Opinion
Case No. A-09-CA-214-SS.
May 13, 2009
ORDER
Before the Court are Defendants' Joint Motion to Dismiss the Amended Complaint With Prejudice and Supporting Memorandum of Legal Authorities, filed August 4, 2008 [#24]; Plaintiffs' Opposition to Defendants' Motion to Dismiss, filed September 17, 2008 [#29]; and Defendants" Reply Memorandum of Legal Authorities in Further Support of Defendants' Joint Motion to Dismiss the Amended Complaint With Prejudice, filed September 29, 2008 [#30]. Having considered the motion, response and reply thereto, the case file as a whole and the applicable law, the Court enters the following opinion and orders.
This action was originally filed in the Beaumont Division of the Eastern District of Texas on April 3, 2008, The case was transferred to this Court on March 26, 2009, The docket numbers refer to the numbers originally used in the Eastern District of Texas.
I. Background
Plaintiffs Christopher Winn, Natalie Cummings and Chris K. Villemarette bring this action on behalf of themselves and others similarly situated. They have named as defendants Alamo Title Insurance Company, Fidelity National Title Insurance Company, Chicago Title Insurance Company, Ticor Title Insurance Company, Fidelity National Finance, Inc., First American Title Insurance Company of New York, United General Title Insurance Company, First American Corporation, Commonwealth Land Title Insurance Company, Lawyers Title Insurance Corporation, Landamerlca Financial Group, Inc., Stewart Title Insurance Company, and Stewart Information Services Corporation. According to Plaintiffs, they are residents of Texas who purchased title insurance policies from the defendants. In sum, they complain the rates they were charged were artificially inflated by the improper actions of the defendants. (Am. Compl. ¶ 4).
Plaintiffs allege title insurance consumers generally exercise little discretion in choosing the title insurance company from whom they purchase title insurance, but rather rely on "middlemen" such as real estate agents, banks, lenders, builders and developers. Plaintiffs further allege title insurance companies pay financial enticements to such middlemen to steer business to the title insurance company. Plaintiffs acknowledge the Texas Department of Insurance sets rates for title insurance that must be charged by all sellers of title insurance in Texas. However, according to Plaintiffs:
During the portion of the Class Period preceding April 2004, such payments and kickbacks were not expressly prohibited by the rules of the Texas Department of Insurance. During the Class Period such payments were included in the expenses reported by title insurers to the Texas Department of Insurance (although not characterized as such) in connection with its rate-setting. Therefore, throughout the Class Period such payments and kickbacks led directly to title insurance rates being set higher than they otherwise would be set.
( Id. ¶¶ 17-23).
Plaintiffs describe title insurance premiums as composed of two portions, the risk component and the agency commission. The risk component covers the risk the title insurance company bears for any undiscovered defects in the title. The agency commission portion covers payments made to title agents. According to Plaintiffs, a small piece of those payments is for the search of prior ownership records of the property to identify any issues with the title of the property. They allege:
The remainder, and by far the bulk, of the agency commissions are comprised of costs unrelated to the issuance of title insurance. These costs include kickbacks and other financial inducements title insurers provide to title agents and indirectly (through title agents) to the lawyers, brokers, and lenders who, in reality, are the ones deciding which title insurer to use. These payments have nothing to do with the issuance of title insurance and are made by title insurers merely to inflate their revenues and steer business their way.
( Id. ¶¶ 24-27).
Plaintiffs additionally allege the Texas Department of Insurance has charged Commonwealth Land Title Insurance Company, Lawyers Title Insurance Corporation and Landamerlca Financial Group, Inc. (collectively "LandAmerica") with violations of the Texas Insurance Code. The alleged violations include paying, or allowing to be paid, commissions, rebates, discounts or other things of value to a person for engaging in, soliciting or referring the business of title insurance. ( Id. ¶ 46 Ex. 1).
Plaintiff further allege Defendants have:
engaged in concerted efforts to (I) cause the Texas Department of Insurance to set supracompetitive rates for title insurance in Texas (ii) include in their calculated rates agency commission costs, (iii) embed within these costs payoffs, kickbacks, and other charges that are unrelated to the issuance of title insurance, and (iv) report the costs of surreptitious payments to title agents to the Department of Insurance as expenses, which in turn has caused the Department of Insurance to set premium rates at a level higher than the level at which they otherwise would have been set.
( Id. ¶ 62). Plaintiffs contend, in the absence of proper regulatory authority and oversight, Defendants' conduct constituted a horizontal agreement to fix the form, structure and price of title insurance in Texas. ( Id. ¶ 63).
Plaintiffs first assert a cause of action for per se price fixing, in violation of the Sherman Act, 15 U.S.C. § 1. They allege the Defendants' conduct has caused substantial anticompetitive effects in the title insurance market, causing Plaintiffs to pay significantly more for title insurance than they would have in the absence of Defendants' illegal activity. ( Id. ¶¶ 82-87). They further claim the conduct of Defendants violates the Texas Deceptive Trade Practices Act ("DTPA"), TEX. BUS. COM. CODE § 17.41 et seq. ( Id. ¶¶ 88-93). Plaintiffs also assert claims for violations of the Texas Free Enterprise and Antitrust Act, TEX. Bus. COM. CODE § 15.01 et seq. ( Id. ¶¶ 94-98). Plaintiffs additionally assert a claim for money had and received, and finally a claim for disgorgement of unjust enrichment. ( Id. ¶¶ 99-103). As relief, Plaintiffs seek declaratory and injunctive relief, monetary damages, and disgorgement of unjust enrichment. ( Id. at 28-29).
Defendants have now filed a motion to dismiss. They contend Plaintiffs' complaint should be dismissed because: (1) it fails to set forth factual allegations sufficient to state a claim for relief; (2) the filed rate doctrine bars all of Plaintiffs' claims; (3) the state action doctrine bars Plaintiffs' antitrust claim; (4) the Court should abstain from deciding Plaintiffs' request for injunctive relief under the Burford abstention doctrine; (5) the claims against the corporate parent defendants are insufficient to establish liability; (6) the state law antitrust claim also fails; (7) Plaintiffs are not entitled to relief as a matter of law under the DTPA; and (8) Plaintiffs cannot recover on their claims for equitable relief. The parties have filed responsive pleadings and the matters are now ripe for determination.
II. Standard of Review
A motion to dismiss under Rule 12(b)(6) "is viewed with disfavor and is rarely granted." Lowrey v. Texas A M Univ. Sys., 117 F.3d 242, 247 (5th Cir. 1997) (quoting Kaiser Aluminum Chemical Sales, Inc. v. Avondale Shipyards, 677 F.2d 1045, 1050 (5th Cir. 1982)). The complaint must be liberally construed in favor of the plaintiff and all facts pleaded therein must be taken as true. Leatherman v. Tarrant County Narcotics Intelligence Coordination Unit, 507 U.S. 163,164, 113 S. Ct. 1160, 1161 (1993); Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996). The Supreme Court has reminded lower courts, in order to survive a motion to dismiss, a complaint need only contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Swierkiewicz v. Sorema N.A., 534 U.S. 506, 122 S. Ct. 922, 998 (2002) (quoting FED. R. CIV. P. 8(a)(2)). Thus, a plaintiff is generally not required to plead facts supporting each and every element of his claim or legal theory. Id. Rather, a complaint is sufficient if it "give[s] the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Id. (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99, 103 (1957)). Dismissal is warranted only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley, 355 U.S. at 45-46, 78 S. Ct. at 102.
III. Analysis
Defendants have sought to dismiss Plaintiffs' complaint on a number of bases. The Court will address the filed rate doctrine first as matters at issue within this action fall squarely within the contours of the doctrine.
In essence, the filed rate doctrine forbids a regulated entity to charge rates for its services other than those properly filed with the appropriate regulatory authority. Arkansas La. Gas Co. v. Hall, 453 U.S. 571, 577, 101 S. Ct. 2925, 2930 (1981). The Supreme Court established this doctrine in Keogh v. Chicago Northwestern Railway, Co., 260 U.S. 156, 43 S. Ct. 47 (1922). The Court held In Keogh that a shipper could not bring an antitrust action against carriers in connection with tariffs paid because those tariffs had been filed and approved by the Interstate Commerce Commission. Id. at 163, 43 S. Ct. at 49. In so doing, the Court reasoned both that allowing the shipper to recover could result in affording him a "preference over his trade competitors" and would force the shipper to prove the charged rates were discriminatory or unlawful, a matter within the authority of the respective governmental agency to determine. Id. at 163-64, 43 S. Ct. 49-50.
Since Keogh, the Supreme Court has repeatedly applied the filed rate doctrine in a number of cases to preclude lawsuits asserting claims directly or indirectly attacking rates filed with the appropriate regulating authority. See, e.g., AT T Co. v. Cent. Office Tel., Inc., 524 U.S. 214, 226-26, 118 S. Ct. 1956, 1964-65 (1998) (state contract and tort claims seeking services contrary to filed tariff preempted under filed rate doctrine); Maislin Indus. v. Primary Steel, Inc., 497 U.S. 116, 128,110 S. Ct. 2759, 2767 (1990) (noting "[d]espite the harsh effects of the filed rate doctrine, we have consistently adhered to it"); Square D Co. v. Niagara Frontier Tariff Bureau, Inc., 476 U.S. 409, 424, 106 S. Ct. 1922, 1931 (1986) (squarely rejecting challenge to continued validity of decision in Keogh); Arkansas La. Gas, 453 U.S. at 577, 101 S. Ct. at 2930 (filed rate doctrine prohibits seller of natural gas from collecting rate different than one it filed with Federal Power Commission, noting doctrine has been extended across spectrum of regulated utilities). Federal circuit courts, including the Fifth Circuit, have also regularly applied the filed rate doctrine as a bar to litigation. See, e.g., Crumley v. Time Warner Cable, Inc., 556 F.3d 879, 881 (8th Cir. 2009) (suit barred by filed rate doctrine where damages sought would preclude defendant from charging challenged fee incorporated in filed rate); Wah Chang v. Duke Energy Trading Mktg., LLC, 507 F.3d 1222, 1225-26 (9th Cir. 2007) (holding filed rate doctrine precludes challenge by retail customer alleging manipulation of wholesale price of electricity, noting doctrine "turns away" federal and state antitrust actions, RICO actions and state tort actions); AT T Corp. v. JMC Telecom, LLC, 470 F.3d 525, 535 (3rd Cir. 2006) (state law claims for fraud and negligent misrepresentation barred by filed rate doctrine where court would be forced to determine what reasonable rate would be to assess damages); Tex. Comm'l Energy v. TXU Energy, Inc., 413 F.3d 503, 507 (5th Cir. 2005) (filed rate doctrine bars judicial recourse against regulated entity based on allegations that entity's filed rate is too high, unfair or unlawful); In re Mirant Corp., 378 F.3d 511, 518 (5th Cir. 2004) (under filed rate doctrine, reasonableness of rates and agreements regulated by FERC may not be collaterally attacked in state or federal courts); Bryan v. BellSouth Comms., Inc., 377 F.3d 424, 432 (4th Cir. 2004) (state law claim of deceptive practice by utility effectively challenged reasonableness of filed rate and was thus barred by filed rate doctrine); Arsberry v. Illinois, 244 F.3d 558, 562 (7th Cir. 2001) (filed rate doctrine bars plaintiff in federal district court from seeking to invalidate or modify filed rate or seeking damages based on difference between actual and hypothetical lawful tariff); Town of Norwood v. F.E.R.C., 202 F.3d 408, 416 (1st Cir. 2000) (filed rate doctrine limits attacks outside regulatory process on rates filed with federal regulatory agencies); Tex. E. Transmission Corp. v. F.E.R.C., 102 F.3d 174, 189 (5th Cir. 1996) (natural gas pipeline precluded from retroactively assessing customer rates based on new and different rate methodology because prior rates had been filed with federal agency); Wegoland, Ltd. v. NYNEX Corp., 27 F.3d 17, 18 (2nd Cir. 1994) (filed rate doctrine holds any rate approved by governing regulatory agency is per se reasonable and unassailable in judicial proceedings brought by ratepayers); H.J. Inc. v. Nw. Bell Tel. Co., 954 F.2d 485, 488 (8th Cir. 1992) (filed rate doctrine prohibits party from recovering damages measured by comparing filed rate and rate that might have been approved absent alleged misconduct at issue).
The Fifth Circuit has enunciated the doctrine in broad terms, describing it as "bar[ring] judicial recourse against a regulated entity based upon allegations that the entity's 'filed rate' is too high, unfair or unlawful." Tex. Comm'l Energy, 413 F.3d at 507. Notably, "[a]pplication of the filed rate doctrine in any particular case is not determined by the culpability of the defendant's conduct or the possibility of inequitable results." Marcus v. AT T Corp., 138 F.3d 46, 59 (2d Cir. 1998). See, e.g., Square D Co., 476 U.S. at 424, 106 S. Ct. at 1931 (filed rate doctrine bars damage action against motor carriers under antitrust laws even where plaintiff alleges carriers colluded to set artificially high filed rate).
Two principles underlie the filed rate doctrine. First, the doctrine prevents regulated companies from engaging in price discrimination between customers ("nondiscrimination"). Verizon Del., Inc. v. Covad Comms. Co., 377 F.3d 1081, 1086 (9th Cir. 2004); Hill v. BellSouth Telecomms., Inc., 364 F.3d 1308, 1316 (11th Cir. 2004); Fax Telecomms., Inc. v. AT T, 138 F.3d 479, 489 (2nd Cir. 1998). Second, the doctrine preserves the exclusive role of regulatory agencies in approving rates and keeping courts, which are far less competent to perform this function, out of the rate-making process ("nonjusticiability"). Verizon, 377 F.3d at 1086; Hill, 364 F.3d at 1316; Fax Telecomms., 138 F.3d at 489. "The nonjusticiability strand recognizes that (1) legislatively appointed regulatory bodies have institutional competence to address rate-making issues; (2) courts lack the competence to set rates; and (3) the interference of courts in the rate-making process would subvert the authority of rate-setting bodies and undermine the regulatory regime." Verizon, 377 F.3d at 1086 (quoting Fax Telecomms., 138 F.3d at 489).
Defendants contend all of Plaintiffs' claims are barred under the filed rate doctrine as each of the claims are predicated on the theory that the title insurance rates charged by them were improperly elevated. They maintain because those rates are regulated and set by the Texas Department of Insurance, determination of Plaintiffs' claims would require this Court to review the reasonableness of those rates. Accordingly, Defendants assert the claims are barred under the filed rate doctrine.
Plaintiffs argue the filed rate doctrine does not apply to bar this action because Defendants have cited "no controlling legal authority to suggest that the Texas Supreme Court" would craft an exemption from the antitrust laws based on the doctrine. (Plf. Oppos. at 15). They contend other federal district courts and the Texas Supreme Court have declined to apply the doctrine to substantially similar claims.
Unfortunately, Plaintiffs do not cite any "controlling legal authority" in support of their position. Rather, they rely heavily on two district court cases, one from Washington and one from Maryland. Additionally, Plaintiffs attempt to distinguish the cases decided by the Fifth Circuit and Texas district courts which are clearly contrary to their position. As set forth more fully below, the Court finds Plaintiffs' arguments unpersuasive.
Notably, Plaintiffs do not argue title insurers and the rates they charge are not subject to a comprehensive regulatory scheme in Texas. See Am. Compl. ¶ 17 ("[i]n Texas, the Department of Insurance sets rates for title insurance that must be charged by all sellers of title insurance"); TEX. INS. CODE. ANN. § 2501.002(a) (Vernon 2009) (purpose of portion of insurance code provisions relating to title insurance "is to completely regulate the business of title insurance on real property" while "protect[ing] consumers and purchasers of title insurance policies" and "provid[ing] adequate and reasonable rates of return for title insurance companies"); Id. § 2703.151(a) (insurance commissioner "shall fix and promulgate" premium rates to be charged by title insurance company). See also Texas Dep't of Ins. v. Reconveyance Servs., Inc., 240 S.W.3d 418, 425 (Tex.App.-Austin 2007, pet. filed) (discussing regulation of title insurance in Texas). Indeed, as Plaintiffs themselves acknowledge by attaching to their complaint the notice of hearing issued by the Texas Department of Insurance for disciplinary action against one of the defendants, allegations substantially similar to those at issue in this action have been the subject of action by the insurance commission. (Am. Comp. Ex. 1). Numerous federal district courts have applied the filed rate doctrine to actions against insurers subject to such comprehensive regulation. See, e.g., Rios v. State Farm Fire Cas. Co., 469 F. Supp. 2d 727, 737 (S.D. Iowa 2007) (applying filed rate doctrine to common law claim seeking return of insurance premiums); Mullinax v. Radian Guar. Inc., 311 F. Supp. 2d 474, 484 n. 6 (M.D.N.C. 2004) (filing of rate by defendant with state Department of Insurance bars plaintiffs from challenging reasonableness of those rates); Kirksey v. Am. Bankers Ins. Co., 114 F. Supp. 2d 526, 529 (S.D. Miss. 2000) (applying filed rate doctrine to insurance companies); Stevens v. Union Planters Corp., 2000 WL 33128256, at *3 (E.D. Pa. Aug. 22, 2000) (allegation of kickbacks in forced hazard insurance scheme barred by filed rate doctrine); Allen v. State Farm Fire Cas. Co., 59 F. Supp. 2d 1217, 1229 (S.D. Ala. 1999) (filed rate doctrine barred claim challenging unlawfulness of rate filing by insurance company); Korte v. Allstate Ins. Co., 48 F. Supp. 2d 647, 651 (E.D. Tex. 1999) (applying filed rate doctrine to claim asserting insurance rates improper due to submission by defendant of illegal subsidy factor accounts to state insurance regulator because state agency determined reasonable rates pursuant to statutory scheme); Morales v. Attorneys' Title Ins. Fund, Inc., 983 F. Supp. 1418, 1429 (S.D. Fla. 1997) (dismissing plaintiffs' kickback claim against title insurer pursuant to filed rate doctrine because claim was nothing more than challenge to title insurance rates set by state regulators); Calico Trailer Mfg. Co., Inc. v. Ins. Co. of N. Am., 1994 WL 823554 at *6 (E.D. Ark. Oct. 12, 1994) (filed rate doctrine barred plaintiffs challenge to insurance rates as inflated as result of conspiracy among defendant insurance companies).
Further, contrary to Plaintiffs' suggestion, "controlling legal authority" has recognized the applicability of the filed rate doctrine to antitrust claims. See Square D Co., 476 U.S. at 424, 106 S. Ct. at 1931 (filed rate doctrine bars damage action against motor carriers under antitrust laws); Keogh, 260 U.S. at 163, 43 S. Ct. at 49-50 (holding plaintiff could not bring antitrust complaint challenging filed tariff); Texas Comm'l Energy, 413 F.3d at 509 (filed rate doctrine applies to bar federal and state antitrust claims). Although the Texas Supreme Court has not specifically held the filed rate doctrine bars antitrust claims, that court has clearly recognized the validity of the filed rate doctrine generally. See Mid-Century Ins. Co. v. Ademaj, 243 S.W.3d 618, 625 (Tex. 2007) (noting filed rate doctrine applies in Texas); Southwestern Elec. Power Co. v. Grant, 73 S.W.3d 211, 216-17 (Tex. 2002) (filed rate doctrine prohibits customer from suing utility in contract or tort over issues that filed tariff governs).
Plaintiffs argue the two Texas Supreme Court cases recognizing the validity of the filed rate doctrine do not afford Defendants any protection against this action. They point out the court in Mid-Century declined to apply the filed rate doctrine to a case attacking the validity of a fee charged by insurers in addition to the insurance premium as beyond the filed rate. In so doing, however, the Texas Supreme Court specifically noted the filed rate doctrine applied in Texas, but concluded it did not bar plaintiff's claims because the fee charged was specifically authorized by a rule of the "appropriate regulatory authority." Mid-Century, 243 S.W.3d at 625. In essence, the court declined to approve the plaintiffs' attempt to use the filed rate doctrine as an offensive weapon to prohibit defendants from charging a fee authorized by a state regulator. The Court does not find the decision in Mid-Century acts to prevent the defensive use of the filed rate doctrine in this action as a bar to Plaintiffs' attack on the validity of the filed rates charged by Defendants as authorized by the Texas Department of Insurance.
Plaintiffs also argue the Texas Supreme Court's decision in Southwestern Elec. Power Co. is inapposite. At issue In that case was whether a provision in the filed tariff of the defendant electric utility limiting liability was legally permissible. The Texas Supreme Court concluded the state regulator had the authority to include such a provision in the filed tariff, such a limitation was reasonable as a matter of law, and the filed rate doctrine thus applied to bar plaintiff's claims. Southwestern Elec. Power Co., 73 S.W.3d at 222. The undersigned agrees with Plaintiffs that the decision is not directly informative as to the matters at issue in this case, but the case nonetheless makes clear that the Texas Supreme Court recognizes and applies the filed rate doctrine. Thus the decision does not stand as "legally controlling authority" preventing application of the doctrine to this action.
Plaintiffs further urge this Court to rely on federal district court cases from Washington and Maryland to reject the application of the filed rate doctrine to this action. In the Washington case consumers sought certification of a class action under the Real Estate Settlement Procedures Act ("RESPA") and state consumer protection statutes for a class of persons who purchased title insurance from the defendants. The plaintiffs alleged, based on a report issued by the Washington State Office of the Insurance Commissioner ("OIC"), that the defendants paid inducements to developers, lenders, loan brokers, real estate agents, and other real estate settlement service providers to obtain their referrals in contravention of Washington law. The title insurer defendants argued the filed rate doctrine precluded the claims against them because the case essentially challenged rates established by a regulatory agency. The court denied the motion, "declin[ing] to extend Washington law to apply the filed rate doctrine to bar Plaintiffs' claims." Blaylock v. First Am. Title Ins. Co., 504 F. Supp. 2d 1091, 1103 (W.D. Wash. 2007).
In considering the persuasiveness of the Blaylock decision the Court finds significant the rationale enunciated by the Washington court. That court stated the decision "[c]onsider[ed] the gradual erosion of the rationale for the doctrine, the cautionary note of the Washington Supreme Court in the only case discussing the doctrine, and the uneasy fit between the animating purposes of the doctrine and the facts of this case" Id. Specifically, the Blaylock court noted the only guidance it found in Washington case law was "a statement of the primary purposes of the doctrine and a cautionary note that it should not be applied rigidly in situations that do not advance its central purposes." Id. at 1101. In contrast, this Court has recent pronouncements of both the Fifth Circuit and the Texas Supreme Court recognizing the continued validity of the filed rate doctrine. Indeed, the Fifth Circuit referred to the doctrine as "consistently applied" to render filed rates "unassailable in judicial proceedings brought by ratepayers." Texas Comm'l Energy, 413 F.3d at 508.
Significantly, the Blaylock court also reviewed the regulatory oversight provided by the Washington OIC. The court stated:
while the regulatory scheme under the Insurance Code is generally quite comprehensive with respect to insurance rates, title insurance is exempted from this comprehensive scheme. By contrast, title insurance rates are subjected only to superficial regulation-while the rates must be submitted to the OIC, the Code does not mandate that they receive any review by the CommissionerBlaylock, 504 F. Supp. 2d at 1102-03. Plaintiffs have not suggested title insurance in Texas is subject to a similarly lax review process. Rather, as set forth above, the regulatory oversight scheme for title insurance companies in Texas is clearly distinguishable from the scheme in effect in Washington. Thus, based on the significant differences in the two regulatory climates, and the differences in governing case law, the Court declines to find the decision in Blaylock persuasive.
The second case cited by Plaintiffs also involved claims brought under RESPA. The plaintiff alleged she purchased a house through one of the defendants, a real estate company, and paid a portion of the title insurance charges to a separate defendant, which she alleged was a sham affiliated business entity jointly owned by the other defendants. The plaintiff claimed the title insurance fees were partially channeled to the real estate company as a kickback or referral fee. Defendants moved to dismiss the action, arguing the plaintiff had not stated a viable claim because she was not alleging she was charged more than the rates filed by the title insurer and thus her challenge could only be to the reasonableness of the rate she was charged. The court disagreed, concluding the plaintiff was not challenging the reasonableness of the fee in and of itself, but was instead arguing she could have been charged a lesser fee by one of the affiliated defendants, which was also on file with the state regulator. Robinson v. Fountainhead Title Group Corp., 447 F. Supp. 2d 478, 488 (D. Md. 2006). Accordingly, the court found the claims were not subject to the filed rate doctrine bar. Id.
As discussed above, Plaintiffs are not alleging they were charged more than the applicable filed rate. Rather, they are claiming that the filed rates are the product of improper conduct. Accordingly, the analysis in Robinson is not applicable to this action.
Not surprisingly, Plaintiffs have not cited cases decided by Texas district courts addressing the assertion of the filed rate doctrine. In light of the clear precedential value of the Fifth Circuit's decision in Texas Commercial Energy, the Court finds particularly instructive the detailed discussion of that case in Utility Choice, L.P. v. TXU Corp., 2005 WL 3307524 (S.D. Tex. Dec. 6, 2005). In Utility Choice two retail electric providers brought suit against other retail electric providers as well as power generation companies. Plaintiffs brought both federal antitrust and RiCO claims, as well as state claims, alleging the defendants unlawfully cornered and conspired to monopolize and manipulate prices in the Texas energy market. Defendants maintained those claims were barred by the filed rate doctrine.
The defendants in Utility Choice did not seek application of the doctrine to a claim based on allegations of improper conduct with the Texas General Land Office
The court in Utility Choice found the decision in Texas Commercial Energy forestalled the plaintiffs' claims, noting the Fifth Circuit had found the electric energy market subject to regulation by the Public Utility Commission of Texas and thus challenges to the price of energy were effectively challenges to a filed rate. Utility Choice, 2005 WL 3307524 at *3. The court further rejected the plaintiffs' argument that the lack of a substitute mechanism for recovery made the filed rate doctrine inapplicable, reasoning any other conclusion would be in clear conflict with the decision in Texas Commercial Energy. Id. at *3-4 This finding is particularly instructive as Plaintiffs here also argue a private right of action is afforded to them by the Texas Insurance Code. See TEX. INS. CODE. ANN. § 541.003 (prohibiting engaging in unfair methods of competition in the business of insurance); §§ 541.054, 541.055, 541.061 (defining unfair methods of competition). As in Utility Choice, the Court does not find the prohibition against improper conduct incorporated in Texas statutes to be an avenue for relief for the Plaintiffs. Providing for a private right of action for unfair competition, which could encompass a wide array of activity, does not insolubly conflict with the filed rate doctrine limitation on actions directly challenging the validity of a rate set by a state agency.
Nor is the Court persuaded by Plaintiffs' final attempt to evade the reach of the filed rate doctrine. Plaintiffs maintain their claims are not barred because they are not seeking to undo a rate, but are seeking "merely to recover damages based on defendants' illegal conduct." (Plf. Oppos. at 18). Such a characterization of their claims is nothing short of disingenuous. As Defendants point out, earlier in the same pleading Plaintiffs admit they are seeking "to recover for substantially illegal overcharges." ( Id. at 10). Further, in their complaint they ask for relief "to compensate them for the overcharges they incurred." (Am. Compl. at 28). Plaintiffs also make clear in their complaint that they believe: (1) the anticompetitive actions of Defendants have resulted in an increase in the amount paid for title insurance ( Id. ¶ 85); and (2) Defendants' acquired money from them for the purchase of title insurance in violation of the DTPA. ( Id. ¶ 85). These allegations clearly rest on the amount paid by Plaintiffs for title insurance, effectively implicating the validity of the rates set for title insurance in Texas. Plaintiffs thus cannot now contend they should not be subject to the filed rate doctrine on the basis that they are not challenging the validity of rates approved by the Texas Department of Insurance. See Hill, 364 F.3d at 1317 (even if claim does not directly attack filed rate, award of damages that would effectively result in judicial determination of reasonableness of rate is prohibited under filed rate doctrine). The Court, therefore, concludes Defendants' motion to dismiss this case based on the filed rate doctrine is proper.
As the undersigned has concluded Defendants are entitled to dismissal of all of Plaintiffs' claims under the filed rate doctrine, the other arguments raised by Defendants for dismissal need not be addressed.
In accordance with the foregoing:
IT IS ORDERED that Defendants' Joint Motion to Dismiss the Amended Complaint With Prejudice and Supporting Memorandum of Legal Authorities [#24] is GRANTED.