
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                                 ____________________                                         -2-                      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                                         -3-                                         -3-            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                                         -4-                                         -4-            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                                                  ___                                         -5-                                         -5-            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                                         -6-                                         -6-            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            ___     _______                                         -7-                                         -7-            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.                                          -8-                                         -8-                       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                                         -9-                                         -9-            "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                                         -10-                                         -10-            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.                     ________                                         -11-                                         -11-
