Court Opinion

ID: 9553065
Source: CourtListenerOpinion
Date Created: 2023-08-07 19:21:25.43663+00
Date Added: 2024-06-11T15:29:38.067759
License: Public Domain

MOSK, J.
—I concur, of course, in the opinion that I have prepared for the court. Specifically, I concur in its conclusion that neither Proposition 103’s rate rollback requirement provision nor the rate regulations as to rollbacks are facially confiscatory under the takings clause of the Fifth Amendment to the United States Constitution.
I write separately to address the following question:

Can any individual insurer, through either the operation of Proposition 103’s rate rollback requirement provision or the rate regulations as to rollbacks, suffer confiscation under the takings clause of the Fifth Amendment?

Evidently, No.
“It is well established that the Takings Clause of the Fifth Amendment applies to so-called ‘regulatory takings[]’” effected by government price regulation. (Garelick v. Sullivan (2d Cir. 1993) 987 F.2d 913, 916.)
“It is” equally “well established that government price regulation does not constitute a taking of property where the regulated group is not required to *330participate in the regulated industry. See, e.g., Bowles v. Willingham, 321 U.S. 503, 517-18 . . . (1944) (rent controls do not constitute prohibited taking because statute does not require landlords to offer their apartments for rent); Minnesota Ass’n of Health Care Facilities, Inc. [v. Minnesota Department of Public Welfare], 742 F.2d [442,] 446 [(8th Cir.1984)] (state statute limiting fees nursing homes participating in Medicaid Program may charge to non-Medicaid patients is not taking within meaning of the Fifth Amendment because ‘the state does not require that nursing homes admit medical assistance residents and participate in the Medicaid Program’).” (Whitney v. Heckler (11th Cir. 1986) 780 F.2d 963, 972, parallel citations omitted.)
“A property owner must be legally compelled to engage in price-regulated activity for regulations to give rise to a taking. See Bowles v. Willingham, 321 U.S. 503, 517-18 . . . (1944); Whitney v. Heckler, 780 F.2d 963, 972 (11th Cir.), cert, denied, 479 U.S. 813 . . . (1986); Minnesota Ass’n of Health Care Facilities v. Minnesota Dep’t of Pub. Welfare, 742 F.2d 442, 446 (8th Cir.1984), cert, denied, 469 U.S. 1215 . . . (1985). For example, public utilities are under a state statutory duty to serve the public, and must furnish ‘service on demand to all applicants’ at government-determined rates. W. Pond, The Law Governing the Fixing of Public Utility Rates: A Response to Recent Judicial and Academic Misconceptions, 41 Admin.L.Rev. 1, 5 (1989) (hereinafter ‘Pond’); see also Duquesne Light Co. v. Barasch, 488 U.S. 299, 307 . . . (1989). Because utilities generally are compelled to employ their property to provide services to the public, the Fifth Amendment requires regulators to provide utilities with reasonable compensation for their services. See Minnesota Ass’n, 742 F.2d at 446; see also Pond, supra, at 5.
“By contrast, where a service provider voluntarily participates in a price-regulated program or activity, there is no legal compulsion to provide service and thus there can be no taking. See Bowles, 321 U.S. at 517-18 . . . ; Burditt v. United States Dep’t of Health and Human Servs., 934 F.2d 1362, 1376 (5th Cir. 1991); Whitney, 780 F.2d at 972; Minnesota Ass’n, 742 F.2d at 446; Texaco Puerto Rico, Inc. v. Ocasio Rodriguez, 749 F.Supp. 348, 359 (D.P.R.1990); Anco, Inc. v. State Health and Human Servs. Fin. Comm., 300 S.C. 432, 441-42 . . . (1989). Thus, in Bowles v. Willingham, the Supreme Court sustained a rent regulation ordinance because the statute did not require that plaintiff landlords remain in the business of renting apartments. The landlords were free to keep their buildings vacant and/or to dispose of their properties on the market (albeit at prices depressed by the rent regulations) without being subject to government price regulations. Consequently, the statute at issue did not give rise to a regulatory taking. See 321 U.S. at 517-18 . . . ; see also St. Francis Hosp. Ctr. v. Heckler, 714 F.2d 872, 884 (7th Cir. 1983) (per curiam) (diminishment of market value resulting from *331regulation will not give rise to taking where property owner retains ‘full rights and control over . . . net investment’), cert, denied, 465 U.S. 1022 . . . .” (Garelick v. Sullivan, supra, 987 F.2d at p. 916, parallel citations omitted.)
A “service provider” may be said to “voluntarily participate] in a price-regulated program or activity” (Garelick v. Sullivan, supra, 987 F.2d at p. 916) when it has the “right to withdraw” therefrom (Texaco Puerto Rico, Inc. v. Ocasio Rodriguez (D.P.R. 1990) 749 F.Supp. 348, 372, italics and initial capitalization omitted; accord, id. at p. 359). Such a right exists even when, “as a practical and financial matter, withdrawal would be enormously costly .... Permian [Basin Area Rate Cases (1968) 390 U.S. 747 (20 L.Ed.2d 312, 88 S.Ct. 1344)] teaches that [government price regulation] may so stringently limit profits that individual providers, even those with major capital investment for whom abandonment may be costly, may be forced to choose abandonment rather than remain in the regulated industry.” (Texaco Puerto Rico, Inc. v. Ocasio Rodriguez, supra, 749 F.Supp. at pp. 372-373.) Of course, government price regulation is valid even if it is arguably “irresponsible.” (Id. at p. 372.) “[T]he wisdom of . . . policy decisions . . . is a matter for the polling place, not the bench.” (Id. at pp. 372-373, italics in original.)
Turning to the present question, I cannot avoid concluding that no insurer, through the operation of Proposition 103’s rate rollback requirement provision, can suffer confiscation under the takings clause of the Fifth Amendment. As explained, “where a service provider voluntarily participates in a price-regulated program or activity, there is no legal compulsion to provide service and thus there can be no taking.” (Garelick v. Sullivan, supra, 987 F.2d at p. 916.) As also explained, a “service provider” may be said to “voluntarily participate] in a price-regulated program or activity” when it has the “right to withdraw” therefrom (Texaco Puerto Rico, Inc. v. Ocasio Rodriguez, supra, 749 F.Supp. at p. 372, italics and initial capitalization omitted; accord, id. at p. 359). Insurers are obviously “service providers.” Before the passage of Proposition 103, each and every insurer had the “right to withdraw”; after its passage, they continue to have that same right. (See Travelers Indemnity Co. v. Gillespie (1990) 50 Cal.3d 82, 92-98 [266 Cal.Rptr. 117, 785 P.2d 500].) “[I]n the normal case the withdrawal process is . . . [nothing] other than simple and expeditious.” (Id. at p. 92.) In the face of Proposition 103, some insurers chose to exercise their “right to withdraw." (50 Cal.3d at pp. 87-92.) Others chose not to. (See ibid.) The latter thereby voluntarily subjected themselves to Proposition 103 ’s rate rollback requirement provision. As a result, they could not have suffered confiscation as a matter of law. That withdrawal might have been “enormously costly” to them matters not. (Texaco Puerto Rico, Inc. v. Ocasio *332Rodriguez, supra, 749 F.Supp. at p. 372.) Neither does the “wisdom” of Proposition 103. (Ibid,)1
For the reasons stated above, I concur in the conclusion that neither Proposition 103’s rate rollback requirement provision nor the rate regulations as to rollbacks are facially confiscatory under the takings clause of the Fifth Amendment.
Respondents’ petition for a rehearing was denied September 29, 1994, and the opinion was modified to read as printed above.

Uniquely to the contrary is the decision in The Aetna Casualty & Surety Co. v. Commissioner of Insurance (1970) 358 Mass. 272, 281 [263 N.E.2d 698]: “[Ijnsurers are not required to either submit to confiscatory rates or go out of business.” This is “substantive” due process, pure and simple. It has been dead since at least the late 1930’s. Indeed, in Bowles v. Willingham (1944) 321 U.S. 503 [88 L.Ed. 892, 64 S.Ct. 641], the United States Supreme Court—declaring flatly that “[w]e are not dealing here with a situation which involves a “taking” of property” (id. at p. 517 [88 L.Ed. at p. 905])—validated a certain governmental price regulation that effectively required residential landlords “to either submit to [assertedly] confiscatory rates or go out of business.”