Edd King v. Nat'l Gen. Ins. Co.

• Docket Number: 15-cv-00313-DMR
• Decision Date: 22 December 2023
• Parties: EDD KING, et al., Plaintiffs, v. NATIONAL GENERAL INSURANCE COMPANY, et al., Defendants.
• Court: U.S. District Court — Northern District of California

1

EDD KING, et al., Plaintiffs,
v.
NATIONAL GENERAL INSURANCE COMPANY, et al., Defendants.

No. 15-cv-00313-DMR

United States District Court, N.D. California

December 22, 2023

ORDER GRANTING SEQUOIA'S MOTION FOR SUMMARY JUDGMENT

RE: DKT. NO. 344

Donna M. Ryu Chief Magistrate Judge

Plaintiffs^[1] brought this putative class action alleging that Defendants^[2] unlawfully overcharged Plaintiffs and the class members they seek to represent for auto insurance premiums in violation of California law.^[3] The court partially granted Defendants' motion to dismiss the fourth amended complaint. [Docket No. 183 (Order on Third MTD).] Defendant Sequoia now moves for summary judgment on Plaintiffs' remaining claims: (1) violations of California's Unfair Competition Law (“UCL”), codified at California Business and Professions Code § 17200 et seq., for unlawful and unfair business practices; (2) breach of the implied covenant of good faith and fair dealing; and (3) declaratory and injunctive relief. [Docket Nos. 344 (“Mot.”), 360 (“Reply”).] Plaintiffs opposed. [Docket No. 356 (“Opp'n”).] This matter is suitable for determination without oral argument. Civ. L.R. 7-1(b). For the following reasons, Sequoia's motion for summary

2

judgment is granted.

I. BACKGROUND

California requires insurers that provide private passenger automobile insurance (“PPA” policies) to offer a Good Driver discount to qualified drivers. See Cal. Ins. Code §§ 1861.025 (defining persons qualified to purchase a Good Driver Discount (“GDD”) policy), 1861.02(b)(1) (“Every person who meets the criteria of Section 1861.025 shall be qualified to purchase a Good Driver Discount policy from the insurer of his or her choice.”). The rate charged for a GDD policy must be “at least 20 percent below the rate the insured would otherwise have been charged for the same coverage.” Id. § 1861.02(b)(2).

California Insurance Code section 1861.16(b) states: “An agent or representative representing one or more insurers having common ownership or operating in California under common management or control shall offer, and the insurer shall sell, a good driver discount policy to a good driver from an insurer within that common ownership, management, or control group, which offers the lowest rates for that coverage.” The California Department of Insurance (“DOI”) refers to the requirement to cross-offer a policy with the lowest Good Driver rates as the “Lowest Rates Rule.” [See Docket No. 163-5 (DOI decision dated November 10, 2020) at 3.] Notwithstanding section 1861.16(b), an insurer is not subject to the Lowest Rates Rule if it meets the eight conditions required for a “Super Group Exemption,” as set forth in section 1861.16(c)(1). See Cal. Ins. Code § 1861.16(c)(1).

In general, Plaintiffs allege that Defendants are (or, at relevant times, have been) in a control group within the meaning of the Lowest Rates Rule. [Docket No. 163 (Fourth Amended Complaint (“4AC”) ¶ 1.]^[4] Each of the named Plaintiffs and class members held insurance policies issued by one or more of the companies in Defendants' control group. Id. ¶ 5. All Plaintiffs qualified as “Good Drivers” and were therefore entitled to a GDD policy from an insurer within Defendants' control group that offered the lowest rates for that coverage. Id. ¶ 7. In violation of the Lowest Rates Rule, Defendants' agents and representatives failed to offer Plaintiffs and class

3

members the lowest available GDD policy premiums within their control group. Id. ¶ 44. Specifically, at the time Plaintiffs purchased their policies, PEIC and Sequoia both had GDD policies with lower rates than what Plaintiffs were paying for substantially similar coverage, but Plaintiffs were never offered those GDD policies. Id. ¶ 44. In addition, Defendants deliberately concealed their wrongful conduct and did not inform policyholders who had been overcharged of their right to be reimbursed for premium overpayments. Id. ¶ 49.

The court granted Defendants' motions to dismiss the first and second amended complaints on September 15, 2015 and May 16, 2016 respectively. [Docket Nos. 70 (Order on First MTD); 92 (Order on Second MTD).] After Plaintiffs filed a third amended complaint, the court ordered the case stayed while the DOI made findings as to some of the issues raised by the parties. [Docket No. 117 (Stay Order).] At the conclusion of the DOI proceedings, Plaintiffs filed the 4AC on January 28, 2021. [Docket No. 163.] Defendants filed a motion to dismiss the 4AC, which was granted in part and denied in part on June 11, 2021. Order on Third MTD. To date, the following claims survive: (1) unfair and unlawful business practices under the UCL; (2) breach of the implied covenant of good faith and fair dealing; and (3) declaratory and injunctive relief. See 4AC counts II, III, V, and VI. Sequoia filed this motion for summary judgment on all claims.^[5]

II. LEGAL STANDARD

A court shall grant summary judgment “if . . . there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The burden of establishing the absence of a genuine issue of material fact lies with the moving party. Devereaux v. Abbey, 263 F.3d 1070, 1079 (9th Cir. 2001) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). The court must view the evidence in the light most favorable to the nonmoving party. Fresno Motors, LCC v. Mercedes Benz USA, LLC, 771 F.3d 1119, 1125 (9th Cir. 2014) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)). A genuine factual issue exists if sufficient evidence favors the non-movant such that “a reasonable [judge or] jury could

4

return a verdict for the nonmoving party. Cline v. Indus. Maint. Eng'g & Contracting Co., 200 F.3d 1223, 1229 (9th Cir. 2000) (alteration in original) (quoting Anderson, 477 U.S. at 248). The court may not weigh the evidence, assess the credibility of witnesses, or resolve issues of fact. City of Pomona v. SQM N. Am. Corp., 750 F.3d 1036, 1049 (9th Cir. 2014) (quoting Anderson, 477 U.S. at 255).

To defeat summary judgment once the moving party has met its burden, the nonmoving party may not simply rely on the pleadings, but must point to specific facts, by affidavit or as otherwise provided by Federal Rule of Civil Procedure 56, showing that a genuine issue of material fact exists. Devereaux, 263 F.3d at 1076. More than a “scintilla of evidence” must exist to support the non-moving party's claims. Pomona, 750 F.3d at 1049 (quoting Anderson, 477 U.S. at 252). A showing that “there is some ‘metaphysical doubt' as to the material facts as issue” will not suffice. In re Oracle Corp. Secs. Litig., 627 F.3d 376, 387 (9th Cir. 2010) (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)). “Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial.” Pomona, 750 F.3d at 1049-50 (quoting Matsushita, 475 U.S. at 587).

III. REQUEST FOR JUDICIAL NOTICE

Plaintiffs filed a request asking the court to take judicial notice of Exhibits A through D. [Docket No. 358 (“RJN”).] Sequoia opposed, and Plaintiffs replied. [Docket Nos. 361, 362.]

Exhibit A is National General Holdings Corporation's Form Def 14A filed on March 23, 2015, which Plaintiffs assert is available on the U.S. Securities and Exchange Commission's website. Exhibits B, C, and C-1 are excerpts of the California Department of Insurance Private Passenger Auto Market Share Reports for 2014, 2015, and 2013, respectively. Plaintiffs state these reports are available on the National Association of Insurance Commissioners and the DOI's websites. Exhibit D is a Report of Examination of Sequoia as of December 31, 2017, which Plaintiffs claim is available on the DOI's website.

Plaintiffs rely on these exhibits in support of their position that Sequoia was part of the same control group as the other Defendants, see Opp'n at 1, 3 (citing Exs. A, D), and Sequoia

5

continued to write PPA policies until at least December 31, 2014. See Opp'n at 2, 6 (citing Exs. B, C). As explained below, whether Sequoia was part of the same control group as other Defendants and/or continued to write PPA policies until December 31, 2014 does not affect the outcome of this motion. Exhibits A through D therefore are not material to this dispute, and the court does not rely on them in reaching its decision. Accordingly, Plaintiffs' RJN and Sequoia's objections to the RJN are denied as moot.

IV. EVIDENTIARY OBJECTIONS

Sequoia makes several objections to Plaintiffs' evidence. See Reply at 8-15. Without deciding whether the evidence submitted by Plaintiffs is admissible, the court finds that none of the facts in the record submitted by Plaintiffs create a genuine issue of material fact. Because the question of whether those facts are admissible is immaterial to the disposition of the summary judgment motion, the court declines to rule on Sequoia's objections to Plaintiffs' evidence.

V. DISCUSSION

Sequoia moves for summary judgment on all of Plaintiffs' remaining claims, arguing that 1) Plaintiffs have not proffered any evidence identifying a single agent or representative of Sequoia, 2) there is no evidence in the record of any conduct by Sequoia relating to the sale of PPA policies in California, and 3) there is no evidence to support Plaintiffs' theory of liability against Sequoia. See Mot. at 6-7. Plaintiffs respond that Defendants' failure to cross-offer policies with the lowest Good Driver rates was “systematic,” and Sequoia is jointly liable with the NG Defendants in the control group for this collective failure.^[6] Opp'n at 1, 7.

6

A. UCL

Under the UCL, unfair competition is defined as “any unlawful, unfair or fraudulent business act or practice” and “unfair, deceptive, untrue or misleading advertising.” See Cal. Bus. & Prof....