IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 94-30428
LIBERTY MUTUAL INSURANCE CO., ET AL.,
Plaintiffs-Appellees,
versus
THE LOUISIANA DEPARTMENT OF INSURANCE, ET AL.,
Defendants,
THE LOUISIANA DEPARTMENT OF INSURANCE, ET AL.,
Defendants-Appellants.
Appeal from the United States District Court
for the Middle District of Louisiana
(August 11, 1995)
Before HIGGINBOTHAM, SMITH, and STEWART, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
Three insurers filed suit in federal court, alleging that
Louisiana insurance regulators violated the federal and state
constitutions by denying requested rate increases. The ratemakers
sued in their individual capacity moved to dismiss or stay
discovery, alleging legislative and qualified immunity. The
magistrate judge allowed limited discovery on the legislative
immunity issue, and the district court affirmed. We remand with
instructions to dismiss.
I.
Liberty Mutual Insurance Company, Liberty Mutual Fire
Insurance Company, and Liberty Insurance Corporation (collectively
Liberty Mutual) write insurance coverage in Louisiana and other
states. The Louisiana Insurance Rating Commission is part of the
Louisiana Department of Insurance, a state agency. Louisiana law
divides the market for worker's compensation insurance into the
voluntary and involuntary markets. The involuntary market contains
insureds who could not buy insurance in a free market. Insurers
serving the voluntary market must also serve the involuntary
market. The LIRC regulates insurance rates in both markets.
Liberty Mutual sought to avoid losses in its sales in the
involuntary market by seeking rate increases in that market or
increases in the voluntary market sufficient to cover the losses by
cross-subsidization. The LIRC denied these requests. With one
exception, Liberty Mutual did not appeal these orders to the state
courts. The one appeal sought only prospective relief to implement
a requested rate increase in the voluntary market. The state
courts denied relief. It left Liberty Mutual free to apply to the
LIRC for a rate increase in the involuntary market, but Liberty
Mutual did not do so. Rather, Liberty Mutual filed this § 1983
action against the Louisiana Department of Insurance, the LIRC, and
ten current and former members of the LIRC in their individual and
official capacities. The complaint alleged that allowed rates were
confiscatory, and it sought damages and both declaratory and
2
injunctive relief. The last amended complaint charges all
defendants with three constitutional violations.
Liberty Mutual noticed the depositions of the ratemakers, who
moved for a protective order and dismissal, arguing legislative and
qualified immunity. The magistrate judge did not rule on the
motion to dismiss, but ruled that Liberty Mutual could take four
depositions, discovery confined to the defense of legislative
immunity. The district court affirmed, and defendants filed this
interlocutory appeal of the discovery ruling. Liberty Mutual has
moved to dismiss this appeal.
II.
The parties dispute whether Mitchell v. Forsyth, 472 U.S. 511
(1985), supports appeal of the discovery order. Liberty Mutual
argues that because the discovery order is narrowly tailored to
discover facts needed to decide the ratemakers' legislative
immunity claim, there was no appealable denial of qualified
immunity.
The difficulty is that the discovery order became appealable
when it implicitly denied the ratemakers' claim to qualified
immunity. The district court permitted limited discovery on the
legislative immunity issue before deciding the qualified immunity
issue. If the ratemakers are entitled to qualified immunity, the
discovery order impermissibly saddles the ratemakers with
"avoidable, burdensome pretrial matters." See Lion Boulos v.
Wilson, 834 F.2d 504, 507 (5th Cir. 1987). This is so, as we will
3
explain, because legislative immunity here requires discovery and
qualified immunity does not. Given the underlying policy of the
immunity doctrines, the magistrate judge should have first
addressed qualified immunity, with its potential for decision
without discovery. Such discovery orders are immediately
appealable, see id., and we decline to dismiss this appeal.
III.
Liberty Mutual charges the ratemakers with violating its
constitutional rights in three related ways:1 by confiscatory rate
regulation in violation of the Takings Clause and substantive due
process, by denying it procedural due process, and by violating the
Commerce Clause. Before deciding whether a defendant enjoys
qualified immunity, we "first resolve the constitutional question
-- that is, whether [plaintiffs have] stated a claim for violation
of a right secured to [them] under the United States Constitution."
Duckett v. City of Cedar Park, 950 F.2d 272, 278 (5th Cir. 1992)
(citing Siegert v. Gilley, 500 U.S. 226, 232 (1991)). We hold that
the first of Liberty Mutual's contentions is not ripe, and that its
second and third fail to state claims.
A.
Much of the briefing on both sides is filled with arguments
and precedents interpreting the Takings Clause and its
1
On appeal, Liberty Mutual also alleges in passing a
violation of the Equal Protection Clause. Because it is neither
briefed on appeal nor raised in the last amended complaint, we do
not consider it.
4
applicability to the type of rate regulation now before us. We
find it unnecessary to reach these issues, and intimate no views on
them.
We are persuaded that this case is controlled by Williamson
County Regional Planning Comm'n v. Hamilton Bank, 473 U.S. 172
(1985). In Williamson, a county zoning commission changed the
zoning rules applicable to a developer's land. The developer
immediately brought a § 1983 lawsuit in federal court, alleging a
violation of the Takings Clause. The Supreme Court held that the
takings claim was unripe for two reasons: First, the
administrative body had not rendered a final decision applying the
challenged rule to the owner's property and rejecting proposed
variances. Id. at 192-94. Second, the owner had not resorted to
state judicial remedies for just compensation. Id. at 194-97.
As plaintiff, Liberty Mutual bears the burden of proving that,
under Louisiana law as applied to it, any attempt to seek
compensation via state procedures "would have been futile." Samaad
v. City of Dallas, 940 F.2d 925, 934 (5th Cir. 1991). It did not
do so. As far as we can determine, it is an open question whether
Louisiana provides a compensation remedy for the kind of
deprivation alleged here,2 and Liberty Mutual should have first
2
Compare Jackson Court Condominiums, Inc. v. City of New
Orleans, 874 F.2d 1070, 1082 (5th Cir. 1989) (La. Rev. Stat. Ann.
§ 19:102 (West 1979) provides a damages remedy in an inverse
condemnation proceeding) and South Cent. Bell Tel. Co. v. Louisiana
Pub. Serv. Comm'n, 236 So. 2d 813, 815 (La. 1970) (ruling in a
public utility rate case that "a violation of constitutional
rights, such as confiscation of property, would require a court to
exercise the necessary authority to grant relief from the
constitutional abuse" with at least injunctive, if not monetary,
5
posed the question to the state courts before bringing it here.
Instead, Liberty Mutual brought this federal action without even
alleging that a state action for compensation was unavailable to
it. Because Liberty Mutual made no effort to compel the state to
pay it just compensation for any confiscatory rate regulation and
because on appeal it has offered no excuse for that failure, we
reject Liberty Mutual's takings claim as unripe.
This reasoning applies equally to the one order for which
Liberty Mutual sought judicial review in the Louisiana state
courts. That claim rested on the takings clause and sought
prospective relief only in the voluntary market and in the form of
a rate increase, not damages.
B.
The second claim, denial of procedural due process, falls with
the first claim. The procedural due process claim fails because
Liberty Mutual has not demonstrated that Louisiana does not offer
a post-deprivation remedy, as we have explained.
C.
Liberty Mutual's third claim is that the ratemakers have
violated the Commerce Clause. The claim is that Louisiana policy
holders enjoyed sub-market rates subsidized by the premiums paid by
out-of-state policy holders. However, by the McCarran-Ferguson
relief) (emphasis added) with La. Rev. Stat. Ann. § 19:1 (West
1979) (restricting definition of compensable property to "immovable
property, including servitudes and other rights in or to immovable
property") and Louisiana v. Henderson, 138 So. 2d 597, 606-07 (La.
Ct. App. 1962) (ruling that "movables" are not compensable under
Louisiana expropriation law).
6
Act, "Congress removed all Commerce Clause limitations on the
authority of the States to regulate and tax the business of
insurance." Western & S. Life Ins. Co. v. State Bd. of
Equalization, 451 U.S. 648, 653 (1981). "The Court has squarely
rejected the argument that discriminatory state insurance taxes may
be challenged under the Commerce Clause despite the McCarran-
Ferguson Act." Id. at 654.
IV.
Liberty Mutual has failed to state a claim on its second and
third grounds, and its first claim is unripe. We remand with
instructions to dismiss all claims. Any supplemental state claims
should also be dismissed for want of jurisdiction, given the early
stage of this litigation.
VACATED AND REMANDED with instructions.
7