Respondents Brief — Adir International, LLC, et al., Petitioners v. Starr Indemnity and Liability Company

No. 21-537

In the Supreme Court of the United States

ADIR INTERNATIONAL, LLC, ET AL., PETITIONERS,

v.

STARR INDEMNITY AND LIABILITY COMPANY.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF IN OPPOSITION

KEVIN F. KIEFFER

RYAN C. TULEY

TROUTMAN PEPPER

HAMILTON SANDERS LLP

5 Park Plaza, Ste. 1400

Irvine, CA 92614

Orange County

CIARAN BRIGID WAY

TROUTMAN PEPPER

HAMILTON SANDERS LLP

3000 Two Logan Square

Eighteenth & Arch Sts.

Philadelphia, PA 19103

MISHA TSEYTLIN

Counsel of Record

KEVIN M. LEROY

TROUTMAN PEPPER

HAMILTON SANDERS LLP

227 W. Monroe St.,

Ste. 3900

Chicago, IL 60606

(608) 999-1240

misha.tseytlin@

troutman.com

Attorneys for Respondent

QUESTION PRESENTED

Whether a state insurance statute that prohibits

insurance policies that fund counsel in one category of

civil cases facially violates any constitutional rights of

litigants, in all of the statute’s applications, including

in applications where litigants can readily secure

highly skilled counsel through other funds.

ii

CORPORATE DISCLOSURE STATEMENT

Pursuant to this Court’s Rule 29.6, Respondent

Starr Indemnity and Liability Company states that it

is wholly owned by Starr Global Financial, Inc., the

common stock of which is wholly owned by Starr

Insurance Holdings, Inc., which, in turn, is wholly

owned by Starr Global Holdings AG. No publicly held

corporation owns ten percent or more of Respondent’s

stock.

iii

TABLE OF CONTENTS

Page

QUESTION PRESENTED ......................................... i

CORPORATE DISCLOSURE STATEMENT ........... ii

TABLE OF AUTHORITIES ..................................... iv

INTRODUCTION .......................................................1

STATEMENT ..............................................................2

REASONS FOR DENYING THE PETITION............8

I.

The Ninth Circuit’s Decision Implicates No

Division Of Lower-Court Authority .................8

II. That Petitioners And Their Amici Resort To

Citing A Grab Bag Of Inapposite Doctrines

Shows That This Case Raises Novel Issues,

And Thus There Is No Conflict With This

Court’s Decisions ............................................11

A. Fourteenth Amendment Right To

Counsel In Civil Cases ..............................13

B. Forfeiture Case Law .................................15

C. “Fundamental Fairness” Doctrine............16

D. Selective-Enforcement Case Law .............19

E. Ex Parte Young..........................................20

F. First Amendment ......................................21

III. This Case Is A Poor Vehicle For Reviewing

The Novel Issues That Petitioners Raise ......21

CONCLUSION ..........................................................23

iv

TABLE OF AUTHORITIES

Cases

Ams. for Prosperity Found. v. Bonta,

141 S. Ct. 2373 (2021)......................................... 21

Anderson v. Sheppard,

856 F.2d 741 (6th Cir. 1988)........................... 6, 10

Arcara v. Cloud Books, Inc.,

478 U.S. 697 (1986) ............................................. 21

Box v. Planned Parenthood of Ind. & Ky., Inc.,

139 S. Ct. 1780 (2019)......................................... 22

Cal. State Auto. Ass’n Inter-Ins. Bureau v.

Maloney,

341 U.S. 105 (1951) ................................... 2, 11, 16

Caplin & Drysdale, Chartered v. United States,

491 U.S. 617 (1989) ............................................. 14

Day-Brite Lighting Inc. v. Missouri,

342 U.S. 421 (1952) ................................... 2, 11, 12

Ex Parte Young,

209 U.S. 123 (1908) ............................................. 20

Gray v. New Eng. Tel. & Tel. Co.,

792 F.2d 251 (1st Cir. 1986) ................................. 6

Guajardo-Palma v. Martinson,

622 F.3d 801 (7th Cir. 2010)................................. 6

v

Honeycutt v. United States,

137 S. Ct. 1626 (2017)................................... 15, 16

Ky. W. Va. Gas Co. v. Penn. Pub. Util. Comm’n,

837 F.2d 600 (3d Cir. 1988) .................................. 6

Lassiter v. Dep’t of Soc. Servs. of Durham Cty.,

452 U.S. 18 (1981) ............................................... 17

Luis v. United States,

136 S. Ct. 1083 (2016)..................................... 8, 14

Maine v. Moulton,

474 U.S. 159 (1985) ............................................. 14

McCray v. New York,

461 U.S. 961 (1983) ............................................. 22

McLane Co. v. EEOC,

137 S. Ct. 1159 (2017)........................17, 20, 21, 23

Minneapolis Star & Trib. Co. v. Minn. Com’r of

Rev.,

460 U.S. 575 (1983) ............................................. 21

Mosley v. St. Louis Sw. Ry.,

634 F.2d 942 (5th Cir. 1981)................................. 6

Mt. Hawley Ins. Co. v. Lopez,

215 Cal. App. 4th 1385 (2013) .................... 2, 3, 16

Murray’s Lessee v. Hoboken Land & Improvement

Co.,

59 U.S. 272 (1856) ................................................. 7

vi

Potashnick v. Port City Const. Co.,

609 F.2d 1101 (5th Cir. 1980)......................... 6, 10

Powell v. Alabama,

287 U.S. 45 (1932) ....................................... 6, 7, 12

Texas Catastrophe Ins. Ass’n v. Morales,

975 F.2d 1178 (5th Cir. 1992)............................. 11

Turner v. Rodgers,

564 U.S. 431 (2011) ............................................. 14

United States v. Monsanto,

491 U.S. 600 (1989) ....................................... 15, 16

United States v. Salerno,

481 U.S. 739 (1987) ......................................... 1, 14

United States v. Stein,

541 F.3d 130 (2d Cir. 2008) ........................ 8, 9, 10

Wardius v. Oregon,

412 U.S. 470 (1973) ............................................. 18

Wayte v. United States,

470 U.S. 598 (1985) ....................................... 19, 20

West Coast Hotel Co. v. Parrish,

300 U.S. 379 (1937) ............................................. 12

Constitutional Provisions

U.S. Const. amend. VI ............................................. 13

vii

Statutes And Rules

Cal. Ins. Code § 533.5........................................ passim

Sup. Ct. Rule 10 ............................................. 9, 11, 13

Other Authorities

1 Couch on Ins., § 2:2 (3d ed. 2019) ........................... 2

INTRODUCTION

Petitioners brought a facial challenge to a 30year-old insurance law, California Insurance Code

§ 533.5, which prohibits parties in California from

contracting for insurance coverage for one category of

civil cases. All of the arguments that Petitioners raise

are novel, and do not implicate any circuit split or

conflict with any of this Court’s cases. That is why

Petitioners and their amici must stretch to invoke

inapposite cases from far-flung areas of law, such as

the Sixth Amendment, forfeiture, Ex Parte Young,

and the like, several of which Petitioners did not raise

below. And if this Court were inclined to look at the

merits, each argument is wrong, including for failure

to satisfy the demanding standard for facial invalidity

under United States v. Salerno, 481 U.S. 739 (1987).

After

all,

if

defendants—like

Petitioners

themselves—have

ample

funds

to

obtain

sophisticated counsel without resorting to insurance

coverage and do, in fact, obtain such counsel, there is

no reasonable argument that Section 533.5 unduly

burdened those defendants’ rights.

This Court should deny the Petition.

2

STATEMENT

A. The regulation of “the business of insurance”

traditionally belongs to the States, which have the

authority to enact insurance regulations that they

“deem[ ] necessary to the public welfare,” in their

“legislative judgment.” Cal. State Auto. Ass’n InterIns. Bureau v. Maloney, 341 U.S. 105, 109–10 (1951);

see also Day-Brite Lighting Inc. v. Missouri, 342 U.S.

421, 423 (1952); see generally 1 Couch on Ins., § 2:2

(3d ed. 2019). This traditional state authority over

insurance is “extremely broad,” subject only to

“specific constitutional prohibitions” and “valid and

controlling federal laws.” Day-Brite, 341 U.S. at 423.

California enacted Section 533.5 over 30 years ago

under this broad authority, choosing not to allow

parties to contract for insurance coverage for one

limited category of civil cases. See Mt. Hawley Ins.

Co. v. Lopez, 215 Cal. App. 4th 1385, 1401–02 (2013).

Section 533.5(a) provides that no insurance policy

may apply to “the payment of any fine, penalty, or

restitution” in any criminal action, or in any civil

action brought by, as relevant here, the California

Attorney General under California’s Unfair

Competition Law or its False Advertising Law. Cal.

Ins. Code § 533.5(a). It then states that no insurance

policy may provide “any duty to defend” any claim in,

as relevant here, any civil action brought by the

Attorney General under the Unfair Competition Law

or the False Advertising Law that seeks “recovery of

a fine, penalty, or restitution.” Id. § 533.5(b); see id.

3

§ 533.5(c). Any insurance policy that violates Section

533.5(a) or (b) “is contrary to public policy and void.”

Id. § 533.5(d); see generally Mt. Hawley Ins., 215 Cal.

App. 4th at 1403.

B. Petitioner Adir International (“Adir”) operates

a chain of retail stores, with Petitioner Ron Azarkman

serving as Adir’s chief executive officer (hereinafter,

collectively, “Petitioners”).

Pet.App. 4a, 117a.

Petitioners

sell

“basic

big-ticket

household

necessities” to a mostly low-income customer base

“who lack access to traditional credit.” Pet.App. 4a,

117a. Petitioners have purchased an insurance policy

from Respondent, which provides that Respondent

will “defend and indemnify [Petitioners] from certain

claims alleging wrongful acts” against either Adir or

its executives, Pet.App. 5a, subject to the limitations

of the policy, Pet.App. 69a; see Pet.App. 45a–115a (full

policy). As relevant here, the policy provides that

“[a]ny terms” that “are in conflict with the terms of

any applicable laws . . . are hereby amended to

conform to such laws.” Pet.App. 74a. So, under this

limitation, Petitioners’ policy never included coverage

of claims within Section 533.5’s terms, and

Petitioners never paid Respondent for such coverage.

In 2017, the California Attorney General filed a

civil action against Petitioners in California Superior

Court under California’s Unfair Competition Law and

its False Advertising Law. Pet.App. 4a–5a; Pet.App.

116a–38a (complaint).

Petitioners tendered the

Attorney General’s complaint to Respondent, and

4

Respondent initially declined to defend Petitioners,

since such a defense fell outside the terms of the

policy.

Pet.App. 28a, 146a.

However, after

subsequent correspondence, Respondent agreed to

provide Petitioners with a defense while expressly

reserving Respondent’s rights under the policy and

applicable law. Pet.App. 5a, 28a, 146a.

In March 2019, the Attorney General sent

Respondent a letter correctly noting that coverage of

Petitioners’ defense would violate Section 533.5.

Pet.App. 5a; see Pet.App. 139a–41a (letter); see

generally Pet.App. 5a (explaining that Petitioners

“also apparently received a copy of the same letter”).

Some weeks after receiving the Attorney General’s

letter, Respondent informed Petitioners that it would

stop covering Petitioners for representation in the

Attorney General’s action and that it reserved its

right to seek reimbursement for its previous

expenditures, under the terms of the policy and

applicable law.

Pet.App. 6a–7a, 142a–56a; see

generally Pet.App. 8a, 36a–38a, 43a.

Petitioners then sued Respondent in California

state court, seeking a judgment that the policy

required Respondent to provide them with

representation. Pet.App. 7a, 26a–27a. Respondent

removed the case to federal court and argued that, as

relevant here, Respondent never had to provide a

defense to Petitioners. Pet.App. 7a. The district court

granted Respondent’s motion for summary judgment,

holding that Respondent had no duty to defend or

5

indemnify Petitioner. Pet.App. 7a, 32a–36a. Then,

the district court concluded that Respondent had the

right to reimbursement from Petitioners for all

previous expenditures that it had made for

Petitioners’ representation. Pet.App. 8a, 36a–38a,

43a. The district court did not address Petitioners’

constitutional challenge to Section 533.5, Pet.App. 7a,

which Petitioners had only perfunctorily raised, see

Adir’s Partial SJ Mem. at Ex. A, 19–20, Adir Int’l,

LLC v. Starr Indemnity & Liability Co.,

No.2:19cv4352, ECF #29-1, 2019 WL 5580791 (C.D.

Cal. Aug. 13, 2019).

Petitioners appealed to the Ninth Circuit,

arguing, as relevant here, that Section 533.5 facially

violated an insurance holder’s alleged “due process

right to retain and fund the counsel of its choice” in a

civil case, Pet.App. 8a–9a, with the California

Attorney General appearing as amicus to defend

Section 533.5, Br. Of California As Amicus Curiae In

Support Of Appellee, Adir Int’l, LLC v. Starr

Indemnity & Liability Co., No. 19-56320, ECF #18,

2020 WL 3493671 (9th Cir. June 18, 2020). The Ninth

Circuit rejected Petitioners’ constitutional argument

and affirmed the district court’s judgment. Pet.App.

9a–10a; see also Pet.App. 16a–23a (also rejecting

Petitioners’ statutory-interpretation argument).

The Ninth Circuit noted that Petitioners had

presented only a facial challenge to Section 533.5, not

an as-applied challenge. Pet.App. 4a, 9a–10a, 15a

n.5. Petitioners had thus made “no allegation that

6

[they] cannot afford competent counsel” in the

Attorney General’s action “absent coverage under the

policy” with Respondent. Pet.App. 9a–10a. Further,

Petitioners “ha[d] not alleged how [Section 533.5]

ha[d] impaired [their] ability to retain [civil] counsel”

in any way. Pet.App. 15a n.5.

The Ninth Circuit then explained that both this

Court and the various Courts of Appeals have

interpreted the due-process right to civil counsel as

more “limited” than the Sixth Amendment right to

counsel for criminal defendants. Pet.App. 9a–11a,

13a–14a. This Court has held that courts may not

“arbitrarily [ ] refuse to hear a [civil] party by

counsel.” Pet.App. 10a (quoting Powell v. Alabama,

287 U.S. 45, 69 (1932)). Courts of Appeals have held

that courts may not: refuse to accept filings from

counseled civil parties, Pet.App. 11a (citing GuajardoPalma v. Martinson, 622 F.3d 801, 803 (7th Cir.

2010)); prohibit a civil party from communicating

with counsel, Pet.App. 11a (citing Potashnick v. Port

City Const. Co., 609 F.2d 1101, 1119 (5th Cir. 1980),

and Mosley v. St. Louis Sw. Ry., 634 F.2d 942, 946

(5th Cir. 1981)); arbitrarily dismiss civil counsel,

Pet.App. 11a–12a (citing Ky. W. Va. Gas Co. v. Penn.

Pub. Util. Comm’n, 837 F.2d 600, 618 (3d Cir. 1988));

or fail to provide an adequate opportunity to retain

civil counsel, Pet.App. 11a–12a (citing Anderson v.

Sheppard, 856 F.2d 741, 748 (6th Cir. 1988), and Gray

v. New Eng. Tel. & Tel. Co., 792 F.2d 251, 257 (1st Cir.

1986)).

7

The Ninth Circuit further explained that “the

original public meaning of the term ‘due process’”

supports this Court’s and the Circuit Courts’ narrow

understanding of the due-process right to civil

counsel. Pet.App. 12a. This Court held long ago that

the Framers understood “due process” in the

Constitution to mean the same thing as “the law of

the land” clause in the Magna Carta, which required

a hearing before any condemnation could occur.

Pet.App. 12a–13a (citing, among other authorities,

Murray’s Lessee v. Hoboken Land & Improvement Co.,

59 U.S. 272, 276 (1856), and Powell, 287 U.S. at 68).

Historically, the right to a “hearing” included only the

“‘the right to the aid of counsel when desired and

provided by the party asserting the right,’” not a

“broad or unfettered right to counsel in civil cases.”

Pet.App. 13a (quoting Powell, 287 U.S. at 68

(emphasis supplied by the Ninth Circuit)). Thus, the

original public meaning of “due process” only “bars

the government from actively preventing a party from

obtaining counsel or communicating with his or her

lawyer in civil cases.” Pet.App. 13a–14a.

The Ninth Circuit then held that Section 533.5

does not facially violate this narrow due-process right

to civil counsel. Pet.App. 14a–15a. Section 533.5 only

prohibits “use [of] insurance proceeds to pay for legal

fees” in one set of circumstances; it “does not actively

prevent [a civil party] from obtaining counsel or

communicating with its lawyers,” which is all that the

Due Process Clause protects in this context.

Pet.App. 14a. Petitioners “ha[ve] not alleged that the

8

government actively thwarted [them] from obtaining

counsel,” “that [Section 533.5] precluded [them] from

communicating with counsel,” or that “[Section 533.5]

has impaired [their] ability to retain counsel.”

Pet.App. 15a & n.5. Petitioners’ challenge “really

boils down to” a claim that Section 533.5 infringes the

alleged “indirect right to fund and retain [civil]

counsel through an insurance contract,” but there is

“no reason to enlarge the limited due process right to

retain counsel to include” this asserted right.

Pet.App. 14a.

Finally, the Ninth Circuit

distinguished Luis v. United States, 136 S. Ct. 1083

(2016), and United States v. Stein, 541 F.3d 130 (2d

Cir. 2008)—both “criminal cases interpreting the

Sixth Amendment right to counsel”—which decisions

Petitioners “relie[d] heavily” upon. Pet.App. 14a–15a.

Petitioners petitioned the Ninth Circuit for panel

rehearing, with a suggestion for rehearing en banc.

Pet.App. 44a. The Ninth Circuit rejected both

requests, with no judge calling for a vote on the

suggestion for rehearing en banc. Pet.App. 44a.

REASONS FOR DENYING THE PETITION

I.

The Ninth Circuit’s Decision Implicates No

Division Of Lower-Court Authority

The Ninth Circuit held that Section 533.5 did not

facially violate any Due Process Clause protection of

the right to civil counsel. It understood this right to

prohibit the State from “actively prevent[ing] a party

9

who is willing and able to obtain [civil] counsel from

doing so” or from “substantially interfer[ing] with a

party’s ability to communicate with his or her

lawyer.” Pet.App. 12a. Section 533.5 does not facially

infringe any such protections because it only prohibits

one source of funding to retain civil counsel, without

disturbing the other funding sources. See Pet.App.

15a. Petitioners “ha[ve] not alleged how” Section

533.5 “impaired [their] ability to retain [civil] counsel”

in the Attorney General’s action, Pet.App. 15a n.5;

have made no “allegation that [they] cannot afford

competent counsel” as a result of Section 533.5,

Pet.App. 9a–10a; and did not show how the “law

precluded [them] from communicating with counsel”

in any way, Pet.App. 15a. At bottom, Petitioners’

claim “really boils down to an indirect right to fund

and retain [civil] counsel through an insurance

contract,” but there is “no reason to enlarge the

limited due process right to retain counsel to” cover

this purported right. Pet.App. 14a.

Before this Court, Petitioners claim only that a

single lower-court decision—the Second Circuit’s

decision in Stein—is in “tension” with the Ninth

Circuit’s decision below. Pet. 16, 20–21. But there is

no such conflict. See Sup. Ct. Rule 10(a)–(b).

In Stein, the Second Circuit considered a criminal

defendant’s right to counsel under the Sixth

Amendment, not a civil litigant’s right to counsel

under the Fourteenth Amendment’s Due Process

Clause. 541 F.3d at 135. There, the government had

10

forced an employer to end its policy of providing

counsel to its employees when facing indictments

from the government. See id. at 153. As a result of

this coercion, certain employees subsequently

indicted by the government “were unable to retain the

counsel of their choosing,” id. at 157, “even if” they

had “liquated all property owned by [them],” id. at 145

(citation omitted).

Other subsequently indicted

employees had “been forced to limit their defenses for

economic reasons” as a result of the government’s

conduct. Id. at 157 (alterations omitted). The Second

Circuit concluded that the government’s coercive

action violated the Sixth Amendment rights of both

groups of indicted employees. Id.

The Ninth Circuit’s decision below does not

conflict with Stein. See Pet. 20–21. As an initial

matter, Stein rested on “[t]he Sixth Amendment’s

explicit guarantee of counsel in criminal cases,” which

is both separate and “broader than the judicially

constructed right under the Due Process Clause” at

issue here. Pet.App. 15a; accord Potashnick, 609 F.2d

at 1118; Anderson, 856 F.2d at 747–48. Further,

before finding a right-to-counsel violation, Stein

considered whether the defendants either “were

unable to retain the counsel of their choosing” or had

“been forced to limit their defenses” due to the

government’s conduct. 541 F.3d at 157; contra Pet. 20

(quoting Stein’s summary of the district court’s

holding, 541 F.3d at 151, not Stein’s own holding).

Here, the Ninth Circuit limited its holding to the

conclusion that Section 533.5 did not facially violate

11

the due-process right to civil counsel, noting that

there is “no allegation that [Petitioners] cannot afford

competent counsel” in the Attorney General’s action

because of Section 533.5, or that this Section

“impaired [their] ability to retain [civil] counsel” in

any way. Pet.App. 9a–10a, 15a n.5.

Petitioners also cite statements from the Fifth

Circuit’s decision in Texas Catastrophe Insurance

Association v. Morales, 975 F.2d 1178 (5th Cir. 1992),

Pet. 17, but this decision also does not conflict with

the Ninth Circuit’s decision below, see Sup. Ct.

Rule 10(a)–(b). Texas Catastrophe held that a statute

requiring a private entity to “rely exclusively on the

Texas Attorney General for legal representation”

likely violated the due-process protections for civil

counsel of choice, 975 F.2d at 1180–83—

circumstances that are far afield from the case here,

where Petitioners have made no allegation that

Section 533.5 deprived them of private counsel.

II. That Petitioners And Their Amici Resort To

Citing A Grab Bag Of Inapposite Doctrines

Shows That This Case Raises Novel Issues,

And Thus There Is No Conflict With This

Court’s Decisions

States have the general authority to regulate “the

business of insurance” in the manner they “deem[ ]

necessary to the public welfare,” in the exercise of

their “legislative judgment.” Maloney, 341 U.S. at

109–10; see also Day-Brite, 342 U.S. at 423. So, when

12

this Court considers a State’s insurance regulation—

such as Section 533.5 here—it does not “sit as a superlegislature to weigh” the regulation’s “wisdom” or

decide whether the regulation’s “policy . . . offends the

public welfare.” Day-Brite, 341 U.S. at 423 (citing,

among other authorities, West Coast Hotel Co. v.

Parrish, 300 U.S. 379 (1937)). Rather, this Court will

only curtail the State’s “extremely broad” authority in

this sphere if an insurance statute violates “specific

constitutional prohibitions” or runs afoul of “valid and

controlling federal laws.” Day-Brite, 341 U.S. at 423.

Further, as a matter of the Constitution’s original

meaning, the phrase “due process of law” imposes few

restrictions on the States with respect to the right to

civil counsel. See Pet.App. 12a–13a. The Framers

understood “due process of law” to be coextensive with

the Magna Carta’s “law of the land” clause, which

protected—as relevant here—only “‘the right to the

aid of counsel when desired and provided by the party

asserting the right,’” not a “broad or unfettered right

to counsel in civil cases.” Pet.App. 13a (quoting

Powell, 287 U.S. at 68 (emphasis supplied by the

Ninth Circuit)).

So, under its original public

meaning, “due process” only “bars the government

from actively preventing a party from obtaining

counsel or communicating with his or her lawyer in

civil cases.” Pet.App. 13a–14a. Section 533.5 does not

conflict with this original understanding, as the

Ninth Circuit explained. Pet.App. 13a–14a.

13

Petitioners and their amici do not squarely

address the originalist grounds for the Ninth Circuit’s

decision. Instead, they cite a series of doctrines, some

of which are not grounded in the Fourteenth

Amendment’s Due Process Clause. Petitioners’ and

their amici’s reliance on this series of inapposite

doctrines only shows that there is no conflict between

the Ninth Circuit’s decision below and any decision of

this Court. See Sup. Ct. Rule 10(c). Indeed, each of

the doctrinal bases that Petitioners and their amici

rely upon raises novel legal issues that this Court has

never addressed, and which lack merit, especially in

the context of a facial challenge like this one.

A. Fourteenth

Amendment

Counsel In Civil Cases

Right

To

Petitioners base their lead argument upon the

novel theory that Section 533.5 facially violates the

right to civil counsel found in the Fourteenth

Amendment’s Due Process Clause by analogy to this

Court’s Sixth Amendment right-to-criminal-counsel

case law. Pet. 2, 17–24. Even if this Court’s Sixth

Amendment cases could support in any way a Due

Process Clause principle by analogy clearly enough to

warrant this Court’s review to address a “conflict[ ]

with relevant decisions of this Court,” Sup. Ct.

Rule 10(c)—which is highly doubtful, given that the

Sixth Amendment, unlike the Due Process Clause,

explicitly guarantees “the assistance of counsel,” U.S.

Const. amend. VI—the Sixth Amendment cases that

Petitioners cite do not support their argument here.

14

This Court’s Sixth Amendment case law generally

establishes the principle that a State may not

substantially burden a defendant’s right to criminal

counsel. In Luis, a plurality of this Court concluded

that such a burden existed when the government

froze “untainted assets” of the defendant that were

“needed to retain counsel of choice.” 578 U.S. at 1088

(plurality op.); accord id. at 1098 (Thomas, J.,

concurring in the judgment); compare Caplin &

Drysdale, Chartered v. United States, 491 U.S. 617,

623–33 (1989) (concluding that such a burden did not

occur when the government froze tainted assets). And

in Maine v. Moulton, 474 U.S. 159 (1985), this Court

held that such a burden existed where the

government deliberately elicited incriminating

statements from a criminal defendant outside the

presence of his or her attorney. Id. at 171–77.

This Court’s Sixth Amendment jurisprudence

does not support the conclusion that Section 533.5 is

facially invalid. As an initial matter, “the Sixth

Amendment does not govern civil cases.” Turner v.

Rodgers, 564 U.S. 431, 441 (2011). And, in any event,

Section 533.5 does not substantially burden the right

to counsel, especially in the context of this facial

challenge, because Petitioners have not shown that

“no set of circumstances exists under which”

Section 533.5 would impose such a burden. Salerno,

481 U.S. at 745. Section 533.5 only prohibits parties

contracting for insurance coverage for one category of

civil cases: certain enforcement actions brought by the

State or local government bodies for violations of

15

specified consumer protection laws. Thus, there is no

burden on any limited due-process right to counsel in

civil cases where a civil litigant has other sources of

funds available to secure counsel. See Pet.App. 15a.

And to the extent there are cases in which the cost

of civil litigation is so high that a particular litigant

could only secure counsel if it obtained the limited

type of insurance coverage barred by Section 533.5,

that litigant may bring an as-applied challenge. See

Pet.App. 15a n.5. In this case, however, Petitioners

brought only a facial challenge and made “no

allegation that [they] cannot afford competent

counsel” due to Section 533.5, Pet.App. 9a–10a, or

that Section 533.5 “impaired [their] ability to retain

counsel” in any way, Pet.App. 15a n.5.

B. Forfeiture Case Law

Petitioners claim that the Ninth Circuit’s decision

below “stand[s] in serious tension with this Court’s

forfeiture jurisprudence,” citing Honeycutt v. United

States, 137 S. Ct. 1626 (2017), and United States v.

Monsanto, 491 U.S. 600 (1989). Pet. 22. In those

cases, this Court explained that the State may only

impose “[p]retrial restraints on forfeitable property”

in a defendant’s possession when the government

proves at a hearing that the defendant committed the

offense triggering forfeiture and that the property has

the requisite connection to the crime. Honeycutt, 137

S. Ct. at 1633; see Monsanto, 491 U.S. at 615.

16

Section 533.5 does not facially conflict with this

jurisprudence. Consistent with the State’s broad

authority to regulate insurance, Section 533.5 defines

the lawful scope of insurance coverage that persons

and entities may purchase. See, e.g., Maloney, 341

U.S. at 109 n.2 (collecting examples of state insurance

regulations upheld by this Court). Section 533.5

further provides that any insurance policy that

violates Section 533.5(a) or (b) “is contrary to public

policy and void.” Cal. Ins. Code § 533.5(d). So, when

a policyholder purchases insurance coverage in the

State, it never pays for insurance coverage in

violation of Section 533.5, see Pet.App. 74a, which is

an over 30-year-old statute, Mt. Hawley Ins., 215 Cal.

App. 4th at 1401–02.

This point is further

underscored here in that the insurance policy

Petitioners purchased expressly provides that “[a]ny

terms” that “are in conflict with the terms of any

applicable laws . . . are hereby amended to conform to

such laws.”

Pet.App. 74a.

Accordingly,

Section 533.5’s operation does not cause the restraint

or forfeiture of any property in the policyholder’s

possession, meaning that Honeycutt’s and Monsanto’s

protections on the pre-trial restraint or forfeiture of

property do not apply. Contra Pet. 22.

C. “Fundamental Fairness” Doctrine

Petitioners claim that this Court’s “fundamental

fairness”

jurisprudence

facially

invalidates

Section 533.5, Pet. 24–30, but Petitioners forfeited

17

this argument by failing to raise it below, see McLane

Co. v. EEOC, 137 S. Ct. 1159, 1170 (2017).

In any event, this Court’s fundamental fairness

case law does not facially invalidate Section 533.5. In

Lassiter v. Department of Social Services of Durham

County, 452 U.S. 18 (1981), this Court held that the

Due Process Clause “imposes on the States the

standards necessary to ensure that judicial

proceedings are fundamentally fair.” Id. at 33. When

considering whether a particular government practice

violates “fundamental fairness,” a court must “view [ ]

all the[ ] circumstances” and the “particular

situation” presented by the case at hand. Id. at 25,

33. Applying these standards, this Court has held, for

example, that “fundamental fairness” does not

categorically require appointment of counsel “when a

State seeks to terminate an indigent’s parental

status.” Id. at 31, 33–34.

Here, Section 533.5 prohibits only one source of

funding for retaining civil counsel, leaving all other

sources intact.

Pet.App. 15a.

So, given that

Section 533.5 permits litigants to obtain civil counsel,

it clears the “minimal[ ]” protections that the Due

Process Clause requires to secure “fundamental

fairness.” Lassiter, 452 U.S. at 31, 33–34. And that

is especially so under the “particular situation” here,

id. at 25, as Petitioners made “no allegation that

[they] cannot afford competent counsel absent

coverage under the policy” or that their “ability to

18

retain [civil] counsel” was “impaired” in any way,

Pet.App. 9a–10a, 15a n.5.

Petitioners’ contrary arguments fail. Petitioners

first list categories of this Court’s “fundamental

fairness” jurisprudence—such as cases considering

the presumption of innocence or the beyondreasonable-doubt standard—with no apparent

relevance to the issues here.

See Pet. 25–27

(collecting cases).

Petitioners then make an

argument based on Wardius v. Oregon, 412 U.S. 470

(1973), but this fails to show that Section 533.5 is

facially invalid. Pet. 27–29. In Wardius, this Court

considered Oregon’s notice-of-alibi rule, which

required defendants to disclose the details of their

alibi defense to the State in advance of a criminal trial

without providing “reciprocal discovery rights” into

the State’s case. 412 U.S. at 471–73, 476. This Court

invalidated this asymmetrical discovery rule because

it unfairly tilted “the balance of forces between the

accused and his accuser.”

Id. at 474–76.

Section 533.5 does not alter any evidentiary rights or

place any special burdens in litigation, as a facial

matter, but prohibits insurance coverage for

enforcement actions brought by the State or local

government bodies under specified consumerprotection laws. That is not facially unconstitutional,

and it would not be unconstitutional as-applied in a

case—such as this one—where the defendant can

mount a vigorous, counseled defense without such

coverage.

19

D. Selective-Enforcement Case Law

Petitioners argue that this Court’s protections

against

selective-enforcement

actions

facially

invalidate Section 533.5 because the Attorney

General has discretion to invoke Section 533.5 by

pleading a case under the Unfair Competition Law or

the False Advertising Law. See Pet. 3, 30–32.

Section 533.5 does not facially violate this Court’s

selective-enforcement

jurisprudence.

“[T]he

Government retains ‘broad discretion’ as to whom to

prosecute” and “the decision whether or not to

prosecute, and what charge to file,” will “generally

rest[ ] entirely in [the State’s] discretion.” Wayte v.

United States, 470 U.S. 598, 607 (1985). This Court

thus will only permit selective-enforcement claims

against enforcement actions when the State’s

enforcement decisions are “deliberately based upon

an unjustifiable standard such as race, religion, or

other arbitrary classification, including the exercise of

protected statutory and constitutional rights.” Id. at

608 (citations omitted). And to prove such a claim,

the challenger must “show both that the passive

enforcement system had a discriminatory effect and

that it was motivated by a discriminatory purpose.”

Id. Section 533.5 does not suggest that the Attorney

General should or must file claims under the Unfair

Competition Law or the False Advertising Law based

on unjustifiable or arbitrary standards. See id. Nor

does Section 533.5 suggest that its enforcement would

have a discriminatory effect along such criteria.

20

Compare id. at 609. Section 533.5 thus does not

violate this Court’s protections against selective

enforcement, especially in the context of a facial

challenge.

Petitioners do not meaningfully address this

precedent, but offer only unpersuasive arguments

that are especially weak for a facial challenge.

Petitioners’ sole complaint is about the breadth of

California’s Unfair Competition Law, which gives the

Attorney General discretion to transform certain

enforcement actions into an action under this law,

thereby triggering Section 533.5. Pet. 31, 33–35;

accord NCLA Am. Br. ii, 2–3, 8–10; LLF Am. Br. 5–6.

Yet, under this Court’s jurisprudence, the breadth of

a statute alone does not support a selectiveenforcement claim. See Wayte, 470 U.S. at 607–09.

Rather, Petitioners must show that the Attorney

General enforced the law with a discriminatory

intent, and that such enforcement had a

discriminatory effect, which Petitioners do not even

attempt to do here. Id. at 608.

E. Ex Parte Young

Amici the New Civil Liberties Alliance and the

Cato Institute argue that Ex Parte Young, 209 U.S.

123 (1908), facially invalidates Section 533.5. NCLA

Am. Br. 7–18. Petitioners did not raise an Ex Parte

Young argument before the Ninth Circuit, so this

argument is not properly before this Court now. See

McLane, 137 S. Ct. at 1170.

In any event,

21

Section 533.5 does not violate Ex Parte Young because

civil litigants may readily test the validity of this

Section in court by, inter alia, bringing a lawsuit

against any state official responsible for enforcing

that provision.

F. First Amendment

Finally, amici led by the Landmark Legal

Foundation argue that this Court’s First Amendment

jurisprudence facially invalidates Section 533.5.

Specifically, these amici claim that Section 533.5

“creates an unnecessary chilling effect for individuals

who might otherwise serve on a board of directors in

violation of the First Amendment.” LLM Am. Br. 10–

11 (citing Ams. for Prosperity Found. v. Bonta, 141 S.

Ct. 2373 (2021)). This argument is not properly before

this Court either, as no party raised it before the

Ninth Circuit. See McLane, 137 S. Ct. at 1170.

Further, Section 533.5 does not implicate the First

Amendment, as it is a generally applicable regulation

of nonspeech, not of expressive conduct. See Arcara v.

Cloud Books, Inc., 478 U.S. 697, 705–07 (1986); accord

Minneapolis Star & Trib. Co. v. Minn. Com’r of Rev.,

460 U.S. 575, 581 (1983).

III. This Case Is A Poor Vehicle For Reviewing

The Novel Issues That Petitioners Raise

Even if this Court were inclined to review the

novel issues that Petitioners raise, this case is a poor

vehicle for three separate reasons.

22

First, this Court’s review of the novel issues that

Petitioners raise would benefit from further

percolation, as no court has decided those issues in

any prior case. Such percolation would “allow” the

lower courts to “further study” the various issues that

Petitioners have brought before this Court, McCray v.

New York, 461 U.S. 961, 963 (1983) (Stevens, J.,

respecting denial of certiorari), “assist[ing]” this

Court in any “review” it deems appropriate in the

future, Box v. Planned Parenthood of Ind. & Ky., Inc.,

139 S. Ct. 1780, 1784 (2019) (Thomas, J., concurring

in denial of certiorari); contra Pet. 19; LLF Am.

Br. 12. While Petitioners claim that no percolation is

possible because Section 533.5 is apparently unique,

Pet. 16, they fail to recognize that the Supreme Court

of

California

could

independently

consider

Section 533.5’s constitutionality because it is not

bound to follow the Ninth Circuit’s opinion below.

And, in any event, given the breadth and diversity of

the many issues that Petitioners have raised here,

such issues could well come up in a variety of other

contexts.

Second, an as-applied challenge to Section 533.5

would serve as a far better vehicle for this Court to

decide the issues that Petitioners have raised. With

an as-applied challenge, the litigant would

presumably argue that Section 533.5 burdened its

ability to engage civil counsel, based on specific and

established facts. See generally Pet. 1, 11 (arguing

that insurance is “frequently the only means” of

obtaining civil counsel for “individual executives and

23

smaller businesses”); accord LLF Am. Br. 3–4, 8–10.

Here, in contrast, Petitioners have raised only a facial

challenge to Section 533.5, making “no allegation that

[they] cannot afford competent counsel” or that

Section 533.5 “has impaired [their] ability to retain

counsel” in any way. Pet.App. 9a–10a; 15a n.5.

Finally, Petitioners failed to raise before the

Ninth Circuit several of the arguments that they and

their amici have now put before this Court.

Petitioners did not present their “fundamental

fairness” arguments before the Ninth Circuit or the

Ex Parte Young or First Amendment arguments of

their amici—thus, none of these arguments are

properly preserved for this Court’s review here. See

McLane, 137 S. Ct. at 1170; supra Parts II.C, E–F.

Instead, Petitioners focused their constitutional

challenge below largely around their right-to-civilcounsel arguments, citing many of the same key

authorities there as in their Petition here. See

Appellants’ Opening Br. at 20–36, Adir Int’l, LLC v.

Starr Indemnity & Liability Co., No. 19-56320,

ECF #6, 2020 WL 1283391 (9th Cir. Mar. 16, 2020);

Appellants’ Reply Br. at 1–18, Adir Int’l, LLC v. Starr

Indemnity & Liability Co., No. 19-56320, ECF #33,

2020 WL 5579424 (9th Cir. Sept. 8, 2020).

CONCLUSION

This Court should deny the Petition.

24

Respectfully submitted,

KEVIN F. KIEFFER

RYAN C. TULEY

TROUTMAN PEPPER

HAMILTON SANDERS LLP

5 Park Plaza, Ste. 1400

Irvine, CA 92614

Orange County

CIARAN BRIGID WAY

TROUTMAN PEPPER

HAMILTON SANDERS LLP

3000 Two Logan Square

Eighteenth & Arch Sts.

Philadelphia, PA 19103

MISHA TSEYTLIN

Counsel of Record

KEVIN M. LEROY

TROUTMAN PEPPER

HAMILTON SANDERS LLP

227 W. Monroe St.,

Ste. 3900

Chicago, IL 60606

(608) 999-1240

misha.tseytlin@

troutman.com

Attorneys for

Respondent

December 2021