Filed 1/25/01

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FOUR

THE COURT:

The petition for rehearing filed by respondents on January 16, 2001, is denied.

The opinion filed herein on December 29, 2000, is ordered modified as follows:

1. On pages 29 and 30, the paragraphs which begin "The testimony of State Farm actuary Becraft was representative . . ." (2d par.) and "Becraft also found substantial differences in the effects . . ." (carry over par.) are deleted and replaced by the following paragraph:

The testimony of State Farm actuary Becraft was representative of the evidence presented in support of the insurers’ arguments. Becraft testified that, because of the pumping or tempering of factors required under Birnbaum’s method, good drivers in most of the state would pay higher BIPD premiums under that method than they would under State Farm’s interpretation. Conversely, under Birnbaum’s method more drivers who did not meet good driver criteria would have premium decreases, and fewer of those drivers would have premium increases, than under State Farm’s interpretation. Becraft also testified that there would be substantial differences in the effects of Birnbaum’s interpretation on the premiums in different counties. She said that "[u]nder the Project’s proposal, if the relativities for the optional factors were compressed to achieve the required order of weights, our policyholders in most California counties would pay at least ten percent higher premiums than under our approved Class Plan filings[, w]hile no more than three counties, including Los Angeles and San Francisco, would pay at least ten percent less. The cost of insuring the policyholders in those counties paying less remains the same, but is shifted to the policyholders in other counties. That is, policyholders in most of California have to pay for the cost of insuring policyholders in a few urban centers. This effect is not dependent upon a policyholder’s ability to pay — wealthy policyholders in Beverly Hills benefit just as much as the Los Angeles urban poor, and the rural poor in counties like Humboldt County pay significantly higher rates to subsidize policyholders no worse off than they are."

2. On page 36, in the first lines of the second and third full paragraphs, the year "1988" is replaced with 1998.

3. On page 58, the paragraph which begins "As previously noted, State Farm actuary Becraft presented a study in the administrative proceeding . . . " is deleted and replaced by the following paragraph:

As previously noted, State Farm actuary Becraft testified in the administrative proceeding that more good drivers, and fewer "poor" drivers, would pay more for BIPD coverage if the Birnbaum method were followed instead of the current regulations. These results are plainly contrary to the intent of Proposition 103. Becraft also predicted that the premiums of State Farm policyholders in most counties would increase by at least 10 percent if Birnbaum’s method were followed. Although we have observed that Proposition 103’s "affordab[ility]" standard is not a clear criterion for evaluating alternative constructions of the factor weight ordering statute, Becraft’s prediction of large premium increases for some insureds was consistent with the findings years earlier that led to the imposition of limits on premium increases when an aggregate cap on optional factor weights was first tried in the Tempered Regulations. (Note at p. 728.12.) Those earlier findings at the least give added credence to Becraft’s conclusions.

There is no change in the judgment.

REARDON, Acting P. J.

Trial Court: Superior Court of Alameda County

Trial Judge: Honorable Henry E. Needham, Jr.

Attorneys for Appellants:

Harry Low, as Commissioner, etc. Bill Lockyer

Attorney General

Paul Gifford

Randall P. Borcherding

Supervising Deputy Attorneys General

Marguerite C. Stricklin

Joyce E. Hee

Deputy Attorneys General

State Farm Mutual Automobile, etc. Paul Alexander

Vanessa Wells

Victoria Collman Brown

James R. Knox

Heller Ehrman White & McAuliffe

Farmers Insurance Exchange Steven H. Weinstein

Mid-Century Insurance Company Richard G. DeLaMora

Truck Insurance Exchange Marina M. Maniatis

Ethan A. Miller

Barger & Wolen

Attorneys for Amici Curiae in Support of Appellants:

American Insurance Association Gary L. Fontana

Hilary N. Rowen

Thelen Reid & Priest

Craig A. Berrington

David F. Snyder

American Insurance Association

County of Fresno Bruce B. Johnson

J. Westley Merritt

Office of County Counsel

County of Madera Jeffrey L. Kuhn

Office of County Counsel

County of Mariposa Jeffrey Gordon Green

Office of County Counsel

City of Hughson John W. Stovall

City Attorney

Attorneys for Respondents:

Spanish Speaking Citizens’, etc. Mark Savage

Consumers Union, etc. Maria E. Andrade

Southern Christian Leadership, etc. Public Advocates, Inc.

Earl Lui

Consumers Union of U.S., Inc.

City of Los Angeles James K. Hahn

City Attorney

Don Kass

Supervising Deputy City Attorney

City of Oakland Jayne Williams

City Attorney

Joyce M. Hicks

Assistant City Attorney

Daniel Rossi

Deputy City Attorney

City and County of San Francisco Louise H. Renne

City Attorney

Owen J. Clements

Chief of Special Litigation

Andrew Y.S. Cheng

Deputy City Attorney

Proposition 103 Enforcement, etc. Edward Howard

Gina Calabrese

Lillian Salinger

Attorneys for Amicus Curiae in Support of Respondents:

Los Angeles County Board of Supervisors David B. Casselman

Mark S. Gottlieb

Wasserman, Comden & Casselman

A084024/A085376/A085713