Onyx Insurance Co. v. New Jersey Department of Banking & Insurance Division
704 F. App'x 110
| 3rd Cir. | 2017Background
- Onyx Insurance is a risk retention group (RRG) organized under the federal Liability Risk Retention Act (LRRA) and insures New Jersey taxis.
- New Jersey maintains an Unsatisfied Claim and Judgment Fund (the Fund) administered by the state-chartered Property-Liability Insurance Guaranty Association (the Association) to pay uninsured pedestrian personal injury claims; membership is limited to "member insurers."
- New Jersey law and federal LRRA provisions exclude RRGs from participating in state insolvency guaranty associations and related membership structures.
- Onyx paid pedestrian claims and sued the Association and New Jersey officials seeking a declaration that it must be allowed to pay into and receive benefits from the Fund and reimbursement for claims it already paid.
- The District Court dismissed Onyx’s complaint under Fed. R. Civ. P. 12(b)(6); Onyx appealed. The Third Circuit reviews the dismissal de novo and affirms.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether LRRA preempts New Jersey law and requires the State to allow RRGs to participate in the Fund | LRRA mandates states allow RRGs to participate in mechanisms that apportion insurer losses, so New Jersey must admit Onyx to the Fund | LRRA only permits states to require RRGs to participate; it does not compel states to create participation rights | Held: LRRA does not compel state participation; New Jersey law declining to include RRGs in the Fund is permissible |
| Whether exclusion of RRGs from the Fund is an unlawful discriminatory treatment under the LRRA | Exclusion discriminates against RRGs in violation of LRRA’s nondiscrimination provision | LRRA contemplates and allows differential treatment; RRGs receive limited regulation in exchange for being excluded from guaranty associations | Held: No impermissible discrimination; disparate treatment is permitted and in many instances required by LRRA |
| Whether discovery should be allowed to probe Department of Banking and Insurance positions | Onyx: Department’s shifting positions show discriminatory intent and warrant discovery | Defendants: Legal dismissal is appropriate; discovery would be a fishing expedition absent a viable legal claim | Held: Dismissal proper as matter of law; discovery denied |
| Whether the case is moot after a June 30, 2015 Department order changing treatment of commercial pedestrian claims | Onyx: Still has a live interest because it seeks reimbursement for claims it already paid | Defendants: Order renders dispute moot by changing treatment for commercial claims | Held: Case not moot because Onyx retains a concrete reimbursement claim |
Key Cases Cited
- McMullen v. Maple Shade Twp., 643 F.3d 96 (3d Cir.) (standards for Rule 12(b)(6) review)
- Santomenno ex rel. John Hancock Tr. v. John Hancock Life Ins. Co. (U.S.A.), 677 F.3d 178 (3d Cir.) (viewing well-pled facts in plaintiff’s favor)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S.) (plausibility standard for pleading)
- Zuk v. E. Pa. Psychiatric Inst. of the Med. Coll., 103 F.3d 294 (3d Cir.) (limits on fishing-expedition discovery after dismissal)
- Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (U.S.) (standing and personal stake in litigation)
- Genesis Healthcare Corp. v. Symczyk, 133 S. Ct. 1523 (U.S.) (standing and mootness principles)