USCA1 Opinion
United States Court of Appeals
For the First Circuit
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No. 95-2316
BASIMAH R. ABDULLAH, et al.,
Plaintiffs-Appellants,
v.
COMMISSIONER OF INSURANCE of the
COMMONWEALTH OF MASSACHUSETTS, et al.,
Defendants-Appellees.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Nancy J. Gertner, U.S. District Judge]
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Before
Lynch, Circuit Judge,
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Coffin, Senior Circuit Judge,
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and Cummings,* Circuit Judge.
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Jack E. Robinson, with whom Carpenter & Robinson, LLP was on
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brief, for appellants.
Judith Fabricant, Assistant Attorney General, with whom Scott
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Harshbarger, Attorney General, E. Michael Sloman and Meyer, Connolly,
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Sloman & MacDonald were on brief, for appellees.
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*Of the Seventh Circuit, sitting by designation.
May 20, 1996
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LYNCH, Circuit Judge. Plaintiffs mounted a facial
LYNCH, Circuit Judge.
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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.
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Taxpayers for Vincent, 466 U.S. 789, 796 (1984). Indeed,
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plaintiffs would have to show that no set of circumstances
exist under which the statute could be validly applied. See
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Reno v. Flores, 507 U.S. 292, 301 (1993) (facial attack on
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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
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Richmond v. J. A. Croson Co., 488 U.S. 469, 500-04 (1989)
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(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
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(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
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Antonio Indep. Sch. Dist. v. Rodriguez, 411 U.S. 1, 44
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(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.
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Commissioner of Ins., 102 N.E.2d 496 (Mass. 1951); Brest v.
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Commissioner of Ins., 169 N.E. 657 (Mass. 1930).
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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.
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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.
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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.
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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
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the scheme deprives the company of an opportunity to achieve
a fair return, see Aetna Casualty & Sur. Co. v. Commissioner
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of Ins., 263 N.E.2d 698, 703 (Mass. 1970), Ms. Abdullah may
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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.
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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
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Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 494-95
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(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
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Cir.), cert. denied, 502 U.S. 866 (1991).
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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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