158 F. Supp. 3d 211
S.D.N.Y.2016Background
- Borrowers sued loan servicers (Litton, Ocwen, Saxon groups) and insurers (Assurant and American Modern groups) alleging exclusive arrangements and kickbacks inflated lender-placed insurance (LPI) premiums, which servicers then passed on to borrowers.
- Plaintiffs asserted RICO, unjust enrichment, aiding-and-abetting, and related common-law claims challenging the LPI procurement and reimbursement scheme.
- Defendants moved to dismiss; the Court previously denied Assurant’s Rule 12(b)(1) motion but later issued an Order to Show Cause addressing whether the filed-rate doctrine bars plaintiffs’ claims after the Second Circuit’s decision in Rothstein v. Balboa Ins. Co.
- The Court treated the filed-rate doctrine as a merits defense (Rule 12(b)(6)), not a jurisdictional standing defect (Rule 12(b)(1)), and denied Assurant’s motion for reconsideration.
- Applying Rothstein, the Court held the filed-rate doctrine bars the remaining claims by the Ervings and Heard against the Saxon, Litton, and Assurant defendants because adjudicating those claims would require impermissible review of regulator-approved insurance rates.
- Surviving claims after this Order: certain claims by the Lyons against Litton and claims (and a preliminary settlement) involving American Modern defendants remain pending.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the filed-rate doctrine bar these LPI-based claims? | Plaintiffs say they challenge unlawful conduct (kickbacks), not the filed rates, and thus doctrine should not apply. | Defendants invoke Rothstein: the doctrine bars challenges that would require assessing regulator-approved rates. | Court: Filed-rate doctrine applies; claims dismissed because relief would require impermissible inquiry into filed rates. |
| Is the filed-rate doctrine a jurisdictional (standing) defect or a merits defense? | Plaintiffs urged standing-based issues should not dispose of merits. | Assurant sought dismissal under Rule 12(b)(1) based on filed-rate standing defect. | Court: Doctrine is a merits defense; analyze under Rule 12(b)(6); denied reconsideration. |
| Do plaintiffs have standing to sue Assurant, Inc. (holding co.)? | Plaintiffs allege Assurant participated in scheme and thus causation traces to Assurant, Inc. | Assurant argued it is a holding company with no contract or direct role causing injury. | Court: Plaintiffs adequately alleged causation; standing against Assurant, Inc. pleaded plausibly. |
| Must named plaintiffs exhaust Florida administrative remedies for rate challenges? | Plaintiffs say they challenge conduct (not rates) and assert FDUTPA claims, so §627.371 exhaustion not required. | Assurant argued Florida statute provides exclusive administrative route to challenge rates. | Court: §627.371 applies to rate challenges under Florida Insurance Code; plaintiffs allege FDUTPA, so exhaustion not required here. |
Key Cases Cited
- Rothstein v. Balboa Ins. Co., 794 F.3d 256 (2d Cir. 2015) (filed-rate doctrine bars LPI-based claims that would require reviewing regulator-approved rates)
- Wegoland Ltd. v. NYNEX Corp., 27 F.3d 17 (2d Cir. 1994) (filed-rate doctrine principles and scope)
- Simon v. KeySpan Corp., 694 F.3d 196 (2d Cir. 2012) (filed-rate doctrine is rigid and bars challenges to filed rates)
- Marcus v. AT&T Corp., 138 F.3d 46 (2d Cir. 1998) (nondiscrimination and nonjusticiability rationales for filed-rate doctrine)
- Ark. La. Gas Co. v. Hall, 453 U.S. 571 (U.S. 1981) (courts should not disturb rates set by regulatory agencies)
- Coll v. First Am. Title Ins. Co., 642 F.3d 876 (10th Cir. 2011) (focus is the decision’s impact on agency procedures and rate determinations)