Nationwide Biweekly Admin. v. Owen, No. 15-16220 (9th Cir. 2017)
Annotate this CaseThe Ninth Circuit reversed the district court's order dismissing two actions under Younger v. Harris, 401 U.S. 37 (1971). On the merits, the panel affirmed the district court's order denying a preliminary injunction in appeal No. 15-16253, holding that Nationwide was unlikely to succeed on its claim that the First Amendment precludes California from requiring it to make certain truthful disclosures in its mail solicitations. The panel vacated the district court's order denying a preliminary injunction in appeal No. 15-16220, holding that Nationwide was likely to succeed on its claim that the Dormant Commerce Clause precludes California from making in-state incorporation a prerequisite of licensure to engage in interstate commerce. Accordingly, the panel remanded both cases for further proceedings.
Court Description: Civil Rights. The panel reversed the district court’s orders dismissing two related actions pursuant to Younger v. Harris, 401 U.S. 37 (1971), affirmed the district court’s order denying a preliminary injunction in appeal No. 15-16253, and vacated the district court’s order denying a preliminary injunction in appeal No. 15-16220, and remanded. In appeal No. 15-16253, Plaintiff Nationwide Biweekly Administration, an administrator of biweekly mortgage loan repayment programs, sought a preliminary injunction against Monterey and Marin County district attorneys to preclude enforcement of California statutes, California Business & Professions Code § 14701(a) and 14702, which required Nationwide to disclose in its mail solicitations to homeowners that it lacked authorization from lenders. Nationwide alleged that enforcement of the statutes would 4 NATIONWIDE BIWEEKLY ADMIN. V. OWEN violate its First Amendment rights. In 15-16220, Loan Payment Administration, a subsidiary of Nationwide, sought to enjoin the enforcement of Cal. Fin. Code § 12200, et seq. (the “Prorater Law”), which required that it obtain a prorater license in order to operate in California. Plaintiffs alleged that limiting prorater licenses to California corporations violated the Dormant Commerce Clause. After the district court denied the preliminary injunctions in each case and while the appeals from the denials were pending in this court, defendants filed a joint enforcement suit in California Superior Court against plaintiffs. The district court subsequently dismissed both cases under Younger v. Harris, 401 U.S. 37 (1971), and plaintiffs filed new notices of appeals from the dismissals in each case. The panel first held that the district court erred by abstaining under Younger because the cases had proceeded beyond the “embryonic stage” in the district court before the corresponding state cases were filed. The panel stated that the district court had spent a substantial amount of time evaluating the merits of the cases in considering and denying Nationwide’s motions for preliminary injunctions. Turning to the merits of the preliminary injunction orders, the panel held that Nationwide was unlikely to succeed on its claim that the First Amendment precluded California from requiring it to make certain truthful disclosures in its mail solicitations. The panel held that the required disclosures are meant to protect against consumer confusion, and are therefore permissible under Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio, 471 U.S. 626, 651 (1985). The panel therefore affirmed the district court’s order denying a preliminary injunction in appeal No. 15-16253. NATIONWIDE BIWEEKLY ADMIN. V. OWEN 5 The panel held that Nationwide was likely to succeed on its claim that the Dormant Commerce Clause precludes California from making in-state incorporation a prerequisite of licensure to engage in interstate commerce. The panel held that this form of discrimination between in-state and out-of- state economic interests was incompatible with a functioning national economy, and the prospect of each corporation being required to create a subsidiary in each state was precisely the sort of “Balkanization” that the Dormant Commerce Clause exists to prevent. The panel vacated the district court’s order denying the preliminary injunction in 15-16220 and remanded both cases for further proceedings. Dissenting, Judge Montgomery disagreed with the majority’s conclusion that the first element of Younger abstention—ongoing state proceedings—was not satisfied in the two cases. Judge Montgomery stated that at the time the state case was filed, no proceedings of substance on the merits had taken place in either of the federal lawsuits, and that the cases remained in an embryonic stage. 6 NATIONWIDE BIWEEKLY ADMIN. V. OWEN
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