Appeal from the United States District Court for the District of New Jersey. Appeal from the United States District Court for the District of New Jersey. (Civil Action No. 90-1315). (Civil Action No. 90-4643).
Present: Becker and Alito, Circuit Judges, and Atkins, Senior District Judge*fn*
ATKINS, Senior District Judge.
This appeal presents the question of whether N.J. Stat. Ann. § 17:28-1.4 violates the Equal Protection Clause of the United States Constitution. The statute limits the right of non-residents of New Jersey to sue for non-economic (pain and suffering) loss by automatically assigning the so called verbal threshold tort option under N.J. Stat. Ann. § 39:6A-8(a) to out-of-state residents involved in accidents occurring in the State of New Jersey, solely on the basis of whether their automobile (auto) insurance carrier is authorized to transact business in the State of New Jersey.*fn1 Plaintiff-appellant Michele Dyszel challenges the district court's entry of a directed verdict against her where, as a matter of law, her non-economic injuries did not meet the jurisdictional requirements of the verbal threshold. Plaintiffs-appellants Daniel and Leslie Tumolo challenge the district court's entry of judgment dismissing their complaint. Furthermore, the Tumolos contend that they have established a prima facie case proving the verbal threshold's jurisdictional requirements. Therefore, the Tumolos assert that the district court's order should be reversed.
The appellants'*fn2 principal argument is that automatic assignment of the verbal threshold option to an out-of-state insured, on the basis that the auto insurer is authorized to transact business in New Jersey, is not rationally related to the purpose of N.J. Stat. Ann. § 17:28-1.4 and violates an insured's right to equal protection of the law. We conclude that the classification at issue is rationally related to New Jersey's legitimate state interest in establishing an insurance scheme that will compensate economic losses for all individuals injured in automobile accidents without unduly raising the cost of automobile insurance. Therefore, N.J. Stat. Ann. § 17:28-1.4 is not violative of equal protection rights. We further agree with the courts' finding that appellants are subject to N.J. Stat. Ann. § 39:6A-8(a), thus neither had a recoverable action. Consequently, we affirm both district courts' decisions.
In this consolidated case, appellants challenge the constitutionality of N.J. Stat. Ann. § 17:28-1.4, which deems New Jersey's auto insurance "verbal threshold"*fn3 applicable to the residents of other states whose insurers are authorized to transact business in New Jersey, if the autos of those non-residents are used in New Jersey. The verbal threshold prohibits suits for non-economic damages in the absence of serious personal injury.
Section 4 of the New Jersey Automobile Reparation Reform Act, N.J. Stat. Ann. § 39:6A-1, et seq., requires every auto insurance policy to provide for the payment of certain personal injury protection (PIP) benefits without regard to negligence, liability, or fault of any kind. N.J. Stat. Ann. § 39:6A-4. PIP benefits include medical expenses, income continuation, essential services, death benefits and funeral expenses. Id.
With respect to suits for non-economic injuries, N.J. Stat. Ann. § 39:6A-8 requires New Jersey auto owners to choose either a "verbal threshold" option or a "full coverage" option.*fn4 The "verbal threshold" option reads in pertinent part:
a. Every owner, registrant, operator or occupant of an automobile to which section 4 of P.L.1972, c. 70 (C. 39:6A-4), personal injury protection coverage, regardless of fault, applies, and every person or organization legally responsible for his acts or omissions, is hereby exempted from tort liability for noneconomic loss to a person who is subject to this subsection and who is either a person who is required to maintain the coverage mandated by this act, or is a person who has a right to receive benefits under Section 4 of P.L.1972, c. 70 (C. 39:6A-4), as a result of bodily injury , arising out of the ownership, operation, maintenance or use of such automobile in this State, unless that person has sustained a personal injury which results in death; dismemberment; significant disfigurement; a fracture; loss of a fetus; permanent loss of use of a body organ, member, function or system; permanent consequential limitation of use of a body organ or member; significant limitation of use of a body function or system; or a medically determined injury or impairment of a non-permanent nature which prevents the injured person from performing substantially all of the material acts which constitute that person's usual and customary daily activities for not less than 90 days during the 180 days immediately following the occurrence of the injury or impairment . . . .
(emphasis added). The "full coverage" or "no threshold" option, N.J. Stat. Ann. § 39:6A-8(b), states:
b. As an alternative to the basic tort option specified in subsection a. of this section, every owner, registrant, operator, or occupant of an automobile to which section 4 of P.L.1972, c. 70 (C. 39:6A-4) applies, and every person or organization legally responsible for his acts or omissions, shall be liable for noneconomic loss to a person who is subject to this subsection and who is either a person who is required to maintain the coverage mandated by P.L.1972, c. 70 (C. 39:6A-4 et seq.) or is a person who has a right to receive benefits under section 4 of that act (C. 39:6A-4), as a result of bodily injury, arising out of the ownership, operation, maintenance or use of such automobile in this State.
(emphasis added). Thus, an auto owner who accepts the verbal threshold option exempts other private passenger auto owners from tort liability for non-economic losses, unless one of the nine categories of specifically listed injuries is involved.
When a non-resident drives in New Jersey, this election is not available. N.J. Stat. Ann. § 17:28-1.4 states that non-resident auto owners who are insured by insurance companies licensed to operate in the State of New Jersey are subject to the verbal threshold, that is, not allowed to sue for non-economic injuries, if the insured vehicle is used or operated in New Jersey.*fn5 This is true whether or not the out-of-state insured has full coverage in his or her home state policy, including coverage for non-economic injuries.
This diversity action involved damages for personal injuries sustained by Rose and Michele Dyszel in an auto accident which occurred on February 15, 1989, in Burlington City, New Jersey. The Dyszels also sought damages for loss of consortium for Robert Dyszel, Rose's husband, and Michael Dyszel, Michele's husband.
The parties to the district court action did not dispute the issue of negligence. It was stipulated that plaintiffs, Rose and Michele Dyszel, were injured in an auto accident in New Jersey as the result of the negligence of defendant, Marks, a New Jersey resident.*fn6 The Dyszels were Pennsylvania residents at the time of the collision. Marks moved for summary judgment on the issue of damages, claiming that under N.J. Stat. Ann. § 17:28-1.4, the deemer statute, the Dyszels were deemed to be covered by the verbal threshold statute since they were residents of another state and because their insurer was licensed to transact business in New Jersey. Therefore, Marks alleged that the Dyszels could not recover damages for non-economic losses.
In response, the Dyszels asserted that the portion of N.J. Stat. Ann. § 17:28-1.4 deeming non-residents who operate vehicles in New Jersey to be bound by the verbal threshold is unconstitutional as violative of the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution. The United States District Court for the District of New Jersey found that the purpose of the statute, limiting insurance costs so as to make personal injury protection available to all, was a legitimate state interest.*fn7 Moreover, the court held that reducing the number of claims for non-economic loss, whether the claims originate from in-state or out-of-state plaintiffs, was rationally related to that interest. Therefore, on January 8, 1992, the district court ruled that the deemer statute did not violate plaintiffs' federal equal protection rights. Accordingly, the district court entered an order holding plaintiffs subject to the verbal threshold but reserving decision as to whether either plaintiff had met the requirements of the verbal threshold.
The district court then heard evidence concerning the nature of the injuries suffered by plaintiffs Michele Dyszel and Rose Dyszel. The court found that the injuries suffered by Michele Dyszel constituted non-recoverable, non-economic injuries under New Jersey's verbal threshold statute and granted a directed verdict against her on May 5, 1992.*fn8 The claims of Rose Dyszel and her husband went to the jury, which returned verdicts in their favor totalling $15,500. The Dyszel's Motion for Reconsideration was denied on May 7, 1992. Consequently, the Dyszels filed a timely Notice of Appeal to this Court on May 26, 1992.
This diversity action involved damages for personal injuries sustained by Daniel Tumolo (Tumolo) in a motor vehicle accident which occurred on January 7, 1989, in Cherry Hill, New Jersey. The Complaint also included a claim for damages for loss of consortium for Leslie Tumolo, Daniel's wife.
The district court found, as a matter of law, that appellant's claim was subject to the New Jersey Lawsuit Threshold, N.J. Stat. Ann. § 39:6A-8(a), by virtue of the provisions of the deemer statute. The court also found that Tumolo's claim failed to meet the requirements of the verbal threshold and entered summary judgment in favor of Andrew Brogan.
On June 18, 1992, plaintiffs filed a timely Notice of Appeal to this Court from the district court's May 29, 1992 order.*fn9
On February 15, 1989, appellant Michele Dyszel was riding as a passenger in a car driven by her mother-in-law, Rose Dyszel. The vehicle was involved in a rear-end collision while stopped at a red traffic light in Burlington City, New Jersey. Defendant Marks was the driver of the other car. Parties stipulated that Marks' negligence ...