SAFECO INSURANCE COMPANY OF AMERICA v. GARAMENDI

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Court of Appeal, Second District, Division 5, California.

SAFECO INSURANCE COMPANY OF AMERICA et al., Plaintiffs and Appellants, v. John GARAMENDI, as Insurance Commissioner, etc., Defendant and Respondent.

No. B063893.

Decided: December 17, 1992

Barger & Wolen, Kent R. Keller, Robert W. Hogeboom, Steven H. Weinstein, John C. Holmes, Los Angeles, Morrison & Foerster, Marc P. Fairman, Michael M. Carlson and Jon S. Tigar, San Francisco, for plaintiffs and appellants. Strumwasser & Woocher, Fredric D. Woocher, Michael J. Strumwasser, Santa Monica, and Susan L. Durbin, Los Angeles, for defendant and respondent.

This appeal involves the nature and finality of the former Insurance Commissioner's so-called “amended decision” of June 15, 1990.   It presents the question of the extent to which the present commissioner is bound by certain agency determinations which resulted from hearings held by his predecessor to devise a plan for the implementation of Proposition 103.1  We find that the amended decision did not address specific issues as to specific insurers, but did develop general principles to be applied in future cases and set forth a plan for the implementation of Insurance Code sections 1861.01 and 1861.05 and related portions of Proposition 103.   Accordingly, the amended decision was not an adjudicatory decision.   Rather, it constituted quasi-legislative rule-making of generic procedures to be followed and thus did not bind the new commissioner, who was free to rescind his predecessor's regulations and establish new and different regulations.

PROCEDURAL AND FACTUAL HISTORY

This case arises out of unfocused early efforts to implement Proposition 103.   As enacted, Proposition 103 provided that rates on policies written between November 8, 1988, and November 8, 1989, would be “rolled back” to 20 percent below their 1987 levels.   The initiative contemplated that all rates modified after November 7, 1989, would be subject to the “prior approval” of the Insurance Commissioner.   The initiative provided for an automatic rollback, giving the Department of Insurance (DOI) a full year before it would have to hold rate hearings.   However, the Supreme Court in Calfarm Ins. Co. v. Deukmejian (1989) 48 Cal.3d 805, 258 Cal.Rptr. 161, 771 P.2d 1247 (hereinafter, Calfarm ), upholding all but two severable portions of the insurance reform initiative, essentially revised the automatic rollback procedure such that each company would be permitted to file for exemption from the rollback requirement until the Commissioner determined that the rate as applied to each company would not be confiscatory.2  Following Calfarm, hundreds of insurers filed thousands of applications for exemption from Proposition 103's requirement that each insurer roll back its levels 20 percent below the November 8, 1987, levels.

In response to the deluge of applications for exemptions, in August of 1989, former Insurance Commissioner Roxani Gillespie commenced a series of company-by-company adjudicatory hearings to determine the rollback liability of several insurers under the Calfarm confiscation standard.   By October of 1989, it became apparent that there were a number of generic issues common to virtually all insurers' rates and that these issues could be resolved in a similar manner for all insurers.   The former Insurance Commissioner then suspended individual hearings and gave notice of the bifurcation of proceedings and the consolidation of proceedings and hearings regarding common, generic insurance rate issues.

The proceedings concluded approximately eight months later, and the former commissioner signed on June 15, 1990, a so-called “amended decision” which reflected the Commissioner's policies on generic issues involved in both rollback and prior-approval applications, subject to the right of each insurer to request variances from those policies.   The amended decision, which by its terms was “effective June 15, 1990,” addressed inter alia the following issues:  (1) the reasonable industry-wide rate of return (11.2%) to be used to determine the insurers' rates for the rollback year, absent a showing by an insurer that its individual circumstances warranted a variance from that rate of return;  (2) the determination of the amount of capital to which that rate of return would be applied, again absent an insurer's showing that it was entitled to a variance;  (3) the disallowance of certain expenses incurred by insurers during the rollback year;  and (4) the provisions for a company-specific adjudicatory hearing to determine whether insurers are entitled to any requested variances.

The amended decision was in the format of a lengthy narrative to which a detailed outline of definitions and procedures entitled “Exhibit A” was appended.   The narrative portion described the various provisions of Proposition 103, the Supreme Court's opinion in Calfarm, and the Commissioner's procedures for setting rollback rates, prior-approval rates and variances.   The detailed “Exhibit A,” captioned “California Department of Insurance Plan for the Implementation of Insurance Code Sections 1861.01 and 1861.05 and Related Portions of Proposition 103,” was an outline with headings and subheadings which were substantively consistent with the descriptive narrative which preceded it.

Following the amended decision, Commissioner Gillespie scheduled the resumption of company-specific rollback exemption hearings for numerous companies.   Several insurers, including Safeco and Allstate, filed actions challenging the amended decision.   Safeco sought a writ of mandate “[o]rdering the Commissioner to set aside the findings, determinations, and rulings contained in her Amended Decision.”   Allstate sought a writ of mandate “requiring the Commissioner to vacate and annul the Amended Decision.”   None of the insurers specifically challenged the portions of the amended decision regarding the right to seek variances from the generic determinations.   Nor did any of the insurers seek to prohibit the Commissioner or the DOI from rendering any decisions or promulgating any future rules or regulations regarding insurance rates.   However, each petition and complaint filed by the insurers sought to invalidate various portions of the June 15, 1990, amended decision, and each contained at least one broadside attack against the amended decision in its entirety or against the portion of it addressing rollbacks.

On July 31, 1990, the superior court ruled on related cases brought by several insurers, including Safeco and Allstate.   The court denied the motions to enjoin the Commissioner from holding company-specific hearings under the guidelines in the June 15, 1990, amended decision and dismissed the insurers' petitions for a writ of mandamus or mandate or for injunctive relief.   The court ruled that the June 15, 1990, amended decision was not a final order and that the insurers had not exhausted their administrative remedies.   The court observed that not one application seeking exemption from the rollback requirement had been decided and no orders had yet been issued that any particular insurer was required to roll back its rates and make a refund.   The court reasoned that since the rate adjustment process entailed company-specific hearings following the consolidated generic hearings, as contemplated by Calfarm and as then ordered by the commissioner who had established bifurcated hearings, until a company-specific hearing is concluded “[T]here is no final rate rollback adjudication as to any insurer.”   The court emphasized, “It is possible that a particular rollback applicant may establish at the company's specific hearing that its application for variance should be granted.   If the application is not granted, judicial review will be available of both the Commissioner's methodology and its application to the insurer.” 3

Following the superior court's decision, a company-specific hearing applying the amended decision commenced as to Safeco and California State Automobile Association (CSAA).   The claims of these two insurers were reviewed at a joint hearing before an administrative law judge (ALJ) who issued a proposed decision for review by the Commissioner.   Before Commissioner Gillespie rendered a decision on the Safeco and CSAA company-specific hearing, she was replaced by the newly elected (see Ins.Code, § 12900) Commissioner John Garamendi.   The new commissioner rejected the ALJ's proposed decision after the company-specific joint hearing and remanded the matter for a further hearing.   Commissioner Garamendi indicated that new regulations were forthcoming and that Safeco and CSAA should have their rollback liability ultimately determined under the new regulations which would also govern the liability of other insurers who came thereafter.   No final decision has yet issued in any company-specific hearing held under the June 15, 1990, amended decision.

As Commissioner Garamendi's regulatory program took shape, insurers became increasingly attached to the former commissioner's previously reviled amended decision.   Although the insurers continued to press the present appeal from their unsuccessful challenge to the amended decision, the insurers also defended the amended decision.   On March 19, 1991, the insurers filed a complaint for declaratory and injunctive relief and a petition for a writ of mandate challenging the right of the Commissioner to ignore and redecide various rate-making determinations in the amended decision.   On April 8, 1991, the superior court denied the insurers' request to enjoin the Commissioner from proceeding with new rate component determinations hearings and denied the attempt to require adherence to the former commissioner's amended decision.4

After extensive rule-making hearings, Commissioner Garamendi subsequently adopted and implemented regulations regarding a reasonable industry-wide rate of return for rollback purposes (10%) and other generic issues common to all insurers' rates.   The regulations promulgated new and different guidelines than those in the amended decision regarding several key rate-making determinations.

The insurers view the regulations as politically motivated and unwarranted changes from the now largely satisfactory guidelines in the amended decision.   On the other hand, the new commissioner portrays the amended decision as the product of hearings infected with wholesale irregularities, including the denial of discovery, denial of the right to cross-examination, unwarranted and capricious limitations on issues and evidence deemed important by consumer intervenors, and purported ex parte communications and alleged conflicts of interest by the hearing officer.   However, the Commissioner's motivation in rescinding the guidelines in the amended decision and in enacting superseding generic issue determinations by way of regulations is irrelevant to this appeal.

The Commissioner thereafter directed the ALJ to determine the rollback liability of Safeco and CSAA based on the new regulations, which had been adopted to replace the determinations contained in the June 15, 1990, amended decision.   The financial rollback obligations of Safeco and CSAA would be less onerous under the generic determinations in the amended decision than under subsequent regulations by the Commissioner.  (Among other things, the new regulations specified that 10 percent, rather than 11.2 percent, constituted a reasonable industry-wide rate of return.)   Pursuant to the guidelines in the amended decision, the ALJ determined (in a company-specific “proposed decision” before Commissioner Garamendi replaced Commissioner Gillespie) that the rollback obligations initially were $41 million for Safeco and $92 million for CSAA.   After allowable variances, the ultimate rollback obligations would have been $17.5 million for Safeco and nothing for CSAA.   However, pursuant to calculations based on the subsequent regulations, Commissioner Garamendi advised the insurers that the rollback obligations would be $88.7 million for Safeco and $126.2 million for CSAA, although new company-specific hearings under Commissioner Garamendi's regulations have apparently not been pursued by Safeco and CSAA.   The insurers' present attachment to the previously attacked amended decision is thus understandable.

Meanwhile, seemingly stuck at first in an administrative morass, Commissioner Garamendi's regulations regarding generic issues common to all insurers' rates are now in an apparent state of flux.   The generic issue regulations formulated after extensive rule-making hearings were submitted by the Commissioner to the Office of Administrative Law (hereinafter, the OAL), were twice rejected by the OAL (see Gov.Code, § 11343.1), but, after appeals by the Commissioner to the Governor (see Gov.Code, § 11349.5), were twice approved on order of the Governor.

Nonetheless, we are most recently advised that once again the OAL has rejected the Commissioner's comprehensive generic regulations.   According to the OAL's notice disapproving of the Commissioner's regulations, the regulations lack the statutorily required consistency and clarity (see Gov.Code, § 11349.1, subds. (a)(3) & (4)) in that they “go too far in restricting an insurer from showing at a rate hearing that a rate is not ‘excessive’ or ‘inadequate’ ” and that the “definitions of ‘excessive’ and ‘inadequate’ (primary standards established by Proposition 103 for approval of a rate) cannot easily be understood․”  The OAL's notice also suggested to the Commissioner that he may seek judicial review of the OAL's decision.  (See Gov.Code, § 11350.3.) 5  The insurers maintain that the OAL's actions illustrate that the Commissioner has no coherent regulatory program.   Moreover, the insurers suggest that upholding the trial court's decision would produce anomalous results and impede the effective resolution of numerous pending rollback cases.

However, the Commissioner notes that, despite the apparently uncertain status of his regulations in the OAL, the superior court's ruling which permitted him to rescind the amended decision and to enact generic issue regulations also permitted a coherent regulatory program which has resulted, albeit not in this case, in voluntary rollbacks of $300 million and a final administrative decision on another $100 million in rollbacks.   Thus, the Commissioner urges that predictable and actual effects of the trial court's denial of the insurers' request for an injunction and the public interest in the consequences of the denial are relevant in reviewing the order denying the insurers' request for equitable relief.6

DISCUSSION

I. Nature And Effect Of The So–Called “Amended Decision” Of June 15, 1990

 The insurers urge that the amended decision was a final decision which was adjudicatory in nature.   The insurers would thus like to see Commissioner Garamendi essentially a prisoner of his predecessor's determinations on June 15, 1990, even if he deems those determinations unwise or erroneous.   According to the reasoning of the insurers:  (1) the amended decision of June 15, 1990, was final for the purposes of judicial review with the DOI retaining no jurisdiction (see Heap v. City of Los Angeles (1936) 6 Cal.2d 405, 407–408, 57 P.2d 1323);  (2) the amended decision was final for the purposes of collateral review with the DOI not entitled to modify the decision and with no inherent jurisdiction to correct any errors or to alter policy determinations in continuing administrative proceedings (see Long Beach Unified Sch. Dist. v. State of California (1990) 225 Cal.App.3d 155, 169, 275 Cal.Rptr. 449);  and (3) the Commissioner must determine rollback liability based on the amended decision regardless of whether equitable principles preclude the insurers from binding the Commissioner to the amended decision which the insurers themselves chose to challenge.   The necessary underlying premise for the entire position taken by the insurers is that the June 15, 1990, amended decision was adjudicatory and final, rather than quasi-legislative rate-making and thus always open to correction or modification as warranted by experience, a change in conditions, or a change in policy.

 Contrary to the contention of the insurers, we find that the amended decision was not adjudicatory.   When an agency formulates generic rules of general applicability and develops principles to be applied in future cases, the agency acts in its quasi-legislative and nonadjudicatory capacity.   (Strumsky v. San Diego County Employees Retirement Assn. (1974) 11 Cal.3d 28, 34–35, fn. 2, 112 Cal.Rptr. 805, 520 P.2d 29.)  “ ‘[A] legislative action is the formulation of a rule to be applied to all future cases, while an adjudicatory act involves the actual application of such a rule to a specific set of existing facts.’ ”  (Dominey v. Department of Personnel Administration (1988) 205 Cal.App.3d 729, 736, 252 Cal.Rptr. 620.)   It is the function performed, not the label attached, which governs whether an agency is engaged in quasi-legislative rule-making.  (Pitts v. Perluss (1962) 58 Cal.2d 824, 834, 27 Cal.Rptr. 19, 377 P.2d 83.)   Even where an agency develops an evidentiary record on technical facts, the fundamentally legislative character of the proceeding is not altered.  (See Stauffer Chemical Co. v. Air Resources Board (1982) 128 Cal.App.3d 789, 794, 180 Cal.Rptr. 550.)   Indeed, the very requirement that the agency make findings based on a huge record of technical facts may itself constitute a basis for classifying the agency's actions as quasi-legislative.  (See, e.g., Rivera v. Division of Industrial Welfare (1968) 265 Cal.App.2d 576, 586, 71 Cal.Rptr. 739.)

 Moreover, an agency's rate-making function is uniformly recognized as quasi-legislative.  (See, e.g., New Orleans Pub. Serv. v. New Orleans (1989) 491 U.S. 350, 371, 109 S.Ct. 2506, 2519, 105 L.Ed.2d 298;  California Hotel & Motel Assn. v. Industrial Welfare Com. (1979) 25 Cal.3d 200, 211, 157 Cal.Rptr. 840, 599 P.2d 31;  Wood v. Public Utilities Commission (1971) 4 Cal.3d 288, 292, 93 Cal.Rptr. 455, 481 P.2d 823.)   As the court explained in Rivera v. Division of Industrial Welfare, supra, 265 Cal.App.2d 576, 71 Cal.Rptr. 739, an agency acts in its quasi-legislative capacity when it sets rates by acting “to receive and consider economic and social data, as well as opinion and argument, covering large numbers of people and wide sectors of the economy;  to select a series of positions aimed at the statutory objectives but shaped by discretion and policy;  finally, to express its selection in rules regulating the future conduct of relatively broad classes of persons.   Thus its function was quasi-legislative rather than adjudicative.”  (Id. at p. 586, 71 Cal.Rptr. 739.)

 Whether an agency acts in its quasi-legislative or in its adjudicative mode is significant regarding the finality of its actions.   An adjudicatory action within the scope of the Administrative Procedure Act (Gov.Code, §§ 11500–11529) (hereinafter, APA) is final and judicially reviewable 30 days after delivery or mailing of the decision, unless an earlier effective date for the decision is set by the agency, and the agency then loses power to reconsider its decision.  (Gov.Code, §§ 11521, subd. (a), 11523.)   On the other hand, it is well established that an agency's quasi-legislative action is like an act by a legislative body which can reconsider and change its action at any time.  (See Hollywood Circle, Inc. v. Dept. of Alcoholic Beverage Control (1961) 55 Cal.2d 728, 732, 13 Cal.Rptr. 104, 361 P.2d 712;  Olive Proration etc. Com. v. Agri. etc. Com. (1941) 17 Cal.2d 204, 208–209, 109 P.2d 918;  California Optometric Assn. v. Lackner (1976) 60 Cal.App.3d 500, 505, 131 Cal.Rptr. 744.)   An administrative agency concerned with furtherance of the public interest is not bound to rigid adherence to precedent.  “ ‘The [agency's] view of what is best in the public interest may change from time to time.   Commissioners themselves change, underlying philosophies differ, and experience often dictates changes.’ ”   (New Castle County Airport Commission v. C.A.B. (D.C.Cir.1966) 371 F.2d 733, 735, fn. 4.)   Indeed, government could not properly function if administrators were bound in perpetuity to initial determinations, and the lessons of experience and the input of varied personnel could not influence and enrich government policy.

 In the present case, the former commissioner's amended decision of June 15, 1990, was captioned on the first page as if it were an adjudicatory opinion and the document was labeled a “decision.”   However, merely labeling the document a decision is not determinative of its adjudicatory rather than quasi-legislative nature.  (See Perdue v. Crocker National Bank (1985) 38 Cal.3d 913, 935–936, fn. 25, 216 Cal.Rptr. 345, 702 P.2d 503;  Dominey v. Department of Personnel Administration, supra, 205 Cal.App.3d at pp. 736–738, 252 Cal.Rptr. 620;  Independent Broker–Deal T. Ass'n v. Securities & E. Com'n (D.C.Cir.1971) 442 F.2d 132, 140–141.)

Nor is the caption of the amended decision conclusive of its nature, though it may be indicative.   Here, the caption of the amended decision is typed as if it were a judicial opinion, but it does not refer to any specific parties and only describes generic issues of general applicability.   The caption refers to rate increase matters and issues related to the control, review and approval of insurance rates pursuant to pertinent statutory provisions, indicative of its quasi-legislative nature.

The text of the amended decision and an analysis of its substance and function further reveal its general applicability and quasi-legislative nature.   The document contains a description of the provisions of Proposition 103, the effect of the Calfarm opinion, and a narrative discourse on general insurance industry characteristics.   The document specifically discusses the desirability of developing generic rules, disclaims any findings as to any specific insurer, and selects approaches from competing methodologies regarding rate-making.

The general rule-making, quasi-legislative nature of the decision is also consistent with the notice announcing the generic hearings which resulted in the amended decision.   The notice announcing the generic hearings revealed, in pertinent part, that the hearing would “result in the adoption of methods for controlling, reviewing and approving insurance rates” and would “determine whether exceptions should be made to the general methodologies for on-going rate review, prior approval or Rollbacks, and if so, what the methodologies for such exceptions should be.”

Conclusively revealing the quasi-legislative rule-making nature of the amended decision is the lengthy Exhibit A appended to the decision.   The exhibit consists in outline format of numerous definitions, formulas and procedural rules for calculating rates which were written precisely in the form of regulations.   In fact, such regulations were promptly enacted.

 We acknowledge, as the insurers point out, that pursuant to Proposition 103, Insurance Code section 1861.05, subdivision (a) “govern[s] rate regulation during the first year of the initiative's operation” (Calfarm, supra, 48 Cal.3d at p. 823, 258 Cal.Rptr. 161, 771 P.2d 1247), and that hearings under section 1861.05 must be conducted pursuant to the adjudicatory hearing provisions of the APA (Ins.Code, § 1861.08).   Nonetheless, the Supreme Court in Calfarm emphasized the Commissioner's broad implied powers which go beyond the adjudicatory provisions of the APA.   The Commissioner's “powers are not limited to those expressly conferred by statute;  ‘rather, “[i]t is well settled in this state that [administrative] officials may exercise such additional powers as are necessary for the due and efficient administration of powers expressly granted by statute, or as may fairly be implied from the statute granting the powers.” ’ ”  (Calfarm, supra, 48 Cal.3d at p. 824, 258 Cal.Rptr. 161, 771 P.2d 1247, citations omitted.)   Accordingly, Insurance Code section 1861.08 merely requires a hearing in conformity with APA adjudicatory procedures on each company's contested rate application.   The procedural requirements of Proposition 103 apply to the adjudicatory hearings contemplated by the initiative, but do not apply to what Calfarm described as the Commissioner's implied “broad discretion to adopt rules and regulations as necessary to promote the public welfare” and to “tak[e] whatever steps are necessary to reduce the job to a manageable size.”  (Ibid.)  “No provision [in Proposition 103] bars the commissioner from consolidating cases or issuing regulations of general applicability.”  (Ibid.)

The insurers also assert the adjudicatory nature of the amended decision because the hearings which led to the amended decision included the right of cross-examination, discovery and subpoena, which are normally associated with adjudicatory hearings.   However, courts have long acknowledged that an agency's decision to ascertain facts in a court-like hearing does not alter the nature of a quasi-legislative proceeding.  (City of Santa Cruz v. Local Agency Formation Com. (1978) 76 Cal.App.3d 381, 388, 142 Cal.Rptr. 873.)   “ ‘The Legislature and administrators exercising quasi-legislative powers commonly resort to the hearing procedure to uncover, at least in part, the facts necessary to arrive at a sound and fair legislative decision․  Hence, the presence of certain characteristics common to the judicial process does not change the basically quasi-legislative nature of the subject proceedings.’ ”   (Ibid.)  Moreover, the agency's determination “to hold hearings, take evidence and make findings creates characteristics shared by adjudicatory proceedings but does not stamp the function with an adjudicative character.”   (Rivera v. Division of Industrial Welfare, supra, 265 Cal.App.2d at p. 587, 71 Cal.Rptr. 739, fn. omitted.) 7

Accordingly, the former commissioner's amended decision of June 15, 1990, was not adjudicatory but was quasi-legislative in nature and thus was lawfully reconsidered, rescinded and superseded by new and different regulations regarding generic rate-setting issues of general applicability.8

II. Mootness

 Safeco filed an action to enjoin enforcement of the June 15, 1990, amended decision and to order “the Commissioner to set aside the findings, determinations, and rulings contained in her Amended Decision․”  Likewise, Allstate sought injunctive relief and a writ to require “the Commissioner to vacate and annul the Amended Decision.”   By validly rescinding the amended decision and superseding it with new and different regulations, the new commissioner has effectively accorded the insurers the relief they requested.

 Safeco protests that “while [the insurers] originally filed their actions to challenge certain aspects of the Amended Decision, the current appeal is not for the purpose of attacking the Amended Decision, but rather to establish the current legal significance of the Amended Decision․”  Nonetheless, the current legal significance of the amended decision is its quasi-legislative and regulatory nature, which leads to the conclusion that the amended decision was validly rescinded by the new commissioner and thus that Safeco administratively obtained the relief requested in the present case.   We therefore find the appeal by Safeco moot based on the well-settled principle that the termination of an administrative action renders a challenge to that action moot.  (Dawson v. Town of Los Altos Hills (1976) 16 Cal.3d 676, 687, 129 Cal.Rptr. 97, 547 P.2d 1377;  Paul v. Milk Depots, Inc. (1964) 62 Cal.2d 129, 132–133, 41 Cal.Rptr. 468, 396 P.2d 924.)

DISPOSITION

The appeal is dismissed as moot.   Appellant insurers are to bear all costs on appeal.

FOOTNOTES

1.   Proposition 103 was an initiative measure adopted by the people of California at the general election on November 8, 1988, which contained various provisions intending to reduce and control insurance rates.

2.   Hence, the parties have used the term “rollback” rates to refer to rates on policies written during the initiative's first year (essentially, 1989), when rates were supposed to be rolled back.   The term “prior-approval” rates are those rates proposed in prospective applications to govern the period after November 8, 1989.

3.   The appeal in the present case by Safeco and other insurers is from this July 31, 1990, order, dismissing the petition for a writ of mandate.   A series of subsequent administrative and legal events have ensued which the parties deem legally relevant for various purposes.   We agree, and have taken judicial notice of the material brought to our attention by the parties and of the record of the other appeal in each appeal.   The facts discussed hereinafter are largely based on judicially noticed material necessary for a complete and meaningful understanding of the legal significance of the order under review.

4.   State Farm and other insurers appeal from that ruling in a related case (State Farm v. Garamendi (Cal.App.1992) [15 Cal.Rptr.2d 546, review granted March 25, 1993] ), which we ordered to be considered concurrently with the appeal in the present case.   Both appeals are similar as to the common facts and principal legal issues.

5.   Yes, another potential level of litigation emerges as the rate-making process is carved up into a myriad of pieces and as attorney billable hours climb and legal costs are passed on to consumers.   As one court cynically observed regarding Proposition 103 litigation, “Insurers doing business in California certainly have a right to challenge any unconstitutional aspects of the rate making process which have been forced on them by the initiative.   But the multiple and over-lapping assertions of these challenges in state court, before the Commissioner, and in this court causes this court to question those tactics.   Numerous insurers are involved in these multiple challenges, some represented by the same law firms.   Some challenges are filed in state court and some are filed in federal.   The challenges are at the same time identical, separate and over-lapping.   Some of that appears to be coordinated and calculated (for example, the filing of the two complaints in these actions ․).  And most of the significant issues in these two cases are already pending in state court.”  (Fireman's Fund Ins. Co. v. Garamendi (N.D.Cal.1992) 790 F.Supp. 938.)

6.   As pointed out by the Commissioner, “In exercising their sound discretion, courts of equity should pay particular regard for the public consequences in employing the extraordinary remedy of injunction.”   (Weinberger v. Romero–Barcelo (1982) 456 U.S. 305, 312, 102 S.Ct. 1798, 1803, 72 L.Ed.2d 91;  see also Brown Derby Hollywood Corp. v. Hatton (1964) 61 Cal.2d 855, 859, 40 Cal.Rptr. 848, 395 P.2d 896;  Loma Portal Civic Club v. American Airlines, Inc. (1964) 61 Cal.2d 582, 588–589, 39 Cal.Rptr. 708, 394 P.2d 548.)

7.   The superior court in the present case, in denying a preliminary injunction sought to preclude the Commissioner from holding company-specific rollback hearings, based its ruling on grounds other than the quasi-legislative and nonadjudicatory nature of the amended decision (i.e., based its decision on the absence yet of any final rate rollback adjudication as to any specific insurer and exhaustion principles).   It appears that the superior court, although arriving at the correct result, may have failed sufficiently to distinguish between the decision on an individual insurer's rate application and the development of general, industry-wide principles to be applied in those subsequent company-specific hearings because of extensive procedural rights (i.e., cross-examination, discovery and subpoenas) normally associated with an adjudicatory hearing.

8.   We note that whether out of an abundance of legal caution or for whatever other reason, the Commissioner has submitted a series of subsequent rate regulations to the OAL for its approval.  (See Cal.Code Regs., Title 10, ch. 5.)   Generally, every state agency must submit to the OAL for filing with the Secretary of State a certified copy of every regulation adopted or amended (Gov.Code, § 11343), and the OAL must review and approve the regulation (Gov.Code, §§ 11340.1, 11342.1, 11342.2, 11342.4), with its denial subject to judicial review (Gov.Code, § 11350.3).   However, one of several statutory exceptions provide that an agency need not submit to the OAL for filing with the Secretary of State any regulation which “[e]stablishes or fixes rates, prices, or tariffs” (Gov.Code, § 11343, subd. (a)(1)), and the OAL's procedures for approval of submitted regulations specifically do not apply to rate-setting regulations (Gov.Code, § 11346.1, subd. (a)).  Thus, after extensive hearings on generic rate-setting issues and prior to further company-specific hearings (Ins.Code, §§ 1861.05, subd. (c), 1861.055), the Commissioner could but was not required to submit rate-setting regulations to the OAL for approval, and the OAL's approval was not necessary for their validity.  (State Comp. Ins. Fund. v. McConnell (1956) 46 Cal.2d 330, 343, 294 P.2d 440 (insurance discount and premium plans are regulations fixing insurance premium rates within the meaning of statutory exception);  see Alta Bates Hospital v. Lackner (1981) 118 Cal.App.3d 614, 623, 175 Cal.Rptr. 196;  California Assn. of Nursing Homes etc., Inc. v. Williams (1970) 4 Cal.App.3d 800, 821, 84 Cal.Rptr. 590.)

BOREN, Associate Justice.

TURNER, P.J., and GRIGNON, J., concur.