Court Opinion

ID: 2964133
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:21:03.678435+00
Date Added: 2024-06-11T15:00:40.411303
License: Public Domain

USCA1 Opinion

	

                            United States Court of Appeals
                                For the First Circuit
                                 ____________________

        No. 95-2316

                             BASIMAH R. ABDULLAH, et al.,

                                Plaintiffs-Appellants,

                                          v.

                           COMMISSIONER OF INSURANCE of the
                        COMMONWEALTH OF MASSACHUSETTS, et al.,

                                Defendants-Appellees.

                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                     [Hon. Nancy J. Gertner, U.S. District Judge]
                                             ___________________

                                 ____________________

                                        Before

                                 Lynch, Circuit Judge,
                                        _____________

                            Coffin, Senior Circuit Judge,
                                    ____________________

                            and Cummings,* Circuit Judge.
                                           ______________

                                 ____________________

            Jack  E. Robinson,  with whom  Carpenter  &  Robinson, LLP  was on
            _________________              ___________________________
        brief, for appellants.
            Judith  Fabricant, Assistant  Attorney  General, with  whom  Scott
            _________________                                            _____
        Harshbarger, Attorney General, E.  Michael Sloman and Meyer, Connolly,
        ___________                    __________________     ________________
        Sloman & MacDonald were on brief, for appellees. 
        __________________

                                 ____________________

                            
        ____________________

        *Of the Seventh Circuit, sitting by designation.

                                     May 20, 1996
                                 ____________________

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                      LYNCH, Circuit Judge.  Plaintiffs  mounted a facial
                      LYNCH, Circuit Judge.
                             _____________

            challenge  to  the  constitutionality  of  the  Massachusetts

            statute requiring the Massachusetts Commissioner of Insurance

            to  establish  at  least   fifteen  territories  for  use  in

            classifying risks  for  setting automobile  insurance  rates.

            Mass.  Gen.  L.  ch.  175E,     4(d).   It  is  claimed  this

            requirement  is irrational on its  face and thus violates the

            Equal   Protection  Clause   of  the   Fourteenth  Amendment.

            Plaintiffs also assert that  the statute on its face  results

            in an unconstitutional taking  in violation of the  Fifth and

            Fourteenth Amendments.

                      Plaintiff  Basimah Abdullah  lives  in the  Roxbury

            section of Boston  and is aggrieved  that policy holders  who

            live  in Roxbury, a mostly  poor community of  color, may pay

            automobile insurance  rates more than  two and  a half  times

            more  than those paid by  policy holders with similar driving

            records  who live  in  Wellesley, Massachusetts,  an affluent

            suburb of Boston.  She is joined as plaintiff by the National

            Association  of African  Americans, Inc.    After considering

            cross-motions for  summary judgment on stipulated  facts, the

            district court granted the  defendants' motion and denied the

            plaintiffs' motion.  We affirm.

                      It  is important  to be  clear about  the challenge

            plaintiffs  have chosen to mount.  This is a facial challenge

            to  the   statute.    Plaintiffs  have   stipulated  that  no

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            fundamental  right is  involved in  the litigation  and their

            challenge does  not  involve claims  of race  discrimination.

            They do  not challenge the  group discount provisions  of the

            insurance  regulatory  scheme, although  they  do attempt  to

            bring those issues to the attention of the court.  Plaintiffs

            have  appropriately  stipulated   that  insurance  risk  does

            correlate  with the territory in which the insured lives.  In

            light  of  these  stipulations  and the  very  narrow  review

            available   in  a   constitutional   challenge  to   economic

            regulation  by a state, grant of summary judgment in favor of

            the defendants was plainly correct.

                      The challenged statute requires:

                      For  motor  vehicle insurance  rates, the
                      commissioner     shall    establish     a
                      classification   of  risks   which  shall
                      include  a designation  of not  less than
                      fifteen territories.

            Mass. Gen. L. ch. 175E,   4(d).

                      In order  to prevail, the plaintiffs  would have to

            show  that   the  establishment  of  a   minimum  of  fifteen

            territories for use in classifying automobile insurance risks

            could  not be rational.   See Members of  the City Council v.
                                      ___ ____________________________

            Taxpayers for  Vincent, 466  U.S. 789,  796 (1984).   Indeed,
            ______________________

            plaintiffs would have  to show that  no set of  circumstances

            exist  under which the statute could be validly applied.  See
                                                                      ___

            Reno  v. Flores, 507 U.S.  292, 301 (1993)  (facial attack on
            ____     ______

            due process  grounds).   Plaintiffs make two  arguments, both

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            demonstrating a  misunderstanding of the role  of the federal

            courts in  reviewing state  economic regulation.   They argue

            that because  there is  no legislative history  setting forth

            the statute's  purpose  and  because  the  statute  allegedly

            results in unfairness it is unconstitutional.

                       Plaintiffs   seek  to   reverse  the   burdens  in

            constitutional  economic regulation litigation by saying that

            the  state, in a  situation where  no fundamental  rights are

            involved,  must provide  legislative  history explaining  the

            purpose  of  its  choice of  classifications.    Cf. City  of
                                                             ___ ________

            Richmond v. J.  A. Croson  Co., 488 U.S.  469, 500-04  (1989)
            _________   __________________

            (when  legislature  employs  suspect   classification,  court

            reviews  legislative findings  to support  the discrimination

            visited).   In  the  absence of  legislative history  plainly

            explaining the purpose  of an economic regulatory  provision,

            the  plaintiffs posit,  the statute  must be  presumed  to be

            irrational.    But  there  is  no  such  requirement  and  no

            presumption.    The Constitution  does  not  impose on  state

            legislatures   the  requirement  of  creating  a  legislative

            history  record to  justify economic  regulatory legislation.

            See  FCC v.  Beach Communications,  Inc., 508  U.S. 307,  315
            ___  ___     ___________________________

            (1993)  ("we never  require a  legislature to  articulate its

            reasons for enacting a statute").

                      Plaintiffs who  claim a statute  is irrational bear

            the burden of showing that it is so.  Id. ("[T]hose attacking
                                                  ___

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            the  rationality  . .  . have  the  burden to  negative every

            conceivable   basis  which  might   support  it.")  (internal

            quotation  omitted).   That showing  of irrationality  is not

            made  by  simple  arguments  of perceived  unfairness.    The

            statutory  scheme  must  stand  so long  as  it  bears  "some

            rational relationship  to a  legitimate state purpose."   San
                                                                      ___

            Antonio Indep.  Sch.  Dist.  v. Rodriguez,  411  U.S.  1,  44
            ___________________________     _________

            (1973).    We cannot  say that  on  its face  the legislative

            choice   of  requiring  at   least  fifteen   territories  is

            irrational.    It  is  evident  that  insureds  in  different

            territories pose different risks and it is rational to permit

            the  insurance companies  to  set premiums  to reflect  those

            different risks.   The choice by  the legislature to  mandate

            the establishment of at least fifteen territories may reflect

            a  judgment that  that number  will provide  some approximate

            reflection of the proper number of categories into which this

            type of risk should be divided.  That the state has chosen to

            classify  purchasers   into  groupings  based   on  objective

            characteristics  and to use such groupings as a base on which

            to set rates is surely rational and promotes a more equitable

            insurance system.

                      In fact,  the Commissioner has chosen  to create 27

            territories, a decision which is  also rational on the theory

            that somewhat more territories  more closely reflect the risk

            associated  with the  residents  of those  territories.   The

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            parties have  appropriately stipulated that the  risk of loss

            "varies  according  to  the   town  in  which  the  [insured]

            vehicle[]  [is]   principally  garaged."     They  have  also

            stipulated  that each  state  uses some  form of  territorial

            subdivision system to  set rates and such  use of territorial

            assignment has  existed in this  country since  1917.   Prior

            rate-setting schemes in Massachusetts, also implementing some

            form   of   territorial   system,   have  twice   been   held

            constitutional  by   the  state  courts.     See  Doherty  v.
                                                         ___  _______

            Commissioner of Ins., 102  N.E.2d 496 (Mass. 1951);  Brest v.
            ____________________                                 _____

            Commissioner of Ins., 169 N.E. 657 (Mass. 1930).
            ____________________

                       The  scheme itself  has  been tested  in a  manner

            consonant  with  democracy.    Prior  unhappiness  about  the

            territorial rating system once  led to an initiative petition

            which  would have  abolished  the use  of  territories.   The

            voters rejected the  petition by  a margin of  three to  one.

            Commonwealth of Massachusetts Election Statistics,  Pub. Doc.
            _________________________________________________

            No.  43,  at 343-45  (1950).    The Commissioner  establishes

            territories  in  a  public  proceeding which  is  subject  to

            judicial  review,  and we  do  not  understand plaintiffs  to

            complain about these procedures.   Indeed, the federal courts

            would  abstain  from considering  the constitutionality  of a

            particular   decision  of   the  Commissioner   defining  the

            territories or  setting particular rates.   See Allstate Ins.
                                                        ___ _____________

            Co.  v. Sabbagh, 603 F.2d 228, 233 (1st Cir. 1979) (affirming
            ___     _______

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            decision of district court to abstain from such a suit due to

            intensity of  local  interest and  because Massachusetts  had

            "indicated  the  importance  it  place[d]  on  coherency   by

            concentrating review  of  all  regulatory  decisions  in  one

            court").

                      Even  consideration of  the  facts surrounding  Ms.

            Abdullah's   individual  situation  does  not  establish  the

            irrationality  of the  statute.  The territory  in which  Ms.

            Abdullah lives,  the Roxbury section of  Boston, does reflect

            greater insurance risks than the territory  she has chosen as

            a comparator, the territory  including the town of Wellesley,

            Massachusetts.  The  parties agree that in  1993, the Roxbury

            territory, Territory  22, had 3.5 times the  state average of

            bodily   injury  claims,   while  the   Wellesley  territory,

            Territory 2,  had half the claims.   Further, if one looks at

            bodily injury  per 100  accidents, the statewide  average was

            30.6.  The  territory in  which Ms. Abdullah  lives had  56.6

            bodily  injuries  per  100  accidents,  while  the  Wellesley

            territory had 17.4.   As a final example,  although insurance

            coverage for theft is  not compulsory (see Mass. Gen.  L. ch.
                                                   ___

            90,     34A,  34B,  34O; ch.  175,    113O),  in  the Roxbury

            territory, the theft  rate is five  times the state  average,

            while the  rate in  the Wellesley  territory is  one-half the

            state average.   These statistics support  the rationality of

            the statutory scheme. 

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                       Plaintiffs'  efforts  to  bootstrap   their  Equal

            Protection  claim  into  some  form of  takings  analysis  is

            neither  supported by the case law nor the facts.  Plaintiffs

            argue  that  because  some  ratings schemes  have  been  held

            unconstitutionally  confiscatory to the  insurance company if
                                             __ ___  _________ _______

            the scheme deprives the company of an opportunity  to achieve

            a  fair return, see Aetna Casualty & Sur. Co. v. Commissioner
                            ___ _________________________    ____________

            of Ins., 263 N.E.2d  698, 703 (Mass. 1970), Ms.  Abdullah may
            _______

            assert a claim  that the  premiums she pays  as an  insurance

            purchaser   are  so   high   as  to   be   unconstitutionally

            confiscatory.  Without accepting  the premise of the argument

            or its leap from the property rights of a regulated insurance

            company to  the premiums  paid  by an  insured, the  argument

            suffers from fatal flaws.   The facts asserted in  support of

            the argument are not properly before us.  Ms. Abdullah states

            in her brief before this court  that she pays more than  one-

            third  of the value of her car to insure it each year.  This,

            she says, effectively denies  her the use of her  automobile,

            as the Massachusetts legislature requires that automobiles be

            insured in order to be  operated on a public way.   See Mass.
                                                                ___

            Gen. L. ch. 90,   34B.  And without a car, Ms. Abdullah says,

            her constitutional  right to  travel is infringed.   However,

            the parties agreed to litigate this case on stipulated facts.

            The  only  facts  with  respect to  Ms.  Abdullah's  personal

            circumstances  that  are  properly  before us  are  that  she

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            "resides .  . . in  the Roxbury section of  Boston," that she

            "owns  a private  passenger  automobile which  is garaged  in

            Roxbury  and is insured . . . under the compulsory automobile

            insurance  laws of  the Commonwealth,"  and that  the average

            rate  for the standard package of insurance was higher in the

            Roxbury territory than in the Wellesley territory.

                      Even were there  facts in the record to support Ms.

            Abdullah's   claim,   the   argument   collapses   because  a

            foundational piece is missing.  The statutory provision under

            attack  does not per se  result in any  particular rate being

            set  or premium being charged.  It simply requires that there

            be at  least fifteen territories  used in assessment  of risk

            factors,  and  plaintiffs do  not  attempt to  show  that any

            possible  designation of  fifteen or  more territories  would

            result in  a confiscatory rate  for Ms. Abdullah.   Moreover,

            other  risk  factors such  as  driver  class (which  includes

            number of  years of  driving experience) and  group discounts

            also  go into the assessment  of an individual's  rates.  The

            facts before the court  do not establish a  causal connection

            between the  statute facially attacked and  the rates claimed

            to  be  confiscatory.     In  essence,  plaintiff's  argument

            inappropriately asks us to turn this facial challenge to  the

            statute  into   an  as  applied  challenge.     Cf.  Keystone
                                                            ___  ________

            Bituminous Coal  Ass'n v. DeBenedictis, 480  U.S. 470, 494-95
            ______________________    ____________

            (1987) (in facial challenge,  "mere enactment" of the statute

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            must deprive plaintiff of economically viable use of her real

            property); Gilbert v. City of Cambridge, 932 F.2d 51, 56 (1st
                       _______    _________________

            Cir.), cert. denied, 502 U.S. 866 (1991).
                   ____________

                      Plaintiffs' claim  at bottom is that  the system is

            unfair.  It may or  may not be.  There is  evidence submitted

            by the defendants that in fact the Commissioner  has required

            certain   non-urban  areas   essentially  to   subsidize  the

            insurance of persons, such as Ms. Abdullah,  living in highly

            urban areas.  Importantly,  however, the question of fairness

            is not properly  addressed to  this court.   Those  arguments

            should be made to  the state insurance regulatory authorities

            or  to  the  Massachusetts  legislature or  directly  to  the

            citizenry  through  the  petition  process.   Our  review  is

            restricted to  whether there is  any rational basis  for this

            scheme.   There  is,  and the  constitutional challenge  must

            fail. 

                      For  these reasons,  the  decision of  the district

            court is affirmed.
                     ________

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