106 F. Supp. 3d 1252
S.D. Fla.2015Background
- Defendant Public Storage operates a national tenant insurance program (PSTIP) offered to self-storage customers via an Insurance Addendum; tenants could elect PSTIP underwritten by New Hampshire Insurance Company and acknowledged they were responsible for insuring stored property.
- PSTIP premiums are routed through a captive reinsurer (PS Insurance Company–Hawaii, Ltd. — PS Hawaii); PS Hawaii transfers 75% of PSTIP premiums to Public Storage as an "access fee" that Public Storage calls administrative compensation; plaintiffs allege it is an undisclosed kickback.
- Plaintiffs filed a putative nationwide class RICO claim and a Florida-subclass FDUTPA claim (plus breach of contract, unjust enrichment, unconscionability), seeking disgorgement of access fees collected since 2009; the court previously certified classes but later revisited class issues at summary judgment.
- Plaintiffs moved to strike certain late-disclosed exhibits and witnesses; Public Storage moved for summary judgment on all claims arguing plaintiffs lack proof of injury/damages and some claims are preempted by insurance regulation.
- The Court struck two exhibits and one witness (Exhibits 6 and 11 to Haga Decl.; witness Clemente Teng), denied striking other items, granted summary judgment dismissing RICO, breach-of-contract, unconscionability, unjust enrichment, and decertified the nationwide RICO class and Florida subclass for breach claims, while denying summary judgment on FDUTPA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs showed a RICO injury from overcharged PSTIP premiums | PSTIP premiums included undisclosed access-fee kickback that inflated price; classwide proof of injury exists | Plaintiffs produced no evidence the insurance premium exceeded the PSTIP's value or that plaintiffs paid more than contractually obligated | Court: No RICO injury proved; RICO claims dismissed and nationwide RICO class decertified |
| Whether FDUTPA applies or is preempted by insurance regulation | The deceptive act is failure to disclose kickback by a non-insurer; FDUTPA covers deceptive trade practices here | PSTIP is insurance regulated by OIR/DFS and FUITPA preempts FDUTPA for insurance activities | Court: FDUTPA claim not barred; non-disclosure of retained premium may be deceptive and Latman measure of damages (disgorgement) can apply; summary judgment denied on FDUTPA |
| Whether plaintiffs proved breach-of-contract damages (and related good-faith claim) | Retention of access fee breached representations (premiums passed to insurer); restitution (return of access fees) warranted | Plaintiffs received the promised insurance and remained contractually obligated to same premiums; no evidence value of PSTIP was less than paid premium | Court: No evidence of damages or overcharge; breach and good-faith claims dismissed; Florida subclass for breach decertified |
| Whether unjust enrichment and unconscionability claims survive | Plaintiffs may plead in alternative and seek relief for retention of access fee | An express contract governs the subject matter; unconscionability requires equitable relief (not mere money damages) | Court: Unjust enrichment barred by existence of express contracts; unconscionability claim dismissed because plaintiffs seek only monetary relief |
Key Cases Cited
- In re U.S. Foodservice Inc. Pricing Litig., 729 F.3d 108 (2d Cir. 2013) (classwide RICO injury where defendant inflated contractually-defined “cost” component via sham entities)
- Union Labor Life Ins. v. Pireno, 458 U.S. 119 (1982) (three-factor test for whether conduct is part of the “business of insurance” under McCarran-Ferguson)
- Latman v. Costa Cruise Lines, N.V., 758 So.2d 699 (Fla. Dist. Ct. App. 2000) (FDUTPA damages can include recovery of a retained "pass-through" charge when consumers paid money believed to go to third parties)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment burden and nonmovant must produce evidence on essential elements)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (standard for genuine dispute of material fact at summary judgment)