Simon Levay et al v. AARP, Inc. et al

Filing 75

ORDER by Judge Dean D. Pregerson, GRANTING MOTION to Dismiss Case (First Amended Complaint) 39 , MOTION to Dismiss First Amended Complaint 40 , MOTION to Dismiss Case -- Notice of Motion and Motion to Dismiss First Amended Complaint, with Proof of Service 41 . Plaintiff shall file an amended complaint within fourteen (14) days after the date of this Order, or by November 16, 2018. (shb)

1

O

2
3
4
5
6
7
8
9
10

UNITED STATES DISTRICT COURT

11

CENTRAL DISTRICT OF CALIFORNIA

12
13
14
15

SIMON LEVAY, JUDITH WILLIS, and
LIONEL BROWN, Individually and on
Behalf of All Others Similarly Situated,
Plaintiffs,

16
17
18
19
20
21
22

v.
AARP, INC., AARP SERVICES, INC.,
UNITEDHEALTH GROUP, INC.,
UNITED HEALTHCARE INSURANCE
COMPANY, NEW YORK LIFE
INSURANCE COMPANY and DOES 1
through 60,

23

Defendants.

24
25

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)

Case No. 17-09041 DDP (PLAx)
ORDER RE: DEFENDANTS’
MOTIONS TO DISMISS
[Dkts. 39, 40, 41]

Presently before the court are Defendants’ Motions to Dismiss. Having considered

26

the parties’ submissions and heard oral argument, the court adopts the following Order.

27

I.

28

BACKGROUND
Plaintiffs Simon Levay, Judith Willis, and Lionel Brown (“Plaintiffs”) bring this

1
2
3
4
5
6

putative class action challenging Defendants’ marketing of AARP-branded insurance
policies. Defendants are AARP, Inc. (“AARP”); AARP Services, Inc. (“ASI”), a wholly
owned subsidiary of AARP; UnitedHealth Group, Inc.; UnitedHealthcare Insurance Co.,
a wholly owned subsidiary of United Health Group, Inc. 1; and New York Life Insurance
Co. (“New York Life”) (collectively, “Defendants”). (See First Amended Complaint
(“FAC”), Dkt. 20, ¶¶ 1-12.)
The FAC alleges that Plaintiffs “are prospective insureds who are at least 65 years

7
8

of age and have seen and/or heard offers of insurance services, joined AARP and pay

9

membership fees to obtain the advertised insurance, and/or have purchased insurance

10

from United Healthcare and New York Life.” (Id. ¶ 44.) However, UnitedHealth records

11

show that Simon Levay was the only plaintiff who ever purchased UnitedHealth

12

Medigap insurance coverage. 2 (Sheak Decl., Dkt. 40-7, ¶¶ 14-15.) Similarly, New York

13

Life’s policyholder records show that none of the plaintiffs ever purchased New York

14

Life insurance policies. (Horan Decl., Dkt. 39-1, ¶3.)
Plaintiffs allege that Defendants have created an unlawful scheme under which

15
16

AARP profits from marketing, advertising, endorsing, soliciting, offering, and selling

17

AARP-branded insurance policies on behalf of UnitedHealth and New York Life. (FAC

18

¶¶ 18-19, 31.) Specifically, Plaintiffs assert that AARP receives a 4.95% “royalty” for each

19

AARP-branded insurance policy sold or renewed on behalf of UnitedHealth and New

20

York Life. (Id. ¶ 18, 28.) Plaintiffs contend that these “royalties” are disguised

21

commissions that create hundreds of millions of dollars in profit for AARP, (Id. ¶ 17), and

22

that “artificially inflate[]” the price of AARP-branded insurance policies when

23
24
25
26
27
28

Defendants UnitedHealth Group, Inc. and UnitedHealthcare Insurance Company are
collectively referred to here and in the First Amended Complaint as “UnitedHealth.”
2 Medigap insurance is designed to offer extra coverage to Medicare beneficiaries beyond
Medicare benefits, including coverage of copays and deductibles that would otherwise be
the patient’s responsibility. See 42 U.S.C. § 1395ss(g)(1).
2
1

1
2
3
4
5

“competing policies offering identical benefits are offered at a lower cost.” (Id. ¶¶ 50, 59.)
Plaintiffs also allege that AARP’s endorsements and branding misleads consumers “into
believing that AARP is a non-profit organization when the advertisements, offer, and
sale of insurance services are actually by an affiliated for-profit organization [ASI]
disguised as the non-profit organization.” (Id. ¶ 78.)
On the basis of these allegations, Plaintiffs brought suit against Defendants for (1)

6
7

negligence, (2) violations of California Insurance Code §§ 785 and 787, (3) violations of

8

California’s Unfair Competition Law (“UCL”), Cal. Business & Professions Code §§ 17200

9

et seq., (4) violations of California’s False Advertising Law (“FAL”), Cal. Business and

10

Professions Code § 17500 et seq., and (5) financial elder abuse. Defendants now move to

11

dismiss the complaint pursuant to Rule 12(b)(1) and Rule 12(b)(6).

12

II.

LEGAL STANDARD

13

A complaint will survive a motion to dismiss when it contains “sufficient factual

14

matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v.

15

Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

16

When considering a Rule 12(b)(6) motion, a court must “accept as true all allegations of

17

material fact and must construe those facts in the light most favorable to the plaintiff.”

18

Resnick v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000). Although a complaint need not include

19

“detailed factual allegations,” it must offer “more than an unadorned, the-defendant-

20

unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678. Conclusory allegations or

21

allegations that are no more than a statement of a legal conclusion “are not entitled to the

22

assumption of truth.” Id. at 679. In other words, a pleading that merely offers “labels and

23

conclusions,” a “formulaic recitation of the elements,” or “naked assertions” will not be

24

sufficient to state a claim upon which relief can be granted. Id. at 678 (citations and

25

internal quotation marks omitted).

26

However, a Rule 12(b)(1) motion to dismiss for lack of subject-matter jurisdiction

27

may challenge a complaint’s allegations on their face or with facts. Safe Air for Everyone v.

28

3

1
2
3
4
5

Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). In a factual challenge, the court is not required
to accept the allegations of the complaint as true and may consider additional evidence
outside of the pleadings. Maya v. Centex Corp., 658 F.3d 1060, 1067 (9th Cir.2011). Once
the moving party has presented evidence showing a lack of subject matter jurisdiction,
the burden shifts to “the party opposing the motion [to] furnish affidavits or other

6

evidence necessary to satisfy its burden of establishing subject matter jurisdiction.” Safe

7

Air, 373 F.3d at 1309 (citations omitted). If the plaintiff cannot meet its burden of

8

establishing the jurisdiction it seeks to invoke, the court must dismiss the case under Rule

9

12(b)(1).

10

III.

DISCUSSION

11

a. Motions to Dismiss Under Rule 12(b)(1)

12

Defendants argue that this court lacks subject-matter jurisdiction over the action

13

because no plaintiff has standing to sue. Federal courts are courts of limited jurisdiction,

14

whose authority under Article III of the Constitution is restricted to “actual cases or

15

controversies.” Raines v. Byrd, 521 U.S. 811, 818 (1997). To establish Article III standing, a

16

plaintiff must have “(1) suffered an injury in fact, (2) that is fairly traceable to the

17

challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable

18

judicial decision.” Spokeo, Inc. v. Robbins, 136 S.Ct. 1540, 1547 (2016).

19

In this case, Plaintiffs allege that they have been injured by Defendants’ marketing

20

of AARP-branded insurance policies. Specifically, Plaintiffs claim that Defendants sold

21

insurance policies that were “artificially inflated in light of AARP’s 4.95 percent

22

commission,” which AARP received on each policy sold or renewed. (FAC ¶ 17, 59.)

23

Moreover, Plaintiffs contend that AARP’s endorsements and branding misled consumers

24

“into believing that AARP is a non-profit organization when the advertisements, offer,

25
26
27
28

4

1
2

and sale of insurance services are actually by an affiliated for-profit organization [ASI]
disguised as the non-profit organization.” 3 (FAC ¶ 78).
To begin with, the court observes that none of the allegations in the FAC identify

3
4
5

injury to Plaintiffs resulting from the advertisement or purchase of insurance policies
from Defendant New York Life. Defendants confirm, and Plaintiffs do not contest, that

6

none of the plaintiffs has ever purchased an AARP-branded New York Life policy.

7

(Horan Decl. ¶3). Based on the facts alleged, the court finds Plaintiffs lack standing to

8

pursue claims for damages against Defendant New York Life.
Moreover, to have Article III standing to seek the remedy of prospective injunctive

9
10

relief, a plaintiff must allege an “actual and imminent,” or “certainly impending” injury.

11

Davidson v. Kimberly-Clark Corp., 889 F.3d 956, 967 (9th Cir. 2018). Here, Plaintiffs do not

12

indicate that they intend to purchase AARP-branded policies from New York Life, such

13

that there might exist a “credible threat of real and immediate harm.” Krottner v.

14

Starbucks Corp., 628 F.3d 1139, 1143 (9th Cir. 2010). Mere exposure to the advertisements,

15

or even a bare allegation of intent to purchase, will not do. See Lujan v. Defenders of

16

Wildlife, 504 U.S. 555, 565 (1992) (“[P]rofession of an intent. . . is simply not enough.”)

17

(quotations and alternations omitted). Plaintiffs must, in the case of impending future

18

harm, plead facts sufficient to demonstrate that the injury will “proceed with a high

19

degree of immediacy.” Id. at 564 n.2. Mere professions of “’some day’ intentions—

20

without any description of concrete plans or indeed any specification of when the some

21

day will be—do not support a finding of the ‘actual or imminent’ injury that our cases

22

require.” Id. at 564.

23
24
25
26
27
28

In order to purchase AARP-branded insurance policy, an individual must first become
an AARP member. (Id. ¶ 24). Although the AARP membership fee could conceivably
factor into the calculation of damages, Plaintiffs do not dispute that the present
allegations fail to articulate a claim with respect to whether Defendants misled Plaintiffs
about the benefits of AARP membership itself. (See AARP Reply at 2.)
5
3

Applying this standard, the court concludes that Plaintiffs have failed to plead

1
2
3
4
5

facts demonstrating that any future injury is “actual and imminent,” which would
provide Plaintiffs with standing to seek injunctive relief against Defendant New York
Life. Davidson, 889 F.3d at 967. As to the UnitedHealth Defendants, two of the three
plaintiffs have never purchased AARP-branded Medigap policies from UnitedHealth, or

6

even expressed the intention of doing so. (Sheak Decl. ¶¶ 14-15.) Therefore, for similar

7

reasons, the court finds that Plaintiffs Judith Willis and Lionel Brown have failed to

8

establish Article III standing to seek relief against the UnitedHealth Defendants. 4
The only plaintiff to have purchased an AARP-branded Medigap policy is Simon

9
10

Levay. (Sheak Decl. ¶¶ 14-15). Even assuming that Levay relied upon AARP’s

11

representations to his detriment in purchasing a Medigap policy, he does not allege how

12

he will continue to be harmed by Defendants’ representations, thereby meriting the

13

remedy of prospective injunctive relief. In Davidson v. Kimberly-Clark, the Ninth Circuit

14

outlined the limited circumstances under which a “previously deceived consumer who

15

brings a false advertising claim can allege that her inability to rely on the advertising in

16

the future is an injury sufficient to grant her Article III standing to seek injunctive relief.”

17

Id. Although a “close question,” id. at 971, the Davidson Court concluded that a

18

previously harmed consumer who had a reasonable desire to purchase a product if it

19

were to perform as advertised, but who could no longer rely upon the “validity of the

20

information advertised,” had Article III standing to pursue injunctive relief. Id. None of

21

those facts, however, are present here.
Therefore, the court grants Defendants’ motion to dismiss for lack of subject-

22
23

matter jurisdiction with respect to Plaintiffs Judith Willis and Lionel Brown. It also

24
25
26
27
28

The court will not, at this preliminary stage, evaluate the standing of prospective class
members or the definition of the prospective class. Rather, the court bases its analysis on
the standing of the named plaintiffs. See Bates v. United Parcel Servs., Inc., 511 F.3d 974, 987
(9th Cir. 2007).
6
4

1
2

dismisses Plaintiffs’ request for injunctive relief, and Plaintiffs’ claims against Defendant
New York Life.
b. Motions to Dismiss Under Rule 12(b)(6)

3

Because Plaintiffs have not indicated whether amendment would cure the various

4
5

standing deficiencies identified above, the court proceeds to examine only whether

6

Levay’s allegations against the UnitedHealth Defendants state a claim for relief under

7

Rule 12(b)(6).
i.

8

California Insurance Code Sections 785 and 787

9

Plaintiffs contend that Defendants’ actions are in violation of California Insurance

10

Code Sections 785 and 787. Even assuming that Plaintiffs have a private right of action to

11

enforce these code provisions, however, they do not apply to the Medigap insurance

12

policy that Levay purchased from UnitedHealth.

13

Section 785 states: “Except where explicitly provided to the contrary, this article

14

shall not apply to . . . Medicare supplement insurance as defined in subdivision (m) of

15

Section 10192.4.” 5 Cal. Ins. Code § 785. Subdivision (m), in turn, defines Medicare

16

supplement insurance, to include, subject to certain exceptions, a policy “advertised,

17

marketed, or designed primarily as a supplement to reimbursements under Medicare.”

18

Cal. Ins. Code § 10192.4(m). The parties do not dispute that Levay’s Medigap insurance

19

policy falls within the definition of “Medicare supplement insurance,” id., and is

20

therefore excluded from the scope of Sections 785 and 787.
Furthermore, there is no reason to believe that Levay has standing to enforce these

21
22

code provisions with respect to other kinds of insurance policies. See supra Part III.a.

23

Article III standing requirements apply with equal force to state law causes of action

24

brought in federal court. See Cantrell v. City of Long Beach, 241 F.3d 674, 683 (9th Cir. 2001).

25

Accordingly, Levay cannot rely upon the bare allegation that a misleading advertisement

26
27
28

5

Sections 785 and 787 are both part of Article 6.3 of the California Insurance Code.
7

1
2
3
4

exists, or that UnitedHealth has a statutory duty to prospective insureds, in order to
create an “actual or imminent” injury to himself for Article III standing purposes.
Davidson, 889 F.3d at 967. Therefore, the court dismisses with prejudice Levay’s insurance
code claims against the UnitedHealth Defendants. 6
ii. UCL and FAL Claims

5

For the purposes of statutory standing, both the UCL and the FAL require that

6
7

Levay plead an economic injury related to the purchase of his AARP-branded Medigap

8

policy. See Hinojos v. Kohl's Corp., 718 F.3d 1098, 1105 (9th Cir. 2013), as amended on denial

9

of reh'g and reh'g en banc (July 8, 2013); see also Cal. Bus. & Prof. Code § 17204 (limiting

10

UCL actions to those brought “by a person who has suffered injury in fact and has lost

11

money or property as a result of the unfair competition”). “To properly plead an

12

economic injury, a consumer must allege that she was exposed to false information about

13

the project purchased, which caused the product to be sold at a higher price, and that she

14

‘would not have purchased the goods in question absent this misrepresentation.’”

15

Davidson, 889 F.3d at 966.
In Davidson, the Ninth Circuit concluded that a plaintiff adequately alleged

16
17

economic injury when the complaint stated that, “had [the defendant] not

18

misrepresented (by omission and commission) the true nature of [the advertised

19

product,” the plaintiff would not have purchased the product at a premium price. Id. at

20

966. The FAC contains similar allegations here:
But for Defendants’ deceptive and unlawful acts, Plaintiffs and Putative
Class would not have been required to join AARP to obtain the advertised

21
22
23
24
25
26
27
28

To the extent Plaintiffs’ other claims are premised on violations of Sections 785 and 787,
they too must be dismissed. In particular, Plaintiffs’ negligence claim is exclusively
premised on the existence of “statutory duties” derived from the insurance code. (FAC ¶
63; see also UnitedHealth MTD at 25; Trans. at 35:3-6, Dkt. 56). Similarly, Plaintiffs’ UCL
claim is based, at least in part, on violations of the insurance code. As currently pled,
these claims will rise and fall with Plaintiffs’ insurance code claims.
8
6

1
2
3
4
5
6

insurance, would not have had to pay the AARP membership fees, would
not have had to pay AARP the illegal commission as part of their purchase
and/or renewal of their AARP policies, and would not of [sic] had to pay the
high rates for the AARP branded insurance when competing policies offering
identical benefits are offered at a lower cost. (FAC ¶ 30.)
The court concludes that these allegations, considered together with the rest of the
FAC, adequately set forth a basis for economic injury under the UCL and FAL.

7

When, as here, the challenged conduct under the UCL and FAL involves

8

“misrepresentation and deception,” a plaintiff must also plead actual reliance. Durell v.

9

Sharp Healthcare, 183 Cal. App. 4th 1350, 1363 (2010). In the UCL context, “actual

10

reliance . . . is inferred from the misrepresentation of a material fact.” Chapman v. Skype,

11

Inc., 220 Cal. App. 4th 217, 229 (2013). Defendants contend, however, that “no reasonable

12

consumer could have been deceived into purchasing AARP-branded Medigap coverage

13

at regulator-approved rates—over allegedly less expensive policies—based on the

14

characterization of United’s royalty payment to AARP.” (UnitedHealth MTD at 14.)

15

The court need not address this issue, however, because Plaintiffs have conceded

16

that their theory of injury does not concern the price of the insurance policy per se, but

17

instead centers on the membership fee paid to AARP. (See Opp. at 9.) Specifically,

18

Plaintiffs have declared that “this case is not about the payment of fees to an unlicensed

19

insurance agent, but rather the advertising, offering, and selling of insurance via a

20

perceived non-profit organization to vulnerable elder California consumers.” (Opp at 20.)

21

In keeping with this representation, counsel for Plaintiffs stated during oral argument

22

that that the only damages sought here concern the payment of AARP membership fees.

23

(Trans. at 39:2-6, 39:20-40:2; 40:20-41:1, Dkt. 56.) Put differently, Plaintiffs’ prevailing

24

theory of injury is that consumers were “duped” into joining AARP and paying

25

membership fees in order to access the AARP-branded policies from UnitedHealth, who

26

they believed had been selected by AARP as “the best insurance company for all of its

27
28

9

1
2
3
4
5

members when in actuality it [was] the for-profit AARP company [ASI] making a
commission on each sale it makes.” (FAC ¶¶ 20, 81.)
Finally, Defendants contend that Levay must have actually seen the allegedly
misleading representations before purchasing his AARP-branded Medigap policy in
order to plead reliance. (UnitedHealth MTD at 17). See McVicar v. Goodman Glob., Inc., 1 F.

6

Supp. 3d 1044, 1052 (C.D. Cal. 2014) (dismissing UCL claim where the plaintiff had not

7

plead that he “ever saw any alleged misrepresentation”); Letizia v. Facebook Inc., 267 F.

8

Supp. 3d 1235, 1244 (N.D. Cal. 2017) (collecting cases where courts have dismissed FAL

9

and UCL claims for failure to plead that plaintiffs had seen the challenged

10

representations). However, Levay has not alleged that he saw any of the advertisements

11

or representations of AARP-branded insurance that he now challenges. Therefore, the

12

court dismisses Levay’s UCL and FAL claims against UnitedHealth on this basis with

13

leave to amend.

14

iii.

15

Fraud Allegations

Defendants contend that the claims in the FAC do not plead fraud with specificity,

16

as required under Rule 9(b). See Fed. R. Civ. P. 9(b). Although a complaint need not

17

mention the word “fraud” to be subject to Rule 9(b)’s heightened pleading requirement,

18

it must contain allegations “that necessarily constitute fraud.” Vess v. Ciba-Geigy Corp.

19

USA, 317 F.3d 1097, 1105 (9th Cir. 2003).

20

In California, the elements of a fraud claim are “a false representation, knowledge

21

of its falsity, intent to defraud, justifiable reliance, and damages.” Moore v. Brewster, 96

22

F.3d 1240, 1245 (9th Cir. 1996) (quotations omitted). Here, the FAC alleges that

23

Defendants falsely represented information about AARP-branded insurance policies; that

24

Defendants did so knowingly; that Defendants intended to defraud consumers; and that

25

consumers relied upon Defendants’ representations. See, e.g., FAC ¶ 18 (“Defendants,

26

together, have orchestrated an elaborate scheme whereby AARP markets, advertises,

27

endorses, solicits, offers, and sells AARP branded insurance”); id. ¶ 19 (“Defendants have

28

10

1
2
3
4
5

deceptively and unlawfully schemed against senior citizens who put their trust in the
AARP name”); id. ¶ 45 (“Defendants mislead and deceive . . . by advertising, marketing,
and insurance services and products with the AARP logo, brand and name”); id. ¶ 59
(“Plaintiffs and the class were . . . deceived into joining AARP . . . and taken advantage
of by Defendants’ insurance scheme to deceive and manipulate persons over 65 years of

6

age.”); id. ¶ 78 (“Defendants violated and continue to make untrue and misleading

7

statements to senior citizens with the intent to induce them to purchase insurance.”); id. ¶

8

81 (“Defendants committed financial elder abuse by using misrepresentations to trick

9

and deceive Plaintiffs into purchasing insurance policies branded and endorsed by

10

AARP which is not only illegal, but improper as it is used to intentionally and

11

deliberately confuse . . . .”). In one case, Plaintiffs expressly label this conduct “fraud.” Id.

12

¶ 84 (“Defendants planned and engaged in their pattern of financial elder abuse with

13

malice, oppression, and fraud. . . .”).

14

The court finds that the allegations in the FAC necessarily constitute fraud. When

15

a plaintiff alleges a “unified course of fraudulent conduct and rel[ies] entirely on that

16

course of conduct as the basis of a claim,” a claim sounds in fraud and is subject to Rule

17

9(b). Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103 (9th Cir. 2003). In some

18

circumstances, however, “fraud is not an essential element of the claim.” Id. If so, “the

19

proper route is to disregard averments of fraud for not meeting Rule 9(b)’s standard and

20

then ask whether a claim has been stated.” Id. at 1105.

21

The question here is whether the fraud-based allegations in the FAC are part of a

22

“unified course of fraudulent conduct” central to Defendants’ theory of liability, rather

23

than non-essential elements of the claims. Id. at 1103. Stripped of the fraudulent

24

allegations, however, the court finds that the FAC fails to state a claim for relief under the

25
26
27
28

11

1
2
3
4
5

UCL or FAL, or for financial elder abuse. 7 If Levay is to retain these allegations in the
complaint, he must plead fraud with specificity, and allege the “who, what, when, where,
and how” of Defendants’ misconduct. 8 Id. at 1106. Put differently, he must do more than
“adequately plead that reasonable consumers are likely to be deceived.” Davidson, 889
F.3d at 964. Rather, he must “set forth what is false or misleading about a statement, and

6

why it is false.” Vess, 317 F.3d at 1106. 9 Accordingly, the court dismisses the remaining

7

claims for failure to allege fraud with specificity pursuant to Rule 9(b).

8

c. Additional Arguments Favoring a Dismissal or Stay

9

Although the court grants the motion to dismiss, it must address two additional

10

theories of dismissal that may influence whether this action should instead be stayed or

11

dismissed with prejudice. These two theories ask whether the present action is barred by

12

the first-to-file doctrine or, alternatively, by the filed-rate and primary jurisdiction

13

doctrines.

14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

Although one can plead financial elder abuse by claiming that property was taken “for
a wrongful use or with an intent to defraud,” Cal. Welf. & Inst. Code 15610.30 (a)(1), the
allegations here rely upon the latter theory. (See FAC ¶¶ 81, 84.)
8 Plaintiffs claim that this court did not dismiss a UCL claim for failure to plead fraud
with specificity in a similar case, Friedman v. AARP, No. 14-56765. Yet that outcome is
attributable to the fact that the court in Friedman dismissed the action on other dispositive
grounds and had no need to reach the issue of whether dismissal for failure to satisfy
Rule 9(b) was appropriate.
9 The court notes that there is some imprecision surrounding the attribution of conduct
among Defendants, specifically AARP and ASI. For example, Plaintiff alleges that
“AARP markets, advertises, endorses, solicits, offers, and sells AARP branded
insurance.” (FAC 18.) Yet this statement appears to be contravened by later statements
that it is not AARP but ASI “disguised as the non-profit organization” that “actually”
makes the “advertisements, offer, and sale of insurance services.” (FAC ¶ 78.) See also
Destfino v. Reiswig, 630 F.3d 952, 958 (9th Cir. 2011) (Rule 9(b) “does not allow a complaint
to . . . lump multiple defendants together but require[s] plaintiffs to differentiate their
allegations when suing more than one defendant.”).
12
7

1
2
3
4
5

i.

First-to-File Doctrine

The first-to-file doctrine traditionally operates when similar actions are pending in
different courts, or before different judges. See, e.g., Pacesetter Sys., Inc. v. Medtronic, Inc.,
678 F.2d 93, 95 (9th Cir. 1982); Cedars-Sinai Med. Ctr. v. Shalala, 125 F.3d 765, 769 (9th Cir.
1997); Henderson v. JPMorgan Chase Bank, No. CV 11-3428 PSG PLAX, 2011 WL 4056004, at

6

*2 (C.D. Cal. Sept. 13, 2011), reversed on other grounds, 651 F. App’x. 669 (9th Cir. 2016).

7

Defendants claim that the first-to-file doctrine should lead to a stay or dismissal of this

8

case because it is substantially similar to an earlier case, Friedman v. AARP, No. 14-56765,

9

pending before the same judge.

10

While the purpose of the first-to-file doctrine is to enhance “efficiency and judicial

11

economy,” these concerns are typically mitigated when the actions are pending before

12

the same judge. Cedars-Sinai Med. Ctr., 125 F.3d at 769. For this reason, the court

13

concludes that the first-to-file doctrine does not warrant dismissal or a stay of the present

14

action. Nonetheless, the court reserves the right to determine at a later stage in the

15

proceedings whether it would be appropriate for case management reasons to stay or

16

consolidate this case with the putative class action in Friedman.

17
18

ii.

Filed Rate & Primary Jurisdiction Doctrines

In Friedman v. AARP, 283 F. Supp. 3d 873, 878-79 (C.D. Cal. 2018), this court held

19

that neither a state filed-rate doctrine nor primary jurisdiction doctrine barred the

20

plaintiff’s challenges to the marketing of AARP-branded Medigap insurance policies. The

21

court reaches the same result here.

22

California courts are split as to whether a general state filed-rate doctrine exists.

23

Compare Fogel v. Farmers Group, Inc., 160 Cal. App. 4th 1403, 1418 (2008), with MacKay v.

24

Superior Court, 188 Cal. App. 4th 1427, 1449 (2010). Under a state filed-rate doctrine,

25

“rates duly adopted by a regulatory agency are not subject to collateral attack in court.”

26

MacKay, 188 Cal. App. 4th at 1448. Even assuming that this doctrine exists with respect to

27
28

13

1
2

state regulator-approved rates, it does not bar actions—as here—where “the underlying
conduct challenged was not the charging of an approved rate.” Id. at 1450.
As in Friedman, the court deems that the claims in this case are essentially about

3
4
5

false or misleading advertising, and not challenges to the reasonableness of the actual
rates that were approved by the California Department of Insurance (“DOI”). The

6

gravamen of the FAC is that Defendants “illegally advertise for insurance services and

7

products,” (id. ¶ 29); “deceptively and unlawfully schemed against senior citizens,” (id. ¶

8

19); and engage in “improper, deceptive, and misleading marketing advertisements,” (id.

9

¶ 14). See also id. ¶ 26 (collecting internet, television, and print materials advertising

10

AARP-branded insurance). Therefore, the DOI’s rate “determination is different from

11

what is at issue here—whether the lender . . . mischaracterize[d] the nature of the

12

charges.” Canon v. Wells Fargo No. C-12-1376 EMC, 2014 WL 324556 at *5 (N.D. Cal. Jan.

13

29, 2014). Under this theory of recovery, the adjudication of Plaintiffs’ claims would not

14

improperly encroach on the DOI’s rate-making authority.
For similar reasons, the court concludes that the primary jurisdiction doctrine does

15
16

not bar Levay’s claims. The doctrine of primary jurisdiction doctrine operates when

17

“enforcement of the claim requires the resolution of issues which, under a regulatory

18

scheme, have been placed within the special competence of an administrative body.”

19

Farmers Ins. Exchange v. Superior Ct., 2 Cal. 4th 377, 390 (1992) (en banc). The court finds

20

that the claims raised in the FAC are “within the conventional competence of the courts,”

21

and therefore do not require the specialized ratemaking expertise of the DOI. Id. at 390.

22

For this reason, the court declines to refer this case to the DOI under the primary

23

jurisdiction doctrine.

24

IV. CONCLUSION
For the reasons stated above, Defendants’ Motions to Dismiss are GRANTED.

25
26

//

27

//

28

14

1
2
3

Plaintiff shall file an amended complaint within fourteen (14) days after the date of this
Order, or by November 16, 2018.
IT IS SO ORDERED.

4
5

Dated: 11/2/18

6
7
___________________________________

8

DEAN D. PREGERSON

9

UNITED STATES DISTRICT JUDGE

10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

15