ins. Code, §§ 12404-12412.) None of those provisions could be said to ‘expressly abrogate’ any other statute. Indeed, some five years later the Legislature did enact an express exemption covering some of the activities authorized by the cited portion of the code. (Ins. Code, § 12414.26, added by Stats. 1973, ch. 1130, § 15, p. 2314.) The absence of such a statute in 1968 renders the Chicago Title dictum nearly unintelligible. Certainly the Legislature could not have given that case the meaning defendants do, or it would not have bothered to enact the cited statute.
“The two paragraphs immediately following the subject dictum suggest that three of the complaint’s eleven counts might intrude upon the commissioner’s jurisdiction over title insurance rates. (Chicago Title Ins. Co. v. Great Western Financial Corp., supra, 69 Cal.2d at pp. 322-323.) None of these three counts invoked the Cartwright Act. We note sharp historical and analytical distinctions between the regulation of rate-setting practices and the broad prohibitions in the UIPA. (See Karlin v. Zalta [(1984)] 154 Cal.App.3d [953,] 973-977.)
“The court thus seemed to say no more than that part of the complaint might intrude upon regulatory turf. Even with respect to that part of the complaint, however, the court ultimately returned to its holding, declaring that the factual allegations under scrutiny ‘fail in each instance to support the charge’ and that the counts discussed to that point ‘state facts insufficient to establish proscribed conduct.’ (Chicago Title Ins. Co. v. Great Western *289Financial Corp., supra, 69 Cal.2d at p. 323.) The court only then turned to claims having any bearing here, declaring that ‘. . . the final counts charging antitrust infringements fall for similar reasons.’ (Ibid.) On the next page, the Supreme Court itself inserted a declaration that the Cartwright Act counts failed ‘because plaintiffs’ vague and conclusionary pleadings fail to allege sufficient facts.’ (Id. at p. 324.)
“It thus appears that the subject dictum means at most that the three claims concerning rates were repugnant, or potentially repugnant, to the ‘specific provisions of the Insurance Code’ concerning rate setting. The allusion to the Speegle case, and thus apparently to the Cartwright Act, was not only dictum, but unsound.” (Fn. omitted.)
II
Second, I consider somewhat differently from the majority the question whether the Unfair Insurance Practices Act, codified as article 6.5, commencing with section 790, of chapter 1 of part 2 of division 1 of the Insurance Code, supersedes other law, statutory and decisional, that may be applicable to trade practices in the business of insurance.
The source of the Unfair Insurance Practices Act is, obviously, the Model Unfair Trade Practices Act drafted by the National Association of Insurance Commissioners. The source of the Model Unfair Trade Practices Act is the Federal Trade Commission Act, codified at section 41 et seq. of title 15 of the United States Code. Indeed, the model act “is patterned very closely after” the federal act “and much of the language was lifted bodily” therefrom. (2 Proceedings of the National Association of Insurance Commissioners (1971) p. 345.)
Let us return to the Unfair Insurance Practices Act itself. Insurance Code section 790 declares that “[t]he purpose of’ the act “is to regulate trade practices in the business of insurance in accordance with the intent of Congress as expressed in the Act of Congress of March 9, 1945 (Public Law 15, Seventy-ninth Congress), by defining, or providing for the determination of, all such practices in this State which constitute unfair methods of competition or unfair or deceptive acts or practices and by prohibiting the trade practices so defined or determined.” The congressional act referred to is popularly known as the McCarran-Ferguson Act, codified at section 1011 et seq. of title 15 of the United States Code, which in its section 2(b), section 1012(b) of title 15 of the United States Code, makes “the Sherman Act, . . . *290the Clayton Act, and ... the Federal Trade Commission Act . . . [in]applicable to the business of insurance to the extent that such business is . . . regulated by State law.”
It seems clear that the Unfair Insurance Practices Act was not intended to supersede other law, statutory and decisional, that might be applicable to trade practices in the business of insurance. The majority are right to impliedly approve the reasoning of Justice Benson in his opinion for the Court of Appeal below: The Unfair Insurance Practices Act “was enacted pursuant to the authority of the McCarran-Ferguson Act ... in order to displace federal law which might otherwise have governed insurance trade practices, displacing the law of any state which did not generally proscribe the same industry conduct. In so doing the Legislature did not intend to shield the industry from otherwise applicable state law.” (Maj. opn., ante, at p. 266, fn. omitted.)
Less clear, however, is whether the Unfair Insurance Practices Act has the effect of superseding other law, statutory and decisional, that may be applicable to trade practices in the business of insurance. Evidently, to use the language of Insurance Code section 790, the act “defin[es], or provides] for the determination of, all. . . [trade practices in the business of insurance] in this State which constitute unfair methods of competition or unfair or deceptive acts or practices and . . . prohibits] the trade practices so defined or determined.” (Italics added.) In so doing, it constitutes a comprehensive statutory scheme governing trade practices in the business of insurance. (American Intern. Group, Inc. v. Superior Court (1991) 234 Cal.App.3d 749, 764 [285 Cal.Rptr. 765].) Such a scheme may supersede the otherwise applicable common law. (E.g., I.E. Associates v. Safeco Title Ins. Co. (1985) 39 Cal.3d 281, 285 [216 Cal.Rptr. 438, 702 P.2d 596].) It may supersede the otherwise applicable statutory law as well.
Weighing all in the balance, however, I believe that the Unfair Insurance Practices Act does not have the effect of superseding other law, statutory and decisional, that may be applicable to trade practices in the business of insurance. A supersessive effect should be found if and only if the act may be considered a substitute for such other law. (See Penziner v. West American Finance Co. (1937) 10 Cal.2d 160, 176 [74 P.2d 252].) The condition is not satisfied. The act sets up a regime of direct regulation by public actors through administrative proceedings of various sorts. By contrast, the otherwise applicable law allows “indirect regulation” by both private and public actors through both civil and criminal actions. There is no basis to conclude that the former is a substitute for the latter.
*291In view of the foregoing, I find it unnecessary to rely on Insurance Code section 790.09. Because I find it unnecessary, I would not do so.
Unlike the majority, I cannot discern in Insurance Code section 790.09 what they have impliedly discovered, namely, an “intent to preserve existing rights and remedies for unlawful business practices in the insurance industry.” (Maj. opn., ante, at p. 266, italics added.) The provision declares: “No order to cease and desist issued under” the Unfair Insurance Practices Act “directed to any person or subsequent administrative or judicial proceeding to enforce the same shall in any way relieve or absolve such person from any administrative action against the license or certificate of such person, civil liability or criminal penalty under the laws of this State arising out of the methods, acts or practices found unfair or deceptive.” The provision merely imposes a bar against defensive collateral estoppel—stating only that an administrative cease-and-desist order issued against a person on a finding that he has engaged in unfair or deceptive conduct does not “relieve or absolve” him from any administrative action, civil liability, or criminal penalty arising out of the conduct in question. The proximate source of Insurance Code section 790.09 is section 8(d) of the Model Unfair Trade Practices Act: “No order of the Commissioner under this Act or order of a court to enforce the same shall in any way relieve or absolve any person affected by such order from any liability under any other laws of this state.” (Italics added.) The ultimate source of Insurance Code section 790.09 is section 5 of the Federal Trade Commission Act, section 45(e) of title 15 of the United States Code: “No order of the Commission or judgment of court to enforce the same shall in anywise relieve or absolve any person, partnership, or corporation from any liability under the Antitrust Acts.” (Italics added.) That provision, in fact, merely imposes a bar against defensive collateral estoppel. (See, e.g., State of N.C. v. Chas. Pfizer & Co., Inc. (4th Cir. 1976) 537 F.2d 67, 74; United States v. Chas. Pfizer & Co. (S.D.N.Y. 1962) 205 F.Supp. 94, 96-97.)
I hasten to add that, although I cannot discern in Insurance Code section 790.09 an “intent to preserve existing rights and remedies for unlawful business practices in the insurance industry” (maj. opn., ante, at p. 266, italics added), I nevertheless find therein an assumption that such “existing rights and remedies” are indeed “preserved.” The provision imposes a bar against defensive collateral estoppel that is broad, extending beyond administrative proceedings to civil and criminal actions. Administrative proceedings belong to the regime of direct regulation set up by the Unfair Insurance Practices Act. Civil and criminal actions, in contrast, belong to the regime of “indirect regulation” allowed under otherwise applicable law. The provision *292recognizes the survival of those actions. It thereby presupposes the perdurance of that law.
III
With all that said, I concur in the judgment, and also generally concur in the majority opinion.

1 “For example: ‘We are persuaded . . . that appellants’ vague and conclusionary pleadings fail to allege facts which might reasonably be construed to reveal a wrongful combination.’ (Chicago Title Ins. Co. v. Great Western Financial Corp., supra, 69 Cal.2d at p. 315.)
“ ‘[T]he factual allegations, as illustrated, fail in each instance to support the charge. Just as the earlier counts state facts insufficient to establish proscribed conduct on the parts of the alleged actors and thus cannot reach their purported conspirators, so the final counts charging antitrust infringements fall for similar reasons.’ (69 Cal.2d at p. 323, brackets original.)
“ ‘The allegation of boycott cannot be supported in this instance because everyone has the unrestricted right to select customers and sources of supply.’ (69 Cal.[2]d at p. 324.)”

2“ ‘We must determine . . . whether the superior court has jurisdiction to entertain an action based upon appellants’ theories, or any of them, and, if so, whether appellants have stated a cause of action against any of the various named defendants. The latter finding, which is determinative, is in the negative.’ (Chicago Title Ins. Co. v. Great Western Financial Corp., supra, 69 Cal.2d at p. 313, italics added.)”