State Supreme Court Blocks Rollbacks Under Prop. 103 : Justices Want Time to Decide

The state Supreme Court today blocked implementation of Ralph Nader’s Proposition 103, with its sweeping insurance rate rollbacks, while the justices decide whether to formally review claims by the insurance industry that the measure is unconstitutional.

Six of the seven justices signed a brief order that covers the four lawsuits filed by insurers against Proposition 103 on Wednesday, the day after the measure won a narrow election victory.

This was the full text of the court order:

“In order to provide time for further study of the petitions for writ of mandate filed in the (lawsuits), and to permit the filing of papers in opposition to the petitions, the implementation of all provisions of Proposition 103, enacted Nov. 8, 1988, is hereby stayed.”

Decision Expected Soon

A source close to the court said the justices hope to decide fairly quickly whether to go ahead and hear the case, in which event a longer stay might be issued.

Nader said in a statement from his Washington office that he was not surprised by the court’s action.

“It’s entirely expected that they (the insurers) would get a temporary restraining order and that the various provisions of Prop. 103 will get a court test,” the consumer advocate said.

“Let’s hope that it’s a test on the merits instead of on any ideological basis. I think they will (decide to formally) take it up, but it’s subject to an expedited procedure. They’re not going to do it in a matter of days, but it’s not going to be months.”

Nader also took note of the high court’s conservative membership, saying, “This is a situation where ideology may collide with an aversion to judicial activism,” an apparent reference to his fear that the court might be tempted to side with the insurers, even if it had to undo an act of the electorate.

‘We’re Heartened by It’

A spokesman for the insurers, George Tye, said of the court’s order:

“We’re heartened by it. Obviously, we don’t know when the court will act, but we think we have a very good case, and that Prop. 103 is fundamentally flawed, has severe constitutional problems and we are hopeful that the Supreme Court will throw it out in its entirety.

“We filed this case to protect our ability to sell insurance to our customers. There haven’t been any profits in California auto insurance for years and what we’re trying to do is protect our ability to sell insurance here and, as in any business, if we want to remain viable, the insurance industry has to be able to make a reasonable profit.”

The industry, during its $60-million campaign for its own defeated no-fault measure and against Proposition 103, had insisted that the Nader measure would bankrupt many companies or drive them out of California if its rollback provisions went into effect.

Going Back a Year

Those provisions call for a 20% rollback from the price levels prevailing on Nov. 8, 1987, one year to the day before the election, for all auto, homeowners, commercial liability, municipal liability, malpractice and property casualty insurance.

The high court’s staying order was signed by Chief Justice Malcolm M. Lucas and Justices Stanley Mosk, Allen E. Broussard, Edward A. Panelli, John A. Arguelles and David M. Eagleson. There was no immediate explanation why the seventh justice, Marcus M. Kaufman, did not sign it.

In Los Angeles, a spokeswoman for state Atty. Gen. John K. Van de Kamp, the official charged with defending Proposition 103 on behalf of the government, said the attorney general was in conference with his staff and would have a statement later in the day.