Alliance of Nonprofits For Insurance Risk Retention Group v. Kipper

(Based on Pre-emption of the Liability Risk Retention Act, the Nevada Insurance Commissioner Was Barred From Prohibiting a Risk Retention Group from Issuing First Dollar Automobile Liability Policies)

In Alliance of Nonprofits for Insurance Risk Retention Group v. Kipper, 712 F.3d 1316 (9th Cir. April 8, 2013), the United States Ninth Circuit Court of Appeals reversed the district court’s judgment in favor of the Nevada Commissioner of Insurance (the “Commissioner”) which had issued an order barring the Alliance of Nonprofits for Insurance Risk Retention Group (“ANI”) from issuing” dollar one automobile liability policies to residents in Nevada. The Ninth Circuit Court of Appeals held that the Liability Risk Retention Act (“LRRA”) broadly preempted “any state law, rule, regulation, or order to the extent that such law, rule, regulation, or order would make unlawful, or regulate, directly or indirectly the operation of a risk retention group (15 U.S.C. §3902(a)(1))”.

The Commissioner issued an order barring ANI from issuing first dollar automobile liability policies based on the argument that it was protecting third parties from the inability of ANI to respond to liability claims. The district court agreed with ANI and entered summary judgment in its favor relative to preemption of the Commissioner’s order. It also held that the Commissioner was discriminating against ANI pursuant to 42 U.S.C. §1983 and awarded it attorneys’ fees as the prevailing party in the lawsuit. The Ninth Circuit affirmed the district court’s order barring the Commissioner’s order preventing ANI from issuing first dollar liability insurance policies in Nevada. However, it reversed the district court’s order awarding attorneys’ fees and costs to ANI. Essentially, the Ninth Circuit Court of Appeals held that “ANI was not entitled to attorneys’ fees because preemption of state law under the LRRA is not a “right” that can be enforced under 42 U.S.C. §1983.