Petition for Writ of Certiorari — Garamendi v. Gerling Global Reinsurance Corp. of America

5

for the insurers and directed that summary judgment be

granted for the Commissioner on all the insurers’ claims

for relief. As such, the Ninth Circuit ruled that the insur-

ers were not “prevailing parties” for purposes of Section

1988, and accordingly held that the insurers were not

entitled to fees. Gerling II, 296 F.3d at 851.

The insurers, supported by the federal government as

amicus, petitioned this Court for a writ of certiorari,

contending that the HVIRA was unconstitutional because

it (i) interfered with the federal governmert’s exercise of

its power over foreign affairs, (ii) violated due process, and

(iii) violated the Commerce Clause. The insurers did not

petition this Court for review of the Ninth Circuit’s dispo-

sition of their other constitutional claims or the attorneys’

fees issue.

This Court granted certiorari on all three questions

presented, but issued a decision on June 23, 2003, holding

only that the HVIRA was preempted because it conflicted

with the federal government's foreign policy initiatives

directed to Holocaust-related insurance claims. Gara-

mendi, 539 U.S. at 401.’ Because this Court disposed of

the case on foreign affairs preemption grounds, this Court

expressly did not address the due process and Commerce

Clause claims. Jd. at 413 n.7.

* Even so, this Court's majority acknowledged that there were

“powerful arguments” made as to why the HVIRA's approach would

work better than the Executive Branch’s approach, and that the

HVIRA'’s approach might be “the preferable policy” were it not for

consideration of other issues involving this country’s relations with its

European allies. Garamendi, 539 U.S. at 427. Four Justices dissented

and voted to affirm the Ninth Circuit's judgment and uphold the

HVIRA. Id. at 430-443.

6

Following the insurers’ success on their foreign affairs

preemption claim in this Court, they again moved for

attorneys’ fees pursuant vo Section 1988. The Ninth

Circuit transferred the question of fees to the district

court, which again ruled that the insurers were not enti-

tled to fees. App., infra, 20-26. The district court correctly

found that the preemption of the HVIRA by the federal

government's exercise of its foreign affairs power did not

implicate a right, privilege or immunity recognized by

Section 1983 so as to support a Section 1988 fee award.

App., infra, 24-26. The district court also correctly found

that even though the Commerce Clause and Due Process

Clause might be bases for a Section 1983 claim, the

insurers had not prevailed on either of those claims

because the Ninth Circuit had already held that the

HVIRA did not violate those constitutional provisions.

App., infra, 26. The district court recognized that this

Court expressly had not considered or decided the Com-

merce Clause or due process issues. App., infra, 24.

The insurers appealed the district court’s denial of

their fees to the Ninth Circuit, which reversed. Gerling

Global Reinsurance Corp. of Am. v. Garamendi, 400 F.3d

803 (9th Cir. 2005), rehearing denied, as amended, 410

F.3d 531 (9th Cir. 2005) (“Gerling III”). App., infra, 1-19.

The Ninth Circuit held that although the insurers had not

prevailed on their due process and Commerce Clause

claims, they were nevertheless entitled to an award of fees

under Section 1988.

7

REASONS FOR GRANTING THE PETITION

The Ninth Circuit’s unprecedented extension of Maher

permits a plaintiff who litigates and loses his Section 1983

claim on the merits to nevertheless recover fees under

Section 1988. Maher, however, held only that a plaintiff

whose Section 1983 claim was never ruled upon for pru-

dential reasons could under certain circumstances be

assumed to have prevailed on that claim. The Ninth

Circuit’s new rule expanding the availability of attorneys’

fees is an unwarranted departure from the settled

boundaries of Maher, is not supported by the language or

legislative history of Section 1988, conflicts in principle

with the decisions of this Court and others, and will have

distorting effects on Section 1983 litigation. The decision also

impermissibly intrudes on this Court’s certiorari process by

attributing legal significance to this Court’s decision to

grant certiorari on the insurers’ Section 1983 claims and its

subsequent decision not to address those claims.

1. Contrary to the Ninth Circuit’s decision, the

essential predicate for an attorneys’ fee award pursuant to

Section 1988 is prevailing on a Section 1983 claim, and not

simply victory in the case. See Natl Private Truck Council,

Inc. v. Okla. Tax Comm'n, 515 U.S. 582, 592 (1995); ef.

Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep't of

Health & Human Res., 532 U.S. 598, 600 (2001); NOW uv.

Operation Rescue, 37 F.3d 646, 653-654 (D.C. Cir. 1994).

Maher created a limited “prevailing party” assumption for

purposes cf awarding Section 1988 fees. Relying on the

legislative history of Section 1988, this Court held in

Maher that a fee award may be permitted in certain

circumstances, as a matter of fairness, where a plaintiff

has been precluded from obtaining any ruling on his

Section 1983 claim.

8

To qualify for fees under Maher, a plaintiff must

prevail on a non-fee bearing claim that is factually related

to a “substantial” Section 1983 claim that was never

decided for prudential reasons. In those limited circum-

stances, Maher permits courts to assume that the plaintiff

would have prevailed on the Section 1983 claim had the

plaintiff been allowed to litigate that claim to adjudication.

That assumption, however, is not warranted where

the plaintiff has actually litigated, and lost, his Section

1983 claim. Under such circumstances, there is no basis to

support the different assumption that the lower court was

wrong and that the plaintiff would have prevailed in a

higher court on his failed Section 1983 claim had that

court addressed it.

Here, the insurers litigated and lost all of their Sec-

tion 1983 claims in the Ninth Circuit. They ultimately

prevailed in this litigation because this Court ruled in

their favor only on the claim that California was intruding

on the Executive Branch’s conduct of foreign affairs - a

non-fee bearing claim.” Maher does not apply to these

circumstances, and there is no public policy reason for

assuming that a plaintiff has prevailed on a Section 1983

claim where a court has already held that the plaintiff has

not vindicated any Section 1983 right and has instead

determined that no such right exists.

* Judge Graber’s concurring opinion in Gerling II] expressly

recognized that such foreign affairs preemption does not create

individual Section 1983 rights (App., infra, 18), and the Ninth Circuit

panel majority in that decision assumed, but did not decide, the same

thing. App., infra, 9 and 17.

9

Nevertheless, purporting to rely on Maher, the Ninth

Circuit has established a new rule for fee awards that

ignores and makes irrelevant the fact that a plaintiff

litigated and lost his Section 1983 claim. So long as the

plaintiff prevails on a non-fee bearing claim and the failed

Section 1983 claim is “substantial” (i.e., not frivolous) and

“unaddressed” by a reviewing court, the plaintiff will be

assumed to have prevailed on his failed Section 1983 claim

and be entitled to fees under Section 1988. App., infra, 12.

There is no authority for this expansion of Maher; to the

contrary, another court has concluded that Maher does not

warrant a fee award where the plaintiff has lost his

Section 1983 claim in the lower court, and the appellate

court declines to reach the claim. Amer. Auto. Mfrs. Ass'n

v. Cahill, 53 F. Supp. 2d 174, 179-181 (N.D.N_Y. 1999).

In effect, the Ninth Circuit’s new rule creates an

assumption for fee purposes that the lower court that

decided the Section 1983 claim was in error and should be

reversed. Maher, however, did not establish a test for

implicitly reversing lower court decisions. Indeed, the

Ninth Circuit’s unfounded implicit reversal rule cannot be

reconciled with its own recognition that its decisions on

the insurers’ due process and Commerce Clause claims

continue to have precedential value.‘

The Ninth Circuit’s new rule will create significant

mischief in many other cases. By emasculating the “pre-

vailing party” standard for the award of fees, the Ninth

Circuit’s decision will invite and encourage plaintiffs to

* The concurring opinion expressly acknowledged that the Ninth

Circuit's Commerce Clause and due process decisions continue to have

precedential effect (App., infra, 19 n.1), and the majority opinion

implied as much. App., infra, 15.

10

attach meritless Section 1983 claims to routine non-fee

bearing claims (e.g., tort claims), hoping that such claims

can meet the minimal substantiality test (ie., non-

frivolousness) necessary for a fee award even if the plain-

tiff loses those claims.’ If an appellate court declines to

address those failed claims, but the plaintiff prevails on

his state law claim, fees will be awarded pursuant to

Gerling III.

The Ninth Circuit’s rule will also have a chilling effect

on a defendant’s decision whether to appeal in cases raising

state law and Section 1983 claims. Where a defendant has

lost on the state law claim but defeated the Section 1983

claim in the lower court, the defendant may be reluctant to

appeal the adverse state law decision for fear that the

plaintiff will cross-appeal on the Section 1983 claim, the

appellate court will reach only the state law claim, but

fees will nevertheless be awarded based on the Section

1983 claim that the plaintiff lost and the appellate court

never reached.

Neither the language of Section 1988, the legislative

history of that section, the decisions of this Court or

others, nor the public policy underlying the award of fees

to Section 1983 claimants supports the Ninth Circuit’s

decision. The insurers had their clay in court and were not

unfairly deprived of the opportunity to vindicate their

Section 1983 rights. Congress neither said nor intended that

a plaintiff is entitled to a second (or third) determination on

the merits of his Section 1983 claim for purposes of a fee

* The “absence of frivolousness” is “scant protection” for those who

are innocent of any civil rights violations. Buckhannon, 532 US. at 620

n.4 (Scalia, J., concurring).

11

award. The Ninth Circuit misconstrued Maher, and certio-

rari should be granted to clarify the boundaries of a

Section 1988 fee award. Cf. Elder v. Holloway, 510 U.S.

510, 515 and n.3 (1994) (granting certiorari and reversing

the circuit court’s announcement of a new rule of qualified

immunity that misconstrued this Court’s precedent and

that “could have a number of untoward effects”).

2. The Ninth Circuit’s decision also impermissibly

intrudes on this Court’s discretionary review process by

according fee significance to this Court’s grant of certio-

rari. Under Gerling III, this Court’s grant of certiorari on a

Section 1983 claim that the petitioner lost in the court of

appeals in effect reverses that adverse ruling for purposes

of a fee award. According to the Ninth Circuit, so long as

this Court rules in favor of the petitioner on a non-fee

bearing claim and leaves the petitioner’s failed Section

1983 claim “unaddressed,” the plaintiff is assumed to have

prevailed in this Court on that Section 1983 claim for

purposes of awarding fees under Maher. App., infra, 15

and 17.

That result misapprehends and interferes with this

Court’s limited and discretionary review through certio-

rari. That discretionary review means, among other

things, that this Court is not bound to decide issues that it

agrees to hear. The Ninth Circuit’s decision, however,

burdens this Court’s discretion by attaching fee signifi-

cance to the decision to grant certiorari. In this case,

millions of dollars in fees could be awarded to the insurers,

who as a matter of law did not vindicate any Section 1983

rights, simply because this Court granted certiorari on

their failed due process and Commerce Clause claims and

then took no further action with respect to those claims.

That result is contrary to well-settled precedent that

12

affords no weight or legal significance to the grant of

Moreover, this Court’s exercise of its discretionary

review power, by granting certiorari on a Section 1983

claim and then not deciding it, does not implicate Maher

because it does not unfairly deprive a petitioner of an

opportunity to be heard on that claim. Certiorari jurisdic-

tion is used to secure uniformity of decisions or to resolve

important questions of public interest. It is not available

simply to give a litigant another hearing on the merits.

Thus, the policy reasons underlying Maher do not apply to

this Court's certiorari jurisdiction.

If Maher applies, then this Court would (or should)

now take into account the potential fee implications of any

decision to grant certiorari and any subsequent decision

not to address an issue for which it has granted certiorari.

There is no authority for the Ninth Circuit’s expansion of

Maher to these circumstances or its attendant intrusion

into this Court’s discretionary review process.

3. The HVIRA was preempted because it conflicted

with the federal government's expression of foreign policy

on Holocaust-related claims. That expression of foreign

policy did not create individual rights in the insurers that

are enforceable under Section 1983. The fact that the

insurers incidentally benefited from that foreign policy or

had an interest in it is insufficient to create Section 1983

rights. Accordingly, preemption of the HVIRA on foreign

affairs grounds does not provide any basis for an award of

attorneys’ fees pursuant to Section 1988.

°

13

ARGUMENT

I. THE NINTH CIRCUIT'S DECISION ERRONE-

OUSLY EXTENDED MAHER TO THIS CASE IN

WHICH THE SECTION 1983 CLAIMS WERE

DECIDED ADVERSELY TO THE INSURERS

Section 1988 permits a court, in its discretion, to

award reasonable attorneys’ fees to a party who prevails

on his Section 1983 claim (i.e., who prevails on his claim

under Section 1983 that he was deprived of a right, privi-

lege or immunity secured by the Constitution or laws of

the United States). Prevailing on the “federal civil rights”

claim is an “essential predicate” for an award of Section

1988 fees. Operation Rescue, 37 F.3d at 653. When a

plaintiff is not entitled to relief under Section 1983, “(i]t

follows that ... no attorney's fees can be awarded under

§ 1988.” Truck Council, 515 U.S. at 592. The Ninth Circuit

ignored this essential predicate in deciding Gerling III.°

There are occasions where it may be appropriate to

infer that a plaintiff who never obtains a decision on his

Section 1983 claim nevertheless st ld be considered the

“prevailing party” on that claim. For example, a plaintiff

asserting a Section 1983 claim may favorably resolve that

* The Ninth Circuit's assertion that its decision is “entirely

consistent” with the Truck Council holding (App., infra, 13 n.1) is

puzzling. This Court held in Truck Council that Section 1988 fees are

not permitted where the plaintiff obtains relief under state law but is

not entitled to Section 1983 relief. 515 U.S. at 592. The Ninth Circuit,

on the other hand, bas held in Gerling II] that a plaintiff may recover

fees even though al) of his Section 1983 claims have been adjudicated

against him and, as such, he is not entitled te Section 1983 relief. The

Ninth Circuit's decision simply cannot be squared with this Court's

holding in Truck Council, and the holdings in numerous other cases,

that a plaintiff must prevail on a Section 1983 claim in order to receive

Section 1988 fees.

14

claim through a consent decree without ever litigating

that claim. Under those circumstances, Congress appar-

entiy intended to assume that the plaintiff was a “prevail-

ing party” on his Section 1983 claim. Maher, 448 U.S. at

129, 132.

Similarly, where a plaintiff joins a fee-bearing Section

1983 claim with a non-fee bearing statutory claim, the

courts for prudential reaso.. are directed to resolve the

case solely on the non-constitutional ground if possible.

Maher, 448 U.S. at 132 and n.15. If the plaintiff wins his

non-fee bearing claim, but is precluded from having a

substantial, factually-related Section 1983 claim decided,

Congress also thought that fees under Section 1988 might

be awarded. Jd. Under those circumstances, a court is

permitted “to assume that the plaintiff has prevailed on

his fee-generating claim.” Smith v. Robinson, 468 U.S. 992,

1007 (1984).

That assumption, however, is not justified where the

plaintiff has lost on his Section 1983 claim in the last court

to rule on that claim. Such an assumption is inconsistent

with the language of Section 1988 and the policy reasons

that motivated Congress and this Court to allow fees for

certain undecided Section 1983 claims. Indeed, applying

the assumption where the plaintiff in fact litigated and

lost his Section 1983 claim in the lower court effectively

creates a new assumption for fee purposes that the lower

court’s Section 1983 decision was in error and should be

reversed. Neither Maher nor the language or legislative

history of Section 1988 supports such a radical assumption.

To the contrary, numerous courts have acknowledged

that a plaintiff who loses on even a “substantial” Section

1983 claim that is factually related to a successful non-fee

15

bearing claim is not entitled to fees. Many of these courts

have recognized that Maher was intended to address the

very different situation where a plaintiff has not been able

to obtain adjudication of his Section 1983 claim because

of the prudential rule directing courts to avoid constitu-

tional questions if the case can be decided on other

grounds. At least one court has held, on facts similar to

this case, that a plaintiff who loses a Section 1983 claim in

the lower court is not entitled to fees on the basis of that

claim where, as here, the reviewing court declines to

address that claim on appeal.

In American Automobile Manufacturers Ass'n v.

Cahill, 53 F. Supp. 2d at 174, plaintiffs sued to enjoin a

state regulation mandating the sale of a certain clean air

vehicle. Plaintiffs challenged the regulation on grounds

that it was preempted by the federal Clean Air Act and

violated the Due Process and Commerce Clauses. /d. at

177-178. Defendants successfully moved to dismiss all

plaintiffs’ claims, and plaintiffs appealed. Jd. at 178-179.

On appeal, the Second Circuit reversed, holding that the

state regulation was preempted by the federal Clean Air

Act. Id. at 179. Because the preemption decision resolved

the lawsuit, the Second Circuit did not address on appeal

the due process and Commerce Clause questions. /d. at

179.

One of the plaintiffs sought attorneys’ fees pursuant to

Section 1988. Relying on Maher, it argued that fees were

recoverable because its constitutional claims were sub-

stantial, were undecided by the appellate court, and arose

out of the same nucleus of facts as the successful preemption

claim. Jd. at 179-180. The court rejected this argument,

holding that plaintiff's loss on its constitutional claims

16

barred the recovery of fees even though those claims were

unaddressed by the court of appeals. Jd. at 180-181.

The court contrasted the situation contemplated in

Maher — an undecided federal constitutional claim — with

the case before it where the plaintiff had litigated and lost

those claims in the district court. Jd. at 180. Those claims

remained “decided” against the plaintiff, notwithstanding

the appellate court’s failure to address them. Jd. “[Tlo

assume otherwise based on plaintiff’s success in another

claim,” the court held, “is to turn a blind eye to the actual

status of the case.” Id.’

The Third Circuit Court of Appeals in Luria Bros. &

Co. v. Allen, 672 F.2d 347 (3d Cir. 1982), correctly framed

the issue as follows:

Thus, the question reduces itself to one of statu-

tory construction: if, as a result of an adjudica-

tion, one is the losing and not the prevailing

party on a § 1983 claim, may he be entitled nev-

ertheless to attorney's fees on the strength of his

success on a related state law claim?

Id. at 357. The court answered the question “no,” holding

that Section 1988 “plainly limits fee awards to ‘the prevail-

ing party’” in an action to enforce Section 1983, and “|[t)he

losing party is not the prevailing party; what is black

cannot be called white.” Jd. Nor, according to the court,

was there any legislative intent by Congress “to treat a

" Plaintiff was found to be entitled to fees on its alternative

argument that the preemptive Clean Air Act conferred Section 1983

rights under the test articulated in Blessing v. Freestone, 520 U.S. 329

(1997). Cahill, 53 F. Supp. 2d at 182-186. Here, in contrast, plaintiffs’

preemption claim based on the foreign affairs power did not implicate

Section 1983. See Section IV below.

17

losing party in a § 1983 action as a ‘prevailing party’

simply because he prevails on a related state claim.” /d.

The court in Luria contrasted the situation before it,

where the plaintiff had adjudicated and lost his Section

1983 claim, with the situation where a court declines to

resolve the fee bearing claim because a non-constitutional

claim is dispositive. 672 F.2d at 357. Other circuit courts

have made the same distinction, rejecting a fee award

where the plaintiff loses his fee bearing claim, even if that

claim is substantial and even if the plaintiff has obtained

relief pursuant to his state law claim.

In Haywood v. Ball, 634 F.2d 740, 742-743 (4th Cir.

1980), for example, a plaintiff who had lost on his “sub-

stantial” constitutional claim, but had recovered both

compensatory and punitive damages on his state law

claim, was not entitled to Section 1988 attorneys’ fees. See

also Bonner v. Guccione, 178 F.3d 581, 595 (2d Cir. 1999)

(Maher exception permitting fees where constitutional

issue is avoided for prudential reasons could not “possibly

be implicated in a case in which the federal claim .. . has

been actually. decided”); Reel v. Arkansas Dep't of Correc-

tion, 672 F.2d 693, 697-698 (8th Cir. 1982); Raley v. Fraser,

747 F.2d 287, 290-292 (5th Cir. 1984).

In Mateyko v. Felix, 924 F.2d 824 (9th Cir. 1991), cert.

denied, 502 U.S. 814 (1991), the Ninth Circuit also recog-

nized the limited scope of Maher. Discussing the House

Report that accompanied Section 1988, the court noted

Congress’ concern about depriving a plaintiff of fees where

he prevails on a pendent state law claim, but does not

obtain an adjudication of the constitutional claim because

of the prudential rule discouraging resolution of such

claims. Jd. at 828. “In such a case,” the court said, “the

2 18

denial of fees would be unfair.” Jd. But where the district

court “did not avoid reaching the constitutional issue

because the pendent claim was dispositive” and instead

held that plaintiff “had no constitutional claim,” fees

should be denied. Jd. at 829.

These cases make clear that, contrary to the Ninth

Circuit’s decision in this case, the proper inquiry is not

simply the end result of the litigation without regard to

whether plaintiff has litigated and lost his Section 1983

claim. App., infra, 15. The determinant of a fee award is

not, as the Ninth Circuit concluded, whether the plaintiff

obtained his desired relief. Jd. Instead, the focus must be

on whether the plaintiff has prevailed, or can be assumed

to have prevailed, on his Section 1983 claim. j

In reaching its conclusion, the Ninth Circuit confused

the gatekeeper issue of whether the insurers earned an

entitlement to Section 1988 fees by prevailing (or, under

Maher, by being assumed to have prevailed) on a Section

1983 claim, with the different issue of what fees a Section

1983 plaintiff may recover once he has established his

right to Section 1988 fees. Hensley v. Eckerhart, 461 US.

424 (1983), on which the Ninth Circuit relied in its discus-

sion of the importance of the “end result of the litigation”

and the need to avoid “piecemeal examination” of the

litigation (App., infra, 14-15), involved a plaintiff who had

prevailed on his Section 1983 claim. The issue before the

Court was whether that plaintiff could then recover fees

for work spent on contentions in the case on which the

plaintiff had not succeeded. Whatever the merit of permit-

ting the recovery of such fees after the plaintiff has estab-

lished his right to an award of fees, that right must first be

established. It was not here.

19

This Court has recognized that merely obtaining the

relief sought is not, by itself, sufficient to entitle a plaintiff

to Section 1988 fees. Buckhannon, 532 U.S. at 600 (reject-

ing “catalyst” theory as basis for awarding fees); Truck

Council, 515 U.S. at 592 (where relief available under

state law but not pursuant to Section 1983, “[ijt follows

that ... no attorney's fees can be awarded under § 1988”).

Cf. Bray v. Alexandria Women’s Health Clinic, 506 U.S.

263, 285 (1993) (“Because respondents were not entitled to

relief under § 1985(3), they were also not entitled to

attorney's fees and costs under 42 U.S.C. § 1988.”).

Where a plaintiff has lost his Section 1983 claim in

the last court to decide the merits of that claim, he is not

the prevailing party on that claim and did not vindicate

any Section 1983 rights, privileges or immunities. The

failure of a higher court to decide that claim does not

mean, and should not mean, that the plaintiff is now

assumed to have prevailed on his Section 1983 claim. To so

hold would mean, in effect, that the lower court's decision

on the merits of that claim was wrong and was being

reversed.

That outcome is fundamentally at odds with the Ninth

Circuit’s own recognition that its decisions on the insurers’

Commerce Clause and due process claims in Gerling I and II

continue to have precedential value. The concurring opinion

expressly acknowledged that the Ninth Circuit's Commerce

Clause and due process decisions continue to have preceden-

tial effect (App., infra, 19 n.1), and the Ninth Circuit major-

ity implied the same thing. App., infra, 15. Those decisions

concluded that the insurers had not been deprived of any

right, privilege or immunity granted by Section 1983. Those

decisions, according to the Ninth Circuit, are still correct.

Yet, for fee purposes, the Ninth Circuit ignored its decisions

and the insurers loss on their Section 1983 claims.

20

Congress and this Court in Maher were concerned

about a plaintiff who was deprived of his day in court on

his Section 1983 claim, not a plaintiff who had his day in

court and lost. Neither the language of Section 1988,

requiring that a plaintiff be the “prevailing party” on his

Section 1983 claim, the legislative history of Section 1988,

nor the public policy underlying Maher supports an award

of fees where the plaintiff has lost that claim on the

merits.”

* None of the cases relied on by the insurers supports the Gerling

Ill decision. In Espino v. Besteiro, 708 F.2d 1002 (5th Cir. 1983), the

district court had granted preliminary injunctive relief based on a non-

fee bearing statute, choosing to avoid plaintiff's constitutiona! claims

for prudential reasons. Jd. at 1004, 1007. The parties thereafter settled

by agreeing to the injunctive relief sought by the plaintiff. Jd. at 1004.

Because of this disposition, no court ever reached the merits of plain-

tiff’s fee-bearing constitutional claims. Espino is therefore an ordinary

application of Maher.

In Aubin v. Fudala, 782 F.2d 287, 290-291 (ist Cir. 1986), the

plaintiffs had prevailed on their civil rights claims. In Williams v.

Thomas, 692 F.2d 1032 (5th Cir. 1982), the court applied Maher when it

declined to rule on an appeal from a Section 1983 claim on which the

plaintiff had technically prevailed in the lower court, and instead

affirmed the plaintiff's win on the state law claim and directed an

award of fees.

Nor does Carreras v. City of Anaheim, 768 F.2d 1039, 1050 (9th Cir.

1985), support the Gerling III decision. As the Ninth Circuit noted in

Gerling III (App., infra, 11), the plaintiffs in Carreras had prevailed in

part on their federal constitutional] claim in the lower court. Moreover,

the court of appeals in Carreras ruled that the district court should not

have reached that claim in any event because state law disposed of-the

case in the plaintiffs’ favor. 768 F.2d at 1042-1043. As such, the district

court’s decision on the federal constitutional question was “unneces-

sary” (id. at 1043), and the court effectively treated the claim as never

decided for fee purposes, awarding fees based on a Maher analysis.

21

Il. THE NINTH CIRCUIT’S DECISION CON-

FLICTS WITH DECISIONS OF THIS COURT

AND OTHER COURTS

As explained in Section I above, the Ninth Circuit’s

decision to award attorneys’ fees to plaintiffs that litigated

and lost all their fee-generating claims on the merits is at

serious odds with decisions of this Court and numerous

circuits. This Court and others have held that a plaintiff

must prevail (or be assumed to have prevailed) on a

Section 1983 claim to be entitled to fees, that merely

achieving the relief sought in the litigation is not enough

to entitle a plaintiff to Section 1988 fees, and that a loss on

the Section 1983 claim precludes a fee award. See Truck

Council, 515 U.S. at 592; cf. Buckhannon, 532 U.S. at 600;

Bray, 506 U.S. at 285; Operation Rescue, 37 F.3d at 653-

654. The Ninth Circuit disregarded each of these core

principles in deciding Gerling III.

These conflicts in principle warrant the grant of

certiorari here. See United-States-v. Nat'l Bank of Com-

merce, 472 U.S. 713, 719 (1985) (granting certiorari where

the court of appeals’ opinion appeared “to conflict, directly

or in principle, with decisions of other Courts of Appeals”);

Ivan Allen Co. v. United States, 422 U.S. 617, 623-624

(1975) (certiorari granted where decision conflicted in

principle with another lower court decision and raised an

important issue). See also Robert L. Stern, et al., Supreme

Court Practice 225, 226 (8th ed. 2002) (“A conflict is

sometimes asserted on the basis of differences between the

general principles or the reasoning involved in the two

decisions .. . [Such conflicts may move the court to grant

certiorari, especially if the case is otherwise important.”).

22

A conflict in principle justifies the grant of certiorari even

if no other appellate court has decided the precise issue

presented. Begier v. IRS, 496 U.S. 53, 57 n.2 (1990);

Supreme Court Practice at 232.

The Ninth Circuit’s decision is also flatly in conflict

with at least one district court decision. Cahill, 53

F. Supp. 2d at 179-181. That conflict also supports the

grant of certiorari here. See Massachusetts v. United

States, 435 U.S. 444, 453 (1978) (certiorari granted on a

conflict between a court of appeals decision and a single

judge district court ruling); Supreme Court Practice at 238

(conflict between district and circuit court is a factor

reinforcing some other basis of review, such as the impor-

tance of the question or “the confusing and differing

judicial responses to that question”).

The availability of fee awards in civil rights cases

should not depend on where the case is brought. Plaintiffs

who litigate and lose their civil rights claims in any court

outside the Ninth Circuit may not recover fees. Plaintiffs

who lose such claims in a Ninth Circuit court, on the other

hand, may recover fees under Gerling III. That conflict

should be resolved by this Court.

Ill. THIS COURT’S GRANT OF CERTIORARI ON

THE INSURERS’ FAILED SECTION 1983

CLAIMS AND ITS SUBSEQUENT DECISION

NOT TO ADDRESS THOSE CLAIMS DID NOT

CREATE AN ASSUMPTION FOR PURPOSES

OF AWARDING FEES THAT THE INSURERS

PREVAILED ON THOSE CLAIMS

This Court granted certiorari on plaintiffs’ Commerce

Clause and due process claims but did not address those

23

claims in its decision. Garamendi, 539 U.S. at 413 n.7. The

Ninth Circuit panel majority in this case asserted that the

Commissioner was unnecessarily concerned about whether

its decision meant that the “mere -grant of certiorari”

would become a “benchmark for granting fees.” App., infra,

15, n.2. The grant of certiorari, the panel majority said,

“does not factor into the prevailing party calculation,”

since it is “only when the Supreme Court (or the court of

highest authority to hear a case) rules in favor of a plain-

tiff and grants him the relief he sought will that plaintiff

be considered prevailing under § 1988.” Jd.

That statement, as Judge Graber recognized in her

concurrence (App., infra, 18-19), is simply not correct. It is

only because this Court granted certiorari on the Com-

merce Clause and due process claims and then declined to

decide those claims that the Ninth Circuit thought it could

bring this case within Maher and award fees to the insur-

ers. As Judge Graber inferred, and as the insurers con-

ceded in their briefing (App., infra, 18, 30-31), had this

Court not granted certiorari on those claims, the insurers

would not be entitled to attorneys’ fees even with their

success on the foreign affairs claim.’ The Ninth Circuit’s

decision misapprehends the purpose of this Court’s certio-

rari jurisdiction and improperly burdens it.

First, this Court’s review of an issue presented in a

petition for certiorari is entirely discretionary, and no

litigant has a right to have such an issue decided by this

* The panel majority's statement also confuses obtaining relief on

some claim in the case with the “essential predicate” that a plaintiff

must prevail, or be assumed to have prevailed, on its Section 1983

claim in order to justify Section 1988 fees. See discussion in Section I

above.

24

Court, even if certiorari is granted. Supreme Court Rule

10; Burrell v. McCray, 426 U.S. 471, 472 (1976) (Stevens,

J., concurring) (discussing the Court’s “broad control of its

discretionary docket”). The purpose of the Court’s certiv-

rari jurisdiction is to secure uniformity of decisions or to

resolve important questions of public interest. Magnum

Import Co. v. Coty, 262 U.S. 159, 163 (1923). This Court

does not grant certiorari “merely to give the defeated party

in the Circuit Court of Appeals another hearing.” Id.

Under these circumstances, this Court’s decision not to

address the insurers’ Commerce Clause and due process

claims did not unfairly deprive the insurers of an opportu-

nity to be heard on those claims, and Maher is irrelevant.

Second, this Court’s grant of certiorari carried no

implication of the Court’s view of the merits of the insur-

ers’ Section 1983 claims. See Tax Analysts v. United States

Dep't of Justice, 965 F.2d 1092, 1097 (D.C: Cir. 1992);

Jackson v. Maine, 300 F. Supp. 2d 197, 199 (D. Me. 2094)

(no significance attaches to Supreme Court grant or denial

of certiorari). Nor is it appropriate to infer that this Court

overruled the Ninth Circuit’s rulings on the merits of those

issues when it decided not to address them. See Texas v.

Cobb, 532 U.S. 162, 169 (2001) (“Constitutional rights are

not defined by inferences from opinions which did not

address the question at issue.”). This Court did not vacate

the Ninth Circuit’s rulings on the Commerce Clause and

due process claims, and, as the Ninth Circuit recognized

(App., infra, 15 and 19 n.1), the insurers’ losses on those

claims remained in place after this Court’s disposition of

the case. See Central Pines Land Co. v. United States, 274

F.3d 881, 893-894 and n.57 (5th Cir. 2001); 18 Moore's

Federal Practice § 134.05[5] (3d ed. 2005).

25

If Maher is extended to encompass failed Section 1983

claims that this Court leaves “unaddressed,” then this

Court, which is not bound to decide any claim that it

agrees to hear, will have created a fee-generating event by

the grant of certiorari. Neither Supreme Court Rule 10 nor

any case of which the Commissioner is aware refers to the

potential fee bearing character of an issue as an appropri-

ate factor for this Court to consider in deciding whether to

grant certiorari. Yet, the attachment of fee significance to

that grant, evident here, would create just such a factor.

IV. FOREIGN AFFAIRS PREEMPTION DOES

NOT CREATE INDIVIDUAL SECTION 1983

RIGHTS

The district court held that this Court’s foreign affairs

preemption ruling in Garamendi was not one that en-

forced any right or immunity secured to the insurers by

the Constitution or federal law. App., infra, 24-26. Judge

Graber’s concurring opinion in Gerling III expressly

recognized that such foreign affairs preemption does not

create individual Section 1983 rights (App., infra, 18), and

the Ninth Circuit panel majority in that decision assumed,

but did not decide, the same thing. App., infra, 9 and 17.

The district court and Judge Graber were correct.

A. The Supremacy Clause Is Not A Source Of

Individual Section 1983 Rights

Section 1983 provides private plaintiffs a means to

enforce “rights, privileges, or immunities secured by the

Constitution and laws.” The statute “is not itself a source

of substantive rights, but rather a method for vindicating

federal rights elsewhere conferred by those parts of the

26

United States Constitution and federal statutes that

it describes.” Baker v. McCollan, 443 U.S. 137, 145 n.3

(1979); see also Chapman v. Houston Welfare Rights Org.,

441 U.S. 600, 617 (1979) (“[O]ne cannot go into court and

claim a ‘violation of § 1983’ — for § 1983 by itself does not

protect anyone against anything.”).

Similarly, the Supremacy Clause itself does not create

individual federal rights. Golden State Transit Corp. v. City

of Los Angeles, 493 U.S. 103, 107-108 (1989) (“‘[The Su-

premacy] [C}lause is not a source of any federal rights’; it

‘secures federal rights by according them priority whenever

they come in conflict with state law.”) (quoting Chapman,

441 U.S. at 613). Thus, a Supremacy Clause claim “is

enforceable under § 1983 only when the [preemptive

federal law] creates ‘rights, privileges or immunities’ in the

particular plaintiff.” Golden State, 493 U.S. at 108 n.4.”

To provide a basis for a Section 1983 action, the

preemptive federal law must “unambiguously confer” an

individually enforceable right. Gonzaga Univ. v. Doe, 536

U.S. 273, 283 (2002) (“[It is only violations of rights, not

laws, which give rise to § 1983 actions... . (O]ur cases [do

not] permit anything short of an unambiguously conferred

right to support a cause of action brought under § 1983.”)

(emphasis in original). In determining whether a violation

of a federal right exists for purposes of Section 1983, this

Court relies on its “implied right of action” jurisprudence

and asks whether the preemptive federal provision was

* This distinguishes the Supremacy Clause from the Commerce

Clause, which this Court has found does secure an individual “right to

engage in interstate trade free from restrictive state regulation.” Dennis

v. Higgins, 498 U.S. 439, 448 (1991).

27

intended to confer individual rights on a particular class of

persons. /d. at 283, 285, 286.

B. The Federal Foreign Policy For Resolving

Holocaust Claims Reflected In Executive ©

Agreements With Other Nations Did Not

Unambiguously Confer Section 1983 Rights

On The Insurers

In Garamendi, this Court held that the HVIRA was

preempted because it conflicted with the federal government's

exercise of its foreign policy favoring consensual resolution of

Holocaust-era insurance claims. See Garamendi, 539 U.S. at

427 (“The question relevant to preemption in this case is

conflict, and the evidence here is more than sufficient to

demonstrate that the [HVIRA] stands in the way of the

President’s diplomatic objectives.”) (internal quotation

marks and alteration omitted). This foreign policy was

reflected in executive agreements between the United

States and Germany, Austria, and France, and in the

government’s support for the International Commission on

Holocaust Era Insurance Claims (ICHEIC). Jd. at 403,

413.

This expression of foreign policy did not create indi-

vidual rights: As this Court recognized, the doctrine of

foreign affairs preemption invalidates state laws that

conflict with the President’s authority to conduct the

Nation’s foreign affairs. Garamendi, 539 U.S. at 413-414.

Thus, this Court held that the HVIRA was unconstitu-

tional, not because it violated any person’s rights, but

rather because “state law must give way where, as here,

there is evidence of clear conflict between the policies

adopted” by the federal Executive Branch and California

over matters of international interest thought to arise out

28

of World War II. Id. at 421. The capacity of the President

to conduct foreign affairs is patently a matter of collective,

rather than individual, concern, and the Executive's

exercise of its foreign affairs power here was not intended

to confer any rights on the insurers.

Neither the executive agreements nor the federal

policy they reflect unambiguously conferred any rights on

the insurers that are enforceable under Section 1983.

Instead, their purpose was to provide Holocaust victims

with “some measure of compensation” through “voluntary,

non-adversarial mechanisms.” App., infra, 34-35, 36. While

this approach might also further the insurers’ interest in

avoiding litigation or regulatory action, the federal gov-

ernment took this course expressly because it “serves the

interests of Holocaust victims and their families” and also

“serves important interests of the Nation in cooperative

relations with its European allies.” App., infra, 37. Pre-

sumably, under this Court’s analysis, if the President had

decided that the HVIRA would better assist survivors in

resolving their claims, the statute would not have been

preempted, even though it “harmed” the insurers, because

the statute would no longer conflict with the President’s

policy.

At best, the insurers are “incidental” beneficiaries of

the executive agreements — a status insufficient to permit

suit under Section 1983 because “it is rights, not the

broader or vaguer ‘benefits’ or ‘interests,’ that may be

enforced under the authority of that section.” Gonzaga,

536 U.S. at 283 (emphasis in original); see also Golden

State, 493 U.S. at 109 (where federal law benefits a par-

ticular party “only as an incident of the federal scheme of

regulations,” a Section 1983 remedy is not available). “The

question is not simply who would benefit from the [federal

29

law], but whether [the federal government) intended to

confer federal rights upon those beneficiaries.” Gonzaga,

536 U.S. at 286."

In sum, the HVIRA was not preempted because it

interfered with any insurer right, but because it conflicted

with the President’s ability to conduct foreign policy. This

conflict does not even remotely suggest the grant of some

enforceable Section 1983 right to the insurers, let alone an

unambiguous grant of such right. Accordingly, preemption

of the HVIRA on these grounds does not provide any basis

for a Section 1983 claim and an award of attorneys’ fees

pursuant to Section 1988.

" Nor does the plain language of these executive agreements

reflect any intent by the federal government to confer any rights on the

insurers. As the government recognized in an amicus brief filed in the

Ninth Circuit, the insurers were not promised “legal peace.” App., infra,

32-33.

30

CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully submitted,

FRANK KAPLAN ANDREW W. STROUD

Counsel of Record MENNEMEIER GLASSMAN &

ALSCHULER GROSSMAN STEIN STROUD LLP

& KAHAN LLP 980 9th Street, Suite 1700

1620 26th Street Sacramento, CA 95814

Fourth Floor, North Tower (916) 553-4000

Santa Monica, CA 90404

(310) 907-1000

LESLIE TICK RYAN S. HEDGES

CALIFORNIA DEPARTMENT OF EIMER STAHL KLEVORN &

INSURANCE SOLBERG LLP

45 Fremont Street, 224 South Michigan Avenue,

21st Floor Suite 1100

San Francisco, CA 94105 Chicago, IL 60604

(415) 538-4190 (312) 660-7600

App. 1

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

GERLING GLOBAL REINSURANCE

CORPORATION OF AMERICA, US Branch;

GERLING GLOBAL LIFE REINSURANCE

COMPANY; GERLING GLOBAL LIFE

INSURANCE COMPANY; GERLING AMERICA

INSURANCE COMPANY; CONSTITUTION

INSURANCE COMPANY; REVIOS

REINSURANCE CANADA, LTD.;

REVIOS REINSURANCE U.S., INC.;

ASSICURAZIONI GENERAL S.P.A.;

AMERICAN INSURANCE ASSOCIATION;

AMERICAN RE-INSURANCE COMPANY,

Plaintiffs-Appellants,

and

WINTERTHUR INTERNATIONAL AMERICA

INSURANCE COMPANY; WINTERTHUR

INTERNATIONAL AMERICA UNDERWRITERS

INSURANCE COMPANY; GENERAL

CASUALTY COMPANY OF WISCONSIN;

REGENT INSURANCE COMPANY;

REPUBLIC INSURANCE COMPANY;

SOUTHERN INSURANCE COMPANY; UNIGARD

INDEMNITY COMPANY, UNIGARD INSURANCE

COMPANY; BLUE RIDGE INSURANCE Co.,

Plaintiffs,

Vv.

JOHN GARAMENDI, in his capacity as the

Insurance Commissioner of the State of

California,

Defendant-Appellee.

No. 04-15332

D.C. No.

CV-00-00506-WBS

———

App. 2

AMERICAN INSURANCE ASSOCIATION;

AMERICAN RE-INSURANCE COMPANY, No. 04-15455

Plaintiffs-Appellants, D.C. No.

. CV-00-00613-

WBS/JFM

JOHN GARAMENDI, in his capacity as the ORDER AND

Insurance Commissioner of the State of AMENDED

California, OPINION

Defendant-Appellee.

Appeal from the United States District Court

for the Eastern District of California

William B. Shubb, Chief Judge, Presiding

Argued and Submitted

December 13, 2004 — Pasadena, California

Filed March 10, 2005

Amended June 3, 2005

Before: Alfred T. Goodwin, Susan P. Graber,

and Richard A. Paez, Circuit Judges.

Opinion by Judge Goodwin;

Concurrence by Judge Graber

COUNSEL

Charles A. Rothfeld, Mayer, Brown, Rowe & Maw, LLP,

Washington, D.C., for the plaintiffs-appellants.

Frank Kaplan, Alschuler Grossman Stein & Kahan, LLP,

Santa Monica, California, for the defendant-appellee.

| App. 3

ORDER

The opinion filed March 10, 2005, slip op. 3137 and

appearing at 400 F.3d 803 (9th Cir. 2005), is amended as

follows:

400 F.3d at 809 (slip op. at 3150, 10th line from the

bottom of the page): Following the citation at the end of

the sentence, “We conclude that the unaddressed due

process and Commerce Clause claims ... pass the ‘sub-

stantiality’ test and therefore support an award of fees to

the plaintiffs,” add the following footnote and renumber

the subsequent footnotes accordingly:

FN 1: The Commissioner and Amici argue that

this result is contrary to National Private

Truck Council, Inc. v. Oklahoma Tax

Commission, 515 U.S. 582, 592 (1995).

Truck Council held that where an ade-

quate state law remedy exists in a state

tax case, federal courts are not permitted

to award declaratory or injunctive § 1983

relief. Jd. at 589. The Court affirmed the

Oklahoma Supreme Court's rejection of

the plaintiff’s § 1983 claims and declined

to award § 1988 attorney's fees because

§ 1983 relief could not be awarded. Jd. at

592. The Truck Council holding is entirely

consistent with our decision. If a plaintiff

does not have a substantial, properly cog-

nizable § 1983 claim, then § 1988 attor-

ney’s fees may not be awarded. In

addition, if the Supreme Court in this

case had expressly affirmed Gerling IIs

rejection of plaintiff's due process and

Commerce Clause claims, then plaintiffs

would not be entitled to § 1988 fees.

App. 4

With the opinion thus amended, the panel has voted

unanimously to deny the petition for rehearing. Judges

Graber and Paez have voted to deny the petition for

rehearing en banc, and Judge Goodwin recommended

denial.

The full court has been advised of the petition for

rehearing en banc and no active judge has requested a

vote on whether to rehear the matter en banc. Fed. R. App.

P. 35.

The petition for rehearing is DENIED and the petition

for rehearing ~ »anc is DENIED.

No subsequent petitions for rehearing or petitions for

rehearing en banc may be filed.

GOODWIN, Senior Circuit Judge:

OPINION

This case returns to our calendar for the fourth time

following its journey to the Supreme Court. Plaintiffs,

three insurance companies and one insurance trade

association, originally brought this action against the

California Commissioner of Insurance (“Commissioner”)

seeking to bar the enforcement of the Holocaust Victim

Insurance Relief Act of 1999 (“HVIRA”), Cal. Ins. Code

§§ 13800-13807 (1999). That statute requires the disclo-

sure of certain information pertaining to Holocaust-era

insurance policies written in Europe. Following the Su-

preme Court's disposition of the case in their favor, plain-

tiffs sought attorney's fees in this court. We remanded the

App. 5

fees question to the district court, which denied the re-

quest. The appealable order was appealed.

This appeal presents two principal questions. First, did

the district court err when it held that plaintiffs were not

prevailing parties within the meaning of 42 U.S.C. § 1988?

Second, do the foreign affairs power of the Executive

branch and the related executive agreements between the

United States, Germany, Austria, and France create

private rights within the meaning of 42 U.S.C. § 1983?

We hold that plaintiffs are prevailing parties and are

thus entitled to an award of a reasonable attorney’s fee.

Because we hoid that plaintiffs are prevailing parties, we

do not reach the question whether executive actions under

the foreign affairs power create justiciable private rights.

Therefore, under the authority of Maher v. Gagne, 448

U.S. 122 (1980), we remand to the district court for a

determination of the proper fee.

I. Factual Background and Procedural History

Because the facts of this case have been set forth by

this court and by the Supreme Court in detail, see Gerling

Global Reinsurance Corp. of Am. (“Gerling Global”) v. Low,

240 F.3d 739, 754 (9th Cir. 2001) (“Gerling I”); Gerling

Global v. Low, 296 F.3d 832 (9th Cir. 2002) (“Gerling IT”);

Am. Ins. Ass'n v. Garamendi, 539 U.S. 396 (2003), we

recount only the basic procedural history here.

Plaintiffs brought this action seeking declaratory and

injunctive relief from the enforcement of HVIRA, claiming

that the statute violated the Commerce Clause, Due Proc-

ess Clause, foreign affairs power, and other constitutional

provisions. The district court concluded that plaintiffs

App. 6

“demonstrated a probability of success on the merits that

the HVIRA is unconstitutional in violation of the federal

foreign affairs power and a violation of the Commerce

Clause.” Gerling Global v. Quackenbush, 2000 WL 777978,

*13 (E.D. Cal. June 9, 2000). After finding that the balance

of irreparable harm favored the plaintiffs, the district

court granted a preliminary injunction and enjoined the

enforcement of HVIRA and its implementing regulations.

Id. at *13-14.

The Commissioner appealed and we reversed, leaving

the preliminary injunction in place. We remanded the case

to the district court to consider plaintiffs’ due process

claims. Gerling I, 240 F.3d at 754.

On remand, the district court granted plaintiffs’

motion for summary judgment and permanently enjoined

the Commissioner from enforcing HVIRA, holding that

“(bly mandating license suspension for non-performance of

what may be impossible tasks without allowing for a

meaningful hearing, HVIRA deprives plaintiffs of a pro-

tected property interest without affording them due

process of law.” Gerling Global v. Low, 186 F. Supp. 2d

1099, 1113 (E.D. Cal. 2001).

The Commissioner again appealed the district court

decision. During the pendency of that appeal, the plaintiffs

filed a motion with the district court seeking attorney's

fees under 42 U.S.C. § 1988. The district court denied the

motion, and plaintiffs timely appealed.

In Gerling II, we reversed the district court and held

that HVIRA did-not violate plaintiffs’ due process rights,

the Commerce Clause, the foreign affairs power, the Bill of

Attainder Clause, the Contract Clause, the Equal Protec-

tion Clause, or the Fourth Amendment. 296 F.3d 832. We

App. 7

concluded that plaintiffs were not “prevailing parties”

under 42 U.S.C. § 1988 and therefore were not entitled to

attorney fees. Jd. at 851.

The Supreme Court granted certiorari. Am. Ins. Ass’n

v. Low, 537 U.S. 1100 (2003). The grant of certiorari

“encompassed three of the questions addressed [in Gerling

I and Gerling II): whether HVIRA intrudes on the federal

foreign affairs power, violates the self-executing element of

the Foreign Commerce Clause, or exceeds the State's

‘legislative jurisdiction.’” Am. Ins. Ass'n, 539 U.S. at 413

n.7. The Court reversed this court’s judgment, holding that

HVIRA was pre-empted by Executive Branch authority

over foreign policy. Jd. at 420. The Court did not address

the Commerce Clause and Due Process Clause issues. Jd.

at 413 n.7 (“Because we hold that HVIRA is preempted

under the foreign affairs doctrine, we have no reason to

address the other questions.”).

Following the Court’s decision, plaintiffs sought

attorney's fees and moved this court for supplemental

briefing and oral argument. We transferred the fee issue to

the district court for consideration on a factual record.

Gerling Global v. Low, 339 F.3d 1078 (9th Cir. 2003)

(“Gerling IIT”).

The district court declined to award fees because it

concluded that the foreign affairs power did not implicate

“a right, privilege, or immunity secured by the Constitu-

tion or laws of the United States” and therefore could not

form the basis of a 42 U.S.C. § 1983 claim.

App. 8

Il. The Prevailing Party Determination

The Civil Rights Attorney's Fee Award Act of 1976

provides, in relevant part: “In any action or proceeding to

enforce a provision of [42 U.S.C. § 1983], the court, in its

discretion, may allow the prevailing party, other than the

United States, a reasonable attorney's fee as part of the

costs.” 42 U.S.C. § 1988(b). 42 U.S.C. § 1983, in turn,

protects against the “deprivation of any rights, privileges,

or immunities secured by the Constitution and laws.” The

first issue is whether plaintiffs constitute “prevailing

parties.”

The Supreme Court has summarized the “prevailing

party” determination as follows:

[Tlo qualify as a prevailing party, a civil rights

plaintiff must obtain at least some relief on the

merits of his claim. The plaintiff must obtain an

enforceable judgment against the defendant from

whom fees are sought, |Hewitt v. Helms, 482 U.S.

755, 760, 107 S. Ct. 2672, 96 L.Ed.2d 654 (1987),

or comparable relief through a cons_nt decree or

settlement, Maher v. Gagne, 448 U.S. 122, 129,

100 S. Ct. 2570, 65 L.Ed.2d 653 (1980). Whatever

relief the plaintiff secures must directly benefit

him at the time of the judgment or settlement.

See Hewitt, |482 U.S. at 764] ... In short, a

plaintiff ‘prevails’ when actual relief on the mer-

its of his claim materially alters the legal rela-

tionship between the parties by modifying the

defendant’s behavior in a way that directly bene-

- fits the plaintiff.

Farrar v. Hobby, 506 U.S. 103, 111-12 (1992). We hold that

plaintiffs are prevailing parties in this litigation. Plaintiffs

not only obtained “some” relief on the merits of their

claim, they received all of the relief they sought in their

App. 9

lawsuit — a permanent injunction enjoined the enforce-

ment of HVIRA. Clearly, the ruling of the Supreme Court

modified the Commissioner’s behavior by “materially

alter{ing) the legal relationship between the parties.” See

id.

The second issue is whether the plaintiffs prevailed

under a fee-generating legal “right.” The Supreme Court

decided for the plaintiffs relying on the implied preemp-

tion of HVIRA by the foreign affairs power of the Execu-

tive branch. The Commissioner argues that, because the

Supreme Court ruled in favor of plaintiffs on a ground not

covered by § 1983, the plaintiffs are not § 1988 prevailing

parties. We are thus faced with the question whether a

court, in an action containing both fee-supporting § 1983

claims and a claim which may not independently support a

fee award, may deprive plaintiffs of attorney's fees by

grounding its ruling on the non-fee-generating claim.

Answering this question in the affirmative would be

inconsistent with both Supreme Court and Ninth Circuit

precedent.

Beginning with the assumption that the foreign

affairs power does not confer rights within the meaning of

§ 1983, we must determine whether the claims left unad-

dressed by the Supreme Court, but included in its grant of

certiorari — the Commerce Clause and Due Process Clause

claims - may support an award of attorney’s fees. Due

Process Clause and Commerce Clause claims are both

properly cognizable, fee-supporting claims under § 1983.

See, e.g., Dennis v. Higgins, 498 U.S. 439, 446 (1991)

(Commerce Clause); Paul v. Davis, 424 U.S. 693, 696-97

(1976) (Due Process Clause). Plaintiffs urge us to apply

Maher v. Gagne, 448 U.S. 122 (1980), and its progeny to

conclude that fees are appropriate here because the

App. 10

unaddressed claims were both substantial and arose from

a common nucleus of operative fact with the foreign affairs

power claim.

Maher held that an award of fees is appropriate where

a “plaintiff prevails on a wholly statutory, non-civil-rights

claim pendent to a substantial constitutional claim or in one

in which both a statutory and a substantial constitutional

claim are settled favorably to the plaintiff without adjudi-

cation.” Jd. at 132. The plaintiff in Maher advanced claims

under the Social Security Act and the Equal Protection

and Due Process Clauses of the Fourteenth Amendment.

Id. at 124-25. The parties settled through a consent decree

before a final adjudication of any of the claims. Jd. at 126

& n.8. Noting that “[njothing in the language of § 1988

conditions the District Court’s power to award fees on full

litigation of the issues or on a judicial determination that

the plaintiff's rights have been violated,” and emphasizing

the policy supporting a broad reading of the fees statutes,

the Court affirmed the award of fees to the plaintiff. Jd. at

129-30.

Although the matter in Maher was settled through a

consent decree, the Maher holding applies equally to the

determination of pendent claims through litigation. See,

e.g., Carreras v. City of Anaheim, 768 F.2d 1039, 1050 (9th

Cir. 1985), abrogated on other grounds by Los Angeles

Alliance for Survival v. City of Los Angeles, 993 P.2d 334

(Cal. 2000) (awarding fees where plaintiff prevailed,

through litigation, on pendent state constitutional law

claims).

Carreras provides some guidance here because it

demonstrates Maher's applicability in the context of

litigation, but it is not the panacea plaintiffs propose. In

App. 11

that case, the International Society for Krishna Con-

sciousness of Laguna Beach, Inc. (ISKCON) sued the City

of Anaheim over the city’s prohibition of ISKCON’s prac-

tice of soliciting donations in the parking areas and

walkways surrounding the Anaheim Stadium and the

Anaheim Convention Center. 768 F.2d at 1041. The dis-

trict court, relying on federal constitutional law, held that

ISKCON was not entitled to relief as to the stadium area

because that area was not a public forum. /d. at 1045 &

n.10. However, the district court did grant ISKCON relief

with respect to the convention center, also relying upon

federal law in reaching its conclusion. Jd. at 1046 & n.15.

On appeal, this court did not reach the federal constitu-

tional question but, relying on the California constitution,

we reversed the district court’s holding on the stadium

issue. Despite the fact that we did not explicitly reverse

the district court’s federal constitutional analysis, see id.

at 1045 n.10, we relied on Maher to award attorney's fees.

Id. at 1050. We are aware that Carreras is distinguishable

because ISKCON did prevail on a fee-supporting claim -

the convention center claim — at the district court level.

Moreover, we reversed the district court’s convention

center holding on different grounds, rather than avoiding

that issue altogether. However, we do not read Carreras to

impose a limit on our ability to award a fee in this case.

Rather, we read Carreras’s application of Maher to support

an award of fees where, as here, the court of highest

authority to hear a case avoids resolution of a fee-

supporting federal claim.

’

A. Applicability of Maher

Maher advocated a “substantiality test” for determin-

ing whether a pendent claim can support an award of fees:

App. 12

In some instances . . . the claim with fees may in-

volve a constitutional question which the courts

are reluctant to resolve if the non-constitutional

claim is dispositive. |Hagans v. Lavine, 415 U'S.

528 (1974)]. In such cases, if the claim for which

fees may be awarded meets the ‘substantiality’

test, see lid. at 537-38; United Mine Workers v.

Gibbs, 383 U.S. 715 (1966)], attorney's fees may

be allowed even though the court declines to en-

ter judgment for the plaintiff on that claim, so

long as the plaintiff prevails on the non-fee claim

arising out of a ‘common nucleus of operative

fact.’ (Gibbs, 383 U.S. at 725].

Maher, 448 U.S. at 132 n.15 (quoting H.R. Rep. No. 1558,

at 4 n.7 (1976)). Under this formulation, we conclude that,

for the purpose of qualifying a prevailing party, an unad-

dressed, fee-supporting claim supports an award of fees if

it is both substantial and arises from a common nucleus of

operative fact with a dispositive, non-fee-supporting claim

addressed by the court. That the substantiality test speaks

of situations in which a “non-constitutional claim is

dispositive” does not dilute its relevance when a claim,

such as the implied preemption claim at issue here, may

be termed a “constitutional claim.” A court’s decision to

resolve one constitutional question and to avoid others

does not exempt the attorney's fee question from the

reasoning of Maher.

We turn now to the application of the Maher substan-

tiality test to the Due Process Clause and Commerce

Clause claims. A claim is constitutionally insubstantial if it

is “essentially fictitious ... wholly insubstantial ... obvi-

ously frivolous ... for] obviously without merit.” Hagans,

415 U.S. at 537-38 (quotations and citations omitted). This

panel has twice grappled with the fee-supporting issues in

App. 13

detail. See Gerling I, 240 F.3d at 754; Gerling II, 296 F.3d

832. The extent of our previous analysis demonstrates that

the Due Process Clause and Commerce Clause claims

brought by plaintiffs were not constitutionally insubstan-

tial.

Claims arise from a common nucleus of operative fact

where fee-supporting claims are so interrelated with non-fee

claims that plaintiffs “would ordinarily be expected to try

them all in one judicial proceeding.” Gibbs, 383 U.S. at

725. The three claims to which the Supreme Court granted

certiorari all arose from California’s attempted enforce-

ment of HVIRA. Plaintiffs correctly attempted to try all of

their issues in one proceeding. We conclude that the

unaddressed due process and Commerce Clause claims,

which remained in the case until the final disposition by

the Supreme Court, pass the “substantiality” test and

therefore support an award of fees to plaintiffs. Cf Maher,

448 U.S. at 131 (“Although . . . the trial judge did not find

any constitutional violation, the constitutions! issues

remained in the case until the entire dispute was settled

by the entry of a consent decree.”).’

' The Commissioner and Amici argue that this result is contrary to

National Private Truck Council, Inc. v. Oh‘ahoma Tax Commission, 515

U.S. 582, 4592 (1995). Truck Council held that where an adequate state

law remedy exists in a state tax case, federal courts are not permitted

to award declaratory or injunctive § 1983 relief. Jd. at 589. The Court

affirmed the Oklahoma Supreme Court's rejection of the plaintiff's

§ 1983 claims and declined tw award § 1988 attorney's fees because

§ 1983 relief could not be awarded. Jd at 592. The Truck Council

holding is entirely consistent with our decision. If a plaintiff does not

have a substantial, properly cognizable § 1983 claim, then § 1988

attorney's fees may not be awarded. In addition, if the Supreme Court

in this case had expressly affirmed Gerling II's rejection of plaintiff's

(Continued on following page)

App. 14

B. Our Previous Holdings

We must note that the fee determination is further

complicated by the lengthy procedural history of the case,

forcing us to address our previous holdings in Gerling I

and Gerling II. Recognizing the admonition of the Su-

preme Court that “[a] request for attorney's fees should

not result in a second major litigation,” Hensley v. Ecker-

hart, 461 U.S. 424, 437 (1983), we briefly revisit those

cases in order to put to rest the Commissioner's contention

that plaintiffs cannot be considered “prevailing parties”

because we previously rejected their due process and

Commerce Clause claims. In Gerling I, we held that the

district court erroneously concluded that plaintiffs demon-

strated a likelihood of success on the Commerce Clause

issue. 240 F.3d at 751. We further held, incorrectly, it

turned out, that HVIRA did not conflict with the foreign

affairs power. Jd. at 753. In Gerling Il, we repeated our

conclusion that HVIRA did not violate the Commerce

Clause or the foreign affairs power, and we determined

that HVIRA also did not violate plaintiffs’ due process

rights. 296 F.3d at 844, 849.

As discussed above, the Supreme Court did not reach

either the Commerce Clause or the due process issues.

Even aside from plaintiff's contention that cur Commerce

Clause and due process holdings were impliedly overruled

by American Insurance Ass'n, 539 U.S. 396, however, we

conclude that in exercising its discretion to award attor-

ney’s fees, a district court must focus on whether a plain-

tiff “succeed[s] on any significant issue in litigation which

due process and Commerce Clause claims, then plaintiffs would not be

entitled to § 1988 fees.

App. 15

achieves some of the benefit the parties sought in bringing

the suit.” Hensley, 461 U.S. at 433 (quoting Nadeau v.

Helgemoe, 581 F.2d 275, 278-79 (1st Cir. 1978)).

The proper inquiry zeros in on the end result of the

litigation: A piecemeal examination of the arguments that

the court of final authority did or did not reach may be

helpful in determining our prior opinions’ precedential

value, but it is not helpful in determining whether a

plaintiff is a “prevailing party” within the meaning of

§ 1988 at the conclusion of the litigation. See id. at 435

(“Litigants in good faith may raise alternative legal

grounds for a desired outcome, and the court’s rejection of

or failure to reach certain grounds is not a sufficient

reason for reducing a fee. The result is what matters.”).’ So

long as an unaddressed, fee-supporting claim meets the

substantiality test set forth above, and the end result of

the litigation grants a plaintiff his desired relief, the

unaddressed claim may support a fee award regardless of

the decision of the court below. Accordingly, we conclude

that our holdings in Gerling I and Gerling II do not pre-

clude the district court from exercising its discretion to

award a reasonable attorney's fee under Maher.

We are not unaware of our holding in Mateyko v. Felix,

924 F.2d 824, 828 (9th Cir. 1991). In that case, the court

did not invoke principles of avoidance; rather, “it found

* Focusing on the end result of the litigation should answer the

Commissioner's concern that the “mere grant of certiorari” will become

a benchmark for granting fees. The grant of certiorari does not factor

into the prevailing plaintiff calculation - only when the Supreme Court

(or the court of highest authority to hear a case) rules in favor of a

plaintiff and grants him the relief he sought will that plaintiff be

considered prevailing under § 1988.

_App. 16

that [Mateyko] had no constitutional claim at all,” and

granted a directed verdict on all of the § 1983 claims. Jd.

at 829 (quoting Reel v. Ark. Dep't of Corr., 672 F.2d 693,

698 (8th Cir. 1982)). A jury, reviewing the remaining state

law claims, found Mateyko was 96% contributorily negli-

gent for his state negligent infliction of emotional distress

claim, and entered a judgment in his favor for 4% of his

damages. Id. at 825. We rejected Mateyko’s claim that this

small victory made him a prevailing plaintiff. Jd. at 828-

29. This result is consistent with our holding above be-

cause, at the conclusion of litigation and after we affirmed

the directed verdict, no fee-supporting claims remained in

the case — Mateyko could not invoke Maher because there

was no unaddressed fee-supporting claim which could pass

Maher’s substantiality test. In such a case, awarding an

attorney’s fee is inappropriate.

C. Policy Considerations

Quite apart from the applicability of Maher, the policy

behind the enactment of § 1988 and the prudential policy

of avoiding constitutional questions further supports the

conclusion that plaintiffs should be awarded a reasonable

fee in this case. “As the legislative history illustrates and

as [the Supreme Court] has recognized, § 1988 is a broad

grant of authority to courts to award attorney's fees to

plaintiffs seeking to vindicate federal constitutional and

statutory rights.” Smith v. Robinson, 468 U.S. 992, 1006

(1984), overruled on other grounds by 20 U.S.C. § 1415(/).

Furthermore, as stated in Maher, a fee award based on

pendent claims “furthers the Congressional goal of en-

couraging suits to vindicate constitutional] rights without

undermining the longstanding judicial policy of avoiding

unnecessary decision of important constitutional issues.”

448 U.S. at 133 (quoting Gagne v. Maher, 594 F.3d 336,

App. 17

342 (2d Cir. 1979)). We decline the Commissioner's invita-

tion to conclude that the Supreme Court must rule in favor

of a plaintiff on a specific, fee-supporting aspect of the case

in order for a plaintiff to be considered a prevailing party.

Rather, applying the Supreme Court’s “generous formula-

tion” of the prevailing party definition, see Farrar, 506

U.S. at 109 (quoting Hensley, 461 U.S. at 433 (1983)), we

hold that the district court read § 1988 too narrowly and

assumed that it lacked discretion to award plaintiff

insurance companies a reasonable attorney’s fee.

Ill. The Foreign Affairs Power and § 1983

The district court concluded that the foreign affairs

power did not “implicate a right, privilege or immunity

secured by the Constitution or laws of the United States”

and therefore did not constitute a § 1983 claim. That

conclusion may have been correct as an abstract proposi-

tion, but it did not support the further conclusion that

plaintiffs were not prevailing parties. Because we reverse

the district court on the prevailing party point, we need not

reach the question whether the foreign affairs power inde-

pendently confers private rights. The fact that plaintiffs’ Due

Process Clause and Commerce Clause claims are properly

cognizable claims under § 1983 satisfies our inquiry and

should result in a fee award to plaintiffs.

IV. Conclusion

For the reasons set forth above, we REVERSE the

denial of § 1988 attorney's fees and REMAND this case to

the district court with instructions to exercise its discre-

tion to determine a reasonable amount of attorney’s fees in

accordance with Hensley, 461 U.S. 424, and Webb v. Sloan,

330 F.3d 1158, 1167-70 (9th Cir. 2003). The award shal]

App. 18

include an allowance for fees and costs incurred in contest-

ing the district court’s denial of fees.

GRABER, Circuit Judge, concurring in the result:

I concur in the result for the following reasons.

1. The claim of preemption by the foreign affairs

power is not a fee-generating claim, for the reasons ably

explained by the district court. In short, the foreign affairs

power, like the Supremacy Clause, creates no individual

rights enforceable under 28 U.S.C. § 1983. Cf Golden

State Transit Corp. v. City of Los Angeles, 493 U.S. 103,

107 (1989) (“[T]he Supremacy Clause, of its own force,

does not create rights enforceable under § 1983.”); Associ-

ated Gen. Contractors v. Smith, 74 F.3d 926, 931 (9th Cir.

1996) (“[P]reemption of state law under the Supremacy

Clause — being grounded not on individual rights but

instead on considerations of power — will not support an

action under section 1983, and will not, therefore, support

a claim for attorneys’ fees under section 1988.” (alteration

in original) (internal quotation marks omitted))

2. The due process and Commerce Clause claims are

fee-generating claims under 28 U.S.C. §§ 1983 and 1988.

But Plaintiffs lost those claims before this court.

3. Ptaintiffs’ entitlement to fees, then, depends on whet

happened to the various claims at the Supreme Court. Had

Plaintifis not sought certiorari on the fee-generating claims,

or had the Supreme Court upheld our result on those claims,

Plaintiffs would not be entitled to fees. See Mateyko v. Felix,

924 F.2d 824, 828 (9th Cir. 1991) (“Where, as here, there

has been a decision adverse to plaintiff on the section 1983

App. 19

claim, section 1988 does not authorize the award of attor-

ney’s fees.”). But neither of those things happened here.

Rather, Plaintiffs sought and received a writ of certio-

rari on both their fee-generating claims and their non-fee-

generating claim. The Court held in Plaintiffs’ favor on the

non-fee-generating claim without reaching the fee-

generating claims at all. Under the principles that we

announced in Carreras v. City of Anaheim, 768 F.2d 1039,

1050 (9th Cir. 1985), abrogated on other grounds by Los

Angeles Alliance for Survival v. City of Los Angeles, 993

P.2d 334 (Cal. 2000), and that the Supreme Court set forth

in Maher v. Gagne, 448 U.S. 122, 132-33 (1980), Plaintiffs

are entitled to fees. The Supreme Court had the opportu-

nity-to decide the fee-generating claims and chose not to

do so;' the policies identified in Carreras and Maher

therefore counsel in favor of awarding fees.

' The Court's decision thereby leaves our opinion in Gerling Global

Reinsurance Corp. of America v. Low, 296 F.3d 832 (9th Cir. 2002), rev'd

sub nom American Insurance Ass'n v. Garamendi, 539 U.S. 396 (2003),

with precedential effect on those issues.

-

App. 20

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

GERLING GLOBAL

REINSURANCE CORP.

OF AMERICA, et al., NO. CIV. 8-00-0506 WBS JFM

Plaintiffs, Consolidated Cases:

No. CIV. S-00-0613 WBS JFM

No. CIV. 8-00-0779 WBS JFM

Vv.

JOHN GARAMENDI,

in his capacity as the No. CIV. S-00-0875 WBS JFM

INSURANCE MEMORANDUM

COMMISSIONER OF

THE STATE OF AND ORDER

CALIFORNIA, (Filed Jan. 29, 2004)

Defendant.

After the Supreme Court’s decision in this case,

plaintiffs moved the Ninth Circuit for supplemental

briefing and oral argument on the issue of attorney fees.

The Ninth Circuit ordered the issue of attorney fees

transferred to this court for briefing and reconsideration.

This matter is now before the court on plaintiffs’ motion

for attorney fees.

I. Procedural Background

On June 9, 2000, this court issued a preliminary

injunction after ruling that plaintiffs had established the

likelihood of irreparable harm and a probability of success

on the merits of their claims that the California Holocaust

Victim Insurance Relief Act (“HVIRA”) violates the Com-

merce Clause and the foreign affairs power. Gerling Global

App. 21

Reinsurance Corp. of Am. (“Gerling Giobal”) v. Quacken-

bush, Nos. CIV. 8-00-0506 WBS JFM, CIV. S-00-0613 WBS

JFM, CIV. 8-00-0779 WBS JFM, CIV. S-00-0875 WBS

JFM, 2000 WL 777978 (E.D. Cal. June 9, 2000).

On February 7, 2001, the Ninth Circuit held that “the

district court erred when it decided that HVIRA violates

the dormant Commerce Clause and the foreign affairs

power.” Gerling Global v. Low, 240 F.3d 739, 754 (9th Cir.

2001). The Ninth Circuit, however, left the preliminary

injunction in place and remanded the matter to this court

to address whether the HVIRA violates the Due Process

Clause. Id.

On October 2, 2001, this court granted plaintiffs’

motion for summary judgment, holding that the HVIRA

violates the Due Process Clause, and permanently en-

joined defendant from enforcing the HVIRA. Gerling

Global v. Low, 186 F. Supp. 2d 1099 (E.D. Cal. 2001). On

October 16, 2001, defendant appealed the grant of sum-

mary judgment to the Ninth Circuit. During the pendency

of this appeal, plaintiffs moved this court for an award of

attorney fees pursuant to, inter alia, 42 U.S.C. § 1988. On

January 14, 2002, this court denied plaintiffs’ motion for

an award of attorney fees.

On September 9, 2002, the Ninth Circuit reversed this

court’s order of October 2, 2001, holding, inter alia, that

the HVIRA does not violate the Due Process Clause, the

Commerce Clause, or the foreign affairs power. Gerling

Global v. Low, 296 F.3d 832 (9th Cir. 2002). The Ninth

Circuit did not address the merits of this court’s January

14, 2002, attorney fees ruling. Instead, the Ninth Circuit

stated: “(T]he district court improperly concluded that

HVIRA was unconstitutional, it also erred in concluding

App. 22

that Plaintiffs were ‘prevailing parties’ for the purposes of

42 U.S.C. § 1988. They are not entitled to fees.” Id., at 851.

On June 23, 2003, the Supreme Court reversed the

Ninth Circuit, holding that the HVIRA violates the foreign

affairs power. Am. Ins. Ass’n v. Garamendi, 123 S. Ct.

2374 (2003). Subsequently, plaintiffs moved the Ninth

Circuit for supplemental briefing and oral argument on

the issue of attorney fees. On September 9, 2003, the

Ninth Circuit denied plaintiffs’ motion and ordered that

“(t]he issue of attorney fees is transferred to the district

court for briefing and reconsideration.” (Oct. 31, 2003

Joint Status Conference Report, Ex. A (Gerling Global v.

Garamendi, Nos. 01-17023, 01-17433, 02-15282 (9th Cir.

Sept. 9, 2003))).

II. Discussion

Section 1988 of Title 42 of the United States Code

provides that “fiJn any action or proceeding to enforce a

provision of section[] . . . 1983, . . . the court, in its discre-

tion, may allow the prevailing party ... a reasonable

attorney's fee.” 42 U.S.C. § 1988(b).

The prevailing party in an action under section 1983

“should ordinarily recover an attorney's fee unless special]

circumstances would render such an award unjust.”

Newman v. Piggie Park Enterprises, Inc., 390 U.S. 400,

402 (1968). The court must examine “two factors in deter-

mining whether a case involves a ‘special circumstance’

justifying the denial of fees: (1) whether allowing attorney

fees would further the purposes of § 1988, and (2) whether

the balance of equities favors or disfavors the denial of

fees.” Gilbrook v. City of Westminster, 177 F.3d 839, 878

(9th Cir. 1999).

App. 23

In its previous order of January 14, 2002, this court

concluded that although allowing attorney fees would

further the purposes of section 1988, the balance of equi-

ties favored the denial of fees. The court remains per-

suaded that allowing attorney fees in this case would

further the purposes of section 1988. Defendant essen-

_ tially concedes that an award of fees would serve the

section 1988 purpose of deterring lawmakers from enact-

ing unconstitutional legislation in the future. (See Def.’s

Opp’n at 30). However, plaintiffs have presented a persua-

sive argument that, in concluding initially that the bal-

ance of equities favored the denial of fees, this court may

have placed too much weight on the decision of another

district court in Thorsted v. Gregoire, 841 F. Supp. 1068,

1084 (W.D. Wash. 1994).

The defendant has the burden of showing special

circumstances warrant a denial of fees, and the defen-

dant’s showing must be a strong one. Herrington v. County

of Sonoma, 883 F.2d 739, 744 (9th Cir. 1989). As plaintiffs

point out, two other courts have declined to adopt the

result in Thorsted,’ and the Eleventh Circuit affirmed an

award of attorney fees to plaintiff under strikingly similar

circumstances to those here. See Gerling Global v. Nelson,

No. 00-16542-BB (11th Cir. Dec. 7, 2001), aff’g Gerling

Global v. Nelson, No. 4:99v444-RH (N.D. Fla. Jan. 2,

2001). Thorsted is distinguishable because it involved an

initiative, rather than an act of the legislature. Upon

further reflection, this court is inclined to conclude that

' Morse v. Republican Party of Va., 972 F. Supp. 355 (W.D. Va.

1997) and Kadlick v. Dep't of Mental Health, 731 N.E.2d 495 (Mass.

2000).

App. 24

defendant has not met his burden of showing such special

circumstances as to justify the disallowance of fees here.

However, for a separate reason, not present at the

time of the court's initial order denying attorney fees, the

court must nevertheless again deny an award of attorney

fees for the plaintiffs.

Section 1988 provides for an award of attorney fees

only in certain types of civil rights actions, including

actions under 42 U.S.C. § 1983. At the time of the order of

January 14, 2002, this court had determined that plain-

tiffs were prevailing parties on a section 1983 claim

because they had prevailed on their Due Process Clause

claim. That decision, however, was reversed by the Ninth

Circuit. On certiorari, the Supreme Court held in favor of

plaintiffs only under the foreign affairs doctrine. The

Supreme Court expressly did not consider or decide

whether the HVIRA violated the Commerce Clause or the

Due Process Clause. Am. Ins. Ass'n, 123 S. Ct. at 2385 n.7

(“Because we hold that HVIRA is preempted under the

foreign affairs doctrine, we have no reason to address the

other questions.”).

Section 1983 of Title 42 of the United States Code

protects against the “deprivation of any rights, privileges,

or immunities secured by the Constitution and laws.”

Under the posture of the case now, unlike when this court

issued its previous order denying plaintiffs’ motion for

award of attorney fees, the court cannot conclude that

plaintiffs prevailed on a section 1983 claim. Now, although

the court must conclude that plaintiffs prevailed on a

claim that the HVIRA was an invalid, unconstitutional

statute, the court cannot conclude that plaintiffs prevailed

on a claim that the HVIRA deprived them of any right,

App. 25

privilege, or immunity secured by the Constitution or

federal law.

Specifically, the court cannot cunclude that the foreign

affairs power implicates a right, privilege, or immunity

secured by the Constitution or laws of the United States

such that it may form the basis of a section 1983 claim.

Rather, to the extent that the foreign affairs power is like

the Supremacy Clause, it is not a source of federal rights.

Cf. Golden State Transit Corp. v. Los Angeles, 493 U.S.

103, 107 (1989) (“[T]he Supremacy Clause, of its own force,

does not create federal rights enforceable under § 1983.”);

Associated Gen. Contractors v. Smith, 74 F.3d 926, 931

(9th Cir. 1996) (“[P]reemption of state law under the

Supremacy Clause — being grounded not on individual

rights but instead on considerations of power — will not

support an action under section 1983, and wil] not, there-

fore, support a claim for attorneys’ fees under section

1988.”).

The court has reviewed several treatises on the

subject, none of which suggest that the foreign affairs

power may be the basis of a section 1983 claim. See John

C. Jeffries, Jr., et al., Civil Rights Actions: Enforcing the

Constitution Ch. 1, § 5 (2000); Erwin Chemerinsky, Fed-

eral Jurisdiction §8.9 (3d ed. 1999); 1A Martin A.

Schwartz and John £E. Kirklin, Section 1983 Litigation:

Claims and Defenses Ch. 3 (3d ed. 1997 & Supp. 2003).

Plaintiffs argue that because the foreign affairs

doctrine is predicated on the need for the United States to

speak with one voice, that being through the President,

their action may be viewed as one for the deprivation of

rights secured by Presidential orders, which have the force

App. 26

of laws of the United States. Even assuming that this

action can be so characterized, and assuming further that

Presidential orders are “laws” within the meaning of

section 1983, it would be too far of a stretch to conclude

that the kind of Presidential orders involved here, negoti-

ating relief for Holocaust victims and their heirs, were

intended to secure any right, privilege, or immunity

guaranteed to the plaintiffs in this case.

Although the Commerce Clause and the Due Process

Clause may be bases of section 1983 claims, Dennis uv.

Higgins, 498 U.S. 439 (1991) (Commerce Clause); Paratt v.

Taylor, 451 U.S. 527 (1981) (Due Process Clause); Paul v.

Davis, 424 U.S. 693 (1976) (Due Process Clause), plaintiffs

ultimately did not prevail on either of those claims.

IT IS THEREFORE ORDERED that plaintiffs’ motion

for attorney fees be, and the same hereby is, DENIED.

DATED: January 29, 2004

/s/ William B. Shubo

WILLIAM B. SHUBB

UNITED STATES

DISTRICT JUDGE

App. 27

42 U.S.C. § 1983. Civil action for deprivation of rights

Every person who, under color of any statute, ordi-

nance, regulation, custom, or usage, of any State or Terri-

tory or the District of Columbia, subjects, or causes to be

subjected, any citizen of the United States or other person

within the jurisdiction thereof to the deprivation of any

rights, privileges, or immunities secured by the Constitu-

tion and laws, shall be liable to the party injured in an

action at law, suit in equity, or other proper proceeding for

redress, except that in any action brought against a

judicial officer for an act or omission taken in such officer's

judicial capacity, injunctive relief shall not be granted

unless a declaratory decree was violated or declaratory

relief was unavailable. For the purposes of this section,

any Act of Congress applicable exclusively to the District

of Columbia shall be considered to be a statute of the

District of Columbia.

42 U.S.C. § 1988. Proceedings in vindication of civil

rights

(b) Attorney's fees

In any action or proceeding to enforce a provision of

sections 1981, 198la, 1982, 1983, 1985, and 1986 of this

title, title IX of Public Law 92-318 [20 U.S.C.A. § 1681 et

seq.], the Religious Freedom Restoration Act of 1993 [42

U.S.C.A. § 2000bb et seq.], the Religious Land Use and

Institutionalized Persons Act of 2000 [42 U.S.C.A. § 2000cc

et seq.], title VI of the Civil Rights Act of 1964 [42 U.S.C.A.

§ 2000d et seq.], or section 13981 of this title, the court, in

its discretion, may allow the prevailing party, other than

the United States, a reasonable attorney's fee as part of

the costs, except that in any action brought against a

App. 28

judicial officer for an act or omission taken in such officer’s

judicial capacity such officer shall not be held liable for

any costs, including attorney's fees, unless such action was

clearly in excess of such officer’s jurisdiction

App. 29

No. 04-15332 (consolidated with No. 04-15455)

IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

AMERICAN INSURANCE ASSOCIATION, et ai.,

Plaintiffs-Appellants,

v.

JOHN GARAMENDI, in his capacity as the

COMMISSIONER OF INSURANCE FOR THE

STATE OF CALIFORNIA,

Defendant-Appellee

Appeal from the United States District Court

For the Eastern District of California

Honorable William B. Shubb, District Judge

Dist. Ct. Docket Nos. CIV-S-00-0613 WBS JFM,

CIV-S-00-0506 WBS JFM, CIV-S-00-0875 WBS JFM

APPELLANTS’ OPENING BRIEF

Peter Simshauser Kenneth S. Geller

Lance Etcheverry Charles A. Rothfeld

SKADDEN, ARPS, SLATE, MAYER, BROWN,

MEAGHER, & FLOMLLP ROWE & MAW LLP

300 South Grand Ave., 1909 K Street, N.W.

Suite 3400 Washington, D.C. 20006

Los Angeles, CA 90071 (202) 263-3000

(213) 687-5000 Counsel for American

Counsel for Assicurazioni Insurance Association

Generali S.p.A. and American

Re-Insurance Company

App. 30

* * *

B. Because The Supreme Court Granted Re-

view On The Commerce And Due Process

Clause Issues In The Case, The Commis-

sioner Cannot Be Treated As Having Pre-

vailed On Those Issues

While the district court made no mention of Maher,

the Commissioner did attempt below to distinguish the

decision, and we assume he will reprise his argument

here. Pointing to this Court’s rejection of plaintiffs’ Com-

merce and Due Process Clause claims in Gerling I and II,

the Commissioner invoked the rule that precludey the

award of fees to a party who prevails on a non-fee claim

but loses on all of its section 1983 civil rights claims. See,

e.g., Mateyko, 924 F.2d at 828 (a plaintiff “who loses on his

federal claim and recovers only on a pendent state claim is

not a prevailing party under section 1988 and may not be

awarded fees”). The Commissioner declared that rule

applicable here because he was successful in his Com-

merce and Due Process Clause arguments before this

Court and the Supreme Court did not expressly overturn

this Court’s holdings on those issues. For several reasons,

however, the Commissioner’s reliance on this principle, as

well as his argument that he should be treated as the

party prevailing on the section 1983 claims in this case, is

insupportable.

l. a. To begin with, the Commissioner commits a

fundamental error when he fails to view the fees issue

from the perspective of the court that had the last word on

the merits of claims that underlie the request for tees —

that is, from the perspective of the Supreme Court. The

Commissioner’s argument might be correct if the Supreme

Court had denied certiorari review of the Commerce and

App. 31

Due Process Clause questions presented by plaintiffs,

leaving only the foreign affairs issue to be decided. But

that is not whet the Court did: to the contrary, it granted

review on all three issues (see American Ins. Ass'n v.

Garamendi, 537 U.S. 1100 (2003), Garamendi, 123 S. Ct.

at 2385 n.7), expressly finding it unnecessary to address

the Commerce and Due Process Clauses only because the

Justices disposed of the case by holding the HVIRA invalid

under the foreign affairs doctrine. See id.

The Supreme Court thus had both the fee-generating

(Commerce and Due Process Clause) and what we are

assuming to be the non-fee (foreign affairs doctrine) claims

before it when it decided the merits of plaintiffs’ suit - and

that is precisely what triggers application of the Maher

rule. So far as Maher is concerned, this Court's interven-

ing ruling on the merits regarding the Commerce Clause

and due process claims is wholly immaterial. After all, as

Congress, the Supreme Court, and this Court each have

explained, the point of the Maher rule is to avoid having

the question of entitlement to fees affect the decision-

making processes of the court that is entertaining the

merits of the plaintiff's suit by forcing that court to

resclve a constitutional claim unnecessarily. But the

Commissioner's approach would place courts in just that

situation. In this case. for example, the Supreme Court

found it unnecessary to decide plaintiffs’ Commerce

App. 32

Nos. 00-16163, 00-16164, 00-16165, and 00-16182

IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

GERLING GLOBAL REINSURANCE

CORP. OF AMERICA, et al.,

Plaintiffs-Appellees,

v.

CLARK KELSO in his capacity as

the COMMISSIONER OF INSURANCE OF

THE STATE OF CALIFORNIA,

Defendant-Appellant.

BRIEF FOR AMICUS CURIAE THE UNITED STATES

OF AMERICA IN SUPPORT OF AFFIRMANCE

ON APPEAL FROM A PRELIMINARY INJUNCTION

ENTERED BY THE UNITED STATES DISTRICT

CO'JRT FOR THE EASTERN DISTRICT OF CALI.-

FORNIA, THE HONORABLE WILLIAM B. SHUBB

In view of the importance of the Foundation Agree-

ment, we wis!) to correct some misunderstandings reflected

in the brief of the American Insurance Association (“AIA”)

concerning the undertakings of the U.S. Government and the

impact of the procedures established by the Agreement on

existing legal remedies available to American citizens

App. 33

against private corporations. AIA states that “[t)he federal

government ... has committed to give affected insurers

legal peace, including against state litigation and regula-

tory action,” AIA Br. 1, and that the Foundation Agree-

ment “imposes a duty on the United States to achieve ‘all-

embracing and enduring legal peace’ for German compa-

nies.” AIA Br. 2. The United States has committed to

various unprecedented undertakings in the Agreement. As

discussed, the United States has committed to file a

Statement of Interest in private suits against German

companies explaining that “it would be in the foreign

policy interests of the United States for the Foundation to

be the exclusive remedy and forum for resolving such

claims,” Foundation Agreement, Art. 2(1), and has commit-

tea to “use its best efforts, in a manner it considers appro-

priate, to achieve the objectives” of the Agreement, Art.

2(2). It has not, however, undertaken a “duty ... to

achieve” legal peace for German companies against state

litigation and regulatory action.

Nor dees the Foundaticn Agreement itself preclude

individuals from filing suit on their insurance policies in

court. Cf, e.g., AIA Br. at 2 (stating that the Agreement

“creates on [sic] exclusive remedy and forum”); id. at 12

(stating that the Agreement “mandates that insurance

claims that come within the scope of... ICHEIC ‘shall be

processed . .. on the basis of such procedures’”). Although

the Agreement obligates the German Foundation to

process insurance claims against German companies

according to ICHEIC procedures, Foundation Agreement,

Art. 1(4), it does not mandate

App. 34

In the Supreme Court of the United States

No. 02-722

AMERICAN INSURANCE ASSOCIATION, ET AL.,

PETITIONERS

v.

Harry Low, INSURANCE COMMISSIONER,

STATE OF CALIFORNIA

No. 02-733

GERLING GLOBAL REINSURANCE CORP. OF AMERICA,

ET AL., PETITIONERS

v.

Harry W. Low, INSURANCE COMMISSIONER,

STATE OF CALIFORNIA

ON PETITIONS FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE

SUPPORTING PETITIONERS

INTEREST OF THE UNITED STATES

The United States has engaged in extensive diplo-

matic efforts to assure that the Nations and enterprises

responsible for the Holocaust provide some measure of

App. 35

compensation to their victims. In so doing, the United

States has

App. 36

(D

IN THE SUPREME COURT OF THE UNITED STATES

No. 02-722

AMERICAN INSURANCE ASSOCIATION, ET AL.,

PETITIONERS

Vv.

JOHN GARAMENDI, INSURANCE COMMISSIONER,

STATE OF CALIFORNIA

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES

AS AMICUS CURIAE SUPPORTING PETITIONERS

INTEREST OF THE UNITED STATES

The United States has engaged in extensive diplo-

matic efforts to assure that the nations and enterprises

responsible for the Holocaust provide some measure of

justice to their victims. In so doing, the United States has

consistently encouraged the use of voluntary, non-

adversarial mechanisms for resolving Holocaust victims’

claims. California has adopted a different approach. The

State has enacted a series of related statutes, including

the one challenged here, to provide a separate means of

resolving such claims. Such state laws directly interfere

with the national

App. 37

through coercive regulative and litigation. The United

States has concluded that such an approach serves the

interests of Holocaust victims and their families through-

out the world, including the interests of elderly survivors

of the Holocaust in obtaining some measure of justice

within their lifetime. The United States also concluded

that a non-adversarial approach serves important inter-

ests of the Nation in cooperative relations with its Euro-

pean allies.

In The

Supreme Court of the United States

s

JOHN GARAMENDI, IN HIS CAPACITY

AS COMMISSIONER OF INSURANCE

FOR THE STATE OF CALIFORNIA,

Petitioner,

Vv.

GERLING GLOBAL REINSURANCE

CORPORATION OF AMERICA, US BRANCH, et al.,

Respondents.

°

On Petition For Writ of Certiorari To The

United States Court Of

For The Ninth Circuit

SJ

BRIEF OF THE NATIONAL ASSOCIATION

OF INSURANCE COMMISSIONERS AS

AMICUS CURIAE IN SUPPORT OF PETITIONER

+

GAIL SCIACCHETANO

Counsel of Record for Amicus Curiae

NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS

2301 McGee Street, Suite 800

Kansas City, Missouri 64108-2664

Telephone (816) 783-8019

Facsimile (816) 460-7507

COCKLE LAW BRIEF PRINTING CO (800) 225-6964

OR CALL COLLECT (402) 342-2831

~- -

TABLE OF CONTENTS

Page

TABLE OF AUTTEIORITIRG ..0..ccccccecccesceescesccsecsseeseeres ii

INTEREST OF THEE MAIC .......cccessesrccssscsecsessoescoseoes 1

SUMMARY OF ARGUMENT .............c:ccccscesseseeeeeenees 3

es sialiaeiiaaem 4

TABLE OF AUTHORITIES

Page

CASES

American Insurance Ass'n, et al. v. Garamendi, 539

2 8 0 ae Lee ee 4,5

Gerling Global Reinsurance Corp. of Am. v. Low,

240 F.3d 739 (9th Cir. 2001) (“Gerling I”) ..........ccc.cceev0e 4

Gerling Global Reinsurance Corp. of Am. v. Low,

296 F.3d 832 (9th Cir. 2002) (“Gerling IT”)...............+ 4,5

Gerling Global Reinsurance Corp. of Am. v. Gara-

mendi, 400 F.3d 803 (9th Cir. 2005) (“Gerling

|g SEES See eee Se eee 5, 7

Group Life and Health Ins. Co. v. Royal Drug Co.,

yg a es 3

Maher v. Gagne, 448 U.S. 122 (1980).......... cccccneceeeeeceeenees 5

Natl Private Truck Council, Inc. v. Okla. Tax

Comm’n, 515 U.S. 582 (1995)...........cccccsscorevsrseveeserserseees 5

STATUTES

McCarran-Ferguson Act, 15 U.S.C. § 1011, et seq. ......... 2,3

42 U.S.C. § 1983............. jecasentisiseltasinaamiaadiiaiestiapeitaianstetites 3,6

IIIa, I icnctsesimcemeseemideipueniiictiaeaasmimninds 3

California's Holocaust Victim Insurance Relief Act,

Cal. Ins. Code $§ 13800-13807 ................ccccccccccseeeereeceeees 4

1

BRIEF OF THE NATIONAL ASSOCIATION

OF INSURANCE COMMISSIONERS AS

AMICUS CURIAE IN SUPPORT OF PETITIONER

Pursuant to Supreme Court Rule 37.1, the National

Association of Insurance Commissioners (“NAIC”) submits

this Brief in support of petitioner, John Garamendi, in his

capacity as Commissioner of Insurance for the State of

California, in respectfully requesting that the Court issue

a writ of certiorari to review the judgment of the United

States Court of Appeals for the Ninth Circuit entered in

this action.

+

INTEREST OF THE NAIC’

The NAIC is a non-profit corporation whose member-

ship consists of the principal insurance regulatory officials

of the fifty States, the District of Columbia, the territories

and insular possessions of the United States. Formed in

1871, it is the nation’s oldest association of state govern-

ment officials. In filing this amicus curiae brief, the NAIC

seeks to demonstrate its interest in this proceeding and to

fulfill the mission of the NAIC, to:

. assist state insurance regulators, individually

and collectively, in serving the public interest and

achieving the following fundamental insurance

* Neither counsel for the parties to this matter authored this brief

in whole or in part. No person or entity, other than the amicus curiae,

its members or its counsel, made a monetary contribution to the

preparation and submission of this brief. The parties have consented to

conseni have been filed with the Clerk of the Court.

2

regulatory goals in a responsive, efficient and

cost-effective manner, consistent with the wishes

of its members:

Protect the public interest;

Promote competitive markets;

Facilitate the fair and equitable treatment of in-

surance consumers;

Promote the reliability, solvency and financial so-

lidity of insurance institutions; and

Support and improve state regulation of insur-

ance.

The Executive Committee of the NAIC voted to file

this amicus curiae brief to demonstrate its support of

Petitioner John Garamendi, Commissioner of Insurance

for the State of California, in this cause. The interest of

the NAIC in this matter arises out of the regulatory

responsibility vested in each insurance commissioner,

director and superintendent to see that all laws respecting

insurance companies are executed faithfully and to safe-

guard the solvency and financial integrity of insurance

companies for the benefit of insurance consumers. The

‘commissioners, directors, and superintendents of the

various states, the members of the NAIC, are charged with

the responsibility of regulating the business of insurance

within their jurisdictions pursuant to the McCarran-

Ferguson Act, 15 U.S.C. § 1011, et seg., and State insur-

ance laws.

* See National Association of Insurance Commissioners, NAIC

Mission Statement, available at http://www.naic.org/index_about.htm

(last visited September 19, 2005).

With regard to the McCarran-Ferguson Act, this Court

has stated that “[t)he views of the NAIC are particularly

significant, because the Act ultimately passed was based

in large part on the NAIC bill.” Group Life and Health Ins.

Co. v. Royal Drug Co., 440 U.S. 205, 221 (1979).

The NAIC agrees with Commissioner Garamendi that

the Ninth Circuit's decision in this case imposing attor-

neys’ fees on the California Department of Insurance will

“create significant mischief in many other cases™ and will

adversely impact the ability of NAIC members to effec-

tively regulate the business of insurance. The NAIC agrees

with the analysis of the district court in finding that

respondents were not entitled to fees because they had not

prevailed on either their Commerce Clause or due process

claims. The NAIC supports Commissioner Garamendi in

respectfully requesting that this Court issue a writ of

certiorari in this matter.

+

SUMMARY OF ARGUMENT

The Ninth Circuit held in this case that respondents

were entitled to an award of attorneys’ fees under 42

U.S.C. § 1988 in spite of the fact that respondents did not

prevail on the merits on any claim governed by 42 U.S.C.

§ 1983. This ruling greatly expands potential liability for

attorneys’ fees for all entities potentially liable under

Section 1983, including the state insurance regulatory

authorities that are the members of the NAIC. This

expansion of potential liability will chill important state

regulatory activities as regulators will face the prospect of

* Petition for Writ of Certiorari at p. 9.

4

paying attorneys’ fees to plaintiffs who may prevail

against them in litigation on non fee-bearing constitu-

tional and state law grounds even where the court rules

that the regulatory conduct at issue does not amount to a

Section 1983 violation. Further, it will encourage the

addition of meritless Section 1983 claims to any action

against a state official and will discourage defendant

regulators from appealing adverse state law rulings in

cases where plaintiff did not prevail on attached Section

1983 claims. Taken together, these results present a very

real threat to the ability of state regulatory officials to

supervise the businesses they are charged with regulating

and to act in the interests of the consumers they are

charged with protecting.

+

ARGUMENT

Respondents in this case challenged the constitution-

ality of California’s Holocaust Victim Insurance Relief Act,

Cal. Ins. Code §§ 13800-13807 (the “H-VIRA”) on a variety

of grounds. This Court ultimate’y held that the HVIRA

was preempted because it conflicted with federal initia-

tives concerning Holocaust related insurance claims

undertaken pursuant to the foreign policy powers granted

to the federal executive branch. American Insurance Ass’n,

et al. v. Garamendi, 539 U.S. 396, 401 (2003) (Garamendi).

Respondents’ Section 1983 claims, those claiming that the

HVIRA violated the Commerce Clause and due process,

were rejected by the Ninth Circuit in its two rulings on the

merits of this case. Gerling Global Reinsurance Corp. of

Am. v. Low, 240 F.3d 739 (9th Cir. 2001) (“Gerling I”)

(rejecting respondents’ Commerce Clause claims) and

Gerling Global Reinsurance Corp. of Am. v. Low, 296 F.3d

832 (9th Cir. 2002) (“Gerling IT”) (ruling that the HVIRA

does not violate due process). This Court did not address

the due process and Commerce Clause claims. Garamendi,

539 U.S. at 413 n. 7.

Following this Court’s decision on the foreign affairs

preemption claim, respondents moved for attorneys’ fees

pursuant to Section 1988.* The district court found that

respondents were not entitled to fees because they had not

prevailed on either their Commerce Clause or due process

claims. The Ninth Circuit reversed, holding that respon-

dents were entitled to fees even though it recognized that

they had not prevailed on any fee-bearing claim. Gerling

Global Reinsurance Corp. of Am. v. Garamendi, 400 F.3d

803 (9th Cir. 2005), rehearing denied, as amended, 410

F.3d 531 (9th Cir. 2005) (“Gerling IIT”).

The NAIC agrees with Petitioner Commissioner

Garanendi that the Ninth Circuit’s decision in this case

represents an unwarranted departure from precedent on

the issue of entitlement to attorneys’ fees under Section

1988. Section 1988 makes it a prerequisite for the award

of attorneys’ fees that the party seeking fees be the “nre-

vailing party”. This Court has previously recognized that

victory in the case does not alone satisfy that necessary

predicate; the plaintiff must be entitied to relief under

Section 1983. Natl Private Truck Council, Inc. v. Okla. Tax

Comm'n, 515 U.S. 582, 592 (1995). Maher v. Gagne, 448 U.S.

122 (1980) created a limited exception to the “prevailing

* Respondents first moved for attorneys’ fees after the initial

summary judgment ruling and that motion was denied by the district

court. The Ninth Circuit then rejected all of respondents’ claims on the

merits and ruled that they were not entitled to fees because they were

not prevailing parties. Gerling 1], 296 F.3d at 851.

party” rule in cases where a plaintiff's substantial 1983

claims were never reached for prudential reasons. The

Maher rule is inapplicable where, as here, the 1983 claims

were litigated and plaintiff lost.

The members of the NAIC, in their capacity as the

chief insurance regulators of their respective states, may

be subject to suits for injunctive relief under Section 1983

for any official act, be it the enactment of a regulation or

administrative practice, or the application of an existing

statute, regulation or administrative practice to an insurer

doing business in their state. The Ninth Circuit's ruling in

this case, which makes it possible for plaintiffs to be

awarded attorneys’ fees in Section 1983 cases even after

losing on those claims, increases the expense and expands

the risk associated with Section 1983 litigation. The likely

result of this expanded availability of fees is that any

~ plaintiff who brings a lawsuit on state law or non-fee

bearing constitutional grounds will append a Section 1963

claim so that they may be awarded fees even if they do not

prevail on thet claim. Further, a defendant regulator who

prevails on a Section 1983 claim may be reluctant to

appeal an adverse ruling on a state law or non-fee bearing

claim for fear that fees will be awarded if plaintiff cross-

appeals the Section 1983 claims. Applicaticn of the Ninth

Circuit's ruling in that scenario could result in an award of

attorneys’ fees even if the reviewing court never reaches

the Section 1983 claims, as in the present case.

More troubling than the impact on litigation is the

potential chilling effect the Ninth Circuit's ruling has on

the segulatory activities of state insurance departments

and other entities potentially liable under Section 1983.

Certainly all state insurance commissioners, directors and

superintendents are well aware that their actions must be

AE A ee —_—

7

within constitutional parameters. 'Jnder Gerling III,

however, these officials have to be concerned not only that

they succeed in any constitutional challenges, but also

that they are not challenged through litigation in the first

place. State regulators now face a new risk from litigation,

being required to pay attorneys’ fees under Gerling III,

even where a court rules for the regulators and finds that

their actions did not violate Section 1983.

The energies and resources of state insurance regula-

tors are focused on protecting insurance consumers in

their state and insuring the financial solvency of insurers

doing business in their state. Regulators should not be

stymied in their efforts towards achieving these goals by

the fear of large awards of attorneys’ fees if those efforts

are challenged and decided on non-fee bearing grounds.

J

CONCLUSION

For the foregoing reasons, the Court should issue a

writ of certiorari to review the judgment of the United

States Court of Appeals for the Ninth Circuit.

Respectfully submitted,

Gal. SCIACCHETANO

NATIONAL ASSOCIATION OF

INSURANCE COMMISSIONERS

2301 McGee Street, Suite 800

Kansas City, Missouri 64108-2662

Telephone (816) 783-8019

Facsimile (816) 460-7507

Counsel of Record for Amicus Curiae

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