In 1988, voters passed Proposition 103, which made "numerous fundamental changes in the regulation of automobile and other types of insurance." (Calfarm Ins. Co. v. Deukmejian (1989) 48 Cal.3d 805, 812, 258 Cal.Rptr. 161, 771 P.2d 1247 (Calfarm).) "Formerly, the so-called `open competition' system of regulation had obtained, under which `rates [were] set by insurers without prior or subsequent approval by the Insurance Commissioner ....'" (20th Century Ins. Co. v. Garamendi (1994) 8 Cal.4th 216, 240, 32 Cal.Rptr.2d 807,
Pursuant, in part, to statutes enacted as part of Proposition 103, the Commissioner promulgated section 2646.6 of title 10 of California Code of Regulations (hereafter Regulation 2646.6).
In this case, we consider the validity of the public inspection provision found in Regulation 2646.6, subdivision (c) and the scope of the public disclosure mandate of Insurance Code section 1861.07. We conclude that (1) the public inspection provision of Regulation 2646.6, subdivision (c) is valid; and (2) Insurance Code section 1861.07 does not incorporate the exemption from disclosure found in Government Code section 6254, subdivision (k), and does not therefore exempt information protected by the trade secret privilege from disclosure.
As required by Regulation 2646.6, State Farm Mutual Automobile Insurance Company, State Farm Fire and Casualty Company and State Farm General Insurance Company (collectively State Farm) filed a community service statement with the Commissioner in 1998. In a letter accompanying its statement, State Farm wrote: "STATE FARM INSURANCE COMPANIES CONSIDER[ ] THE INFORMATION CONTAINED IN RECORD A, B, AND C HEREIN AS PRIVILEGED AND CONFIDENTIAL. IT IS PROPRIETARY IN NATURE, CONSTITUTES TRADE SECRET MATERIAL, AND IS NOT TO BE DISSEMINATED BEYOND THE DESIGNATED RECIPIENTS WITHOUT THE EXPRESS WRITTEN CONSENT OF THE STATE FARM INSURANCE COMPANIES."
Despite State Farm's invocation of the trade secret privilege, the Commissioner, without notifying State Farm beforehand,
State Farm then filed this action against Birnbaum and the Commissioner, seeking declaratory and injunctive relief. In its complaint, State Farm alleged that "the information contained in the Community Service Statement is confidential and constitutes trade secrets belonging to State Farm" and is not subject to public inspection under Insurance Code section 1861.07. It sought, among other things, the return of its trade secret information and an injunction barring Birnbaum from using or disclosing that information.
Soon thereafter, the Southern Christian Leadership Conference of Greater Los Angeles, Inc., and the Consumers Union of U.S., Inc. (collectively interveners), successfully intervened in the action. In their complaint, the interveners sought a declaration "that the Community Service Statement and data insurers file with the [Commissioner] ... are public records subject to public inspection and not exempt from public disclosure."
State Farm then amended its complaint. The amended complaint included the interveners and clarified that only the record A data was a trade secret. State Farm also added two declaratory relief claims. First, it sought "a declaration that 10 C.C.R. § 2646.6(c) is invalid to the extent that it purports to make Insurance Code § 1861.07 applicable to data submitted by State Farm pursuant to 10 C.C.R. § 2646.6, and purports to make data submitted in confidence by State Farm pursuant to 10 C.C.R. § 2646.6 publicly available." Second, it sought a "declaration that Insurance Code § 1861.07 does not abrogate trade secret rights; that trade secret protections apply to information submitted under Insurance Code § 1861.07; that State Farm's data submitted in Record A ... constitutes a trade secret; and that, if Insurance Code § 1861.07 applies to data submitted pursuant to 10 C.C.R. § 2646.6, State Farm's data submitted in Record A to each of its Community Service Statements must be held as confidential by the [Commissioner] and cannot be produced pursuant to a Public Records Act request."
After the trial court dismissed Birnbaum from the action,
The Court of Appeal affirmed.
We granted review.
Before the Court of Appeal, State Farm contended the Commissioner exceeded his "statutory authority by making community service statements subject to the public disclosure mandate of Insurance Code section 1861.07 and that California Code of Regulations, title 10, section 2646.6, subdivision (c) [was] invalid to the extent that it purport[ed] to do so." According to State Farm, only information submitted pursuant to article 10 of chapter 9 of part 2 of division 1 of the Insurance Code (hereafter article 10) must be disclosed under Insurance Code section 1861.07, and community service statements do not contain such information. The court rejected this contention. Citing Insurance Code section 1861.03,
In reviewing the validity of a regulation, "[o]ur function is to inquire into the legality of the regulations, not their wisdom." (Morris v. Williams (1967) 67 Cal.2d 733, 737, 63 Cal.Rptr. 689, 433 P.2d 697.) The Commissioner "has broad discretion to adopt rules and regulations as necessary to promote the public welfare." (Calfarm, supra, 48 Cal.3d at p. 824, 258 Cal.Rptr. 161, 771 P.2d 1247.) Thus, our task "is limited to determining whether the regulation (1) is `within the scope of the authority conferred' (Gov.Code, § 11373) and (2) is `reasonably necessary to effectuate the purpose of the statute' (Gov.Code, § 11374)." (Agricultural Labor Relations Bd. v. Superior Court (1976) 16 Cal.3d 392, 411, 128 Cal.Rptr. 183, 546 P.2d 687.) In this case, State Farm only challenges the authority of the Commissioner to enact the public inspection provision of Regulation 2646.6, subdivision (c). We must therefore conduct an independent examination (see 20th Century, supra, 8 Cal.4th at pp. 271-272, 32 Cal.Rptr.2d 807, 878 P.2d 566) and determine "whether in enacting the specific rule" the Commissioner "reasonably interpreted the legislative mandate" (Fox v. San Francisco Residential Rent etc. Bd. (1985) 169 Cal.App.3d 651, 656, 215 Cal.Rptr. 565).
The challenged portion of Regulation 2646.6, subdivision (c) provides that community service statements are subject to Insurance Code section 1861.07. As relevant here, Insurance Code section 1861.07 states that "all information" submitted to the Commissioner "pursuant to" article 10 "shall be available for public inspection...." Because all information provided pursuant to article 10 — which encompasses Insurance Code sections 1861.01 to 1861.16 — is subject to public disclosure under Insurance Code section 1861.07, the validity of the regulation depends on whether the statutes in article 10 authorize the Commissioner to require community service statements.
In answering this question, we first find that Office of Administrative Law (OAL) opinions approving Regulation 2646.6 are irrelevant. "The approval of a regulation ... by the [OAL] ... shall not be considered by a court in any action for declaratory relief brought with respect to a regulation." (Gov.Code, § 11350, subd. (c), italics added; see also Jimenez v. Honig (1987) 188 Cal.App.3d 1034, 1040, fn. 4, 233 Cal.Rptr. 817 ["The courts are precluded from considering ... the opinion of the [Office of Administrative Law (OAL)] ... in reviewing the validity of the regulation"].) Thus, we reject State Farm's claim that we are constrained by holdings of the OAL. As such, we may consider all the article 10 statutes cited as authority for the promulgation of Regulation 2646.6, subdivision (c) — i.e., Insurance Code sections 1861.02, 1861.03 and 1861.05 — in determining the regulation's validity. (See Note, foll. Regulation 2646.6.)
Nor, contrary to State Farm's contention, did the Court of Appeal consider whether Insurance Code section 1861.03 actually incorporates provisions of the Unruh Act and other business laws. Rather, the court correctly observed that Insurance Code section 1861.03 made "the business of insurance subject to the state's
In doing so, the Court of Appeal correctly found that the Commissioner did not exceed his authority by promulgating the public inspection provision of Regulation 2646.6, subdivision (c). As part of Proposition 103, article 10's stated purpose was "`to protect consumers from arbitrary insurance rates and practices, to encourage a competitive insurance marketplace, to provide for an accountable Insurance Commissioner, and to ensure that insurance is fair, available, and affordable for all Californians.'" (Historical and Statutory Notes, 42A West's Ann. Ins.Code (1993 ed.) foll. § 1861.01, p. 649.) To this end, article 10 gives the Commissioner broad authority over insurance rates (CAARP, supra, 232 Cal.App.3d at pp. 913-914, 283 Cal.Rptr. 562), and expressly precludes him from approving rates that are "excessive, inadequate, unfairly discriminatory or otherwise in violation of" chapter 9 of the Insurance Code (Ins.Code, § 1861.05, subd. (a)). Through Insurance Code section 1861.03, subdivision (a), the article also subjects the business of insurance to laws prohibiting discriminatory and unfair business practices. Thus, article 10 is not limited in scope to rate regulation. It also addresses the underlying factors that may impermissibly affect rates charged by insurers and lead to insurance that is unfair, unavailable, and unaffordable.
As such, the Commissioner undoubtedly has the authority under article 10 to gather any information necessary for determining whether these factors are impermissibly affecting the fairness, availability, and affordability of insurance. This information necessarily includes statistical data relevant to the Commissioner's determination that a California community is underserved by the insurance industry. (See Reg. 2646.6, subd. (c) [using information from community service statements, the Commissioner shall "issue the Commissioner's Report on Underserved Communities which will report those communities within California, designated by ZIP code, that the Commissioner finds to be underserved by the insurance industry"].) Therefore, the Commissioner reasonably concluded that community service statements fall within his legislative mandate under article 10. Accordingly, we conclude that the Commissioner did not exceed his statutory authority by promulgating Regulation 2646.6, subdivision (c), and subjecting these statements to the public disclosure mandate of Insurance Code section 1861.07.
Although the public inspection provision of Regulation 2646.6, subdivision (c) is a valid regulation, the scope of disclosure required by the regulation depends on the scope of disclosure required by Insurance Code section 1861.07. According to State Farm, Insurance Code section 1861.07, by expressly barring the application of the exemption from public disclosure codified in Government Code section 6254, subdivision (d), establishes that the rest of Government Code section 6254 applies. Specifically, State Farm contends
The interveners contend Insurance Code section 1861.07 establishes an absolute rule in favor of public disclosure, and its language barring the application of Government Code section 6254, subdivision (d) merely buttresses this rule. Thus, according to the interveners, neither Government Code section 6254, subdivision (k) nor Evidence Code section 1060 applies to a records request. As explained below, we agree with the interveners.
"When construing a statute, we must `ascertain the intent of the Legislature so as to effectuate the purpose of the law.' "(Wilcox v. Birtwhistle (1999) 21 Cal.4th 973, 977, 90 Cal.Rptr.2d 260, 987 P.2d 727, quoting DuBois v. Workers Comp. Appeals Bd. (1993) 5 Cal.4th 382, 387, 20 Cal.Rptr.2d 523, 853 P.2d 978.) "In determining such intent, a court must look first to the words of the statute themselves, giving to the language its usual, ordinary import and according significance, if possible, to every word, phrase and sentence in pursuance of the legislative purpose." (Dyna-Med, Inc. v. Fair Employment & Housing Com. (1987) 43 Cal.3d 1379, 1386-1387, 241 Cal.Rptr. 67, 743 P.2d 1323.) At the same time, "we do not consider ... statutory language in isolation." (Flannery v. Prentice (2001) 26 Cal.4th 572, 578, 110 Cal.Rptr.2d 809, 28 P.3d 860.) Instead, we "examine the entire substance of the statute in order to determine the scope and purpose of the provision, construing its words in context and harmonizing its various parts." (Alford v. Superior Court (2003) 29 Cal.4th 1033, 1040, 130 Cal.Rptr.2d 672, 63 P.3d 228.) Moreover, we "`read every statute "with reference to the entire scheme of law of which it is part so that the whole may be harmonized and retain effectiveness."'" (Calatayud v. State of California (1998) 18 Cal.4th 1057, 1065, 77 Cal.Rptr.2d 202, 959 P.2d 360, quoting People v. Pieters (1991) 52 Cal.3d 894, 899, 276 Cal.Rptr. 918, 802 P.2d 420.) "These rules apply equally in construing statutes enacted through the initiative process." (Day v. City of Fontana (2001) 25 Cal.4th 268, 272, 105 Cal.Rptr.2d 457, 19 P.3d 1196.)
We now apply these rules. Insurance Code section 1861.07 states: "All information provided to the commissioner pursuant to [article 10] shall be available for public inspection, and the provisions of Section 6254(d) of the Government Code and Section 1857.9 of the Insurance Code shall not apply." The first clause broadly requires public disclosure of "[a] ll information provided to the commissioner pursuant to" article 10 — which, by definition, includes record A data. (Ins.Code, § 1861.07, italics added.) Thus, Insurance Code section 1861.07, on its face, subjects State Farm's record A data to public inspection.
The second clause of Insurance Code section 1861.07 — which states that two specific statutory exemptions from disclosure do not apply — does not alter this conclusion. The statutes listed in the second clause-Government Code section 6254,
Such a construction comports with the purpose behind Proposition 103. Proposition 103 was enacted to "`ensure that insurance is fair, available, and affordable for all Californians.'" (Wolfe v. State Farm Fire & Casualty Ins. Co. (1996) 46 Cal.App.4th 554, 564, 53 Cal.Rptr.2d 878.) To achieve this goal, the drafters established a public hearing process for reviewing insurance rate changes. (See Ins.Code, §§ 1861.05, 1861.055, 1861.08.) In doing so, the drafters sought to "enable
Nonetheless, State Farm contends our rules of statutory construction compel a contrary conclusion. According to State Farm, Insurance Code section 1861.07, by specifying that the exemption from disclosure found in Government Code section 6254, subdivision (d) does not apply, establishes that the rest of Government Code section 6254 — including its other exemptions from disclosure, such as the exemption codified in subdivision (k) — does apply. Otherwise, the clause would be mere surplusage and serve no purpose, in direct contravention of our rules of statutory construction. (See, e.g., Williams v. Superior Court (1993) 5 Cal.4th 337, 357, 19 Cal.Rptr.2d 882, 852 P.2d 377 ["An interpretation that renders statutory language a nullity is obviously to be avoided"].)
State Farm also claims that the rule of statutory construction, expressio unius est exclusio alterius, establishes that the other exemptions from disclosure codified in Government Code section 6254 should apply. Under this rule, "where exceptions to a general rule are specified by statute, other exceptions are not to be presumed unless a contrary legislative intent can be discerned." (Mountain Lion Foundation v. Fish & Game Com. (1997) 16 Cal.4th 105, 116, 65 Cal.Rptr.2d 580, 939 P.2d 1280.) According to State Farm, the second clause of Insurance Code section 1861.07 creates an exception to the general rule — that records identified in Government Code section 6254 may be exempt from disclosure — for those records identified in subdivision (d). Thus, it contends no exception should be presumed for those records identified in any other part of Government Code section 6254, including subdivision (k). (See Mountain Lion Foundation, at p. 116, 65 Cal.Rptr.2d 580, 939 P.2d 1280.)
These rules of statutory construction do not, however, apply here. As explained above, the language of Insurance Code section 1861.07, when viewed in context, is not ambiguous and, by its terms, requires public disclosure of the record A data. (See ante, 12 Cal.Rptr.3d at pp. 352-354, 88 P.3d at pp. 79-80.) The rules cited by State Farm therefore "cannot perform [their] proper role of resolving an ambiguity in statutory language or uncertainty in legislative intent because here we encounter neither ambiguity nor uncertainty." (Williams v. Los Angeles Metropolitan Transit Authority (1968) 68 Cal.2d 599, 603, 68 Cal.Rptr. 297, 440 P.2d 497.) "In these circumstances there is no room for the proposed rule[s] of construction." (Ibid.) Indeed, we have long recognized that these rules do not control where, as here, the statutory language "may fairly comprehend many different objects, some of which are mentioned merely by way of example, without excluding others of similar nature." (Estate of Banerjee (1978) 21 Cal.3d 527, 539, fn. 10, 147 Cal.Rptr. 157, 580 P.2d 657.)
Finally, the fact that insurers may invoke the trade secret privilege in the public hearing process established by Proposition 103, pursuant to Insurance Code section 1861.08, does not dictate a different
Accordingly, we conclude that Insurance Code section 1861.07 does not incorporate the exemption to disclosure found in Government Code section 6254, subdivision (k), and that trade secret information is therefore not exempt from disclosure. Because we find that State Farm may not invoke the trade secret privilege to prevent disclosure of its record A data under Insurance Code section 1861.07, we decline to address the other issues raised by State Farm.
We affirm the judgment of the Court of Appeal.
WE CONCUR: GEORGE, C.J., KENNARD, BAXTER, WERDEGAR, CHIN, and MORENO, JJ.