Fowler et al v. Caliber Home Loans, Inc et al
ORDER granting 22 Motion to Dismiss; granting 23 Motion to Dismiss; denying 58 Motion for Leave to File. Closing Case. Signed by Magistrate Judge Jonathan Goodman on 7/8/2016. (tr00) NOTICE: If there are sealed documents in this case, they may be unsealed after 1 year or as directed by Court Order, unless they have been designated to be permanently sealed. See Local Rule 5.4 and Administrative Order 2014-69.
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 15‐24542‐CIV‐GOODMAN
RICHARD L. FOWLER, et al.,
CALIBER HOME LOANS, INC., et al,
ORDER ON MOTIONS TO DISMISS
“I went to the fortune teller, Had my fortune read
I didn’t know what to tell her/ I had a dizzy feeling in my head”
The Rolling Stones, from the song, Fortune Teller1
Predicting the future is no easy task. It is therefore no surprise that people use
different strategies to forecast what is likely to happen, with differing results. Some
people use psychics, mediums, crystal balls, horoscopes or tea leaf readers. Weather
forecasters use empirical data from myriad sources, supplemented by computer
models. Cardiologists analyze blood samples to see if a patient is likely to have
hypertension. Some blackjack gamblers use card‐counting to determine whether the
Released on the “Got Live If You Want It!” album (London 1966).
next card the dealer turns over will cause a bust over 21 (and hope they don’t get
caught counting cards and get booted out of the casino). Seismologists try to measure
how much strain accumulates along a fault to predict earthquakes. And then, of course,
there are the classic fortune cookies which are often served for dessert in Chinese
restaurants in the United States.
Courts, too, are sometimes in the prognostication business. Trial‐level courts, for
example, must predict how their appellate court would rule when there is no binding
precedent on a specific legal issue. In this case, the Undersigned must predict how the
Eleventh Circuit Court of Appeals would rule on a critical, case‐dispositive issue raised
in the motions to dismiss the class action lawsuit filed against an insurer (American
Security Insurance Company) and a mortgage servicing firm (Caliber Home Loans, Inc.)
in a force‐placed insurance lawsuit.
Specifically, because the appellate court has not yet ruled, all parties agree that
the Undersigned must predict whether the Eleventh Circuit would hold that the filed‐
rate doctrine applies to bar all eight of the counts asserted by Plaintiffs. Plaintiffs
concede that all of the claims asserted in their Complaint would be subject to dismissal
if the filed‐rate doctrine applied here at the motion to dismiss stage.
Naturally, Plaintiffs contend that the filed‐rate doctrine does not apply at all and
they further argue that the doctrine should certainly not apply now, when the Court is
evaluating the sufficiency of the Complaint as part of its assessment of the two motions
to dismiss. Just as naturally, Defendants argue that the doctrine does apply (across the
board and also at the pleadings evaluation stage) and should result in a with‐prejudice
dismissal of the Complaint.
Not only is there no Eleventh Circuit case on point, but the two federal appellate
courts which have considered the issue appear to have adopted two diametrically
opposed views. The district courts in those two circuits have, as expected (and as
required), followed the applicable precedent, with trial courts in the Second Circuit
following Rothstein v. Balboa In. Co., 794 F.3d 256 (2d Cir. 2015) and trial courts in the
Third Circuit following Alston v. Countrywide Fin. Corp., 585 F.3d 753 (3d Cir. 2009).
Plaintiffs urge me to follow Alston; Defendants lobby for Rothstein. Each side argues that
the appellate court opinion it relies upon is the better‐reasoned, more‐logical view.
But the question here is not whether the Undersigned selects Alston or Rothstein
as the more‐convincing, better‐analyzed interpretation. Instead, the question is what
would the Eleventh Circuit Court of Appeals do? That is a different question. Cf.
Molinos Valle Del Cibao, C. por A v. Lama, 633 F.3d 1330, 1348 (11th Cir. 2011) (federal
court must predict how the highest state court would decide the case when applying
that state’s substantive law and noting that decisions of intermediate state appellate
courts provide data for the prediction and will generally be followed, unless persuasive
evidence demonstrates that the highest state court would conclude otherwise).
The answer to this question (of what the Eleventh Circuit would do) necessarily
involves a not‐guaranteed forecast of what I surmise a higher‐level court would decide
if the issue were before it. The following exchange from the four‐hour hearing on the
motions to dismiss confirms the parties’ view that I must predict how the Eleventh
Circuit would rule:
THE COURT: All right. So there is no Eleventh Circuit case on point
having to do with the filed‐rate doctrine as it applies to force placed or
lender placed. And therefore, does everybody agree that my job is to take
out the [Ouija] board and predict what the Eleventh Circuit would do?2
ALL COUNSEL: Yes.
[ECF No. 73, pp. 12‐13].
Based on my review of the Eleventh Circuit’s opinions in other cases not
involving lender‐placed insurance in which the filed‐rate doctrine was asserted, I
believe that our appellate court has firmly embraced the filed‐rate doctrine and does not
hesitate to invoke it when circumstances are appropriate. In fact, the Eleventh Circuit
has noted that the doctrine is applied “strictly” to “prevent a plaintiff from bringing a
In a March 4, 2016 hearing before United States District Judge Kathleen M.
Williams on Defendants’ motions to dismiss in a similar force‐placed class action case,
one of Plaintiffs’ attorneys ‐‐ who is also Plaintiffs’ counsel here ‐‐ explained that “your
Honor’s job in today’s hearing is going to be[,] what would the Eleventh Circuit do,
and that’s what a district court needs to do.” Beber v. Branch Banking & Trust Co., et al
No. 15‐cv‐23294, ECF No. 63, p. 47 (S.D. Fla. Mar. 11, 2016) (emphasis added). Judge
Williams later (on June 21, 2016) denied the motions to dismiss as moot after granting a
joint request to stay pending settlement and after Plaintiffs filed an amended complaint.
cause of action even in the face of apparent inequities[.]”3 (emphasis added). In
addition, I have considered whether there might be something about lender‐placed
insurance cases in general or the specific allegations made in this case which might
cause the Eleventh Circuit to be leery about using the filed‐rate doctrine here to prohibit
the claims, but I have not found anything which would create a de facto immunity from
the filed‐rate doctrine which might exist in this Circuit.
For reasons outlined in greater detail below, I predict that the Eleventh Circuit
would apply the filed‐rate doctrine here, thereby precluding all eight counts and
requiring the Undersigned to grant Defendants’ motion and dismiss the Complaint
This case is one of many putative class actions that have been filed around the
country against various servicers and insurers regarding their lender‐placed insurance
Plaintiffs are borrowers with home loans serviced by Caliber Home Loans, Inc.
(“Caliber”). Richard Fowler and Yvonne Yambo‐Gonzalez are Florida residents who
own separate properties in Miami‐Dade County. [ECF No. 1, ¶¶ 13‐14, 47‐48, 64‐65].
Hill v. Bellsouth Telecommunications, Inc., 364 F.3d 1308, 1316 (11th Cir. 2004).
Plaintiffs often refer to the program as force‐placed insurance. In the Class
Action Complaint (“CAC”), for example, Plaintiffs here use that very term. [See, e.g, ECF
No. 1, p. 2].
Glenda Keller is a Pennsylvania resident who owns real property in Lancaster,
Pennsylvania. [Id., at ¶¶ 15, 76‐77]. Plaintiffs allege that Caliber colluded with its LPI
insurer, American Security Insurance Company (“ASIC”), to charge them inflated LPI
premiums that included “kickbacks” paid to Caliber and its affiliates.
Each Plaintiff’s loan was secured by a mortgage that required the mortgagor to
maintain insurance on the property and gives the lender or its assigns the right to
purchase its own insurance if the borrower breaches that promise. [ECF No. 1, ¶¶ 48,
64, 77, Exs. A, B]. Specifically, the mortgage provided:
5. Property Insurance. If Borrower fails to maintain
coverage described above, Lender may obtain insurance
coverage, at Lender’s option and Borrower’s expense.
Lender is under no obligation to purchase any particular
type or amount of coverage. Therefore, such coverage shall
cover Lender, but might or might not protect Borrower,
Borrower’s equity in the Property, or the contents of the
Property, against any risk, hazard or liability and might
provide greater or lesser coverage than was previously in
effect. Borrower acknowledges that the cost of the
insurance coverage so obtained might significantly exceed
the cost of insurance that Borrower could have obtained.
[Id., at ¶¶ 48, 64, 77, Ex. A, ¶ 5 (emphasis added), Ex. B, ¶ 5; see also ECF No. 22‐1, ¶ 7].
Caliber’s predecessor, Vericrest Financial, first notified Yambo‐Gonzalez of a
lapse in her hazard and flood insurance in June 2009. [ECF Nos. 1, ¶ 49; 23‐2, ¶ 7]. The
letter warned that the cost of any LPI policy “may be substantially higher” than any
voluntary coverage and that “[a]ffiliates of Vericrest Financial, Inc. may earn
commissions or income in conjunction with the placement of this coverage.” [ECF No.
23‐2, Ex. 1] (emphasis supplied). Yambo‐Gonzalez did not respond to that letter or
subsequent similar letters [id., at ¶ 8, Ex. 2], and Caliber obtained one‐year hazard and
flood LPI policies from ASIC [id., Ex. 3].
Since 2010, Caliber has sent Yambo‐Gonzalez letters annually, reminding her of
the lapse in coverage and advising it will renew the LPI hazard and flood policies for an
additional one‐year term if she fails to provide proof of coverage. [Id., Exs. 5‐16; ECF
No. 1, ¶¶ 52, 54‐56]. Yambo‐Gonzalez has not provided proof of coverage in response to
any of these letters. Caliber therefore renewed the hazard and flood policies each year.
[ECF No. 1., ¶¶ 50, 52].
Caliber sent Fowler a letter in May 2014, advising that it had no record of
insurance on his property and requesting that he provide proof of coverage. [ECF No.
23‐1, Ex. 1]. The letter disclosed, in boldfaced type, that the insurance Caliber would
obtain “[m]ay be more expensive than insurance you can buy yourself[.]” Id. Fowler
did not provide proof of coverage in response to that letter or a follow‐up letter [id. at
Ex. 2], and Caliber therefore obtained an LPI policy from ASIC in June 2014 [id., Ex. 3].
Caliber has since renewed the policy based on Fowler’s failure to provide proof of
voluntary coverage. [ECF No. 1, ¶ 66].
Caliber sent Keller a letter in March 2015, advising that it had no record of
hazard insurance on her property and requesting she provide proof of coverage. [ECF
Nos. 1, ¶ 78; 23‐3, Ex. 1]. The letter contained the same disclosures warning of LPI’s
disadvantages that were made in the letter sent to Fowler. [Id.]. Keller did not provide
proof of coverage in response to that letter or a similar follow‐up letter. [Id., Ex. 2]. As a
result, Caliber obtained an LPI policy from ASIC in May 2015. [Id., Ex. 3]. Caliber has
since renewed the policy based on Keller’s failure to provide proof of voluntary
coverage. [ECF No. 1, ¶ 66].
THE COMPLAINT’S ALLEGATIONS AND CLAIMS
The CAC alleges that Caliber and ASIC have an arrangement under which ASIC
performs “many of Caliber’s mortgage‐servicing functions and is the exclusive provider
of [LPI] for . . . mortgage loans owned or serviced by Caliber.” [ECF No. 1, ¶ 2]. In
exchange, ASIC is alleged to pay Caliber “kickbacks,” including one or more of the
following: unearned commissions paid to a Caliber affiliate, “expense reimbursements”
paid to Caliber for LPI placement expenses, reinsurance premiums that did not carry
any transfer of risk, and below‐cost mortgage servicing functions that ASIC performs
for Caliber. [Id., at ¶¶ 3, 26‐28].
Plaintiffs’ theory is that the alleged “kickbacks” provide Caliber with a “rebate
on the cost of the force‐placed insurance” which Caliber “do[es] not pass on . . . to the
borrower.” [Id., at ¶ 3]. Plaintiffs repeatedly complain about amounts included in their
LPI premiums,5 and seek damages exactly equal to the portions of their LPI premiums
they contend comprise the alleged “kickbacks.” [Id., at ¶¶ 6, 12, 25, 31, 34, 37, 45‐46,
123‐29, 134, 157‐58] (emphasis added). Plaintiffs do not dispute they were charged only
the exact LPI premiums authorized by state‐approved rates.6
The CAC asserts four claims against ASIC: Count IV (unjust enrichment), Count
V (tortious interference with a business relationship), Count VII (RICO violation of §
1962(c)), and Count VIII (RICO conspiracy). In addition, the CAC asserts six claims
against Caliber: Count I (breach of contract), Count II (breach of implied covenant of
good faith and fair dealing), Count III (unjust enrichment), Count VI (Truth in Lending
Act violations), Count VII (substantive RICO) and Count VIII (RICO conspiracy). ASIC
and Caliber have both moved to dismiss the Complaint with prejudice on grounds of
See, e.g., ECF No. 1, ¶¶ 26 (“a percentage of borrowers’ [LPI] charges are ‘kicked
back’ . . . to Caliber”); 31 (same); 32 (the “kickback” “is an effective rebate on the
premium amount”); 34 (“Caliber . . . charges the borrower the full, ‘pre‐rebate’ amount
for the coverage”); 35 (Caliber purchases LPI “with artificially inflated premiums”); 37
(“The full cost of the servicing activities are added into the force‐placed amounts which
are then passed on to the borrower.”).
See the May 16, 2016 Hearing:
THE COURT: So if you go down six lines, Fowler[,] Keller and Yambo‐
Gonzalez . . . paid the very rate approved by the regulator as applied to
their specific properties.
So number one, I take it, you don’t factually disagree with that, correct?
MR. MOSKOWITZ: I’ll take their word for it.
[ECF No. 74, p. 119].
the filed‐rate doctrine. They also allege other pleadings defects, but the Undersigned
need not address them because the filed‐rate doctrine is sufficient to justify a with‐
prejudice dismissal of all eight counts.
THE PARTIES’ DECLARATIONS (SUBMITTED IN THIS CASE)
In support of its Motion, ASIC submitted three declarations by Ronald K. Wilson
‐‐ one for each plaintiff ‐‐ and one by Rebecca H. Voyles. [ECF Nos. 23‐1; 23‐2; 23‐3; 23‐
4]. Mr. Wilson’s declarations include the LPI letters sent to the plaintiffs along with LPI
insurance binders and policies. Ms. Voyles’ declaration includes ASIC’s Florida and
Pennsylvania rate filings relevant to the LPI coverages issued to plaintiffs.
Plaintiffs have moved for leave to file a declaration of Mr. Birny Birnbaum,
purportedly in response to the Wilson and Voyles declarations. Plaintiffs filed their
motion for leave to file Birnbaum’s declaration [ECF No. 58] on May 6, 2016. The
declaration is dated March 25, 2016, however. Plaintiffs’ counsel later explained, in the
reply [ECF No. 66] filed in support of the motion seeking leave to file the Birnbaum
declaration, that he filed the declaration in two other LPI cases pending in this district.
He explained that he had not realized that the declaration had not been filed in this case
until he began preparing for the motion to dismiss hearing and further noted that ASIC
already reviewed and commented upon the same declaration in the two other cases in
which it was filed. Therefore, Plaintiffs’ counsel argued, undue delay should not be a
reason to deny the motion for leave. As explained below, however, other reasons, not
the timing issue, compel the Undersigned to deny the motion for leave to file
As an initial matter, the Court addresses whether it can ‐‐ or should ‐‐ consider
these declarations, or if it should consider only the documents attached to the
In addition to considering the complaint’s factual allegations, “[c]ourts may take
judicial notice of publicly filed documents . . . at the Rule 12(b)(6) stage.” U.S. ex rel.
Osheroff v. Humana Inc., 776 F.3d 805, 815 n. 4 (11th Cir. 2015) (citing Fed. R. Evid.
201(b)(2)). Also, under the “incorporation by reference” doctrine, “the district court may
consider an extrinsic document if it is (1) central to the plaintiff’s claim, and (2) its
authenticity is not challenged.” SFM Holdings, Ltd. v. Banc of America Securities, LLC, 600
F.3d 1334, 1337 (11th Cir. 2010).
Plaintiffs agree that the Court may take judicial notice of ASIC’s rate filings. [ECF
No. 74, pp. 45‐47];7 see also Chinn v. PNC Bank, N.A., 451 F. App’x 859, 860 n.1 (11th Cir.
2012); Armour v. Transamerica Life Ins. Co., 2012 WL 234032, *5 (D. Kan. Jan. 25, 2012)
(taking judicial notice of rate filing with the department of insurance). Plaintiffs also
agree the Court may consider the documents attached to the Wilson Declarations
because the CAC includes those documents and because the documents are referred to
At the hearing, Plaintiffs’ counsel explained that “[f]or judicial notice, the Court
has wide discretion to take judicial notice of many publically available items. And, of
course, it is not reversible error whether you do or you don’t.” (emphasis added) [ECF
No. 74, p. 46].
and are central to the allegations and claims in the Complaint. [ECF No. 74, pp. 29‐30];
see also Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1369 (11th Cir. 1997).
Plaintiffs do not challenge the authenticity of the rate‐filing documents and the LPI
notices attached to ASIC’s declarations.
In Patel v. Specialized Loan Servicing LLC, No. 15–62600, 2016 WL 1663827 (S.D.
Fla. Apr. 25, 2016) and Trevathan v. Select Portfolio Servicing, Inc., 142 F. Supp. 3d 1283
(S.D. Fla. 2015), District Judges Cohn and Dimitrouleas took “judicial notice of ASIC’s
exhibits documenting OIR’s approval of ASIC’s premium rates in Florida, as these
documents are a matter of public record.” 2016 WL 1663827, at *2; 142 F. Supp. 3d at
1287‐88. This Court will likewise take judicial notice of ASIC’s rate‐filing documents
because they are public records. In addition, the Court will consider the LPI notices and
other documents attached to Mr. Wilson’s declarations because these documents are
included in, and are central, to the claims asserted. [ECF No. 74, pp. 29‐30]. But the
Court declines to consider Mr. Birnbaum’s declaration, as it does not dispute the
authenticity of either the rate filings or the LPI notices, and is instead an attempt to
interject improper expert testimony into a Rule 12(b)(6) context.8
The Undersigned views the filed‐rate doctrine argument as a merits‐based
defense, rather than a challenge to the Court’s subject matter jurisdiction or an issue of
standing. Therefore, the Court evaluates the dismissal motions under Federal Rule of
Civil Procedure 12(b)(6), not (b)(1). Thus, the Birnbaum declaration should not be
considered for 12(b)(1) purposes. The other documents, however, are properly
considered under a 12(b)(6) analysis. Patel, 2016 WL 1663827, at *2 (listing cases).
Applicable Legal Standards and Analysis
Motion to Dismiss Standard
In reviewing a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6),
a court must take all well‐pleaded facts in the plaintiff’s complaint and all reasonable
inferences drawn from those facts as true. Jackson v. Okaloosa Cnty., Fla., 21 F.3d 1531,
1534 (11th Cir. 1994). “A pleading must contain ‘a short and plain statement of the claim
showing that the pleader is entitled to relief.’” Ashcroft v. Iqbal, 556 U.S. 662, 677‐78
(2009) (quoting Fed. R. Civ. P. 8(a)(2)). While detailed factual allegations are not always
necessary in order to prevent dismissal of a complaint, the allegations must “‘give the
defendant fair notice of what the . . . claim is and the grounds upon which it rests.’” Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47
A complaint must provide “more than labels and conclusions” or “a formulaic
recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555. See also Iqbal,
556 U.S. at 678 (explaining that the Rule 8(a)(2) pleading standard “demands more than
an unadorned, the‐defendant‐unlawfully‐harmed‐me accusation”). Nor can a complaint
rest on “‘naked assertion[s]’ devoid of ‘further factual enhancement.’“ Iqbal, 556 U.S. at
678 (quoting Twombly, 550 U.S. at 557 (alteration in original)).
The Supreme Court has emphasized that “[t]o survive a motion to dismiss a
complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.’” Iqbal, 556 U.S. at 678. (quoting Twombly, 550 U.S. at
570) (emphasis added); see also Am. Dental Assoc. v. Cigna Corp., 605 F.3d 1283, 1288–90
(11th Cir. 2010). “[C]onclusory allegations, unwarranted deductions of fact, or legal
conclusions masquerading as facts will not prevent dismissal.” Oxford Asset Mgmt., Ltd.
v. Jaharis, 297 F.3d 1182, 1188 (11th Cir. 2002).
Determining whether a complaint states a plausible claim for relief is “a context‐
specific task that requires the reviewing court to draw on its judicial experience and
common sense.” Iqbal, 556 U.S. at 679. Moreover, when the “well‐pleaded facts do not
permit the court to infer more than the mere possibility of misconduct, the complaint
has alleged—but it has not show[n]—that the pleader is entitled to relief.” Id. (internal
quotations omitted) (alteration in original).
While the court is required to accept as true all allegations contained in the
complaint, courts “are not bound to accept as true a legal conclusion couched as a
factual allegation.” Twombly, 550 U.S. at 555; Iqbal, 556 U.S. at 678. “Dismissal pursuant
to Rule 12(b)(6) is not appropriate unless it appears beyond doubt that the plaintiff can
prove no set of facts in support of his claim which would entitle him to relief.” Magluta
v. Samples, 375 F.3d 1269, 1273 (11th Cir. 2004) (internal quotations omitted). Although,
as noted, a court must accept as true a plaintiff’s allegations, a court may dismiss a
complaint on a dispositive issue of law. Marshall Cnty. Bd. of Educ. v. Marshall Cnty. Gas
Dist., 992 F.2d 1171, 1174 (11th Cir. 1993).
The Filed‐Rate Doctrine
Both ASIC and Caliber contend that the filed‐rate doctrine bars all of Plaintiffs’
claims here because the damages it seeks would effectively require an assessment of the
regulator‐approved rates. Plaintiffs do not dispute that such an evaluation would be
necessary in order to pursue their claim. At the hearing, their counsel admitted that
Plaintiffs could not “calculate damages without determining the amount of the
commissions, tracking expenses, or other allegedly inflated, or unearned portions, of
the LPI premium.” [ECF No. 74, p. 105]. And there is no dispute that the Plaintiffs were
in fact charged the very same premiums which the applicable state regulators approved
in connection with ASIC’s filed rates.
The Undersigned will address the filed‐rate doctrine as follows: (1) I will first
explain the filed‐rate doctrine in general; (2) I will then discuss why it makes sense to
address the issue now, at the pleadings stage; (3) I next will provide a comprehensive
discussion of both Rothstein and Alston; and (4) I will analyze the filed‐rate doctrine’s
applicability in this case, including a discussion of Plaintiffs’ arguments about why the
doctrine should not be applied here.
“Where the legislature has conferred power upon an administrative agency to
determine the reasonableness of a rate, the rate‐payer can claim no rate as a legal right
that is other than the filed rate[.]” Taffet v. S. Co., 967 F.2d 1483, 1494 (11th Cir. 1992)
(quotation marks and citation omitted); Square D Co. v. Niagara Frontier Tariff Bureau,
Inc., 476 U.S. 409, 416‐17 (1986) (parties’ rights defined by the filed rate “cannot be
varied or enlarged by either contract or tort” of the regulated entity).
The doctrine bars all claims which would effectively result in a rate lower than the
filed rate. Fla. Mun. Power Agency v. Fla. Power & Light Co., 64 F.3d 614, 615 (11th Cir.
1995). “[E]ven if a claim does not directly attack the filed rate, an award of damages to
the customer that would, in effect, result in a judicial determination of the
reasonableness of that rate is prohibited under the filed rate doctrine.” Hill v. Bellsouth
Telecomms. Inc., 364 F.3d 1308, 1317 (11th Cir. 2004).
“[T]wo companion principles lie at the core of the filed rate doctrine: first, that
legislative bodies design agencies for the specific purpose of setting uniform rates, and
second, that courts are not institutionally well suited to engage in retroactive rate
setting.” Wegoland Ltd. v. NYNEX Corp., 27 F.3d 17, 19 (2d Cir. 1994) (citation omitted).
Under the “nonjusticiability” principle, the doctrine “preserve[s] the regulating
agency’s authority to determine the reasonableness of rates.” H.J., Inc. v. Nw. Bell Tel.
Co., 954 F.2d 485, 488 (8th Cir. 1992). “This principle ‘prevents more than judicial rate‐
setting; it precludes any judicial action which undermines agency rate‐making
authority.’” Hill, 364 F.3d at 1317 (quoting Marcus v. AT&T Corp., 138 F.3d 46, 61 (2d Cir.
1998)). Under the “nondiscrimination” principle, the doctrine “insure[s] that the
regulated entities charge only those rates that the agency has approved or been made
aware of as the law may require.” H.J., Inc., 954 F.2d at 488.
“Based on these two principles, ‘the doctrine is applied strictly to prevent a
plaintiff from bringing a cause of action even in the face of apparent inequities
whenever either the nondiscrimination strand or the nonjusticiability strand underlying
the doctrine is implicated by the cause of action the plaintiff seeks to pursue.’” Hill, 364
F.3d at 1316 (quoting Marcus, 138 F.3d at 59) (emphasis added).
It is not a plaintiffs’ legal theory, or the defendants’ alleged conduct, or even
fraud upon the regulator that controls whether the filed‐rate doctrine applies. See, e.g.,
Taffet, 967 F.2d at 1495.9 It is instead “‘the impact [a civil action] will have on agency
procedures and rate determinations,’ rather than the defendant’s underlying conduct,
[that] controls whether the filed rate doctrine applies.” Taffet, 967 F.2d at 1495 (citing
approvingly to H.J. Inc., 954 F.2d at 489).
ASIC’s counsel did not shy away from the strong and wide net cast when the
filed‐rate doctrine applies. In fact, at the hearing, counsel, in response to a question
from the Court, explained that the filed‐rate doctrine would still apply even if the rate
for the force‐placed insurance was the result of a bribe paid to an insurance regulator
See also Coll v. First Am. Title Ins. Co., 642 F.3d 876, 890 (10th Cir. 2011) (it is not
defendant’s “underlying conduct . . . [that] control[s] whether the filed rate doctrine
applies. Rather, the focus for determining whether the filed rate doctrine applies is the
impact the court’s decision will have on agency procedures and rate determinations.”)
(internal quotation marks and citation omitted); Wegoland, 27 F.3d at 20 (“every court
that has considered the . . . argument has rejected the notion that there is a fraud
exception to the filed rate doctrine;” collecting cases, including Taffet, 967 F.2d at 1494‐
(or corruption, a conflict of interest, pure negligence, or a mistake. [ECF No. 74, p. 60‐
61]. In confirming that this was ASIC’s view of the filed‐rate doctrine, counsel cited
Wegoland and Taffet.
In Taffet, the Eleventh Circuit held that the filed‐rate doctrine barred a RICO
action filed by utility customers, in which the utility allegedly obtained approval of
rates through fraud. The customers alleged that the utilities, in a conspiracy with their
accounting firm, understated their net income in rate applications to their state public
service commissions by improperly accounting for purchases of spare parts, thereby
obtaining rate increases through fraud. Explaining that a rule allowing consumers to
recover damages for “fraudulent” rates would “disrupt greatly the states’ regulatory
schemes” and “in the end,” would “cost consumers dearly,” the Eleventh Circuit held
that there was no fraud exception to the filed‐rate doctrine. 967 F.2d at 1491, 1494‐95.
Applying the Doctrine at the Pleadings Stage
A preliminary question is whether the Court may decide the filed‐rate doctrine’s
application on the pleadings, at the motion‐to‐dismiss stage. Addressing the doctrine at
this stage is not unusual. In fact, in at least four cases, the Eleventh Circuit has held the
filed‐rate doctrine bars claims at the pleadings stage. See Pfeil v. Sprint Nextel Corp., 284
F. App’x 640, 643 (11th Cir. 2008); Hill, 364 F.3d at 1317; In re Olympia Holding Corp., 88
F.3d 952, 962 (11th Cir. 1996); Taffet, 967 F.2d at 1495. On each of those occasions, the
plaintiffs denied that they were challenging the filed rate itself, arguing that they were
challenging only defendant’s alleged fraud or other misconduct. See, e.g., Hill, 364 F.3d
at 1317 (“Hill, for example, argues that her remaining claims do not directly challenge
BellSouth’s filed FUSF, but instead challenge BellSouth’s representation of the FUSF to its
customers.”). But the Eleventh Circuit did not accept those descriptions at face value ‐‐
it analyzed plaintiffs’ characterizations itself when rejecting claims under the filed‐ rate
doctrine at the pleadings stage.
Moreover, two district courts in the Southern District of Florida have also
recently granted motions to dismiss based on the filed‐rate doctrine in cases nearly
identical to this one. See Patel, 2016 WL 1663827, at *2; Trevathan, 2015 WL 6913144, at
*2. The filed‐rate doctrine arguments raised by the parties in Patel and the instant case
are virtually identical, and the Undersigned notes that Plaintiffs’ counsel and counsel
for ASIC are the same in both cases. Patel relied heavily on Rothstein, and the
Undersigned notes that ASIC’s counsel in this case also filed an amicus curiae brief for
ASIC in Rothstein, where the appellate court reversed a district court’s order denying a
motion to dismiss.
While the Undersigned has been hesitant to substantively rule on the filed‐rate
doctrine during the pleadings stage in past LPI cases,10 there does not appear to be any
In Montoya v. PNC Bank, N.A., 94 F. Supp. 3d 1293, 1320‐22 (S.D. Fla. 2015), a pre‐
Rothstein case, I did not then substantively rule on the applicability of the doctrine.
Instead, I emphasized that the filed‐rate doctrine was being asserted in a motion to
dismiss and expressly noted that Defendants could raise the argument again (and
pointed out that the issue would need to be confronted when analyzing the not‐yet‐filed
valid reason to wait to decide the issue in this case, now that an appellate court has
weighed in with a detailed analysis. Courts in similar LPI cases that previously had
been reluctant to address the filed‐rate doctrine on a motion to dismiss have ultimately
addressed the issue later in the case because the plaintiffs’ claims do allege that portions
of the filed rates were excessive.
For example, in Kunzelmann v. Wells Fargo Bank, N.A., No. 9:11‐cv‐81373, 2012 WL
2003337, at *2‐3 (S.D. Fla. June 4, 2012), the Court initially denied defendants’ motion to
dismiss, accepting plaintiffs’ argument that they were not challenging the filed rates.
However, after plaintiffs’ counsel explained their damage model later in the case, the
Court realized the argument the plaintiffs advanced on the pleadings was incorrect and
concluded that “the filed‐rate doctrine is an issue that must be addressed.” Kunzelmann
v. Wells Fargo Bank, N.A., 2013 WL 139913, at *12 (S.D. Fla. Jan. 10, 2013). The Court there
concluded that differences between the states in their application of the filed‐rate
doctrine render certification of a nationwide class improper. The implicit point in this
conclusion, however, is that the filed‐rate doctrine would in fact apply. If the Kunzelman
Court had decided that the doctrine did not apply at all, then the differences between
the states would have been irrelevant.
In addition, Plaintiffs’ counsel agreed at the hearing on the motion to dismiss in
the instant case that the Court may decide whether or not the filed‐rate doctrine applies
class certification motion). I likewise observed that I might also need to grapple with the
filed‐rate doctrine again if Defendants asserted it in a summary judgment motion.
on this motion. [ECF No. 74, pp. 79‐81]. In light of plaintiffs’ concession11 and after
considering the authority above, the Court will address the merits of Defendants’ filed‐
rate doctrine argument.12
Rothstein and Alston
As noted above, two different circuit courts (the Second and the Third) have
issued opinions on whether the filed‐rate doctrine should be applied to bar force‐placed
In Alston, the plaintiffs challenged the payment of kickbacks in connection with
a reinsurance scheme related to private mortgage insurance (“PMI”). 585 F.3d at 757‐
At the hearing, the Undersigned asked Plaintiffs’ counsel, “assuming that I agree
with the Defendants on the applicability of the filed‐rate doctrine, is there any reason
why I must defer the application of the doctrine to a later stage of this litigation, such as
summary judgment?” Plaintiff’s counsel succinct, to‐the‐point response: “The answer is
no.” He then elaborated by saying, “If Your Honor finds, like Judge Cohn, that the
doctrine applies, you can dismiss this case. Absolutely.” [ECF No. 74, p. 80].
Counsel’s reference to Judge Cohn is a reference to Patel, which Judge Cohn
recently decided (and granted a motion to dismiss). Plaintiffs’ counsel asks that the
Undersigned not follow Patel for several reasons, one of which is the absence of oral
argument or a hearing on the dismissal motion which Judge Cohn granted. But the
docket sheet in Patel does not reflect a motion or request for oral argument. Local Rule
7.1(b)(2) provides that “a party who desires oral argument or a hearing of any motion
shall request it within the motion or opposing memorandum in a separate section titled
“request for hearing.” Plaintiffs’ opposing memoranda to the two dismissal motions in
Patel do not include a section with the required section, and a review of the memoranda
itself did not locate a request buried within the legal argument either.
At the hearing, all parties also urged the Undersigned to not postpone a ruling
on the motions to dismiss until the Eleventh Circuit issues its opinion in the Patel
appeal, which Plaintiffs’ counsel explained will primarily challenge the filed‐rate
doctrine. [ECF No. 74, pp. 39‐44].
58. The plaintiffs argued that the filed‐rate doctrine did not bar their claims because
they had “challenged the payment of kickbacks, not the rates paid for PMI.” Id. at 764.
The court concluded: “It is absolutely clear that the filed rate doctrine simply does not
apply here. Plaintiffs challenge Countrywide’s allegedly wrongful conduct, not the
reasonableness or propriety of the rate that triggered that conduct.” Id. at 765.
District courts in the Third Circuit have followed this reasoning in holding that
the filed‐rate doctrine does not apply to claims like those pled here. See, e.g., Laffan v.
Santander Bank, N.A. No. 13‐cv‐4040, 2014 U.S. Dist. LEXIS 79915, at *7‐10 (E.D. Pa.
June 12, 2014) (discussing Alston and concluding that doctrine did not apply because
plaintiff was challenging the manner and methods used by Defendant in purchasing
force‐placed insurance); Lauren v. PNC Bank, N.A., No. 2:13–cv–762, 2013 WL 5565511,
at *5 (W.D. Pa. Oct. 8, 2013) (“In Alston, the Court of Appeals for the Third Circuit
recognized the distinction between wrongful conduct and rate challenges and held
that wrongful conduct claims were not barred by the filed rate doctrine.”); Gallo v.
PHH Mortg. Corp., 916 F. Supp. 2d 537, 544 (D.N.J. 2012) (quoting Alston for
proposition that “‘the filed rate doctrine simply does not apply’ in circumstances
where plaintiffs ‘challenge the defendant’s allegedly wrongful conduct, not the
reasonableness or propriety of the rate that triggered the conduct’”).
Defendants note that Alston involved only a claim for statutory treble damages
under section 8(d)(2) of the Real Estate Settlement Procedures Act of 1974 (“RESPA”),
a statutory claim not advanced here. In addition, they underscore the fact that the
Third Circuit’s filed‐rate doctrine is relatively truncated and begins with the
introduction that the “final issue” of the filed‐rate doctrine would be “briefly
address[ed].” Defendants also contend that Alston is technically not in conflict with
Rothstein (because of these distinctions) and is merely inapposite.
Unlike Alston, the Rothstein Court issued an opinion containing an extensive
discussion of the filed‐rate doctrine, including the policy reasons underlying it and a
discussion of why the plaintiff’s arguments against the doctrine’s applicability are
unpersuasive. Also, unlike Alston, the Rothstein opinion arose from LPI scenarios ‐‐ the
same fact pattern at issue here. The Undersigned will therefore provide a
comprehensive discussion of Rothstein, including a point‐by‐point list of the more‐
The Rothstein plaintiffs are borrowers who did not purchase hazard insurance on
their mortgaged properties, in violation of their loan agreements. Their loan servicer
bought LPI from two insurance companies at rates that were approved by regulators.
The servicer then sought reimbursement from the plaintiffs at those same rates.
The plaintiffs alleged that they were fraudulently overbilled because the rates
their servicer charged them did not reflect secret “rebates” and “kickbacks” that the
servicer received from an insurer through one of the insurer’s affiliates. The plaintiffs
pursued claims under RICO and RESPA. The servicer and its affiliate moved to
dismiss under the filed‐rate doctrine. The district court denied the motion in relevant
part, reasoning that the insurer received approval for the rates charged to the lender
but that the approval did not necessarily extend to the borrowers’ reimbursement to
the servicer. Noting a conflict, the district court certified its decision for interlocutory
The Second Circuit held in Rothstein that a claim challenging a regulator‐
approved rate is subject to the filed‐rate doctrine regardless of whether the rate is
passed through an intermediary. Therefore, the Court held, a claim is “barred if it
would undermine the regulator’s rate‐setting authority or operate to give the suing
ratepayer a preferential rate.” 794 F.3d at 259. The Court held that the plaintiffs’ claims
were barred and therefore reversed and remanded for dismissal of the case. Id.
According to the second amended complaint in Rothstein, the alleged scheme
was that the servicer agreed to buy LPI exclusively from one insurer, who, in return,
agreed to provide the servicer with loan tracking services through an affiliate. The
services performed by the affiliate offset the servicer’s expenses by relieving it of the
obligation to do those things itself. Because the insurer provided the affiliate’s services
as a quid pro quo for the servicer’s LPI business, the plaintiffs branded the affiliate’s
services as, in effect, a discount on LPI from the filed rates approved by regulators.
And because the servicer still billed the plaintiffs at the approved, filed rates, it
retained for itself the entire benefit of the discount.
The second amended complaint in Rothstein alleged substantive and conspiracy
claims under RICO based on predicate acts of wire fraud, mail fraud and extortion, as
well as a RESPA claim. The district court concluded that the filed‐rate doctrine did not
apply because the plaintiffs were not direct customers of the rate filer (the insurer).
Nevertheless, it observed that the issue was “a close call,” and the Second Circuit then
tackled the issue on interlocutory appeal.
The Rothstein Court made the following important points in its appellate ruling:
Under the filed‐rate doctrine, “any” filed rate ‐‐ one approved by the
governing regulatory agency ‐‐ is “per se reasonable and unassailable in judicial
proceedings brought by the ratepayers.” 794 F.3d at 261.
The filed‐rate doctrine is grounded on two rationales: the nonjusticiability
principle (i.e., courts should not “undermine agency rate‐making authority” by
“upsetting approved rates”) and the nondiscrimination principle (i.e., litigation should
not become a means for certain ratepayers to obtain preferential rates). Id.
The doctrine reaches both federal and state causes of action and protects
rates approved by federal or state regulators. Id.
The doctrine does not depend on the nature of the cause of action or the
culpability of the defendant’s conduct “or the possibility of inequitable results.” Instead,
the ratepayer’s claim is barred if it would offend either the nonjusticiabiity principle or
the nondiscrimination principle. Id. at 262.
A “claim may be barred under the nonjusticiability principle even if it can
be categorized as challenging something other than the rate itself.” Id. (emphasis
Plaintiffs’ claims would undermine the rate‐making authority of the state
insurance regulators who approved the carrier’s rates because the Plaintiffs’ theory ‐‐
they were overbilled when they were charged the full LPI rates approved by regulators,
instead of the lower rates net of the value of loan tracking services provided by the
affiliate ‐‐ “can succeed only if the arrangements with [the affiliate] should have been
treated as part and parcel of the LPI transaction and reflected in the LPI rates.” Id.
(emphasis by the Court).
Under the nonjusticiability principle, “it is squarely for the regulators to
say what should or should not be included in a filed rate.” Id.
The Court rejected the argument that the filed‐rate doctrine did not bar
the claims because Plaintiffs said they were attacking the fraudulent scheme, not the
Any attempt to determine what part of the rate approved by the
regulators was a result of the fraudulent acts “would require determining what rate
would have been deemed reasonable absent the fraudulent acts, and then finding the
difference between the two.” Id. at 262‐63.
The question of whether insurer‐provided services should have been
reflected in the calculation of LPI “is not for us to say” because the nonjusticiability
principles mandates that “the question is reserved exclusively to the regulators.” Id. at
Judicial endorsement of Plaintiffs’ claims “would displace and distort the
regulatory process,” which means that “Plaintiffs’ claims invite judicial meddling in
issues of insurance policy”” ‐‐ a result “forbidden under the principle of
The nondiscrimination principle, like the nonjusticiability principle,
applies “even to claims that purport to seek relief other than a lower rate.” Id.
Any damages recovered by the plaintiffs would operate as a rebate giving
them a preference over other borrowers who were charged the full LPI rate. Id.
Non‐suing borrowers would be billed at the filed LPI rates, while the
plaintiffs would enjoy the discount that the affiliate allegedly provided to the servicer,
and “the problem is not obviated simply because Plaintiffs have brought their claims on
behalf of a putative class.” Id.
The district court did not undertake the usual analysis under the
nonjusticiability and nondiscrimination principles. Instead, it held that the filed‐rate
doctrine did not apply at all because it addresses only a simple A‐to‐B transaction “in
which A, the insurer, approved a rate and charged it to B, not the A‐to‐B‐to‐C
arrangement at issue here, in which the insurer billed the lender and the lender in turn
billed the borrower.” Id. at 264.
“The filed rate doctrine is not limited to transactions in which the
ratepayers deals directly with the rate filer.” Instead, “the doctrine operates
notwithstanding an intermediary that passes along the rate.” Id.
There is no “evident reason why the doctrine should be limited to direct
transactions between the rate payer and the rate filer” because the two principles “have
undiminished force even when the rate has passed through an intermediary.” Id.
Focusing on policy reasons and practical, common sense concerns, a court
is “confronted with a single case, whereas a regulator can ‘consider the whole picture’
and ‘make hundreds if not thousands of discretionary decisions’ about overall industry
regulation.” 794 F.3d at 264‐65.
In many industries, including the LPI industry, the “rate‐regulated
product necessarily passes through intermediaries before the rate is paid by the
ultimate consumer.” In these industries, it would “make little sense” for the doctrine to
apply “as between the rate filer and the intermediaries, but not when it comes to the
ultimate ratepayers.” 794 F.3d at 265.
The distinction between an “A‐to‐B” transaction and an “A‐to‐B‐to‐C”
transaction “is especially immaterial in the LPI context because LPI travels invariably
LPI is “an A‐to‐B‐to‐C transaction that implements a two‐party transaction
between the insurer and the borrower.” Id.
The state insurance regulators were well aware that the approved LPI
rates would be “fully born by borrowers,” which means the “quintessentially ‘A‐to‐B‐
to‐C’ character of LPI transactions was known to the regulators who approved” [the
insurer’s] rates.” 794 F.3d at 266.13
Would the Eleventh Circuit Apply the Filed‐Rate Doctrine Here?
“The State of Florida heavily regulates the insurance industry.” Gilchrist v. State
Farm Mut. Auto. Ins. Co., 390 F.3d 1327, 1334 (11th Cir. 2004) (footnote omitted). The
The regulators in the instant case understand that the filed and approved rates
for LPI will be passed on to borrowers. In fact, the OIR’s website states that
homeowners may be responsible for paying the LPI rates. [ECF No. 74, pp. 47‐50].
Specifically, on its official website, the Florida Office of Insurance Regulation states:
“The premium cost for this insurance is usually higher than conventional
homeowners’ premium, and this cost may ultimately be borne by the homeowner.
The high premium costs and the fact that homeowners are often ‘forced’ to pay for
this coverage by the lender (mortgage lender/bank) has increased the attention for
this type of insurance.” Fla. Office of Ins. Reg., “Lender‐Placed Insurance Coverage”
Insurance Code provides that insurers “must” file “cop[ies] of rates, rating schedules,
rating manuals, premium credits or discount schedules, and surcharge schedules, and
changes thereto” with the Office of Insurance Regulation. Fla. Stat. § 627.062(2)(a).
“Upon receiving a rate filing, the [OIR] shall review the filing to determine if a rate is
excessive . . . ,” in light of accepted and reasonable actual techniques and considering 14
specified factors. Fla. Stat. § 627.062(2)(b). If the OIR finds the rate excessive, “the office
shall initiate proceedings to disapprove the rate and shall so notify the insurer.” Fla.
Stat. § 627.062(2)(g).
Pennsylvania also heavily regulates the insurance industry. Insurers “shall file
every manual of classifications, rules and rates, every rating plan and every
modification of a manual of classifications, rules and rates and a rating plan which it
proposes to use in this Commonwealth.” 40 Pa. Stat. § 710‐6(a). The Insurance
Commissioner may disapprove rates that “are determined to be excessive, inadequate
or unfairly discriminatory.” 40 Pa. Stat. § 710‐7(b). The Commissioner may disapprove
or suspend previously approved rates if it subsequently determines the rates are
excessive or otherwise contrary to law. 40 Pa. Stat. § 710‐11(a)‐(e).
As explained more fully in ASIC’s motion to dismiss (see Declaration of Rebecca
Voyles, ¶¶ 4‐17, Exs. A‐I) [ECF No. 23‐4], ASIC filed its LPI rates for the policies at issue
in this case in both Florida and Pennsylvania. The Florida OIR and Pennsylvania
Department of Insurance approved the rates. See id. Plaintiffs do not challenge this.
In Hill, the Eleventh Circuit provided a road‐map for analyzing filed‐rate cases.
The Court did not have any “binding, on‐point precedent” for applying the doctrine but
fulfilled its judicial function through “consideration of persuasive authority and the two
broader principles underlying the doctrine: nondiscrimination and nonjusticiability.”
364 F.3d at 1315. The Court turned to cases from other courts of appeals which had
“considered the effect of the filed rate doctrine on claims similar to Hill’s,” and followed
the analysis of these courts in concluding that the claims at issue were barred under the
doctrine. Id. at 1315‐16.
Applying the analytical template set forth in Hill, this Court predicts that the
Eleventh Circuit would decline to follow Alston, which concerned whether RESPA’s
section 8 “created a private right of action without requiring an overcharge allegation.”
585 F.3d at 755 (also stating, “[t]he focus of our attention in this appeal is RESPA section
8”); see also Hazewood v. Found. Fin. Grp., 551 F.3d 1223 (11th Cir. 2008). The Alston
defendant raised the filed‐rate doctrine, 585 F.3d at 757, but the Court’s analysis focused
on the statutory interpretation of the relevant RESPA provisions. Id. at 761, 759‐62.
As noted earlier, Alston also “briefly” addressed defendant’s filed‐rate argument,
concluding that the doctrine “d[id] not apply” because “the measure of damages [under
RESPA] is three times the price of PMI, no matter the price, so there is no need to parse
or second guess the rates.” Id. at 764. The court did not make any reference to the
nonjusticiability and nondiscrimination principles, the touchstones of Hill’s analysis.
It is not Alston itself, but some district courts within the Third Circuit, that
extended Alston to LPI cases. See Patel, 2016 WL 1663827, at *4. Alston did not involve
LPI claims similar to those in the CAC, and Alston has no analysis of the
nonjusticiability and nondiscrimination principles, and I believe that the Eleventh
Circuit would not find Alston to be persuasive authority for the filed‐rate issue here.
This prediction is confirmed by the Third Circuit’s filed‐rate case law, which
adopts and conducts the same analysis of nonjusticiability and nondiscrimination as the
Second Circuit in Rothstein, Marcus and Wegoland. See, e.g., In re N.J. Title Ins. Litig., 683
F.3d 451, 455‐58 (3d Cir. 2012) (relying on Marcus and Wegoland to affirm the dismissal
of antitrust price fixing claims against numerous New Jersey title insurance companies,
and adopting the Second Circuit’s “expla[nation] that the [filed‐rate] doctrine is
designed to advance two ‘companion principles’: . . . ‘nondiscrimination’ . . . and . . .
It is apparent from N.J. Title Ins. Litig. that when the Third Circuit faces a true
filed‐rate issue, it undertakes a detailed analysis of nonjusticiability and
nondiscrimination exactly like the Second Circuit did in Rothstein. Thus, I predict that
the Eleventh Circuit would conclude that Alston is not persuasive, or, if somewhat
persuasive, is not as helpful as Rothstein.
Application of Hill’s analytical principles clearly counsels that this Court adopt
the predicted evaluation of the Eleventh Circuit and follow Rothstein. In Hill, the
Eleventh Circuit expressly noted that the filed‐rate doctrine is applied “strictly,” even
“in the face of apparent inequities,” whenever either strand underlying the doctrine is
implicated. This is a powerful indicator of the Eleventh Circuit’s view of the filed‐rate
Moreover, not only is Rothstein a materially identical LPI case (in which ASIC
filed a successful amicus brief), but it also undertook a detailed analysis of
nondiscrimination and nonjusticiability in the context of LPI claims and allegations
similar to those in this case. 794 F.3d at 262.
Following Rothstein, other courts in this district evaluated the broad principles of
nonjusticiability and nondiscrimination as applied to plaintiffs’ claims and allegations
in the LPI context. See Patel, 2016 WL 1663827, at *4 (declining to follow Alston in
virtually identical LPI case and instead following Rothstein); Trevathan, 142 F. Supp. 3d
at 1287 (following the framework for filed‐rate analysis laid out in Hill). This authority
lends additional support to the prediction that the Eleventh Circuit would follow
Rothstein, as opposed to Alston.
Defendants contend that there is no split of authority between Alston and
Rothstein, but I reject that argument, as have other courts confronted with the
Alston/Rothstein dichotomy. For example, in Lyons v. Litton Loan Servicing LP, No. 1:13‐
cv‐513, 2016 WL 415165, at *13 (S.D.N.Y. 415165 Feb. 2, 2016), the court noted that a
Third Circuit district court recently noted that “Rothstein is in direct tension with the
prevailing precedent in the Third Circuit, Alston.” So there is a split, but, as outlined
above, I predict that the Eleventh Circuit would find Rothstein more persuasive and
would follow its holding.
Rothstein considered only claims against the insurer and the insurer’s affiliate, as
the claims against the loan servicer had already settled. In the instant case, Plaintiffs
assert claims against the insurer and the servicer, but Trevathan and Patel extended
Rothstein’s reasoning to the servicer, as “failing to do so would contravene the purposes
of the filed‐rate doctrine.” Trevathan, 2015 WL 6913144, at *3. The Undersigned does not
see any logical reason to limit Rothstein to insurers and their affiliates and not apply it to
the servicers, who charged the homeowners the precise premium they paid (after the
appropriate state regulators approved it). Consequently, I predict the Eleventh Circuit
would apply the filed‐rate doctrine to loan servicers, as well.
Although the Eleventh Circuit has not yet ruled on the whether the filed‐rate
doctrine applies to LPI cases, it has issued a relatively recent opinion in a force‐placed
flood insurance case. See Feaz v. Wells Fargo Bank, N.A., 745 F.3d 1098 (11th Cir. 2014). In
Feaz, a borrower brought an action against her mortgage lender, alleging that it
breached the mortgage‐loan contract and violated extracontractual duties by requiring
her to have more flood insurance than the amount established by federal law. Plaintiff
alleged, in her breach of fiduciary duty claim under Alabama law, that Wells Fargo
violated its fiduciary duty and committed fraud by charging her a commission, a
“kickback” or “other compensation” ‐‐ any amount above the net cost to Wells Fargo of
obtaining the force‐placed insurance.
Although the Feaz court had no need to analyze the filed‐rate doctrine, it
affirmed the district court’s dismissal on other grounds, noting that Wells Fargo
disclosed that Feaz would incur higher costs if it force‐placed the flood insurance for
her and agreeing that “simply calling a commission a kickback doesn’t make it one.”
745 F.3d at 1110‐11. Given this ruling, it does not appear that the Eleventh Circuit
would somehow view an LPI case differently from the other cases in which it applied
the filed‐rate doctrine to prevent claims. In fact, in other LPI cases, Defendant ASIC has
argued that Feaz is dispositive and precludes the claims. Nevertheless, notwithstanding
Defendants’ broad view of Feaz’s applicability, the Undersigned perceives nothing in
that LPI case to suggest that the Eleventh Circuit would carve out LPI cases from its
precedents concerning the filed‐rate doctrine.14
Having predicted that the Eleventh Circuit would follow Rothstein, I need to
determine whether Rothstein’s interpretation of the filed rate doctrine would preclude
The Undersigned realizes that Plaintiffs have cited district court cases from the
Third Circuit to support their view that Alston, not Rothstein, would be the law in the
Eleventh Circuit, including at least one case which followed Alston not only because it is
precedent which must be followed but also because the district judge found it “is the
more sound application.” Burroughs v. PHH Mortg. Corp., No. 15‐6122‐NLH‐KMW, 2016
WL 1389934, at *4 (D.N.J. Apr. 8, 2016). But, like the court in Patel, which specifically
mentioned Burroughs, the Undersigned does not view Alston and the cases which follow
it to be more persuasive than Rothstein and I do not believe the Eleventh Circuit would
adopt the “brief” analysis of the filed‐rate doctrine in Alston over the more‐
comprehensive analysis in Rothstein.
Plaintiffs’ claims here against the insurance carrier and the loan servicer, or whether
there are circumstances which would render the doctrine inapplicable here for some
The filed‐rate doctrine bars Plaintiffs’ claims: Like this case, in Rothstein, the
plaintiffs alleged “they were fraudulently overbilled because the rates they were
charged” by their mortgage servicer as reimbursement for LPI “did not reflect secret
rebates and kickbacks that [the servicer] received from [the insurer.]” 794 F.3d at 259.
The Second Circuit held that the claims implicated the filed‐rate doctrine because
“whether insurer‐provided services should have been reflected in the calculation of LPI
is not for us to say; under the nonjusticiability principle, the question is reserved
exclusively to the regulators.” Id. at 263 (citation omitted).
Rothstein concluded that the “overbilling” claims effectively required the Court
to determine the reasonableness of the approved rates, thereby violating the
nonjusticiability strand. Id. at 262‐63. Likewise, Plaintiffs’ demand here for return of
the alleged “kickbacks” included in their LPI premiums asks this Court to determine the
reasonableness of ASIC’s LPI rates and whether the alleged “kickbacks” should have
been part of the authorized rate. As in Rothstein, adjudicating that claim would violate
the nonjusticiability principle. See also Hill, 364 F.3d at 1317 (“Were we to award Hill
the relief she seeks, we would be retroactively determining that the [charge] originally
levied by Bellsouth . . . filed with and approved by the FCC, was unreasonable.”).
Rothstein also held that any damages awarded to plaintiffs “would operate like a
rebate to give them a preference over other borrowers who were charged for LPI,”
thereby violating the nondiscrimination principle. 794 F.3d at 263; Hill, 364 F.3d at 1316‐
17 (to permit plaintiff to recover BellSouth’s undisclosed charges “would be to allow
her ‘to receive a discounted rate for phone service over other [BellSouth] customers’”)
(citations omitted). Rothstein and Hill dismissed “overcharge” claims because such
claims violate both the nonjusticiability and nondiscrimination principles. Rothstein, 794
F.3d at 263, 266; Hill, 364 F.3d at 1317.
The Trevathan Court also followed Rothstein. The Plaintiff in Trevathan alleged
that defendants charged “inflated” LPI premiums to borrowers whose loans they
serviced or owned. 142 F. Supp. 3d at 1286, 1288. Like the plaintiffs here, Trevathan
alleged that the defendants “failed to disclose to him that the premium included
‘unearned kick‐backs’” to the servicer. Id. Also like the plaintiffs here, Trevathan
“argue[d] that it is not the rate itself, but rather the ‘kickback’ present in the inflated rate
and the Defendants’ alleged ‘collusion and self‐dealing’ that is at issue.” Id. at 1288.
The Trevathan Court found those arguments “unavailing.” Id. It explained:
In Rothstein . . . the plaintiff alleged that, while he was charged the “filed
rate,” the loan servicer itself paid a lower rate to the insurer, benefitting
from secret “rebates” and “kickbacks.” The Second Circuit held that the
filed‐rate doctrine applied regardless, even though an intermediary had
passed along the rate. The Second Circuit explained that to hold otherwise
would violate the nondiscrimination and nonjusticiability principles that
the filed‐rate doctrine seeks to promote. As in Rothstein, the Plaintiff in
this action was charged by the servicer for the insurance at the rate filed
Id. (internal notes and citations omitted). Trevathan dismissed all “inflated premium”
claims with prejudice on the basis of the filed‐rate doctrine. Id. at 1292.15
This Court also followed Rothstein in Patel, where the plaintiffs, in a complaint
filed on the same day and materially identical to the operative complaint here, asserted
that SLS, the servicer, “in collaboration with ASIC,” charged borrowers inflated LPI
premiums because the premiums included “‘kickbacks’ in the form of unearned
commissions and expense reimbursements, ‘illusory reinsurance,’ and discounted
mortgage servicing functions.” 2016 WL 1663827, at *1. Plaintiffs alleged that “SLS did
not pass these savings on to the borrowers, and therefore . . . they were improperly
charged more than SLS actually paid to secure the lenders’ interest in the property.” Id.
Exactly like the Complaint at hand, the Patel Complaint alleged claims against
ASIC for unjust enrichment, tortious interference with a business relationship, and
federal RICO claims. Id. The Patel Court dismissed the claims, concluding as follows:
Like Judge Dimitrouleas, the Court instead adopts the rationale of
Rothstein and holds that the filed‐rate doctrine bars Plaintiffs’ claims
arising from [LPI] excess premiums because the rates charged were
approved by OIR. The reasonableness of the commissions,
Plaintiffs contend that Trevathan is subject to challenge because the plaintiff’s
attorneys were not familiar with LPI cases and devoted only less than one page to
responding to the filed‐rate doctrine asserted in the dismissal motion. This argument
might render the case slightly less persuasive, but it does not, in the Undersigned’s
view, make the case inapplicable.
reimbursements, reinsurance costs, and services calculated into those rates
is a question reserved for the regulators.
Id., at *4.16
Rothstein, Trevathan and Patel counsel dismissal of all claims. Plaintiffs do not
dispute that ASIC’s LPI rates are regulated by the relevant states, and they were
charged the exact LPI premiums required by ASIC’s authorized rates. Plaintiffs’
damages are allegedly being charged the components of their LPI premiums they call
“kickbacks.” Plaintiffs’ claims require this Court to parse out the portion of the
authorized LPI premiums that may be attributed to the alleged “kickbacks,” and then
award that portion to plaintiffs as damages. That exercise would necessarily trespass on
the regulators’ authority to determine ASIC’s LPI rates and the components thereof,
violating the nonjusticiability principle. Such damages would also have the effect of
retroactively reducing plaintiffs’ LPI premiums over other ASIC insureds, violating the
Plaintiffs try to distinguish Patel, a case their counsel filed and argued in the
opposition to the two dismissal motions, on the ground that Judge Cohn did not hold
oral argument. The Undersigned is not even remotely convinced by that argument.
First, it appears that Plaintiffs never requested oral argument in Patel. Second, they filed
comprehensive memoranda (i.e., a 20‐page opposition to the servicer’s dismissal motion
and a separate 20‐page opposition to the insurer’s dismissal motion). [See Patel et al v.
Specialized Loan Servicing LLC et al, Case No. 15—cv‐62600, ECF Nos. 26; 27 (S.D. Fla.)].
Plaintiffs here have not suggested that their memoranda there were deficient,
inadequate or otherwise problematic. To the contrary, the submissions in Patel were, as
here, well‐written, amply‐researched and completely professional. Under Plaintiffs’
apparent view, any opinion, whether from a trial court or an appellate court, would be
somehow unpersuasive if the ruling had not been preceded by oral argument. The
Undersigned is not prepared to entertain such an extreme view.
nondiscrimination principle. See Hill, 364 F.3d at 1316‐17 (quoting Taffet, 967 F.2d at
Plaintiffs’ claims challenge the filed rates: Plaintiffs argue that ASIC’s rate
filings have “nothing to do” with this case and they do not challenge the filed rate. [ECF
No. 74, pp. 17‐18]. Similarly, in their opposition memorandum, they contend the filed‐
rate doctrine does not apply because they purportedly are challenging only Defendants’
“allegedly wrongful conduct . . . ,” not the rates themselves. [ECF No. 47, at p. 5].
But Rothstein “rejected that [same] argument, explaining that even where the
challenge is framed as a challenge to conduct, the claims ‘rest on the premise that the
rates approved by regulators were too high.’” Lyons, 2016 WL 415165, at *12 (quoting
Rothstein, 794 F.3d at 263). “[A] claim is barred if an award of damages to the plaintiff
would result in judicial [determination of] reasonableness of the rate even if the claim
does not directly attack the filed rate.” Trevathan, 2015 WL 6913144, at *2.
The same is true here. Plaintiffs’ proposed distinction is purely semantical. At
bottom, all of their “kickback scheme” claims are premised on the allegation that the
LPI premiums were “inflated” or excessive. [ECF No. 1, ¶¶ 23, 35, 45, 103, 111]. Hence,
all of Plaintiffs’ claims are barred by the filed‐rate doctrine regardless of how they
attempt to frame them here.
The Undersigned does not find pre‐Rothstein cases from the Southern District of
Florida to be particularly enlightening, especially because some of them relied on the
Rothstein district court’s decision, which the Second Circuit overruled. See e.g., Wilson v.
EverBank, N.A., 77 F.Supp.3d 1202, 1234 (S.D. Fla. 2015).
Beyond that, Plaintiffs’ argument that they are challenging alleged “kickbacks”
that are “never part of the filed rates” appears nowhere in the CAC. Indeed, the CAC
repeatedly alleges that Plaintiffs’ LPI charges were “inflated” because they included
alleged “kickbacks.” [See, e.g., ECF No. 1, ¶¶ 6, 25, 26, 31, 32, 34, 35, 37].
The CAC seeks damages exactly equal to the components of their LPI premiums
which Plaintiffs attribute to the alleged “kickbacks.” The allegations of the CAC control,
not counsel’s arguments. See Burgess v. Religious Tech. Cntr., Inc., 600 F. App’x 657 (11th
Cir. 2015); Kuhn v. Thompson, 304 F. Supp. 2d 1313, 1321 (M.D. Ala. 2004).
Moreover, at the May 16 hearing, Plaintiffs’ counsel admitted he could not
calculate damages “without determining the amount of the commissions, tracking
expenses, or other allegedly inflated, or unearned portions of the LPI premium[.]” [ECF
No. 74, p. 105]. Claims that consumer charges included in filed rates are “excessive” are
the classic claims barred by the filed‐rate doctrine. See, e.g., Rothstein, 794 F.3d at 261‐66;
Taffet, 967 F.2d at 1485‐86; Patel, 2016 WL 1663827, at *1‐4; Trevathan, 142 F. Supp. 3d at
1287‐88; Uniforce, 892 F. Supp. at 1512.
In addition, as the Eleventh Circuit has cautioned, “even if a claim does not
directly attack the filed rate, an award of damages to the customer that would, in effect,
result in a judicial determination of the reasonableness of that rate is prohibited under
the filed rate doctrine.” Hill, 364 F.3d at 1317. Here, Plaintiffs’ theory would require the
Court to determine that components of the LPI rates charged to plaintiffs, such as
commissions and tracking or other “unearned” components, were improper and should
be returned to the plaintiffs, thereby necessarily deciding that the rates approved by the
insurance regulators were unreasonable. That “is prohibited under the filed rate
Moreover, if the Court ordered a refund of portions of the authorized LPI
premiums to plaintiffs, then they would effectively pay a lower premium than other LPI
insureds of ASIC who are not represented in this case, thereby violating the
Taffet, Hill, Rothstein, Patel and the allegations of the CAC require this Court to
reject Plaintiffs’ argument that the filed rates are not central to their claims. It is the
nature of the relief being sought, and the implications of awarding that relief for the
At the May 16 hearing, Plaintiffs argued that the nondiscrimination principle
would not be violated because all individuals whose mortgages and loans were
serviced by Caliber are at issue. This argument was rejected in Wegoland, 27 F.3d at 22
(“Because most of the animating policies behind the filed rate doctrine are not
diminished in the class action context, we hold that the filed rate doctrine applies
whether or not plaintiffs are suing for a class.”) and Taffet, 967 F.2d at 1492 (application
of the filed‐rate doctrine forecloses “strike suits that would be brought as eager lawyers,
using the class action vehicle, circumvent the states’ rate‐making mechanisms—all at
the expense of the consumers”).
In addition, Plaintiffs conceded that ASIC had only one set of filed rates which
were applied to all its LPI insureds regardless of the servicer. [ECF No. 74, p. 17]. A
refund to Caliber’s customers would effectively order a lower LPI rate for ASIC’s
insureds who were Caliber customers than for customers of other servicers. Plaintiffs’
further argument that ASIC allegedly paid different amounts to different servicers
under separate out‐sourcing contracts [id., at pp. 17‐23, 86‐87] is irrelevant because
those amounts were not components of the LPI rates and are not at issue here.
regulatory process, which triggers application of the filed‐rate doctrine. Taffet, 967 F.2d
at 1495; Rothstein, 794 F.3d at 263; Roberts v. Wells Fargo Bank, N.A., 2013 WL 1233268,
*13, n.9 (S.D. Ga. Mar. 27, 2013) (“Regardless of the spin put on Roberts’s allegations
and claims, at bottom this case calls for relief that itself triggers application of the filed
Here, the damages Plaintiffs seek are measured by the portions of their LPI
premiums they attribute to alleged “kickbacks.”19 Assessing and awarding that relief
would subvert the regulators’ authority to decide which expense components should be
included in a reasonable LPI rate and discriminate between ASIC’s LPI customers. The
filed rate is central to Plaintiffs’ claims and the CAC challenges the filed rate.
Plaintiffs are “rate‐payers”: Plaintiffs argue that they are not “rate‐payers”
because Caliber initially pays for LPI and passes along the LPI charges to plaintiffs.
Plaintiffs offer no coherent factual or legal support for their position. The CAC
throughout alleges that Plaintiffs and putative class members were charged or paid for
Challenging components “that make up a portion of the premium . . . is
challenging . . . [the] insurance premiums, . . . , and thus [the plaintiffs’] claims are
barred by the filed rate doctrine.” Roussin v. AARP, Inc., 664 F. Supp. 2d 412, 417
(S.D.N.Y. 2009), aff’d, 379 F. App’x 30 (2d Cir. 2010); Uniforce Temporary Personnel, Inc. v.
National Council on Compensation Insurance, Inc., 892 F. Supp. 1503, 1512 S.D. Fla. 1995)
(applying doctrine to dismiss antitrust claims); Decambaliza v. QBE Holdings, Inc., No.
13‐cv‐286, 2013 WL 5777294, at *6‐7 (W.D. Wisc. Oct. 25, 2013) (plaintiffs’ “attempt to
characterize [their] claims as a challenge to improper and unlawful insurance practices
and not to the reasonableness of the filed rate” is “an illusory distinction”).
LPI coverage.20 The CAC avoids the word “premium” and instead uses “charge” to
describe amounts charged for LPI, but semantics do not change the fact that Plaintiffs
were in fact charged the very LPI premiums. Plaintiffs’ mortgages expressly permit
their lenders to “obtain insurance coverage, at . . . Borrower’s expense.” [ECF No. 1, ¶¶
48, 64, 77]. As Rothstein explains:
The purpose of LPI is to enforce the borrower’s contractual obligation to
maintain adequate hazard insurance; the lender acts on the borrower’s
behalf and in the borrower’s place to ‘force place’ a transaction that the
borrower should have entered. There are three participants in the
transaction (insurer, lender, borrower), but the lender is a go‐between that
connects the insurer (the party selling insurance) to the borrower (the
party actually paying for it). Thus LPI is an A–to–B–to–C transaction that
implements a two‐party transaction between the insurer and the
794 F.3d at 265 (internal citations and footnotes omitted).
Furthermore, the certificates of insurance issued to Plaintiffs, which were
approved by the regulators, expressly state that “the lender is authorized to advance all
funds to be recovered from the borrower for the insurance afforded[.]” [ECF Nos. 74, p.
51; 23‐1 Ex. 3, p. 34 of 101 (Fowler); 23‐3, Ex. 3, p. 33 of 62 (Keller).21 And as Plaintiffs
See, e.g., ECF No. 1, ¶¶ 2, 3, 5, 6, 12, 25, 26, 31, 34, 35, 45, 46, 123, 125, 131, 133, 150;
see also ECF No. 74, p. 105 (Plaintiffs admit they cannot calculate damages without
determining the allegedly inflated, or unearned portions of the LPI premium).
Plaintiff Yambo‐Gonzalez’s LPI policies name her as an “Additional Insured.”
[ECF No. 23‐2, pp. 30, 50, 68, 88, 104, 124, 140].
admit, the OIR’s website expressly states that homeowners may be responsible for
paying the LPI rates. [ECF No. 74, pp. 47‐48, 50].
Plaintiffs attempt to avoid the obvious conclusion that they are rate‐payers by
arguing that there are two separate transactions ‐‐ first between ASIC and Caliber, and
then between Caliber and the borrowers. But this argument ignores the express terms of
their mortgages, which expressly authorize the purchase of LPI at plaintiffs’ expense.
[ECF No. 1, ¶¶ 48, 64, 77]. And Plaintiffs’ purported distinction was explicitly rejected
in Rothstein, Patel, and Trevathan.22
Plaintiffs’ argument that LPI is a “‘commercial’ lines insurance, covering
businesses, as opposed to ‘personal lines’ insurance, covering individual consumers,”
was rejected in Lyons. The Lyons Court found this argument to be “merely a
recapitulation” of the argument that the filed‐rate doctrine does not apply, and
reiterated that it could not examine the amount charged for reimbursement to plaintiffs
without considering the reasonableness of the filed rate ‐‐ an exercise that would violate
the nonjusticiability principle. 2016 WL 415165, at *13. Lyons’ reasoning is persuasive.
Lyons involved lender‐placed hazard insurance, the type of coverage at issue here, but
other district courts in the Second Circuit have also applied the analysis to lender‐
placed flood insurance. Clarizia v. Ocwen Financial Corp., No. 1:13‐cv‐2907, 2016 WL
439018, at *3 (S.D.N.Y. February 2, 2016) (rejecting Plaintiffs’ four arguments designed
to avoid Rothstein and noting that the distinction between “consumer lines” insurance”
and “commercial lines” insurance is “a distinction without a difference” because,
“regardless of the type of insurance, the Court must apply the filed rate doctrine and
bar the claims”).
Because the Undersigned predicts that the Eleventh Circuit would apply the
filed‐rate doctrine to this LPI class action case, I grant Defendants’ motions to dismiss
and dismiss with prejudice the Complaint.
DONE AND ORDERED in Chambers, in Miami, Florida, July 8, 2016.
Copies furnished to:
All counsel of record
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