Opposition Brief — Garamendi v. Gerling Global Reinsurance Corp. of America

solved. The rule of Maher, he asserts, is predicated on the

assumption that “the plaintiff would have prevailed on the

Section 1983 claim had the plaintiff been allowed to litigate

that claim to adjudication.” Pet. 8. But “(t}hat assumption,”

he continues, “is not warranted where the plaintiff has actu-

ally litigated, and lost, his Section 1983 claim” before the

lower court. /bid.; see id. at 13-14.

The Commissioner’s argument, however, rests on a fun-

damental misunderstanding of the basis for the Maher rule.

Pointing to the legislative aatery of Section 1988, the Court

has explained:

“In some instances, * * * the claim [supporting an award

of] fees may involve a constitutional question which the

courts are reluctant to resolve if [a] non-[fee] 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 Hagans v. Lavine, su-

pra, United Mine Workers y. Gibbs, 383 U.S. 715 (1966),

attorney's fees may be allowed even though the court de-

clines to enter judgment for the pl-intiff on that claim, so

long as the plaintiff prevails on the non-fee claim arising

out of a ‘common nucleus of operative fact.’ United

Mine Wokers v. Gibbs, supra, at 725.”

Maher, 448 U.S. at 133 n.15 (quoting H.R. Rep. No. 1558,

94th Cong., 2d Sess. (1976), at 4 n.7 (emphasis added)).

The rule of Maher thus is prompted both by general prin-

ciples of judicial restraint and by the particular policies that

underlie Section 1988. The Court has long recognized “the

wisdom of the federal policy of avoiding constitutional adju-

dication where not absolutely essential to disposition of a

case.” Hagans v. Lavine, 415 U.S. 528, 547 n.12 (1974).

See, ¢.g., Superintendent v. Hill, 472 U.S. 445, 450 (1985).

If a court's failure to resolve a substantial constitutional

ciaim makes fees unavailable when the plaintiff prevails on a

related non-fee claim, courts accordingly would be put to an

9

unpalatable choice: they either would be obligated to engage

in otherwise unnecessary constitutional adjudication simply

to resolve the plaintiff's entitlement to fees, or they would

have to deny fees to plaintiffs who might well have had meri-

torious civil nghts claims.

As the Ninth Circuit correctly recognized, these concerns

apply with full force in a case like this one, where the lower

court rejected civil nghts claims that later were left unre-

solved by the higher court that ultimately decided the case.’

In challenging “. Ninth Circuit's holding and arguing to the

contrary, the Conimissioner commits a basic error when he

fails to view the fees issue from the perspective of the court

that had the last word on the merits of the claims that under-

lie the request for fees — in this case, from the perspective of

this Court. Here, this Court granted review on ail three is-

sues in the case but ultimately found it unnecessary to ad-

dress the Commerce and Due Process Clauses only because it

disposed of the case by holding the HVIRA invalid under the

foreign affairs doctrine. The 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.

That is precisely what triggers application of the Maher rule.

So far as Maher is concerned, the Ninth Circuit’s inter-

vening ruling on the merits regarding the Commerce Clause

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

point of the Maher rule is to avoid having the question of en-

' There is no dispute here that the Commerce and Due Process

Clause claims advanced in this case by respondents were substan-

tial. The district court ruled for respondents on both claims. The

Eleventh Circuit ruled for respondents on an essentially identical

due process claim. See Gerling Global Reinsurance Corp. of Am

v. Gallagher, 267 F.3d 1228 (11th Cir. 2001). And the United

States supported respondents’ Commerce and Due Process Clause

arguments in this Court

10

titlement 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 resolve a constitutional claim unneces-

sarily. But the Commissioner’s approach would place courts

in just that situation. In this case, for example, the Court

found it unnecessary to decide plaintiffs’ Commerce and Due

Process Clause claims; presumably, the Court found it easier,

or preferable, or both, to resolve the case on foreign affairs

grounds.” If the Commissioner were correct, however, the

Court would have been obligated to go on to address one of

the remaining constitutional claims (or, at a minimum, to re-

verse its preferred order of addressing the issues before it)

simply to settle the plaintiffs’ entitlement to fees. The Com-

missioner thus would turn Maher on its head by having the

fee tail wag the merits dog.

Alternatively, if the court resolving the merits does not

volunteer to decide superfluous constitutional questions, the

Commissioner’s rule would have the effect of denying fees to

prevailing plaintiffs whose substantial constitutional claims

were presented to, but not resolved by, the court that had the

last word on the merits. But that, too, is just what the Maher

rule was designed to prevent. “Congress’ purpose in author-

izing a fee award for an unaddressed constitutional claim was

to avoid penalizing a litigant for the fact that courts are prop-

erly reluctant to resolve constitutional questions if a noncon-

Because the Court’s decision turned in part on its construction

of executive agreements that it accu.ded preemptive force (see

Garamendi, 539 U.S. at 420-428), it may have believed that its

approach allowed it to avoid the most difficult constitutional issues

in the case, even as to the foreign affairs doctrine itself. See id. at

419-420 (although “[i}t is a fair question whether respect for the

executive foreign relations power requires a categorical choice be-

tween the contrasting theories of field and conflict preemption,”

“the question requires no answer here”).

1]

stitutional claim is dispositive.” Smith, 468 U.S. at 1007

The Commissioner’s rule, however, would have precisely

that inequitable result whenever a reviewing court finds it

unnecessary to reverse an adverse lower-court ruling on the

plaintiff's fee-generating claims. Here, for example, the

Commissioner would penalize plaintiffs because this Court

understandably declined to reach out to decide constitutional

questions that were unnecessary to the resolution of the case.

The Commissioner also is wrong in suggesting that there

is something anomalous in applying the Maher rule when the

lower court’s analysis rejecting the civil rights claims has not

been expressly repudiated by the higher court that ultimately

ruled for the plaintiff on non-fee grounds. In this case, after

all, this Court reversed the Ninth Circuit's judgment and held

that at least a portion of its reasoning was incorrect. In those

circumstances, it makes perfect sense to say that the remain-

ing portion of the lower court's judgment should not stand as

a bar to the award of fees to a party that (a) has obtained all

the relief sought and (b) might well have prevailed on the

constitutional claims had they been reached by the higher

court.

> Moreover, the Cormissioner’s argument is premised on the

false assumption that the Ninth Circuit's Commerce and Due Proc-

ess Clause holdings continue to “have precedential value.” Pet. 19

This Court's reversal of the Ninth Circuit's judgment on the merits

means that the court of appeals’ prior holdings no longer remain in

effect. Cf. O'Connor v. Donaldson, 422 U.S. 563, 578 n.12 (1975)

(“Of necessity our decision vacating the judgment of the Court of

Appeals deprives that court's opinion of precedential effect, leav-

ing this Court's opimon and judgment as the sole law of the case”),

see also Pet. App 14. In addition, this Court's analysis in Gara-

mendi — which concluded that the HVIRA impeded the Federal

Government's ability to “speak with one voice” about Holocaust-

era insurance claims and repudiated the Ninth Circuit's view that

Congress affirmatively approved state laws like the HVIRA (see

539 U.S. at 427-429) ~ substantially undermined the analysis used

12

2. There Is No Conflict In The Courts Of Appeals On

The Issue Presented Here

The Commissioner gets no further with his carefully

phrased argument that “numerous courts have acknowledged

that a plaintiff who loses on even a ‘substantial’ Section 1983

claim that is factually related to a non-fee bearing claim is

not entitled to fees.” Pet. 14-15. In fact, there is no conflict

in the circuits on the question here. In each of the appellate

decisions the Commissioner invokes (at Pet. 16-18), the court

expressing the /ast word on the merits rejected the plaintiff's

civil rights claim. In such circumstances, the Maher princi-

ple simply does not apply because the court that ultimately

decided the merits did not leave the civil rights issue unre-

solved. As the Ninth Circuit accordingly recognized in re-

jecting the Commissioner’s reliance on these decisions (see

Pet. App. 15-16), a rule intended to keep courts from having

to decide constitutional claims unnecessarily has no applica-

tion in cases where the courts found it appropriate fo resolve

those constitutional claims. But just as obviously, the deci-

sions cited by the Commissioner have no bearing in a case

like this one, where the higher court did nor address the fee-

creating claims.*

The Ninth Circuit’s decision in Mateyko v. Felix, 924

F.2d 824 (9th Cir.), cert. denied, 502 U.S. 814 (1991), cited

by the Ninth Circuit to reject respondents’ Commerce Clause

claim.

* This Court's decision in National Private Truck Council, Inc. v.

Oklahoma Tax Commission, 515 U.S. 582 (1995), also invoked by

the Commissioner (at Pet. 7, 13, 19, 21), rested on a similar basis.

There, the Court held fees unavailable under Section 1988 because,

given the nature of the plaintiff's claim, “no relief can be awarded

pursuant to § 1983." 515 U.S. at 592. Here, in contrast, there is no

doubt that Section 1983 did provide a cause of action to advance

claims under the Commerce and Due Process Clauses.

13

by the Commissioner (at Pet. 17-18), is typical of the cases

on which he relies. There, the plaintiff brought both state and

federal «'aims. Before the district court, the plaintiff pre-

vailed (ix part) on his state law arguments, but lost on his

federal claims. See 924 F.2d at 825. The court of appeals

expressly affirmed the ruling dismissing the federal claims on

the merits. /d. at 826. Having done so, the court held that

attorneys’ fees were unavailable because “all Mateyko’s fed-

eral claims were decided against him.” /d. at 828. The other

appellate decisions cited by the Commissioner involve simi-

lar circumstances. See Luria Bros. & Co., Inc. v. Allen, 672

F.2d 347, 349, 357 (3d Cir. 1982) (plaintiff prevailed before

the district court on both federal and state claims; the court of

appeals reversed as to the federal claim and therefore held

fees unavailable); Haywood v. Ball, 634 F.2d 740 (4th Cir.

1980) (fees not available where court of appeals previously

had rejected the federal claims, see Haywood v. Ball, 586

F.2d 996, 998-1000 (4th Cir. 1978)); Bonner v. Guccione,

178 F.3d 581 (2d Cir. 1999) (fees not available where the

relief obtained by the plaintiff on her non*sderal claim was

not equivalent to relief that she sought on her federal claim);

Reel v. Ark. Dept. of Correction, 672 F.2d 693, 696-697 (8th

Cir. 1982) (fees not available where the court of appeals re-

manded the federal issue for further consideration); Raley v.

Fraser, 747 F.2d 287, 290-292 (Sth Cir. 1984) (fees not

available where the court of appeals rejected the civil rights

claim).

In fact, in the almost 30 years since Section 1988 was en-

acted, it appears that the issue raised by the Commissioner

here — availability of fees when the fee-bearing claim is re-

jected by a lower court but left open by the higher court — has

been addressed in only two appellate decisions: this case and

a prior ruling of the Ninth Circuit, which reached the same

result. See Carreras v. City of Anaheim, 768 F.2d 1039,

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

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

14

334 (Cal. 2000); Pet. App. 11 (reading Carreras “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”).° The great infrequency with which the issue of

Maher’s application to the unusual factual setting of this case

has arisen militates strongly against review; it is difficult to

characterize an issue that has reached a court of appeals only

5

The issue appears to have been addressed in only one other re-

ported decision, Am. Auto. Mfrs. Ass'n v. Cahill, 53 F. Supp. 2d

174, 180-181 (N.D.N.Y. 1999) (“AAMA”), which is cited by the

Commissioner at Pet. 9, 15-16. In AAMA, the plaintiff advanced

both statutory and constitutional arguments; the district court re-

jected both claims; on appeal, the Second Circuit ruled for the

plaintiff on statutory grounds without reaching the constitutional

issue. See id. at 178-179. The district court then held that tees

were not available under Section 1988 even though the court of

appeals had left open the constitutional issue. AAMA, however, is

of limited value to the Commissioner. This Court “will not grant

certiorari to review a decision of a federal court of appeals merely

because it is in direct conflict on a point of federal law with a deci-

sion rendered by a district court, whether in the same circuit or in

another circuit.” R. Stern, ef a/., SUPREME COURT PRACTICE 237

(8th ed. 2002). Moreover, the district court in AAMA acknowl-

edged that there was no case law clearly supporting its analysis (53

F. Supp. 2d at 180) — and, because the AAMA court did award fees

on the plaintiff's statutory claims (see id. at 182-186), the Second

Circuit had no opportunity to review the distnct court’s conclu-

sions about Section 1988. In addition, the district court offered an

alternative ground for its holding that the plaintiff was not entitled

to fees on its unreviewed constitutional clairns; the plaintiff re-

ceived “far narrower’ relief on its statutory claims than it had

sought under the Constitution. /d. at 181. In this context, any ten-

sion between the Ninth Circuit's decision in this case and a single

aberrant district court ruling (which, so far as we know, has never

been followed) does not provide a basis for the grant of review by

this Court.

15

twice in three decades as “an important question of federal

law” that should be settled by this Court. Sup. Ct. R. 10(c).

3. The Commissioner's Remaining Merits-Based Chal-

lenges To The Court Of Appeals’ Decision Lack

Substance

The various other challenges that the Commissioner

raises to the merits of the decision below lack substance and

certainly do not warrant review. The Commissioner is wrong

in contending that the Ninth Circuit’s decision makes the

grant of certiorari “a fee-generating event.” Pet. 25; see id. at

12, 23-24. As the court of appeals explained, “[t]he grant of

certiorari does not factor into the prevailing plaintiff calcula-

tion — 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 consid-

ered prevailing under § 1988.” Pet. App. 15 n.2. This

Court's grant of certiorari does not dictate the award of fees;

under the holding below, it is the Court’s ultimate disposition

on the merits of the fee-bearing claims before it that deter-

mines whether fees are available.

By the same token, the Commissioner is incorrect in ar-

guing that the Ninth Circuit’s ruling wall frustrate Section

1983's policy by “encourag[ing] plaintiffs to attach meritless

Section 1983 claims to routine non-fee bearing claims” in

hopes of obtaining fees if they prevail on the non-fee portion

of the case. Pet. 9-10. If a civil rights claim truly is insub-

stantial and is advanced abusively simply to generate enti-

tlement to fees, it would be an easy enough matter for an

appellate court to reject that claim on the merits. It is notable

that the Commissioner's concern has not proved to be a prob-

lem for district courts applying the Maher rule, even though

the Commissioner agrees that. in the absence of an appeal,

fees are available when the district court rules for the plain-

tiff on non-fee grounds while leaving civil nghts claims un-

resolved.

16

Indeed, it is the Commissioner’s rule that would create

perverse incentives. Under his approach, a plaintiff who lost

on both a state law and a federal civil mghts claim in district

court, but who believed that it had strong appellate arguments

on both claims, might forgo advancing its state-law claim on

appeal for fear that the court of appeals would reverse on that

ground — which, according to the Commissioner, would

make attorneys’ fees unavailable. And mest fundamentally,

denying fees in these circumstances “would frustrate section

1988's purpose to encourage private parties to vindicate their

federal civil rights.” Mateyko, 924 F.2d at 828-829. As

Maher and Smith demonstrate, this policy is effectuated

when fees are awarded to a plaintiff who advances unre-

solved fee-generating claims but prevails in the district court

on a non-fee claim. That policy applies in precisely the same

way-in cases like this one, the happenstance that there was an

intervening adverse decision on the fee-generating claim that

was left unresolved by the court that ultimately ruled in the

plaintiff's favor has no bearing on the utility of awarding fees

to prevailing plaintiffs who advance substantial but ulti-

mately undecided constitutional issues. Such an award “*fur-

thers the Congressional goal of encouraging suits to vindicate

constitutional nghts without undermining the longstanding

judicial policy of avoiding unnecessary decision of important

constitutional issues."” Pet. App. 16 (quoting Maher, 448

U.S. af 133).

In fact, this case is one in which there should be no doubt

about the propriety of a fee award. The California legislature

was warned that it was proposing to pass a statute of dubious

constitutionality. When the HVIRA nevertheless was en-

acted, the Commissioner enforced it in the most aggressive

manner, although he was advised that the law was constitu-

tionally flawed and was urged to refrain by federal officials.

See pages 2-3, supra. After respondents brought suit to vin-

dicate their constitutional nghts, the Commissioner litigated

the issue relentlessly, forcing respondents to take two tnps to

17

the court of appeals and one to this Court before they finally

prevailed on the merits and obtained complete success in

their constitutional challenge. These considerations — where

the plaintiff is forced to engage in years of burdensome,

time-consuming, and expensive litigation to defeat unconsti-

tutional enforcement action — are precisely the ones for

which Section 1988 was enacted.

4. The Question Whether The Executive Agreement At

Issue In This Case Is Enforceable Under Section

1983 Was Not Decided By The Court Of Appeals

And Does Not Warrant Review

The Commissioner also urges the Court to decide

whether the Federal Government’s preemption of state law

pursuant to the Constitution’s foreign affairs power creates

“rights” under Section 1983. Pet. 25-29. But that issue is not

now presented in the case. As the Commissioner acknowl-

edges (at Pet. 25), the Ninth Circuit expressly declined to re-

solve the question. See Pet. App. 9, 17.° Moreover, there is

no conflict on this issue in the lower courts. Indeed, so far as

we are aware, this case is the only one ever to address

whether the German Foundation Agreement — or, for that

matter, the Constitution’s foreign affairs principle — is en-

forceable under Section 1983. The question presented by the

Commissioner therefore plainly does not warrant review.

° As respondents argued below, the foreign affairs principle and

the German Foundation Agreement - which was designed, in rele-

vant part, to advance “the [German] companies’ interest in secur-

ing ‘legal peace’” (Garamendi, 539 U.S. at 423 (citation omitted))

do create rights, privileges, or immunities that are enforceable

under Section 1983. :

18

CONCLUSION

For the foregoing reasons, the petition for a writ of certio-

rari should be denied.

Respectfully submitted.

PETER SIMSHAUSER KENNETH S. GELLER

LANCE ETCHEVERRY CHARLES A. ROTHFELD

Skadden, Arps, Slate, Counsel of Record

Meagher & Flom LLP Mayer, Brown, Rowe

300 South Grand Ave & Maw LLP

Los Angeles, CA 90071 1909 K Street, NW.

Washington, DC 20006

FREDERICK W. REIF 202) 263-3000

Riker, Danzig, Scherer,

Hyland & Perretti LLP

500 Fifth Ave., Suite 4920

New York, NY 10/710

SEPTEMBER 2005

FILED

OCT 6 - 2005

In The paper

Supreme Court of the Gnit aber

.

JOHN GARAMENDI, in his capacity as

Commissioner of Insurance for the State of California,

Petitioner,

v.

GERLING GLOBAL REINSURANCE

CORPORATION OF AMERICA, US BRANCH, et al.,

Respondents.

+

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Ninth Circuit

>

REPLY BRIEF FOR PETITIONER

+

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 si

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

Counsel for Petitioner John Garamendi

In his capacity as Commissioner of Insurance

for the State of California

cc,

a

COCKLE LAW BRIEF PRINTING CO (800) 225-6964

OR CALL COLLECT (402) 342-2831

TABLE OF AUTHORITIES

Page

FEDERAL CASES

Central Pines Land Co. v. United States, 274 F.3d

RETEST eRe re ae An Pee 4

Farrar v. Hobby, 506 U.S. 103 (1992) .............ccccccececeeeeeeeees 5

Maher v. Gagne, 448 U.S. 122 (1980)..........ccccecccceeeee 1,45

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

ya ol, 2

O’Connor v. Donaldson, 422 U.S. 563 (1975)...............0..... 4

1

The insurers’ brief in opposition to the Commissioner’s

certiorari petition (“Opp.”), if anything, highlights the

reasons why this Court should grant review to address an

unprecedented decision of the Ninth Circuit (“Gerling IIT”).

That decision conflicts with the language and intent of an

important federal statute, conflicts with settled principles

articulated by this Court and numerous others, and

threatens to severely burden government defendants who

will now face additional, meritless Section 1983 claims

brought by plaintiffs buoyed by the prospect of recovering

attorneys’ fees even if they lose those claims on the merits.

1. The insurers say that “the relevant rules in this

area of the law have long been settled and noncontrover-

sial.” Opp. at 6. The Commissioner agrees. Until Gerling

III, no one would have reasonably thought that a plaintiff

who loses his Section 1983 claim on the merits has “pre-

vailed” on that ciaim, entitling the plaintiff to an award of

attorneys’ fees under Section 1988. Congress never author-

ized such an award, and Maher v. Gagne, 448 U.S. 122

(1980), certainly does not permit that result. Maher only

permits an award of fees to a plaintiff who has not had the

opportunity to litigate his Section 1983 claim to judgment;

it does not grant a windfall recovery of fees to a plaintiff

who has litigated and lost that claim. Presumably, until

Gerling Ill, plaintiffs have understood that reality and

have not often pressed for the recovery of fees after having

lost their Section 1983 claim. Gerling II] now opens that

door.

2. The insurers dismissively characterize their loss

on their Section 1983 claims as a “wholly immaterial”

“happenstance.” Opp. at 9, 16. But that loss is anything

2

but immaterial. It reflects a judicial determination, by a

federal court of appeals, that the insurers were not enti-

tled to relief under Section 1983 as a matter of law. Con-

trary to the insurers’ assertion (Opp. at 16), their Section

1983 claims are not “unresolved.” Accordingly, there is no

basis for considering the insurers to be “prevailing parties”

on those claims for purposes of Section 1988 fees. See Nat7

Private Truck Council, Inc. v. Okla. Tax Comm’n, 515 U.S.

582, 592 (1995).

3. The insurers assert that unless they are awarded

fees here, they will be unfairly “penalized.” Opp. at 1, 11.

To the contrary, if Gerling III is allowed to stand, it is the

Commissioner and other defendants who defeat Section

1983 claims brought against them who will be unfairly

penalized. Gerling II] creates an assumption, never before

recognized, that the court that ruled against a plaintiff on

the merits of his Section 1983 claim was wrong and that

the plaintiff would prevail on that failed claim were a

reviewing court to address it.

There is no basis for such an assumption. Neither

Congress nor this Court has ever suggested that losing

litigants are entitled to that assumption. And the fact that

the Section 1983 claim satisfies the minimal “substantial-

ity” test (i.e., it is not frivolous) hardly justifies the as-

sumption that the lower court was wrong on the merits

and that the plaintiff would prevail on appeal.

4. Gerling III has significant practical consequences

that justify this Court’s immediate attention. Amici,

insurance regulators and local governments, have ex-

pressed serious concerns about the impact of this unprece-

dented decision. By expanding the right to attorneys’ fees

to parties who have lost their Section 1983 claims, Gerling

III presents the very real dangers of chilling regulatory

activity, burdening local government with costly additional

litigation, and exposing public agencies and local govern-

ment to unwarranted fee awards.’ Following Gerling III,

plaintiffs with little prospect of prevailing on a Section

1983 claim have every reason to add such a claim to a run-

of-the-mill tort lawsuit or challenge to an administrative

action, since they may now be awarded fees even if they

lose the Section 1983 claim.

The insurers’ response to this increase in meritless

Section 1983 suits exposes the fallacy of their position.

They say that appellate courts can deal with such claims

by addressing and rejecting them on the merits. Opp. at

15. But that is precisely the kind of judicial work that they

elsewhere say the courts should avoid for prudential

reasons. See Opp. at 8-9.

5. The insurers’ protests notwithstanding (Opp. at

15), Gerling III also reflects a significant intrusion on this

Court’s certiorari process. As the insurers themselves

conceded in their Ninth Circuit briefing (App. 30-31) and

Judge Graber inferred in her concurrence (App. 18), this

Court’s grant of certiorari on the Section 1983 claims was

’ Gerling III is not limited to situations in which a plaintiff loses

both the fee and non-fee claims in the lower court and then prevails on

the non-fee claim in the appellate court without obtaining an appellate

ruling on the fee claim. As the National Association of Insurance

Commissioners explains in its amicus brief (at page 6), Gerling III also

applies when the plaintiff has won on its non-fee claim in the lower

court. Significantly, Gerling III will chill a defendant’s willingness to

appeal on that non-fee claim, since the plaintiff can then cross-appeal

on the Section 1983 claim and recover fees if the appellate court affirms

the defendant’s loss on the non-fee claim and does not address the

Section 1983 issue. /d.

4

essential to the award of fees. Without that grant, the

Ninth Circuit could not have characterized those claims as

“unaddressed” for purposes of applying Maher to this case

and ruled that the insurers were entitled to an award of

attorneys’ fees under Section 1988.

The insurers also argue that this Court’s grant of

certiorari is not a fee-generating event under Gerling III

because “it is the Court's ultimate disposition on the

merits of the fee-bearing claims before it that determines

whether fees are available.” Opp. at 15. That argument is

puzzling, since this Court expressly did not address the

merits of the insurers’ Section 1983 claims in Garamendi,

and the Court’s decision not to address those claims is

precisely what the insurers ~~ provides the basis for a

fee award under Maher.

6. The insurers are simply wrong in asserting that

the Ninth Circuit's Commerce Clause and due process

rulings do not continue to have precedential value. Opp. at

11 n.3. They cite a case, O’Connor v. Donaldson, 422 U.S.

563, 578 n.12 (1975), that holds only that a lower court

opinion loses its precedential value when it has been

vacated. However, the law recognizes a critica) distinction

between vacating and reversing a lower court judgment.

Reversal of a decision on one ground does not affect the

precedential value of the balance of the decision. See

Central Pines Land Co. v. United States, 274 F.3d 881,

893-894 and n.57 (5th Cir. 2001). Were this not the law,

there would be no point in referring to a decision as

“reversed on other grounds,” as no aspect of the decision

would have any value. The insurers simply ignore this

critical distinction.

5

This Court reversed the Ninth Circuit on foreign

affairs preemption grounds only; it did not vacate the

Ninth Circuit’s Commerce Clause and due process rulings.

As Judge Graber recognized (App. 19 n.1), the Ninth

Circuit’s Commerce Clause and due process rulings con-

tinue to have precedential effect.

7. Section 1988 permits a plaintiff to recover fees

only if he has prevailed on his Section 1983 claim.’ Con-

gress, and this Court in Maher, recognized that there are

limited circumstances where it is perceived to be unfair to

deny fees to a plaintiff who has never had the opportunity

to obtain a ruling on his Section 1983 claim. Neither

Congress nor any other court has ever suggested, let alone

held as the Ninth Circuit has in Gerling III, that a plain-

tiff who has lost his Section 1983 claim on the merits in a

lower court is entitled to fees when a reviewing court does

not address that failed claim.

The Maher rule, contrary to the insurers’ repeated

suggestion (Opp. at 8-9, 12), is not one that awards fees

sim: ly as a convenience to courts that wish to avoid

constitutional issues. Instead, it addresses a specific and

limited perceived unfairness visited on a plaintiff who has

never had his day in court on his Section 1983 claim. That

unfairness does not exist where the plaintiff has litigated

and lost his Section 1983 claim in at least one court.

Under Gerling III, however, that loss is ignored as

though it never happened. As the amici have expressed,

* A plaintiff must prevail (or be assumed to have prevailed) on his

Section 1983 claim to recover fees under Section 1988. In Farrar v.

Hobby, 506 U.S. 103, 106, 107, 112 (1992), cited by the insurers (Opp. at

6-7), the plaintiff established that his civil rights had been violated.

6

that perverse result will improperly chill regulatory

activity, and expand litigation against and impose signifi-

cant risks upon local governments and regulators.

The petition for 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

* The issue of the insurers’ entitlement to fees is ripe and is not in

an interlocutory posture. The parties agreed to adjudicate the entitle-

ment issue prior to any proceedings to determine any fee award

amount, and the distnct court and Ninth Circuit have proceeded to

decide the entitlement issue.