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CHARTER RISK RETENTION GROUP INS. CO. v. ROLKA

June 11, 1992

CHARTER RISK RETENTION GROUP INSURANCE COMPANY, Plaintiff
v.
DAVID W. ROLKA, JOSEPH RHODES, JR., and WENDELL F. HOLLAND, COMMISSIONERS PUBLIC UTILITY COMMISSION, Defendants



The opinion of the court was delivered by: WILLIAM W. CALDWELL

 I.Introduction

 Plaintiff, Charter Risk Retention Group Insurance Company, seeks a declaratory judgment that defendants' enforcement of section 512 of the Pennsylvania Public Utility Code (the Code), 66 Pa.C.S. § 512, and certain regulations of the Pennsylvania Public Utility Commission (the Commission), 52 Pa.Code § 32.11, is unconstitutional and in violation of the Liability Risk Retention Act of 1986 (the Act), 15 U.S.C. § 3901, et seq. Defendant commissioners, David W. Rolka, Joseph Rhodes, Jr., and Wendell F. Holland, have filed a motion to dismiss for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1) and failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6). An amicus curiae brief has been filed in opposition to defendants' motion by the National Risk Retention Association.

 II.Background

 Defendants, acting as commissioners for the Commission, based their decision upon their interpretation of section 512 of the Code and the Commission's regulations, 52 Pa. Code § 32.11(a) and (b), which require that private carrier utilities obtain insurance from an insurer "authorized to do business within the Commonwealth." Defendants determined that plaintiff's insurance plan did not comply for purposes of demonstrating financial responsibility, because it is not licensed in Pennsylvania and for that reason is not "authorized to do business in the Commonwealth." Id.

 The complaint alleges that the defendants' action is in violation of section 3902 (1) through (4) of the Act, including its anti-discrimination provisions, which preempts state insurance laws that require risk retention groups to "obtain authorization under differing standards before being permitted to do business in a given state." (Complaint at P 17). The complaint further avers that the Act "authorized duly constituted groups to offer its members liability insurance coverage in every state without having to obtain a license from each state." (Complaint at P 18). The Act provides:

 Except as provided in this section, a risk retention group is exempt from any State law, rule, regulation, or order to the extent that such law, rule, regulation, or order would:

 (1) make unlawful, or regulate directly or indirectly, the operation of a risk retention group except that the jurisdiction in which it is chartered may regulate the formation and operation of such a group . . .

 . . .

 (4) otherwise discriminate against a risk retention group or any of its members, except that nothing in this section shall be construed to affect the applicability of State laws generally applicable to persons or corporations.

 15 U.S.C. § 3902(a)(1) and (4). Plaintiff claims that it and its members will suffer irreparable harm to their business interests and ability to operate in Pennsylvania unless defendants are enjoined from enforcing the orders to show cause and the state laws as interpreted by them.

 III. Discussion

 Defendants contend that the Act does not apply to this action and, accordingly, plaintiff may not avail itself of 28 U.S.C. § 1331 or 1337(a) as there is no federal question jurisdiction. *fn2" They argue further that plaintiff's claim against them in their individual capacities is in effect a claim against the Commission which is barred by the eleventh ...


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