Respondents Brief — Motor Vehicle Mfrs. Assn. of United States, Inc. v. State Farm Mut. Automobile Ins. Co.

Nos. 82-354, 82-355, 82.398 Office-Supreme Court, US.

D

IN THE FEB 9 1983

States

Supreme Cont of the Brite ALEXANDER L STF vas,

October Term, 19f ‘* rASRA |

Motor VEHICLE MANUFACTURERS ASSOCIATION OF THE

Unitep States, Inc., et al.,

Petitioners,

against

State Farm MutTvat AvuTomosite INsuRANCE Company, ef ail.,

Respondents.

ConsuMER ALERT AND Pacific Lecat FouNDATION,

Petitioners,

against

Strate Farm Mutvat AvuTomosite InsurANCE Company, ef ai.,

Respondents.

Unitep States DEPARTMENT OF TRANSPORTATION, e¢ al.,

Petitioners,

against

Strate Farm Mutrvat Avtomospite INsurANce Company, ef al.,

Respondents.

On Petitions for Writs of Certiorari to the United States

Court of Appeals for the District of Columbia Circuit

BRIEF FOR RESPONDENT SUPERINTENDENT

OF INSURANCE OF THE STATE OF NEW YORK

Rosert ABRAMS

Peter H. Scuirr Attorney General of the

Acting Attorney-in-Chief State of New York

Appeals and Opinions Attorney for Respondent

Rowers § Hance Syecrears ewe

Ra wo Wor ter

Assistant Attorney General New York, New York 10047

MartTINn Massowrzs (212) 488-2464

Deputy Superintendent and

General Counsel

Mitton L. oe

and Counsel

New York State Insurance Department

Of Counsel

Question Presented

Whether the revocation by the National Highway

Traffic Safety Administration (NHTSA) of the ‘‘passive

restraint’’ requirements of Federal Motor Vehicle Safety

Standard 208 was arbitrary, capricious and unlawful?

Itt

TABLE OF CONTENTS

PAGE

Question Presented 1

Opinions Below 2

Jurisdiction 2

Statutes Involved 2

Statement of the Case 3

Summary of Argument 3

Point I—The Judgment of the Court of Appeals Was

in Full Accord with the Administrative Procedure

Act 3

Point Il—Retention of the Passive Restraint Stand-

ard Will Clearly Protect Automobile Passengers

from Death and Serious Injury and Result in

Substantial Keonomic Savings 5

Point III—NHTSA’s Rescission of the Passive Re-

straint Portion of Standard 208 Was Arbitrary,

Capricious and Unlawful 11

Conclusion a z 15

IV

TABLE OF AUTHORITIES

Cases:

Citizens to Preserve Overton Park v. Volpe, 401 U.S.

402 (1971) . !

Industrial Union Dep’t v. American Petroleum Insti-

tute, 448 U.S. 607 (1980)

Montgomery v. Daniels, 38 N.Y.2d 41, 340 N.E.2d 444,

378 N.Y.S. 2d 1 (1975)

Ostrer v. Schenck, 41 N.Y.2d 782, 364 N.E.2d 1107, 396

N.Y.S. 2d 335 (1975) .

State Farm Mutual Automobile Insurance Company v.

United States Department of Transportation, 680

F.2d 206 (D.C. Cir. 1982)

Statutes:

Administrative Procedure Act, Section 10(e) (5 U.S.C.

> ae

National Traffic and Motor Vehicle Safety Act of 1966,

Section 103 (15 U.S.C. § 1392)

5 U.S.C. § 706(2)(A)

15 U.S.C. § 1381 - |

15 U.S.C. § 1391(1)(2)

15 U.S.C. § 1392(a)

15 U.S.C. § 1394(a)(1) ...

15 U.S.C. § 1394(a) (4)

15 U.S.C. § 1397(a)(2)(A) .

28 U.S.C. § 1254(1)

42 U.S.C. 6402

42 U.S.C. § 423 ....

PAGE

cons

42 U.S.C. § 601

42 U.S.C. § 1381

N.Y. Insurance Law § 10

N.Y. Insurance Law, Art. VITA (§§ 175-179)

N.Y. Insurance Law, Art. VIII (§§ 180-189)

N.Y. Insurance Law § 670, et seq.

N.Y. Insurance Law § 671(4)

N.Y. Insurance Law § 678

N.Y. Social Services Law § 157

Federal Motor Vehicle Safety Standard 208

Other Authorities:

4,10

passim

Hartunian, et al., ‘‘ The Incidence and Economic Costs

of Cancer, Motor Vehicle Injuries, Coronary

Heart Disease, and Stroke: A Comparative

Analysis’’, 70 Am. J. Public Health 1249 (1980)

N.Y. Times, Jan. 29, 1983, p. 12, col. 1

N.Y. Times, Feb. 3, 1983, p. D2, col. 1

Status Report, Vol. 16, No. 9, p. 1 (Insurance Institute

For Highway Safety, June 24, 1981)

Status Repori, Vol. 18, No. 1, p. 2 (Insurance Institute

For Highway Safety, January 18, 1983)

Nos. 82-354, 82-355, 82-398

IN THI!

Supreme Court of the United States

October Term, 1982

Motor Venice MANUFACTURERS .\SSOCIATION OF THE

Unitep States, Inc., ef al...

Petitioners.

against

Strate Farm Mutuart \cTromospite INsurANcE Company, ef al.,

Respondents.

CoNSUMER ALERT AND Paciric L&eGAL FouNpDATION,

Petitioners,

agaist

State Farm Mutvar .\vromort.e INsurANcE ComMPpaANy, et al.,

Respondents.

Unirep STATES DEPARTMENT OF TRANSPORTATION, ef al.,

Petitioners.

against

State Farm Mutuat A\vromorire Insurance Company, et al..

Respondents.

On Petitions for Writs of Certiorari to the United States

Court of Appeals for the District of Columbia Circuit

BRIEF FOR RESPONDENT SUPERINTENDENT

OF INSURANCE OF THE STATE OF NEW YORK

Opinions Below

The June 1, 1982 opinion of the Court of Appeals for

the District of Columbia Cireuit (Pet. App. la-76a)* is

reported at 680 F.2d 206. The August 4, 1982 supplemental

order and memorandum of the Court of Appeals (Pet. App.

79a-82a) are not reported.

Jurisdiction

The jurisdiction of the Court of Appeals was invoked

pursuant to 15 U.S.C. § 1394(a)(1). The judgment of the

Court of Appeals (Pet. App. 160a-161a) was entered on

June 1, 1982, and the supplemental order of the Court of

Appeals (Pet. App. 79a-80a) was entered on August 4, 1982.

The petitions for a writ of certiorari in Nos. 82-354 and

82-355 were filed on August 30, 1982. On August 24, 1982,

the Chief Justice extended the time for filing a petition for

a writ of certiorari in No. 82-398 to and including Septem-

ber 8, 1982, and the petition was filed on that date. The

petitions for a writ of certiorari were granted on November

8, 1982. The jurisdictions of this Court rests upon 28

U.S.C. § 1254(1) and 15 U.S.C. § 1394(a) (4).

Statutes Involved

Section 103 of the National Traffic and Motor Vehicle

Safety Act of 1966, 15 U.S.C. § 1392, and Section 10(e) of

the Administrative Procedure Act, 5 U.S.C. § 706, are re-

produced in pertinent part in the Appendix to the Govern-

ment’s brief at la-2a.

* Numbers in parentheses preceded by “Pet. App.” refers to the

quads te logins ter 0 Gn denen fled te No. 82.384

Statement of the Case

In the interests of brevity, the Court is respectfully

referred to the statement of the case contained in the briefs

submitted by the other respondents and in the opinion of

the Court of Appeals (Pet. App. 4a-24a).

Summary of Argument

The record of these proceedings demonstrates that

NHTSA’s rescission of Federal Motor Vehicle Safety

Standard (FMVSS) 208 was arbitrary, capricious and un-

lawful. The Court of Appeals (Pet. App. 46a et seq.) gave

due deference to the agency’s views and properly employed

the ‘‘rational basis’’ test relied wpon by all parties.

The elimination of passive restraints violated the re-

quirement of the 1966 National Traffic and Motor Vehicle

Safety Act that NHTSA adopt practicable standards to pro-

mote motor vehicle safety. Passive restraints work. They

can be installed in new automobiles at moderate cost,

and will result in direct savings to the consumer in the form

of reduced automobile insurance premiums. Premium dis-

counts for vehicles equipped with passive restraints have

already been adopted by insurers writing two-thirds of the

automobile casualty business in New York. They will be

mandated for the rest of the industry when passive re-

straints are implemented. The reduction in the number of

deaths and the frequency and severity of personal injuries

resulting from front-end collisions will, in addition, neces-

sarily lessen the burden upon private life, accident and dis-

4

ability insurance, workers’ compensation systems, Federal

survivors (42 U.S.C. § 402) and disability insurance (id.

§ 423) ; Supplemental Security Income (id. § 1381), Aid to

Families With Dependent Children (id. § 601) and other

State public assistance programs such as New York’s Home

Relief, N.Y. Social Services Law § 157. Public and private

employers would benefit from less employee time lost due to

accidents and the need to hire substitutes. (ne cannot as-

sign a dollar amount to the fewer widows and orphans,

crippled and maimed that would result from the mandated

use of passive restraints.

Regrettably, the Government has approached the re-

quirement for passive restraints in an entirely irresponsible

fashion. NHTSA first allowed the automobile industry to

‘**comply’* with Standard 208 by approving what it subse-

quently concluded was an easily defeasible seatbelt that

was not a passive restraint at all. NHTSA could have

moved to modify its standard if it determined it was de-

fective. Rather, it invoked its own failure to enforee Stand-

ard 208 as an excuse to dispense with it entirely. When

called to account by the Court of Appeals, its response was

to propose yet additional, open-ended ‘‘study’’ of a mat-

ter which had been ‘‘studied’’ for well over a decade.

NHTSA’s approach to automobile passenger safety is to

engage in a demonstrably ineffective program of ‘‘educat-

ing’’ the public to voluntarily use the presently mandated

seatbelt system. Meanwhile, the needless slaughter on the

highways goes on.

ARGUMENT

POINT I

The Judgment of the Court of Appeals Was in

Full Accord with the Administrative Procedure Act.

In determining that NHTSA’s rescission of FMVSS 208

was ‘‘arbitrary, capricious, an abuse of discretion or other-

wise not in accordance with law,’’ 5 U.S.C. 4706(2)(A), the

Court of Appeals followed the standard analysis applicable

to informal rule making under the Administrative Proce-

dure Act (Pet. App. 24a, et seq.) which the respondents,

themselves, concede to be the appropriate standard of re-

view. See, ¢.g., Gov't Br. p. 23, et seq.; Consumer Alert Br.

p. 6; see also Citizens to Preserve Overton Park v. Volpe,

401 U.S. 402, 416 (1971) ; Industrial Union Dep’t v. Ameri-

can Petroleum Institute, 448 U.S. 607, 662-63 (1980) (Bur-

ger, C.J., concurring). Little, if anything, need be added to

its opinion in this regard.

POINT II

Retention of the Passive Restraint Standard Will

Clearly Protect Automobile Passengers from Death

and Serious Injury and Result in Substantial Economic

Savings.

In enacting the National Traffic and Motor Vehicle

Safety Act of 1966, it was the express purpose of Congress

to ‘‘reduce traffic accidents and deaths and injuries to per-

sons resulting from traffic accidents,’’ 15 U.S.C. 4 1381. To

that end, Congress mandated that NHTSA adopt safety

standards that are ‘‘practicable [and] meet the need for

motor vehicle safety’’. This is defined as—

‘*the performance of motor vehicles or motor vehicle

equipment in such a manner that the public is protected

against unreasonable risk of accidents occurring as a

result of the design, construction or performance of

motor vehicles and is also protected against unreason-

able risk of death or injury to persons in the event ac-

cidents do oceur, and includes nonoperational safety

of such vehicles.

‘* *Motor vehicle safety standards’ means a minimum

standard for motor vehicle performance, or motor

vehicle equipment performance, which is practicable,

which meets the need for motor vehicle safety and

which provides objective criteria.”” 15 U.S.C. § 1391

(1)(2).

See also: 15 U.S.C. § 1392(a). By deleting from Standard

208 the requirement of automatic or passive restraints for

the front seats of passenger cars—a measure that would

offer substantial protection from bodily injury and the re-

sulting economic loss—NHTSA failed to meet these statu-

tory requirements. The clear effect of passive restraints in

fulfilling the cost-effectiveness and practicability require-

ments of the statute can be seen in the area of automobile

insurance. The pervasive role of the automobile as a major

means of transportation has made automobile insurance

coverage an essential form of protection. As regulator of

the insurance industry in the State of New York,* the Su-

perintendent of Insurance is the guardian of the State’s

* The Superintendent of Insurance of the State of New York is

charged with the rights, powers and duties express or implied by the

Insurance Law in connection with the supervision of the business of

insurance in New York, N.Y. Insurance Law § i0, Ostrer v. Schenck,

41 N.Y.2d 782, 785, 364 N.E.2d 1107, 1108, 1109, 396 N.Y.S.2d 335,

336-337 (1975). Other state insurance regulators have similar powers.

7

compelling interest in assuring the availability, at reason-

able cost, of insurance protection against economic losses

due to automobile accidents.

States such as New York have, in recent years, sought

to reduce the cost of automobile insurance by such means

as eliminating unnecessary litigation, through ‘‘no-fault’’

laws ; making the payment of claims more efficient, and con-

trolling the cost of medical care, N.Y. Insurance Law § 670,

et seq.; § 678; Montgomery v. Daniels, 38 N.Y.2d 41, 49-52,

340 N.E.2d 444, 448-450, 378 N.Y.S. 2d 1, 7-10 (1975). The

cost of insurance must, however, reflect anticipated claims.

No matter how efficient the system is, only a reduction in the

frequency and severity of automobile injuries holds a prom-

ise of large-scale premium reductions. (See generally,

_ affidavit of Superintendent of Insurance Albert B. Lewis,

sworn to December 22, 1981 in support of motion to inter-

vene in Court of Appeals.)

These objectives, as well as those of Congress in legis-

lating the Safety Act, are advanced by the requirement for

passive restraints. During the course of the administrative

proceedings, Dr. William Nordhaus, Professor of Econom-

ies, Yale University and a former member of the Presi-

dent’s Council of Economic Advisors, testified without con-

tradiction that the failure to employ passive restraints

vould result in an annual increase of 6,400 fatalities and at

least 120,000 moderate to critical injuries, resulting from

front-end collisions (Pet. App. 122a). These facts are not

new ; they have been conclusively established over the more

than two decades in which automobile passenger safety

research has been conducted and are conceded by NHTSA

in its own analyses (Pet. App. 14a-15a, 94a). On the other

8

hand, the mandatory introduction of passive restraints

would necessarily be translated into fewer and less expen-

sive bodily injury claims and the savings would be passed

on to the consumer.

As the Court of Appeals observed (Pet. App. 65a, n. 37),

it is the Superintendent’s intent to require all automobile

insurers to introduce discounts on the personal injury por-

tion of automobile insurance premiums applicable to cars

equipped with proper passive restraint systems. They

would be based upon reasonable projections of the expected

reductions in the frequency and severity of injuries to pas-

sengers in motor vehicles so equipped. Anticipated per-

formance would be reflected in lower automobile insurance

premiums charged for such vehicles. Thus, whatever the

consumer spends on airbags or other passive restraints may

well be offset by premium savings alone.

It has been estimated that airbags, the most effective

passive restraint, could be installed at a cost to the con-

sumer of $200-$300, assuming the economics of mass pro-

duction (Pet. App. 16a)." Since the average bodily injury

portion of a New York no-fault premium is $75.00 per year,

the 25-30% anticipated discount would translate into a total

saving of $300 over a ten-year life of the average vehicle.

Bodily injury liability insurance premiums are closely

related to the severity and cost of ‘‘no-fault’’ claims, since,

* The $800-$900 estimate for the 4,000 cars in which Mercedes-

Benz plans to install airbags, N.Y. Times, Jan. 29, 1983, p. 12, col. 1,

is clearly excessive for mass production and universal installation. A

stark contrast to the mere ten per cent installation in a luxury car

that i Ne ee ee ee a

<4 as an optional extra. N.Y. Times, Feb. 3, 1983, p. D2,

9

by definition, New York limits tort actions to ‘‘serious

injuries’’, as defined in N.Y. Insurance Law §671(4).

Bodily injury settlements and judgments tend to be multi-

ples of special damages, i.¢., medical costs and lost wages

which are payable under no-fault.

Since the severity and frequency of serious injuries will

be reduced by passive restraints, a reduction of the bodily

injury premium will necessarily follow. At present, the

average bodily injury liability rate is $150, per year. As-

suming an anticipated saving of only fifteen percent, per

year over the same ten-year period—a most conservative

estimate—the savinge on this coverage would be another

#300. Thus, the automobile insurance premium savings

would more than offset the cost of universally installed

airbags.”

It is also most significant that companies insuring more

than two-thirds of the automobile risks in the State of New

York have already filed rating plans which offer from

twenty-five to thirty percent discounts on the Personal in-

jury Protection (no-fault) portion of automobile insurance

premiums. This is a clear recognition by the insurance

industry’s actuaries ef the expected reduction in the fre-

quency and severity of death and injury to passengers in

automobiles equipped with passive restraints. Upon the

implementation of Standard 208, all insurers will be re-

quired to file rates which provide for appropriate passive

restraint discounts. Such action would be based upon the

Superintendent’s statutory authority, N.Y. Insurance Law

the New York State

which are

4 public

* The foregoing analysis was 1

I the

eats Eas ei basis of rate

rates of 8% annually.

10

Art. VII-A (Seetions 175-179-a inclusive—‘‘Rate Regula-

tion and Promotion of Competition’’) and Article VII

(Sections 180-189 inelusive—‘‘ Rates and Rating Organiza-

tiens’’) of the New York Insurance Law which provide

that rates shall not be ‘‘exeessive, inadequate or unfairly

discriminatory’? (N.Y. Ins. Law §§175 and 180). Other

states exaploy comparable standards in their evaluation

of filed rates.

In addition to the direct savings to the consumer in the

form of lowered insurance premiums, the economy, as a

whole, will derive significant benefits from the manlatory

iastaliation of passive restraints. One must bear in mind

that the cost of automobile related death and injury is borne

not only by private life, accident and disability insurers,

but by workers’ compensation systems, Federal Social Secu-

rity survivors (42 U.S.C. § 402) and disability (id. § 423)

insurance, as well." The frequent need to replace a tem-

porarily disabled worker places additional burdens on

private and public employers alike. When private insur-

ance, workers’ compensation and payroll-tax funded Social

Security programs are insufficient to support the injured

parties, the burden falls directly upon the taxpayer in the

form of claims for Supplemental Security Income (42

U.S.C. § 1381), Aid To Families With Dependent Children

(id. § 601) and other state public assistance programs such

as New York’s Home Relief, N.Y. Social Services Law

§ 157.

ll

In the final analysis, however, one can never put a price

tag on the broken bodies, broken families and shattered

dreams that result from the needless death and injury that

could be so easily avoided by the mandatory installation of

passive restraints.

POINT III

NHTSA’s Rescission of the Passive Restraint Por-

8 ae St ee Sa Capea ae

A.

Althongh the National Traffic and Motor Vehicle Safety

Act views with disfavor any practice which renders a

safety device inoperative, 15 U.S.C. §1397(a)(2)(A),

NHTSA determined that a detachable seatbelt meets the

requirement of Standard 208 and that, accordingly, auto-

mobile manufacturers may choose such a system instead of

a non-detachable seatbelt or airbags." But NHTSA rea-

soned, since the public can, and most people will, disengage

detachable safety devices, Standard 208 would not achieve

its purpose insofar as it related to passive restaints (Pet.

App. 96a-105a). NHTSA’s reasoning is contrary to clear

Congressional mandate that effective mechanisms be in-

cluded in motor vehicles to reduce the severity of injuries.**

If NHTSA was unconvinced as to the performance of de-

* Compare the V. and Chevette, which feature automatic

seatbelts with ignition i (Pet. App. cyte

** On the contrary, adoption of NHTSA's at a time when

smaller, lighter motor vehicles are replacing , More protective

vehicles, could result in an increase in the severity of injuries and loss

of life (Pet. App. 14a).

12

tachable belts, iis duty was to require industry to offer a

system which truly functioned as a passive restraint. As

the Court of Appeals noted (Pet. App. 72a), the evidence,

indeed, justified requiring the installation of airbags as the

sole form of passive restraint.”

Much has been said by NHTSA and the automobile man-

ufacturers as well as some of their supporters that govern-

ment ought not to require manufacturers to install passive

restraints in automobiles, but should, instead, educate the

public to the value of voluntarily utilizing the lap-shoulder

belts presently in use. Sec, e.g., Pet. App. 110a-112a, 126a).

They advocate an educational campaign to use present seat-

belt systems as a substitute for passive restraints with the

full knowledge that such efforts have been an abysmal fail-

ure wherever tried, Siafus Report, Vol. 16, No. 9, p. 1 (In-

surance Institute For Highway Safety, June 24, 1981). In-

deed, Congressional skepticism as to the effieacy of spend-

ing money for educational campaigns which have proven to

have no lasting effect was highlighted by its refusal to allow

funds for such use, unless the Government required its own

employees to use seatbelts and set specifie goals against

which the Congress could measure their worth, Status Re-

port, Vol. 18, No. 1, p. 2 (Insurance Institute For Highway

Safety, January 18, 1983).

* Except for forbidding the automatic ignition interlock, Con-

gress has given free rein to NHTSA to wage Fo —

a

specific methods to achieve results, its refusal to mn sy with the

passive restraint concept reflects an ongoing awareness and tacit

13

The demonstrated futility of attempting to educate the

public to voluntarily use lap and shoulder belts is but one

more argument in favor of mandatory passive restraints.°

Thus, as Circuit Judge Mikva found (Pet. App. 74a), the

administrative record demonstrates that NHTSA’s rescis-

sion of Standard 208 was completely unjustified. As the

Court of Appeals later noted, the agency showed no inten-

tion of setting its house in order by addressing the points

diseussed in that Court’s opinion (Pei. App. 82a, 85a), but

instead attempted to thwart its mandate by proposing yet

an additional period of open-ended ‘‘study’’ (Pet. App.

130a, 139a, ef seq.).

Cc.

It is, we suggest, significant that the National Associ-

ation of Insurance Commissioners (NAIC), representing

the insurance regulators of every state, commonwealth and

territory, has, by unanimous resolution, determined to par-

ticipate in this appeal as amicus curiae to urge affirmance

of the judgment below. The NAIC acted with rare unanim-

ity, demonstrating that not only the insurance industry as

a whole but the insurance regulators view NHTSA’s action

here to be irresponsible and contrary to the public interest.

Neither we nor the other regulators believe that the Court

of Appeals’ action involved any usurpation of the power of

equipment

App. 6a, n). Now beter is repeating itself with oa cae,

for voluntary self-protection.

14

the Executive. indeed, it is the Executive Branch that has

abdicated its responsibility to implement the will of Con-

gress. It was nothing less than the Court of Appeals’ ob-

ligation to require NHTSA to adhere to the statutory

mandate.

The Government’s request for a remand for further

proceedings should be denied and the Court of Appeals’

order that passive restraints remain part of Standard 208

affirmed. No useful purpose can be served by remanding to

the agency for further administrative proceedings. It

would only result in the continuation of the present attempt

by NHTSA to undo over two decades of research and devel-

opment and regulatory history and to repeal by administra-

tive fiat the Congressional mandate to establish practicable

standards for motor vehicle safety. Only a peremptory

mandate to NHTSA to implement Standard 208 with 1984

models, if physically possible, will carry out the will of

Congress and conform to the clearly established efficacy of

installing the passive restraint systems. Any arguments

by the automobile industry that it will not be able to comply

should be rejected out of hand, since the industry has been

on notice of its responsibility for nearly a decade (Pet.

App. 6a).

15

Conclusion

The judgment of the Court of Appeals for the District

of Columbia Circuit should be affirmed.

Dated: New York, New York

February 7, 1982

Respectfully submitted,

Ropert ABRAMS

Attorney General of the

State of New York

Attorney for Respondent .

Superintendent of Insurance

Perer H. Scuirr

Acting Attorney-in-Chief

Appeals and Opinions

Rosert S. HAMMER

Assistant Attorney General

MARTIN a ‘

Deputy Superintendent an

General Counsel

Mitton L, FreepMan

Assistant Deputy Superintendent

and Counsel

New York State Insurance Department

Of Counsel