Bowler v. Hawke

United States Court of Appeals
For the First Circuit

No. 02-1738

JULIANNE M. BOWLER, in her capacity as Commissioner of Insurance
of the Commonwealth of Massachusetts; THOMAS J. CURRY, in his
capacity as Commissioner of Banks of the Commonwealth of
Massachusetts; COMMONWEALTH OF MASSACHUSETTS,

Petitioners,

v.

JOHN D. HAWKE, in his capacity as Comptroller of the Currency of
the United States; THE OFFICE OF THE COMPTROLLER OF THE CURRENCY,
an Agency of THE UNITED STATES OF AMERICA,

Respondents.

PETITION FOR REVIEW OF DETERMINATION BY COMPTROLLER
OF THE CURRENCY OF THE UNITED STATES

Before

Torruella, Circuit Judge,
John R. Gibson,* Senior Circuit Judge,
and Howard, Circuit Judge

Thomas A. Barnico, Assistant Attorney General, with whom
Thomas F. Reilly, Attorney General, was on brief for the
petitioners.
John B. Williams, Scott A. Sinder, and Christy Hallam
DeSanctis, and Collier, Shannon, Scott, PLLC on brief for amici
curiae the Independent Insurance Agents of America, Inc., and the
National Association of Professional Insurance Agents, Inc.
John W. Bauer, Andrew J. Beal, Eric A. Smith and Rackemann,
Sawyer & Brewster, on brief for amicus curiae the National
Association of Insurance Commissioners.
Douglas B. Jordan, with whom Julie L. Williams, Daniel P.
Stipano, and L. Robert Griffin, were on brief for the
respondents.
 Brenda R. Sharton, Collin O'Connor Udell, and Goodwin
Procter, LLP on brief for amici curiae the Massachusetts Bankers
Association, American Bankers Association, American Bankers
Insurance Association, America's Community Bankers, and
Independent Community Bankers of America.
Kenneth F. Ehrlich, John J. O'Connor, and Peabody & Arnold,
LLP, on brief for amicus curiae Banknorth, N.A.

February 13, 2003

*Of the Eighth Circuit, sitting by designation.
 HOWARD, Circuit Judge. The Commonwealth of Massachusetts

and its Commissioners of Insurance and Banks (collectively,

"Massachusetts") have filed a petition asking that we "vacate, set

aside, or otherwise annul" an opinion of the Office of the

Comptroller of the Currency ("OCC"). Massachusetts objects to the

OCC's determination that the Gramm-Leach-Bliley Act of 1999

("GLBA"), Pub. L. No. 106-102, 113 Stat. 1338 (1999), preempts

three provisions of a Massachusetts consumer protection statute and

their corresponding regulations.

In filing the petition with this Court, Massachusetts

relies on GLBA § 304(a), 15 U.S.C. § 6714(a), which provides:

In the case of a regulatory conflict
between a State insurance regulator and a
Federal regulator regarding insurance issues,
including whether a State law, rule,
regulation, order, or interpretation regarding
any insurance sales or solicitation activity
is properly treated as preempted under Federal
law, the Federal or State regulator may seek
expedited judicial review of such
determination by the United States Court of
Appeals for the circuit in which the State is
located or in the United States Court of
Appeals for the District of Columbia Circuit
by filing a petition for review in such court.

Because the OCC's determination was set forth in an

informal opinion letter which does not appear to carry the force of

law, presage imminent coercive conduct, or seemingly otherwise bind

Massachusetts, we became concerned that the petition seeks an

advisory opinion and thus fails to describe a "regulatory conflict"

amounting to a case or controversy. Accordingly, we solicited

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supplemental briefs addressing our subject matter jurisdiction.

See, e.g., Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de

Guinee, 456 U.S. 694, 701-02 (1982) (recognizing that the federal

judicial power conferred by U.S. Const. art. III, § 2, cl. 1,

extends only to cases and controversies and that a court must on

its own motion raise the issue if doubtful about its power to

adjudicate a matter). Having considered the parties' submissions,

we conclude that the OCC opinion letter does not create a

justiciable "regulatory conflict" within the meaning of the GLBA.

We therefore dismiss the petition.

The facts relevant to our jurisdictional analysis are

undisputed. The GLBA, which became effective in 1999, amended

several federal statutes that govern financial institutions. Among

its many goals, the GLBA sought to facilitate affiliations between

banks and insurance companies and to permit depository institutions

and their affiliates to offer insurance products. See generally,

Pub. L. No. 106-102, 113 Stat. 1338, tit. I (codified in scattered

sections of 12 and 15 U.S.C.). Because the states have

historically regulated the insurance industry, see, e.g., the

McCarran-Ferguson Act of 1945, 15 U.S.C. § 1101 (recognizing this

practice and declaring it to be in the public interest), the GLBA

includes a number of provisions specifying whether and how much it

preempts otherwise applicable state insurance laws.

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 Of particular concern for present purposes is GLBA §

104(d)(2), 15 U.S.C. § 6701(d)(2), which addresses the extent to

which the states may continue to regulate the insurance sales,

solicitation, and cross-marketing activities of depository

institutions and their affiliates. GLBA § 104(d)(2)(A), 15 U.S.C.

§ 6701(d)(2)(A), sets forth a general preemption provision. The

provision reads:

In accordance with the legal standards for
preemption set forth in the decision of the
Supreme Court of the United States in Barnett
Bank of Marion County N.A. v. Nelson, 517 U.S.
25 (1996), no State may, by statute,
regulation, order, interpretation, or other
action, prevent or significantly interfere
with the ability of a depository institution,
or an affiliate thereof, to engage, directly
or indirectly, either by itself or in
conjunction with an affiliate or any other
person, in any insurance sales, solicitation,
or crossmarketing activity.

GLBA § 104(d)(2)(B), 15 U.S.C. § 6701(d)(2)(B), refines the scope

of subparagraph (A)'s general preemption provision by stating that

state laws regulating the sales, solicitation, and cross-marketing

activities of depository institutions and their affiliates are not

preempted under subparagraph (A) so long as they "are substantially

the same as but no more burdensome or restrictive than" thirteen

statutory categories described in subsequent clauses. GLBA §

104(d)(2)(C)(iii), 15 U.S.C. § 6701(d)(2)(C)(iii), provides this

additional interpretive gloss:

Nothing in this paragraph shall be construed -

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 (I) to limit the applicability of the
decision of the Supreme Court in Barnett Bank
of Marion County N.A. v. Nelson, 517 U.S. 25
(1996) with respect to any State statute,
regulation, order, interpretation, or other
action that is not referred to or described in
subparagraph (B); or

(II) to create any inference with respect
to any State statute, regulation, order
interpretation, or other action that is not
described in this paragraph.

On May 30, 2000, the Massachusetts Bankers Association,

a trade association, requested the OCC's opinion whether GLBA §

104(d)(2) preempts three provisions of a Massachusetts statute

entitled "An Act Providing Consumer Protection Relative to the Sale

of Insurance by Banks." That state law regulates the sales,

solicitation, and cross-marketing activities of banks within

Massachusetts.

The first of the three provisions discussed in the letter

prohibits non-licensed bank personnel from referring bank customers

to a licensed insurance agent or broker except upon an inquiry

initiated by the customer. See Mass. Gen. Laws ch. 167F, § 2A

(1998); see also Mass. Regs. Code tit. 211, § 142.05(3) (1998);

Mass. Regs. Code tit. 209, § 49.06(3) (1998). The second prohibits

non-licensed bank personnel from receiving additional compensation

for insurance referrals regardless whether the compensation is

conditioned upon the sale of insurance. See Mass. Gen. Laws ch.

167F, § 2A (1998); see also Mass. Regs. Code tit. 211, § 142.05(3)

(1998); Mass. Regs. Code tit. 209, § 49.06(3) (1998). The third

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prohibits banks from making an insurance solicitation in connection

with an application for an extension of credit until after the

application has been approved and, in the case of an extension of

credit secured by a mortgage on real estate, until after the

customer has accepted the bank's written commitment to extend

credit. See Mass. Gen. Laws ch. 167F, §§ 2A(b)(4)(ii) and (iii);

see also 211 Mass. Regs. Code tit. 211, § 142.06; Mass. Regs. Code

tit. 209, § 49.06(5).

The OCC published notice of the preemption request, see

65 Fed. Reg. 43827 (July 14, 2000), and solicited comments on

whether GLBA § 104(d)(2) preempts the state laws in question. The

OCC received a total of 110 comments in response to the notice,

including comments submitted by Massachusetts. Some comments

argued in favor of preemption, some argued against, and some

questioned the OCC's authority to weigh in on the subject at all

because Congress did not delegate to the OCC authority to determine

whether specific state laws are preempted by GLBA § 104(d)(2).

On March 18, 2002, the OCC issued a letter opining that

GLBA § 104(d)(2) does indeed preempt the Massachusetts laws at

issue. The opinion almost immediately led a number of banking

interests to file waiver requests with state regulators seeking

permission to engage in activities proscribed by these laws.

Massachusetts has held these requests in abeyance, pending

resolution of its petition.

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 In the letter, the OCC responded to comments questioning

its right to take a position on the preemptive effect of GLBA §

104(d)(2) by pointing to case law and statutes recognizing, with

varying degrees of explicitness, its authority "to interpret, in

the first instance, federal laws affecting national bank powers."

Importantly, the OCC implicitly conceded that Congress did not

authorize it to effect specific GLBA § 104(d)(2) preemptions

through administrative conduct - e.g., promulgating regulations,

conducting adjudications, issuing licenses - that carries the force

of law. No party or amicus curiae has taken a contrary position,

and our independent review of the GLBA persuades us that the OCC

reasonably has concluded that, in the present context, it may do

nothing more than provide "informal agency guidance of a sort

commonly and traditionally offered by the OCC in its role as

supervisor of national banks." OCC Brief, at 19 (characterizing

the nature of the March 18, 2002 opinion letter).1

Because the opinion letter constitutes no more than

informal agency guidance to banks and other interested parties, it

does not in these circumstances create a "regulatory conflict"

giving rise to a case or controversy between OCC and Massachusetts.

1
Because we conclude that Massachusetts's petition does not
describe a "regulatory conflict" within the meaning of GLBA §
304(a), we do not resolve whether the OCC's issuance of the opinion
letter was ultra vires, as the Commonwealth and certain amici
argue. Rather, for purposes of our analysis, we shall assume
arguendo that the opinion letter was authorized.

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It is true that informal agency action not carrying the force or

effect of law can give rise to a case or controversy where it meets

the test for ripeness set forth in Abbott Laboratories, Inc. v.

Gardner, 387 U.S. 136, 148-49 (1967) (matter is ripe if it is fit

for judicial decision and if withholding court consideration would

cause the parties hardship). For example, the opinion letter might

well affect banking and insurance interests differently and

sufficiently to give rise to a case or controversy between such

interests and the OCC. But Abbott requires a showing that the

informal action somehow imposes a legal or practical constraint on

the party seeking to invoke federal court jurisdiction. See

generally N.Y. Stock Exch. v. Bloom, 562 F.2d 736, 741-43 (D.C.

Cir. 1977) (declining to find Abbott's hardship requirement met

where informal agency action had no immediate effect on the parties

invoking the court's jurisdiction); Pierce, Administrative Law

Treatise, § 15.15 (4th ed. 2002) (discussing how courts assessing

the justiciability of informal agency action under Abbott have

focused on whether the action has some "binding effect" on the

plaintiff or petitioner); cf. Nat'l Automatic Laundry and Cleaning

Council v. Schultz, 443 F.2d 689, 696-97 (D.C. Cir. 1971) (holding

that Labor Department opinion letter concluding that plaintiff's

members were violating the Fair Labor Standards Act gave rise to a

justiciable controversy because plaintiff's members faced a

"Hobson's choice" of either conforming their business practices to

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the agency's view or risking strong statutory sanctions in any

enforcement action under the Act). Here, there has been no such

showing with respect to Massachusetts.

In their supplemental briefs, the parties assert that the

opinion letter impairs Massachusetts's ability to enforce its laws.

But as we already have observed, the letter neither has legal

effect nor presages future coercion by the OCC, which claims no

entitlement to restrain the states from enforcing preempted law or

to authorize third parties to engage in conduct forbidden by

preempted law. We thus fail to see how the letter circumscribes

Massachusetts's ability to enforce its laws in any meaningful way.

If banks within Massachusetts were to act in defiance of state

law, the opinion letter in no way affects Massachusetts's

entitlement or ability to take responsive action.

The parties also suggest that the OCC's issuance of the

opinion letter gives rise to a case or controversy because it so

strengthened the hand of banking interests seeking to avoid

Massachusetts law that it led them to file waiver requests. But it

is difficult to see how the filing of a waiver request intrudes on

state prerogatives sufficiently to cause the State constitutional

injury. See Vt. Agency of Natural Resources v. United States, 529

U.S. 765, 771 (2000) (describing the "injury in fact" requirement

of Article III standing). We have found no authority for the

proposition that a state may bring an action in an Article III

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court against the author of, say, an authoritative but non-binding

legal opinion expressed in a Securities and Exchange Commission no-

action letter or an Internal Revenue Service private-letter ruling

(or, for that matter, in a law review article or treatise) simply

because the expression of the opinion prompts a third party to

challenge the lawfulness of some state enactment under federal law.

So too here. Because we are unable to discern how the opinion

letter constrains Massachusetts in such a way as to give rise to a

case or controversy between Massachusetts and the OCC, we do not

regard this matter to be a "regulatory conflict" within the meaning

of GLBA § 304(a). We so read the statute because a contrary

construction would raise grave concerns about its constitutionality

as applied here, see, e.g., Harris v. United States, 122 S. Ct.

2406, 2413 (2002), and because there are situations governed by

GLBA § 304(a) that raise no Article III concerns, see Petitioner's

Initial Brief at 24-25 (listing clearly justiciable conflicts

covered by GLBA § 304(a)). Our holding therefore does not render

the statute insignificant or superfluous. See, e.g., Duncan v.

Walker, 533 U.S. 167, 174 (2001) (counseling against statutory

constructions that have su c h effects).

We close on a practical note. The questions

Massachusetts's petition seeks to have us adjudicate are unlikely

to be purely legal. It is apparent that, in deciding whether state

laws are preempted by GLBA § 104(d)(2), courts are going to have to

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make judgment calls about the extent to which the laws hinder the

ability of depository institutions to engage in sales,

solicitation, and cross-marketing activities, as a factual matter.

Such judgment calls will often be better made on an evidentiary

record created in litigation in the trial court. See Toilet Goods

Assn., Inc. v. Gardner, 387 U.S. 158, 163-64 (1967).

Petition dismissed.

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