GOETTEL, District Judge.
Plaintiff, a New York insurance company issuing automobile accident insurance, seeks to have declared unconstitutional two portions of New York's "No-Fault" Insurance Law.
New York's No-Fault Law was (and, perhaps, continues to be) the center of much controversy. Its constitutionality was challenged in the New York courts by claimant interests and was upheld by the New York Court of Appeals in Montgomery v. Daniels, 38 N.Y.2d 41, 378 N.Y.S.2d 1, 340 N.E.2d 444 (1975). The issues presented here were not passed upon and have not been authoritatively reviewed by the New York courts.
Plaintiff's principal argument with respect to the arbitration issue is that it is being deprived of its "right to access" to the courts. This argument derives primarily from the Supreme Court's decision in Boddie v. Connecticut, 401 U.S. 371, 91 S.Ct. 780, 28 L.Ed.2d 113 (1971). That case held that due process of law prohibited the State from denying indigents seeking divorces access to its courts simply because they could not pay court costs. While some of the language in the concurring opinions have broader implications (see, e. g., 401 U.S. at 388, 91 S.Ct. 780, Brennan J. concurring), it is clear from the decision in United States v. Kras, 409 U.S. 434, 93 S.Ct. 631, 34 L.Ed.2d 626 (1973) that there is no basic constitutional right to litigate all disputes.
Arbitration is a reasonable alternative to a judicial determination of insurance claims and, at least so long as no fundamental rights are involved, the state may choose to provide any rational method of dispute settlement that comports with the basic procedural safeguards required by due process. Cf. Goldberg v. Kelly, 397 U.S. 254, 266-71, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970). New York's police powers are sufficient to justify compelling insurers to submit to binding arbitration. Hardware Dealers Fire Ins. Co. v. Glidden Co., 284 U.S. 151, 158, 52 S.Ct. 69, 76 L.Ed. 214 (1931). One of the purposes of No-Fault legislation is to reduce the amount of litigation in the courts, and this provision serves that goal.
Plaintiff relies on Wolff Packing Co. v. Indus. Court, 262 U.S. 522, 43 S.Ct. 630, 67
The Court has steadily rejected the substantive due process approach exemplified by Wolff and Dorchy, espousing a constitutional doctrine under which "the due process clause is no longer to be so broadly construed that * * * state legislatures are put in a strait jacket when they attempt to suppress business and industrial conditions which they regard as offensive to the public welfare." Lincoln Fed. Labor Union v. Northwestern Iron & Metal Co., 335 U.S. 525, 536-37, 69 S.Ct. 251, 257, 93 L.Ed. 212 (1949).
The only federal case directly presenting a due process analysis of compulsory arbitration of insurance claims is Hardware Dealers Fire Ins. Co. v. Glidden, 284 U.S. 151, 52 S.Ct. 69, 76 L.Ed. 214 (1931). It clearly disposes of plaintiff's contentions concerning arbitration. The Minnesota statutory scheme required all state fire insurance policies to provide for compulsory binding arbitration of the amount of certain losses. The insurance company maintained that this infringed its rights under the Fourteenth Amendment. The Court rejected the challenge concluding:
The Court noted that this procedure was comparable to other constitutionally permissible processes such as workmen's compensation proceedings where compensation is determined administratively, and such as "findings of fact by boards or commissions which . . . are [statutorily] made conclusive upon the courts if supported by evidence." Id. at 160, 52 S.Ct. at 71.
The procedural safeguards of plaintiff's interests embodied in the New York State No-Fault Arbitration Rules include provision for adequate notice, hearing before an impartial decision-maker, presentation of evidence and witnesses who testify under oath, and the assistance of counsel. Arbitration awards are subject to judicial review and may be vacated or modified for any one of the several grounds set forth in N.Y.C.P.L.R. § 7511 (McKinney 1963) (which deals with voluntary arbitration). Moreover, the New York Court of Appeals appears to have added another element to the judicial review authorized by N.Y.C.P. L.R. § 7511. In Mount St. Mary's Hosp. v. Catherwood, 26 N.Y.2d 493, 311 N.Y.S.2d 863, 260 N.E.2d 508 (1970), involving compulsory arbitration, the court declared that due process required a further review of whether the award was supported by the evidence in the record. Id. at 508-10, 311 N.Y.S.2d at 874-76, 260 N.E.2d at 516-518. See also the Court of Appeal's recent decision in Caso v. Coffey, 41 N.Y.2d 153, 391 N.Y.S.2d 88, 359 N.E.2d 683 (1976). As the Supreme Court has stated, "due process is flexible and calls for such procedural protections as the particular situation demands." Morrissey v. Brewer, 408 U.S. 471, 481, 92 S.Ct. 2593, 2600, 33 L.Ed.2d 484 (1972). The process afforded plaintiff
Perhaps the strongest element of plaintiff's position is the fact that only claimants, and not the insurance companies, may demand arbitration.
The plaintiff also argues that it has been denied its right to jury trial under the New York Constitution, Article 1, Section 2, which states in pertinent part: "Trial by jury in all cases in which it has heretofore been guaranteed by constitutional provision shall remain inviolate forever." This issue is not free from doubt. Claims under insurance policies are, broadly speaking, contract claims as to which there has been a right to jury trial since 1777. New statutory compensation schemes that restricted the right to jury trial have been criticized by the New York courts. Ives v. South Buffalo, 201 N.Y. 271, 94 N.E. 431 (1911).
Defendant relies on Montgomery v. Daniels, supra, for the proposition that where the legislature has abolished a cause of action, there remains nothing to which the right of trial by jury may attach. However, the cause of action has not been abolished here, but merely modified, while retaining the claimants' right to jury trial. Of course, it could be argued that the right to benefits under No-Fault has become more equitable than contractual (in which case there is no right to jury) or that it amounts to a statutory rather than a common law claim. R. Keeton & J. O'Connell, Basic Protection for the Traffic Victim 498-504 (1965). Since this is a novel and important issue as to which the state law is evolving, it would appear that this Court should exercise its discretion to refuse to decide this pendent issue of state law. Hagans
Finally, we have plaintiff's attack on the provisions which require automatic renewal of most automobile insurance policies for specified periods,
We are told that the legislature first extended the life of the policies in order to ensure continuance of an orderly market during the early years of No-Fault.
The public need for these extensions has been sufficiently demonstrated. Regulation of the insurance industry, in order to provide adequate protection of the public, is surely a proper subject for the state's exercise of its police power. California State Auto. Ass'n v. Maloney, 341 U.S. 105, 109-110, 71 S.Ct. 601, 95 L.Ed. 788 (1950); Hardware Dealers Mutual Fire Ins. Co. v. Glidden, supra, at 157-58, 52 S.Ct. 69. The same public interests which justified the imposition of the entire No-Fault scheme support this aspect of the statutory framework. Montgomery v. Daniels, supra. The law accomplishes a legitimate public goal and any contract right must yield to it. Veix v. Sixth Ward Bldg. & Loan Ass'n, 310 U.S. 32, 41, 60 S.Ct. 792, 84 L.Ed. 1061 (1940); Home Bldg. & Loan Ass'n v. Blaisdell, 290 U.S. 398, 437, 54 S.Ct. 231, 78 L.Ed. 413 (1934); Marcus Brown Holding Co. v. Feldman, 256 U.S. 170, 41 S.Ct. 465, 65 L.Ed. 877 (1921).
In conclusion, therefore, the amended complaint must be dismissed. This, of course, is without prejudice to the institution of a state court action pursuing the state claim.