Restoration Risk Retention Group, Inc. v. Gutierrez

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Risk retention groups (RRGs) insure only their owners. The Products Liability Risk Retention Act encourages manufacturers to pool their resources into RRGs and explicitly preempts state laws that inhibit the formation of RRGs. The subsequent Liability Risk Retention Act (LRRA) preempts any state law that would “make unlawful, or regulate, directly or indirectly, the operation of" an RRG, 15 U.S.C. 3902(a) and provides that only an RRG’s chartering state may regulate its formation and operation. If RRGs are “subject to that state’s insurance regulatory laws, including adequate rules and regulations allowing for complete financial examination of all books and records” they may operate in any state. Nonchartering states may require RRGs “to … demonstrate[e] financial responsibility" to obtain a license or permit to undertake specified activities but states are prohibited from “discriminating” against an out-of-state RRG. Restoration is a Vermont-chartered RRG for businesses that restore buildings after disasters. In Wisconsin, these businesses are regulated as “dwelling contractors” and must obtain an annual certificate of financial responsibility from the state Trades Credentialing Unit (TCU), by proof of a “policy of general liability insurance issued by an insurer authorized to do business in [Wisconsin].” Since 2006, Wisconsin dwelling contractors could meet this requirement by securing insurance from Restoration. In 2015, TCU changed its position so that none of Restoration’s Wisconsin shareholder‐insureds could rely on Restoration to satisfy the state liability insurance requirements. The Seventh Circuit vacated a judgment rejecting Restoration’s challenge to the ruling and remanded for a determination of whether intervening amendments to the statute render the litigation moot. View "Restoration Risk Retention Group, Inc. v. Gutierrez" on Justia Law