Council of Insurance v. Molasky-Arman

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

COUNCIL OF INSURANCE AGENTS & 

BROKERS and REBECCA RESTREPO,

Plaintiffs-Appellees, No. 04-17271

v.

 D.C. No.

CV-02-00813-JCM

ALICE A. MOLASKY-ARMAN, in her

official capacity as Nevada OPINION

Commissioner of Insurance,

Defendant-Appellant.



Appeal from the United States District Court

for the District of Nevada

James C. Mahan, District Judge, Presiding

Argued and Submitted

October 19, 2006—San Francisco, California

Filed April 10, 2008

Before: Melvin Brunetti, Diarmuid F. O’Scannlain, and

Stephen S. Trott, Circuit Judges.

Opinion by Judge Brunetti

3703

3706 COUNCIL OF INS. AGENTS v. MOLASKY-ARMAN

COUNSEL

George H. Taylor and Robert Auer, Deputy Attorneys Gen-

eral of the State of Nevada, Carson City, Nevada, for the

defendant-appellant.

Scott A. Sinder, Alysa N. Zeltzer, and Daniel S. Blynn, Col-

lier Shannon Scott, PLLC, Washington, District of Columbia,

for the plaintiffs-appellees.

Daniel F. Polsenberg, Lawrence Epstein, and Heidi Parry

Stern, Beckley Singleton, Chtd., Las Vegas, Nevada, for the

plaintiffs-appellees.

OPINION

BRUNETTI, Circuit Judge:

On cross-motions for summary judgment, the district court

declared Nevada’s “countersignature” statute, Nev. Rev. Stat.

COUNCIL OF INS. AGENTS v. MOLASKY-ARMAN 3707

§ 680A.300, unconstitutional, holding that it violates the Priv-

ileges and Immunities Clause of Article IV and the Equal Pro-

tection Clause of the Fourteenth Amendment. 358 F. Supp. 2d

981, 982-83. The district court stayed its injunction pending

appeal, and Defendant-Appellant Alice Molasky-Arman,

Nevada Commissioner of Insurance (the Commissioner), now

appeals. We have jurisdiction under 28 U.S.C. § 1291, and we

affirm and remand.

I. Facts and proceedings below

Plaintiff-Appellee Council of Insurance Agents & Brokers

(the Council) is a national trade association that represents

more than 250 of the nation’s largest commercial property

and casualty insurance agencies and brokerage firms. The

Council’s members, which include corporations and partner-

ships rather than individuals, place over eighty billion dollars

in insurance premiums annually, which constitutes more than

seventy-five percent of the commercial marketplace. The

majority of the Council’s members sell insurance in more

than one state, and in many cases in all fifty states, to large,

sophisticated, commercial end-users that typically have multi-

state exposures. Included in the Council’s members are insur-

ance agencies and brokerage firms based outside of Nevada

that sell insurance in Nevada.

In this case, the Council challenges Nevada’s “countersig-

nature” statute, Nev. Rev. Stat. § 680A.300, which provides

that no authorized insurer may make, write, place, or renew

any insurance policy on persons, property, or risks in Nevada,

“except through its duly appointed and licensed agents resi-

dent in [Nevada], any one of whom shall countersign the poli-

cy.”1 Despite this limitation on insurers, section 680A.300

1

Section 680A.300 states in pertinent part:

1. Except as provided in NRS 680A.310, no authorized insurer

may make, write, place, renew or cause to be made, placed or

3708 COUNCIL OF INS. AGENTS v. MOLASKY-ARMAN

guarantees the “free and unlimited right to negotiate insurance

contracts by licensed nonresident agents or brokers outside

[Nevada], if the policies, endorsements or evidence of those

contracts covering properties or insurance interests in

[Nevada] are countersigned by a resident agent . . . .” Finally,

section 680A.300 requires that the countersigning agent be

paid a commission of at least five percent of any resulting

premium. In its complaint, the Council alleged that section

680A.300 violates the Constitution’s Commerce Clause, Priv-

ileges and Immunities Clause of Article IV, and the Four-

teenth Amendment’s Equal Protection Clause.

renewed, any policy or duplicate policy of insurance of any kind

upon persons, property or risks resident, located or to be per-

formed in this state, except through its duly appointed and

licensed agents resident in this state, any one of whom shall

countersign the policy.

....

4. Nothing contained in this section prevents exercise of the

free and unlimited right to negotiate contracts by licensed nonres-

ident agents or brokers outside this state, if the policies, endorse-

ments or evidence of those contracts covering properties or

insurable interests in this state are countersigned by a resident

agent of this state. Every such policy or contract must be counter-

signed by a resident agent.

5. On business produced by a licensed nonresident agent or bro-

ker, which is countersigned by a resident commissioned agent of

this state, there must be a division of the usual commission

between the licensed nonresident producing agent or broker and

the resident countersigning commissioned agent which must pro-

duce for the latter a commission of at least 5 percent of the pre-

mium. No commission or fee is required as to policies with an

annual premium of $250 or less. The insurer issuing any policy

or bond is responsible for payment to the countersigning agent of

the fee or commission for the countersignature. Where the

licensed nonresident agent or broker or the insurer assuming the

risk desires the resident commissioned agent to render additional

services during the life of a policy, the compensation to the coun-

tersigning commissioned resident agent is a matter of contract

between the parties in interest.

COUNCIL OF INS. AGENTS v. MOLASKY-ARMAN 3709

The Commissioner promptly filed a motion for summary

judgment and the Council filed a cross-motion for summary

judgment. The district court denied both parties’ motions

without prejudice; and after expressing some doubt as to

whether the Council had standing to assert its constitutional

claims during a hearing on the parties’ motions, the court

granted the Council leave to amend its complaint. The Coun-

cil did so, adding Plaintiff-Appellee Rebecca Restrepo

(Restrepo) as co-plaintiff in its First Amended Complaint, in

which the Council reasserts its equal protection and privileges

and immunities claims.

Restrepo is a resident of California, is licensed to sell insur-

ance in California, and is the Managing Director of the Sacra-

mento office of ABD Insurance and Financial Services

(ABD), a member of the Council. Restrepo is also licensed to

produce and sell insurance in Nevada as a nonresident agent.

In Nevada, the Commissioner issues licenses to nonresidents

as producers of insurance if four requirements are satisfied.

Nev. Rev. Stat. § 683A.271. The nonresident must be in good

standing as a licensed resident in his home state, pay a pre-

scribed fee, submit an application, and the nonresident’s home

state must issue nonresident licences to Nevada residents pur-

suant to a substantially similar procedure.2 In its First

2

Section 683A.271 states in pertinent part:

1. Unless the Commissioner refuses to issue the license under

NRS 683A.451, the Commissioner shall issue a license as a pro-

ducer of insurance to a nonresident person if:

(a) He is currently licensed as a resident and in good standing in

his home state;

(b) He has made the proper request for licensure and paid the fee

prescribed for the license and a fee established by the Commis-

sioner of not more than $15 for deposit in the Insurance Recovery

Account;

(c) He has sent to the Commissioner the application for licensure

that he made in his home state, or a completed uniform applica-

tion; and

(d) His home state issues nonresident licenses as producers of

insurance to residents of this State pursuant to substantially the

same procedure.

3710 COUNCIL OF INS. AGENTS v. MOLASKY-ARMAN

Amended Complaint, the Council alleges that section

680A.300 causes Restrepo to forfeit approximately $50,000

annually, and that she is suffering immediate injury and being

deprived of significant rights.

Following discovery, the Commissioner renewed and sup-

plemented her initial motion for summary judgment, and the

Council renewed its motion for summary judgment and sup-

plemented its initial motion with a motion for summary judg-

ment on behalf of Restrepo. This time, the district court

granted the plaintiffs’ motion, concluding that “Restrepo has

standing,” that the Council “has representative standing to

assert the underlying constitutional claims” of “its member

firms and their officers, directors, principals, and employees,”

and that section 680A.300 “plainly draws a distinction

between Nevada-licensed resident agents and brokers,” for

which “there is no legitimate rational basis.” 358 F. Supp. 2d

at 982. Therefore, the district court held, section 680A.300

“violates the Privileges and Immunities Clause and Equal Pro-

tection Clause of the United States Constitution because it

denies to Nevada-licensed nonresident insurance agents the

same rights and privileges that are afforded to Nevada-

licensed resident agents.” Id. at 982-83. The district court

enjoined the Commissioner from enforcing section 680A.300,

but later stayed this injunction pending appeal. This appeal

followed.

II. Standard of review

Reviewing de novo the district court’s decision on cross-

motions for summary judgment, we must decide whether the

record, when viewed in the light most favorable to the non-

moving party, shows that there is no genuine issue of material

fact and that the moving party is entitled to judgment as a

matter of law. Pocatello Educ. Ass’n v. Heideman, 504 F.3d

1053, 1056 (9th Cir. 2007). We also review de novo whether

the plaintiffs have standing, whether the plaintiffs’ claims are

moot, and the constitutionality of section 680A.300. See Get

COUNCIL OF INS. AGENTS v. MOLASKY-ARMAN 3711

Outdoors II, LLC v. City of San Diego, 506 F.3d 886, 890 (9th

Cir. 2007); Rosenbaum v. City and County of San Francisco,

484 F.3d 1142, 1152 (9th Cir. 2007).

III. Discussion

A. Standing

The Commissioner first argues that Restrepo and the Coun-

cil lack standing to challenge the constitutionality of section

680A.300. “Article III of the Constitution limits the ‘judicial

power’ of the United States to the resolution of ‘cases’ and

‘controversies.’ ” Valley Forge Christian Coll. v. Americans

United for Separation of Church and State, Inc., 454 U.S.

464, 471 (1982). “[S]tanding is an essential and unchanging

part of the case-or-controversy requirement of Article III.”

Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992).

“The doctrine of standing is based both on prudential con-

cerns and on constitutional limitations on the jurisdiction of

the federal courts.” Doran v. 7-Eleven, Inc., 506 F.3d 1191,

1195 (9th Cir. 2007). Here, the plaintiffs bear the burden of

establishing standing’s three constitutional requirements.

Lujan, 504 U.S. at 561. First, they must establish that they

suffered an injury in fact, “an invasion of a legally protected

interest which is (a) concrete and particularized, and (b) actual

or imminent, not conjectural or hypothetical.” Id. at 560 (cita-

tions, internal quotation marks, and footnote omitted). Sec-

ond, they must establish “a causal connection between the

injury and the conduct complained of.” Id. Third, they must

establish that it is “likely as opposed to merely speculative,

that the injury will be redressed by a favorable decision.” Id.

at 561 (citation and internal quotation marks omitted).

The district court concluded that Restrepo has standing

because she has suffered, and continues to suffer, economic

and other forms of injury because of the requirements

imposed upon nonresident insurance agents by Nevada’s

countersignature law. 358 F. Supp. 2d at 982. The Commis-

3712 COUNCIL OF INS. AGENTS v. MOLASKY-ARMAN

sioner contends that Restrepo provided no evidence of actual

economic injury, and specifically notes Restrepo’s inability to

firmly connect the amount of her compensation with the sale

of products insuring Nevada risks. The Council argues that

while Restrepo is a salaried employee, her overall compensa-

tion (which includes a bonus based on the growth and profit-

ability of her office) is affected by section 680A.300’s

commission-splitting provision. In the end, we need not

resolve the parties’ dispute over Restrepo’s alleged economic

injury because on appeal the Council asserts an alternative

injury, discriminatory administrative burdens placed on

Restrepo because of her nonresident status. While the Com-

missioner argues that we should not consider this argument

because the Council raises it for the first time on appeal, we

may affirm summary judgment on any ground supported by

the record. Doran, 506 F.3d at 1195 n.1.

[1] “It has long been clear that economic injury is not the

only kind of injury that can support a plaintiff’s standing.”

Vill. of Arlington Heights v. Metro. Hous. Dev. Corp., 429

U.S. 252, 262-63 (1977). “Impairments to constitutional

rights are generally deemed adequate to support a finding of

‘injury’ for purposes of standing.” Doe v. Sch. Bd. of Oua-

chita Parish, 274 F.3d 289, 292 (5th Cir. 2001). The relevant

constitutional provision here is Article IV, § 2, which pro-

vides that the “Citizens of each State shall be entitled to all

Privileges and Immunities of Citizens in the several States.”

“[O]ne of the privileges which the clause guarantees to citi-

zens of State A is that of doing business in State B on terms

of substantial equality with the citizens of that State.” Toomer

v. Witsell, 334 U.S. 385, 396 (1948). Accordingly, here, “the

ability of a citizen in one state to act as an insurance [agent

or broker] in another state must be considered a fundamental

right or privilege protected by the privileges and immunities

clause.” Silver v. Garcia, 760 F.2d 33, 36 (1st Cir. 1985);

Council of Ins. Agents + Brokers v. Viken, 408 F. Supp. 2d

836, 844 (D.S.D. 2005) (nonresident insurance agents and

producers licensed in South Dakota have a fundamental right

COUNCIL OF INS. AGENTS v. MOLASKY-ARMAN 3713

or privilege to place insurance on terms of substantial equality

with licensed resident agents).

[2] Section 680A.300 infringes on Restrepo’s ability, as a

licensed nonresident agent, to do business in Nevada on sub-

stantially equal terms with resident agents. It is undisputed

that Restrepo is a resident of California, that she is licensed

in Nevada as a nonresident agent, and that section 680A.300

treats her differently than resident agents because of her out-

of-state residency. While section 680A.300 protects

Restrepo’s “free and unlimited right to negotiate contracts . . .

if the policies, endorsements or evidence of those contracts

covering properties or insurable interests in [Nevada] are

countersigned by a resident agent,” it also requires that

“[e]very such policy or contract must be countersigned by a

resident agent.” Section 680A.300 precludes Restrepo from

finalizing insurance contracts in Nevada without the counter-

signature of a resident agent. In effect, section 680A.300

creates two classes of insurance agents in Nevada, one class

of licensed resident agents that can finalize insurance con-

tracts, and a second class of licensed nonresident agents that

cannot.

[3] Unfortunately for Restrepo, her California residency

places her squarely within Nevada’s second class of insurance

agents. Despite her “free and unlimited right to negotiate con-

tracts,” Restrepo cannot do business on substantially equal

terms with resident agents because she cannot finalize an

insurance contract without the countersignature of a resident

agent. The Commissioner argues that the impact on Restrepo,

if she is impacted at all, is only minor, as Restrepo has no per-

sonal contact with the countersigning resident agents and that

the only additional burden placed on her is having her staff

mail the policies to obtain the resident agents’ signatures.

However, the Commissioner’s argument misses the mark;

Restrepo’s lack of personal contact with the countersigning

agent does nothing to diminish the fact that section 680A.300

prevents her from doing business in Nevada on substantially

3714 COUNCIL OF INS. AGENTS v. MOLASKY-ARMAN

equal terms with resident agents. Even if the Commissioner

were right that the degree of Restrepo’s injury should factor

into our analysis, as noted in United States v. Students Chal-

lenging Regulatory Agency (SCRAP), 412 U.S. 669 (1973),

the Court has

allowed important interests to be vindicated by

plaintiffs with no more at stake in the outcome of an

action than a fraction of a vote, a $5 fine and costs,

and a $1.50 poll tax . . . . ‘The basic idea that comes

out in numerous cases is that an identifiable trifle is

enough to fight out a question of principle; the trifle

is the basis for standing and the principle provides

the motivation.’

Id. at 689 n.14 (internal citations omitted). Here, because sec-

tion 680A.300 precludes Restrepo from doing business in

Nevada on substantially equal terms with resident agents, a

right guaranteed to her by the Privileges and Immunities

Clause, she suffers an injury which is “concrete,” “actual,”

and amounts to more than an “identifiable trifle,” thereby sat-

isfying standing’s injury in fact requirement.

[4] We similarly conclude that Restrepo satisfies standing’s

causation and redressability requirements. Lujan, 504 U.S. at

561. Section 680A.300 causes Restrepo’s injury by preclud-

ing her from participating in Nevada’s insurance market on

substantially equal terms with resident agents, and a favorable

decision invalidating the statute redresses that injury. There-

fore, Restrepo has standing to challenge the constitutionality

of section 680A.300, and having found standing, we do not

consider whether the Council also has standing. Leonard v.

Clark, 12 F.3d 885, 888 (9th Cir. 1993) (“The general rule

applicable to federal court suits with multiple plaintiffs is that

once the court determines that one of the plaintiffs has stand-

ing, it need not decide the standing of the others.”).

COUNCIL OF INS. AGENTS v. MOLASKY-ARMAN 3715

B. Mootness

The Commissioner also argues on appeal that Restrepo’s

claims are moot because they no longer present a live contro-

versy. While we generally do not consider arguments raised

for the first time on appeal, S.E.C. v. Internet Solutions for

Bus., Inc., 509 F.3d 1161, 1167 (9th Cir. 2007), we have an

independent obligation to address whether a case is moot

because it goes to the Article III jurisdiction of this court. Ari-

zonans for Official English v. Arizona, 520 U.S. 43, 66-67

(1997); Clark v. City of Lakewood, 259 F.3d 996, 1011 (9th

Cir. 2001).

[5] “To qualify as a case fit for federal-court adjudication,

an actual controversy must be extant at all stages of review,

not merely at the time the complaint is filed.” Arizonans for

Official English, 520 U.S. at 67 (internal quotation marks and

citations omitted). “A claim is moot when the issues presented

are no longer live or the parties lack a legally cognizable

interest in the outcome. The basic question is whether there

exists a present controversy as to which effective relief can be

granted.” Outdoor Media Group, Inc. v. City of Beaumont,

506 F.3d 895, 900 (9th Cir. 2007) (internal quotation marks

and citations omitted). “[T]he party moving for dismissal on

mootness grounds bears a heavy burden.” Jacobus v. Alaska,

338 F.3d 1095, 1103 (9th Cir. 2003) (internal quotation marks

and citations omitted). “[D]ismissal of a case on grounds of

mootness would be justified only if it were absolutely clear

that the litigant no longer had any need of the judicial protec-

tion that it sought.” Id. at 1102-03 (internal quotation marks

and citations omitted).

[6] The Commissioner argues that Restrepo’s claims are

moot because in May of 2004, her employer, ABD, acquired

a Nevada-based insurance agency. This acquisition, the Com-

missioner contends, provides Restrepo with in-house counter-

signature services, thereby eliminating the possibility of any

further injury to either Restrepo or ABD. However, “[d]espite

3716 COUNCIL OF INS. AGENTS v. MOLASKY-ARMAN

superseding events, an issue is not moot if there are present

effects that are legally significant.” Id. at 1104. Assuming,

without deciding, that ABD’s acquisition of a Nevada-based

insurance company eliminates the possibility of economic

harm to Restrepo and ABD, section 680A.300 still precludes

Restrepo from participating in Nevada’s insurance market on

substantially equal terms with its resident agents. Restrepo

remains unable to finalize an insurance contract without the

countersignature of a resident agent. Therefore, despite the

availability of an in-house resident agent that is willing and

able to countersign policies negotiated by Restrepo, section

680A.300’s effects remain legally significant and her claims

are not moot.

C. Privileges and Immunities Clause of Article IV

As noted, the Privileges and Immunities Clause of Article

IV provides that the “Citizens of each State shall be entitled

to all Privileges and Immunities of Citizens in the several

States.” “While the Privileges and Immunities Clause cites the

term ‘Citizens,’ for analytic purposes citizenship and resi-

dency are essentially interchangeable.” Supreme Court of Vir-

ginia v. Friedman, 487 U.S. 59, 64 (1988). The primary

purpose of the Privileges and Immunities Clause “was to help

fuse into one Nation a collection of independent, sovereign

States.” Toomer, 334 U.S. at 395. The clause “was intended

to create a national economic union,” Supreme Court of New

Hampshire v. Piper, 470 U.S. 274, 280 (1985), and “was

designed to place the citizens of each State upon the same

footing with citizens of other States, so far as the advantages

resulting from citizenship in those States are concerned.”

Friedman, 487 U.S. at 64 (internal quotations omitted);

Toomer, 334 U.S. at 395.

[7] “Like many other constitutional provisions, the privi-

leges and immunities clause is not an absolute.” Id. at 396.

While it bars “discrimination against citizens of other States

where there is no substantial reason for the discrimination

COUNCIL OF INS. AGENTS v. MOLASKY-ARMAN 3717

beyond the mere fact that they are citizens of other States . . .

it does not preclude disparity of treatment in the many situa-

tions where there are perfectly valid independent reasons for

it.” Id. Therefore, we examine claims that a residency classifi-

cation offends the Privileges and Immunities Clause using a

two-step inquiry. First, we decide whether the activity in

question is “sufficiently basic to the livelihood of the nation

. . . as to fall within the purview of the Privileges and Immuni-

ties Clause.” Friedman, 487 U.S. at 64 (citations and internal

quotation marks omitted). “Second, if the challenged restric-

tion deprives nonresidents of a protected privilege, we will

invalidate it only if we conclude that the restriction is not

closely related to the advancement of a substantial state inter-

est.” Id. at 65 (citation omitted).

[8] In the first step of our inquiry, it is “[o]nly with respect

to those ‘privileges’ and ‘immunities’ bearing upon the vital-

ity of the Nation as a single entity must the State treat all citi-

zens, resident and nonresident, equally.” Baldwin v. Fish and

Game Comm’n of Montana, 436 U.S. 371, 383 (1978). As the

court noted in Silver,

There can be no doubt that insurance and occupa-

tions in the insurance industry are important to the

national economy. Consequently, the ability of a citi-

zen of one state to act as an insurance [agent or bro-

ker] in another state must be considered a

fundamental right or privilege protected by the privi-

leges and immunities clause.

760 F.2d at 36. Therefore, the ability of licensed nonresident

agents and brokers to ply their trade in Nevada on substan-

tially equal terms with resident agents falls within the purview

of the Privileges and Immunities Clause. Section 680A.300

deprives licensed nonresident agents and brokers of this privi-

lege by precluding them from finalizing insurance contracts

without the countersignature of a resident agent, thereby satis-

fying the first step of our inquiry.

3718 COUNCIL OF INS. AGENTS v. MOLASKY-ARMAN

[9] In the second step of our inquiry, we ask whether sec-

tion 680A.300 is “closely related to the advancement of a sub-

stantial state interest.” Friedman, 487 U.S. at 64. A

“substantial reason” for discrimination does not exist “unless

there is something to indicate that non-citizens constitute a

peculiar source of the evil at which the statute is aimed.”

Toomer, 334 U.S. at 398. The Commissioner states that sec-

tion 680A.300 protects Nevada’s consumers and that Nevada

benefits by having a record of all transactions so that it can

collect its premium tax. According to the Commissioner, sec-

tion 680A.300 protects Nevada’s consumers by providing a

local point of contact for policyholders, by providing a local

agent that can offer advice on coverage issues, by providing

a local agent to assist in the claims process, by protecting

Nevada residents from unqualified or unlicensed insurance

agents, and by giving consumers greater assurance that they

will receive reputable and qualified services. However, as the

Commissioner’s contentions are not supported by the record,

there is no support for a conclusion that licensed nonresident

agents and brokers are a “peculiar source of evil” to either

Nevada’s consumers or its tax collection efforts; therefore,

Nevada does not have a substantial reason to discriminate

against them. See Toomer, 334 U.S. at 398. However, even

assuming that licensed nonresident agents and brokers were a

“peculiar source of evil,” section 680A.300 also fails to sur-

vive the second step of our inquiry because it is not closely

related to either consumer protection or tax collection.

[10] Section 680A.300 is not closely related to providing a

“local” point of contact for the policyholder as a source of

advice on coverage issues and to assist in the claims process.

See Barnard v. Thorstenn, 489 U.S. 546, 553-554 (1989)

(geographic isolation insufficient to justify discrimination

against nonresidents); Council of Insurance Agents + Brokers

v. Gallagher, 287 F. Supp. 2d 1302, 1312-13 (N.D. Fla. 2003)

(same). The court confronted a similar argument in Gal-

lagher, where Florida’s Commissioner of Insurance sought to

uphold the state’s countersignature statute against a Privileges

COUNCIL OF INS. AGENTS v. MOLASKY-ARMAN 3719

and Immunities Clause challenge. Id. As the Gallagher court

noted, “the notion that an agent cannot provide assistance out-

side his home state is nonsense; whatever may have been said

when people traveled by horseback and communicated by

regular mail, today people communicate by telephone and

facsimile and e-mail and overnight courier . . . ; state bounda-

ries pose no obstacle.” Id. at 1312; Council of Ins. Agents &

Brokers v. Juarbe-Jimenez, 363 F. Supp. 2d 47, 55 (D.P.R.

2005), aff’d on other grounds, 443 F.3d 103 (1st Cir. 2006).

Here, too, just as in Gallagher, section 680A.300’s disparate

treatment of licensed nonresident agents and brokers is also

over-inclusive. Id. at 1312-13. For example, section 680A.300

allows a “local” resident agent in Las Vegas, Nevada, to final-

ize an insurance contract with a consumer more than 400

miles away in Stateline, Nevada, while allowing a licensed

nonresident agent or broker in South Lake Tahoe, California,

to negotiate, but not finalize, that same contract with the con-

sumer, even though the licensed nonresident agent/broker and

consumer may be separated by nothing more than the

Nevada-California state line. Id. This contradicts the Commis-

sioner’s argument that section 680A.300 allows Nevada’s

consumers to walk right into the office of the “local” counter-

signing resident agent with policy questions and concerns.

Not only is the Commissioner’s argument not supported by

the record before us, it also flies in the face of all notions of

modern business practices and commerce. “[E]recting a fence

at the [Nevada] border does nothing to promote geographic

proximity.” Id. Therefore, section 680A.300 is not closely

related to providing Nevada consumers with a “local” point of

contact to provide advice and assist with claims.

Furthermore, section 680A.300 is neither closely related to

protecting Nevada consumers from unqualified and unli-

censed agents, nor assuring consumers that they will receive

reputable and qualified services. In conformity with the well-

established principle that residency does not equate with pro-

fessional competence, nonresident producers of insurance

(that are licensed for the same lines of authority in another

3720 COUNCIL OF INS. AGENTS v. MOLASKY-ARMAN

state) are exempt from completing both the state’s education

and written examination requirements, and becoming resident

agents if they move to Nevada. See Thorstenn, 489 U.S. at

555; Piper, 470 U.S. 285 (“Nor may we assume that a nonres-

ident lawyer-any more than a resident-would disserve his cli-

ents by failing to familiarize himself with the rules.”); Nev.

Rev. Stat. §§ 683A.241, 683A.291. There is no evidence in

the record that licensed nonresident agents and brokers are

inherently less trustworthy or less competent insurance pro-

fessionals than Nevada’s resident agents. See Silver, 760 F.2d

at 38-39. In fact, Nevada’s statutory exemption directly con-

tradicts both that notion and the Commissioner’s arguments

that licensed nonresident agents and brokers are any less qual-

ified than resident agents, and that consumers need any assur-

ance of their qualifications. Therefore, section 680A.300 is

not closely related to protecting Nevada’s consumers from

unqualified insurance agents and brokers.

Admittedly, Nevada has a valid interest in protecting its

consumers from unlicensed agents. See Nev. Rev. Stat.

§ 683A.201 (“A person shall not sell, solicit or negotiate

insurance in this state for any class of insurance unless he is

licensed for that class of insurance.”). However, here, the

plaintiffs challenge the constitutionality of section 680A.300

because of its treatment of licensed nonresident agents and

brokers, not unlicensed persons. Therefore, section 680A.300

is not closely related to protecting consumers from unlicensed

agents.

[11] Finally, the Commissioner states that Nevada benefits

by having a record of all transactions so that it can collect its

premium tax. While Nev. Admin. Code § 680A.410 requires

countersigning agents to “maintain complete records of coun-

tersignature transactions, including daily reports, correspon-

dence, names of nonresident agents and brokers who wrote

the policies, and evidence of fees and commissions charged,”

there is no indication in the record that the Commissioner can-

not obtain any information needed by Nevada to collect its

COUNCIL OF INS. AGENTS v. MOLASKY-ARMAN 3721

premium tax from licensed nonresident agents and brokers in

the first instance. Therefore, it appears that the Commissioner

already has a less restrictive means of obtaining that informa-

tion. As the Piper Court noted, “[i]n deciding whether the dis-

crimination bears a close or substantial relationship to the

State’s objective, [we consider] the availability of less restric-

tive means.” 470 U.S. at 284; see also Viken, 408 F. Supp. 2d

at 844 (noting less restrictive means available to advance

South Dakota’s goals). Here, obtaining records directly from

nonresident agents and brokers is less restrictive than requir-

ing them to obtain the countersignature of a resident agent

who must then maintain the same transaction records under

section 680A.410. The Commissioner has direct control over

licensed nonresident agents and brokers, as Nev. Rev. Stat.

§ 683A.281 requires every nonresident producer of insurance

to “appoint the commissioner in writing as his attorney upon

whom may be served all legal process,” to agree “to appear

before the commissioner pursuant to notice of hearing, show

cause order or subpoena issued by the commissioner,” and

allows the commissioner to impose penalties on the licensee

if he fails to appear. Again, modern technology and business

practices make records in the possession of nonresident agents

and brokers just as accessible as records in the possession of

resident agents. Therefore, section 680A.300 is not closely

related to the collection of Nevada’s premium tax.

[12] In sum, section 680A.300 is unconstitutional under the

Privileges and Immunities Clause because it discriminates

“against citizens of other States where there is no substantial

reason for the discrimination beyond the mere fact that they

are citizens of other States . . . .” Toomer, 334 U.S. at 396.

Having concluded that section 680A.300 violates the Privi-

leges and Immunities Clause, we don’t consider the plaintiffs’

alternative argument under the Equal Protection Clause of the

Fourteenth Amendment. Id. at 403 (after concluding statute

violated the privileges and immunities clause the Court did

not consider an equal protection argument); Friedman, 487

U.S. at 63 n.* (same).

3722 COUNCIL OF INS. AGENTS v. MOLASKY-ARMAN

IV. Conclusion

Restrepo has standing because she suffers an injury, which

is caused by section 680A.300, and which a favorable deci-

sion invalidating that provision redresses. Restrepo’s claims

are not moot because section 680A.300’s effects on her

remain legally significant. Section 680A.300 violates the

Privileges and Immunities Clause because Nevada’s discrimi-

nation against licensed nonresident agents is not closely

related to a substantial reason for that discrimination beyond

the mere fact that they are citizens of other states.

AFFIRMED and REMANDED for further proceedings on

the injunction that was stayed pending appeal.