The opinion of the court was delivered by: PINE
This is an action brought by the National Capital Insurance Company of the District of Columbia on its own behalf and on behalf of others similarly situated. The American Fire Insurance Company of the District, which also sued as a plaintiff, is no longer in the case, having dismissed its action. The plaintiff is a corporation organized under the laws of the District, and conducts a fire insurance business herein. The defendants are the Superintendent of Insurance of the District, the Insurance Company of North America, the Philadelphia Fire and Marine Insurance Company, and the Insurance Rating Bureau of the District. Each of defendant companies conducts a fire insurance business in the District.
The action seeks to contest the validity of the approval by the Superintendent of an application for deviation in rates, filed by defendant companies. This approval permits these companies to deviate 10% downward from the fire and extended coverage rates and the minimums thereof, filed by the Rating Bureau on behalf of all its members and approved by the Superintendent. Plaintiff claims that no notice of the filing of the application was given by the Superintendent to it, nor was it given an opportunity to be heard. The effect of this deviation, according to plaintiff, is a price cut of 10% below the prices which the plaintiff and other licensees may lawfully charge for the same insurance, resulting in a competitive advantage which will be most persuasive in securing insurance business for defendant companies, which otherwise would be written by plaintiff and other licensees. This act of the Superintendent in preferring two competitors over others, without notice or opportunity to be heard, is alleged by plaintiff to be in violation of the due process clause of the Fifth Amendment to the Constitution. Plaintiff also charges that the Superintendent, in approving the application of defendant companies, acted upon insufficient evidence, and that his action is arbitrary, discriminatory, and capricious. It also charges that the approval can only be valid if proper standards have been established, but that in this case there were no standards and none was considered. Finally, it claims that the act of the Superintendent is confiscatory, and that, if permitted to stand, defendant companies would have an undue and unlawful competitive advantage over plaintiff and other licensees, in that plaintiff and other licensees would either be unable to meet such competition, thereby resulting in a virtual monopoly of the business by defendant companies, or would be compelled to seek similar deviations which, if granted, would compel them to write insurance at inadequate, confiscatory, and discriminatory rates.
All the defendants, other than the Rating Bureau, have moved to dismiss the complaint or, in the alternative, for summary judgment, contending that plaintiff has no standing to sue, has alleged no direct injury, and has raised no valid constitutional issues.
The action of the Superintendent in this case was taken under the Act of Congress to provide for 'regulation of certain insurance rates in the District of Columbia,' approved June 1, 1944, and contained in Chapter 14 of Title 35, D.C.Code 1951, Sections 35-1401 to 35-1409, inclusive, hereinafter briefly discussed.
Section 2 of this Act, Sec. 35-1402, D.C.Code, provides that its provisions shall apply to insurance in the District of Columbia against loss or damage to property as a consequence of fire, etc.
Section 3 of the Act, Sec. 35-1403, D.C.Code, provides that the Superintendent is empowered to investigate the necessity for an adjustment of rates on any and all risks or classes of risks within its scope, and to order an adjustment of such rates whenever he determines, after investigation of the experience showing premiums and losses for a period of not less than five years next preceding such investigation, that the rates are excessive, inadequate, or unreasonable. In determining the necessity for an adjustment of rates, the Superintendent is required by give consideration to all factors reasonably attributable to the risks, etc., both within and without the District, and to a reasonable profit; and he is further empowered to order removed any unfair discrimination existing between individual risks or classes of risks.
This section further provides that any person aggrieved by any order, ruling, proceeding, or action of the Superintendent may appeal to the Commissioners of the District, or may contest the validity of such order, ruling, proceeding, or action, in any court of competent jurisdiction, by appeal or through any other appropriate proceedings, as provided under Sections 35-1348 and 35-1349 of the Code. The last-mentioned section provides that any person affected by an order, ruling, proceeding, or action of the Superintendent may contest the validity of the same in any court of competent jurisdiction, by appeal or through any other appropriate proceedings.
The Court of Appeals for this circuit has held, in Jordan v. American Eagle Fire Insurance Co., 83 U.S.App.D.C. 192, 169 F.2d 281, that the authorization to the Superintendent to adjust rates whenever he determines, after investigation, that they are excessive, inadequate, or unreasonable, does not require that a quasi-judicial hearing be conducted by him, but that the section permitting any person aggrieved by the Superintendent's order to contest the validity thereof in any court of competent jurisdiction, gives a complete right to a full hearing de novo, upon which the court will determine the validity of the order in all respects in which it is contested.
Section 4 of this Act, Sec. 35-1404, D.C.Code, provides that the insurance companies authorized to effect insurance in the District shall organize a rating bureau for the purpose of administering rates for such insurance, and that all such companies authorized to transact such business shall be members of such bureau.
Section 5 of the Act, Sec. 35-1405, D.C.Code, provides that no company shall issue or deliver any policy of insurance which does not conform to the requirements approved by the Superintendent, provided, however, that a company may deviate from such requirements if the company has filed with the rating bureau and with the Superintendent the deviation to be applied, and provided such deviation is approved by the Superintendent. It further provides that the deviation shall remain in force for a period of one year unless such approval is withdrawn by the Superintendent for cause, after notice to the insurer, or withdrawn by the insurer with the approval of the Superintendent.
Section 6 of the Act, Sec. 35-1406, D.C.Code, provides that the Bureau shall keep a record of all rates, etc.; and Section 7 of the Act, Sec. 35-1407, D.C.Code, provides that the Superintendent is authorized to examine all records of the Rating Bureau, companies, and agents, and to require every company to furnish statistical reports of premiums and losses.
Section 8 of the Act, Sec. 35-1408, D.C.Code, provides that no rate, premium, schedule, rating method, rule, bylaw, agreement, or regulation shall become effective or be charged, applied, or enforced in the District by the Rating Bureau or any company, agent, or broker governed by the provisions of this Act until it has been first filed with and approved by the Superintendent; and that no company, agent, or broker shall issue any form of policy, clause, warranty, rider, or endorsement until such form shall have been filed with and approved by the Superintendent.
The threshold question -- indeed, the point principally relied on by defendants in their motion -- is whether the plaintiff has standing to sue. Plaintiff contends that it has a statutory right to sue under Section 35-1403, supra, as a party 'aggrieved.' Defendants contend that this statutory right does not apply to the act of the Superintendent in approving an application for deviation under Section 35-1405, supra, and more-ever, that plaintiff is not a party 'aggrieved.'
To be sure, as defendants point out, the statutory right to appeal to the courts is not contained in the section relating to approval of deviations, and is contained in the section relating to overall 'adjustment' of rates. However, a 'deviation' in rates necessarily is an adjustment of rates on an individual basis, and the provision for appeal would appear to be as applicable in the one case as in the other. In addition, the paragraph providing for an appeal gives the right to any person aggrieved by any 'order, ruling, proceeding, or action of the superintendent.' This all-inclusive language literally covers the 'action' of the Superintendent in approving an application for deviation, and would have been surplusage and inappropriate if the intention were to confine appeals merely to an 'order' adjusting rates, as contended by defendants. Moreover, it is significant to note that when the bill, which later became the Act of Congress herein involved, was under consideration by a subcommittee of the Committee of the District of Columbia of the Senate, objection was made to the section having to do with deviation by a proposal for a new section, and in connection with this ...