McCray v. Fid. Nat'l Title Ins. Co.

• Decision Date: 14 June 2012
• Docket Number: No. 10–3576.,10–3576.
• Citation: 682 F.3d 229,2012 Trade Cases P 77922
• Parties: Dawn A. McCRAY; William H. Williamson; Daralice Grayo, on behalf of themselves and all others similarly situated, Appellants v. FIDELITY NATIONAL TITLE INSURANCE COMPANY; Chicago Title Insurance Company; Ticor Title Insurance Company; Ticor Title Insurance Company of Florida; Security Union Title Insurance Company; Fidelity National Financial Inc.; First American Title Insurance Company; United General Title Insurance Company; TA Title Insurance Company; Censtar Title Insurance Company; First American Corporation; Commonwealth Land Title Insurance Company; Lawyers Title Insurance Company; Transnation Title Insurance Corporation; Landamerica Financial Group Inc.; Stewart Title Guaranty Company; Stewart Information Services Corporation; Old Republic National Title Insurance Company; Old Republic International Corporation; Delaware Title Insurance Rating Bureau.
• Court: U.S. Court of Appeals — Third Circuit

682 F.3d 229

2012-1 Trade Cases P 77,922

Dawn A. McCRAY; William H. Williamson; Daralice Grayo, on behalf of themselves and all others similarly situated, Appellants

v.FIDELITY NATIONAL TITLE INSURANCE COMPANY; Chicago Title Insurance Company; Ticor Title Insurance Company; Ticor Title Insurance Company of Florida; Security Union Title Insurance Company; Fidelity National Financial Inc.; First American Title Insurance Company; United General Title Insurance Company; TA Title Insurance Company; Censtar Title Insurance Company; First American Corporation; Commonwealth Land Title Insurance Company; Lawyers Title Insurance Company; Transnation Title Insurance Corporation; Landamerica Financial Group Inc.; Stewart Title Guaranty Company; Stewart Information Services Corporation; Old Republic National Title Insurance Company; Old Republic International Corporation; Delaware Title Insurance Rating Bureau.

No. 10–3576.

United States Court of Appeals,Third Circuit.

Argued April 19, 2012.

Filed: June 14, 2012.

Steven J. Greenfogel, Meredith, Cohen, Greenfogel & Skirnick, Philadelphia, PA, Richard M. Hagstrom (Argued), Zelle, Hofmann, Voelbel & Mason, Minneapolis, MN, John S. Spadaro, Hockessin, DE, David R. Woodward, Heins, Mills & Olson, Minneapolis, MN, for Appellants.

Kevin J. Arquit, Barry R. Ostrager (Argued), Patrick T. Shilling, Simpson, Thacher & Bartlett, Kenneth A. Lapatine, Stephen L. Saxl, James I. Serota, Greenberg Traurig, David G. Greene, Kevin J. Walsh, Locke Lord, New York, NY, David A. Felice, Ballard Spahr, Basil C. Kollias, Cooch & Taylor, John D. Balaguer, White & Williams, Peter J. Duhig, Buchanan Ingersoll & Rooney, Wilmington, DE, Darryl J. May, Ballard Spahr, Brian T. Feeney, Greenberg Traurig, Jennings F. Durand, Carolyn H. Feeney, Dechert, Philadelphia, PA, David M. Foster, Fulbright & Jaworski, Washington, DC, Jayson R. Wolfgang, Buchanan Ingersoll & Rooney, Harrisburg, PA, for Appellees.

Before: McKEE, Chief Judge, SLOVITER, Circuit Judge and O'CONNOR, Associate Justice (Ret.).^*

OPINION OF THE COURT

SLOVITER, Circuit Judge.

Appellants' challenge to the Delaware title insurance program trenches on the challenge raised by other parties to the New Jersey title insurance program, a challenge that we rejected today in our opinion in In Re: New Jersey Title Insurance Litigation. The same result follows here to the extent the analysis set forth here unavoidably duplicates that in In Re: New Jersey Title Insurance Litigation.

I.Background

Dawn McCray, William Williamson and Daralice Grayo (“Appellants”), on behalf of themselves and similarly situated consumers, appeal the District Court's orders dismissing their federal antitrust claims against numerous Delaware title insurance companies (“Appellees”). Appellants assert that Appellees fixed the prices of title insurance in Delaware in violation of the Sherman Act and seek treble damages and injunctive relief. The District Court held that Appellants' claims are barred by the filed rate doctrine and the McCarran–Ferguson Act. We will affirm the District Court's judgment with respect to the filed rate doctrine and hold that Appellants lack standing to seek injunctive relief.

Title insurers in Delaware are required to file their insurance rates with the state's Department of Insurance (“DOI”). SeeDel.Code Ann. tit. 18, § 2504(a) (2012). Insurers may comply with the state's rate filing requirements through a licensed rating organization. Id. §§ 2510–12. Appellee title insurers are members of and file their rates through the Appellee Delaware Title Insurance Rating Bureau (“DTIRB” or “the bureau”), which is licensed by the DOI. “DTIRB claims to obtain, compile, and analyze statistical data from its members relating to their title insurance premiums, losses and expenses.” J.A. at 216.

Delaware insurers must propose their own “effective date” for new insurance rates. Tit. 18, § 2504(a). However, they must file those rates with the DOI Commissioner “not less than 30 days prior to the proposed effective date.” Id. § 2506(c). The Delaware Code requires the Commissioner to “review filings as soon as reasonably possible.” Id. § 2506(a). The Commissioner must consider various factors to determine whether the rates comport with the law and ensure that the rates are not “excessive, inadequate or unfairly discriminatory.” Id. § 2503(a). Filings “shall be deemed to meet the statutory requirements unless disapproved by the Commissioner within 30 days.” Id. § 2506(c). If the Commissioner determines that “additional time is needed to review a rate filing,” s/he “shall ... notify the filer that the review ... shall be extended” and can extend the review up to ninety days, “unless the insurer ... agree[s] to a longer term.” Id.

In addition to rates, the DOI typically requires insurers to “develop and file ... advisory prospective loss costs and supporting actuarial and statistical data.” ¹ J.A. at 206. Prospective loss costs are “the portion of a rate that does not include provisions for expenses (other than loss adjustment expenses) or profit, and are based on historical aggregate losses and loss adjustment expenses.” Id. At DTIRB's request, the DOI temporarily exempted DTIRB's members from its “prospective loss costs” and supporting data requirement.² In particular, the DOI recognized that “there is no credible historic data, particularly with regard to expenses, that the rating bureau could use in preparing the initial rates.” J.A. at 137. It therefore granted the bureau an “exception to the requirements of using the rating format (loss cost) prescribed in Bulletin No. 5.” Id. Nevertheless, the Commissioner required DTIRB to “have an approved statistical plan in place,” that would “enable the [DOI] to monitor rate adequacy,” id., which the bureau did until at least 2007.

On October 15, 2008, Appellants filed a class action complaint, alleging that Appellees engaged in collective price-fixing in violation of Section 1 of the Sherman Act.³ Appellants claim that Appellees used DTIRB as a vehicle for setting uniform rates, which “consist[ ] of costs unrelated to the issuance of title insurance, including kickbacks and other financial inducements title insurers provide to title agents” and other parties. J.A. at 56. Appellants allege that as a result, the title insurance market is non-competitive and dominated by a relatively small number of insurers.⁴ Furthermore, Appellants assert that despite growing profits and efficiencies, Appellees' rates have not changed since 2004.

The District Court dismissed Appellants' complaint under Federal Rule of Civil Procedure 12(b)(6) but granted Appellants leave to amend their request for injunctive relief. Specifically, the court concluded that Appellants' Sherman Act claim is barred by the filed rate doctrine, which precludes antitrust suits challenging rates currently filed with federal or state agencies. McCray, 636 F.Supp.2d at 327 (citations omitted). Because the doctrine does not bar certain injunctive relief claims, the Court granted Appellants leave to amend their complaint, as they “d[id] not describe in much detail the type of injunctive relief they [sought].” Id. at 334.

Appellants filed a nearly identical amended complaint, which the District Court also dismissed under Rule 12(b)(6). The Court held that Appellants' injunctive relief claim is barred by Section 1012(b) of the McCarran Ferguson Act, which exempts conduct from antitrust liability if it constitutes the “business of insurance” and is “regulated by state law.” See McCray v. Fidelity Nat'l Title Ins. Co., No. 08–775, 2010 WL 3023164 (D.Del. July 29, 2010). The Court determined that Appellees' conduct met both those requirements. Appellants appeal.

II.Discussion

The District Court had jurisdiction under 28 U.S.C. §§ 1331 and 1367. This court has appellate jurisdiction under 28 U.S.C. § 1291 and reviews de novo the District Court's dismissal of Appellants' initial and amended complaints. Utilimax.com, Inc. v. PPL Energy Plus, LLC, 378 F.3d 303, 306 (3d Cir.2004).

A. The Filed Rate Doctrine

Appellants argue that the District Court erred by applying the filed rate doctrine to dismiss their damages claims.⁵ The District Court invoked the doctrine to dismiss Appellants' demand for: (1) “treble damages as provided by Section 4 of the Clayton Act, 15 U.S.C. § 15,” and (2) the return of “overpayments made by [Plaintiffs and the Class] for defendants' title insurance policies.” J.A. at 65.

Courts often trace the filed rate doctrine to Keogh v. Chicago & Northwestern Railway Co., 260 U.S. 156, 43 S.Ct. 47, 67 L.Ed. 183 (1922). In that case, a shipper alleged that certain railroad carriers conspired to fix freight transportation rates in violation of the Sherman Act. Id. at 160–61, 43 S.Ct. 47. The shipper sought damagesbased on the unusually high rates. Id. The Supreme Court, however, denied the shipper's claim because the carriers had filed the challenged rates with the Interstate Commerce Commission (“ICC”), which authorized them. Id. at 162, 43 S.Ct. 47. The Court reasoned that it would be improper to hold carriers civilly liable for enforcing rates that the ICC had already approved as legal. Id. at 162–63, 43 S.Ct. 47. In addition, the Court expressed a concern about rate discrimination, stating that the shipper's potential damages “might, like a rebate, operate to give him a preference over his trade competitors.” Id. at 163, 43 S.Ct. 47. Finally, the Court considered the impracticability of awarding damages based on a lower hypothetical rate, which would require “reconstituting the whole rate structure”—a task that the Court viewed the ICC as more competent to handle. Id. at 164, 43 S.Ct. 47 (“[I]t is the Commission which must determine whether a rate is discriminatory; at least, in the first instance.”).

The Court re-examined the filed rate doctrine in Square D Co. v. Niagara Frontier Tariff Bureau Inc., 476 U.S. 409, 106 S.Ct. 1922, 90 L.Ed.2d 413 (198...