Benanav v. Healthy Paws Pet Ins., LLC, CASE NO. C20-421-RSM

495 F.Supp.3d 987

Steven BENANAV, et al., on behalf of themselves and all others similarly situated, Plaintiffs,

v.HEALTHY PAWS PET INSURANCE, LLC, Defendant.

CASE NO. C20-421-RSM

United States District Court, W.D. Washington, at Seattle.

Signed October 15, 2020

Jeffrey D. Kaliel, Pro Hac Vice, Sophia Goren Gold, Pro Hac Vice, Kaliel PLLC, Washington, DC, Stan M. Doerrer, Pro Hac Vice, The Law Office of Stan M. Doerrer PLLC, Alexandria, VA, Samuel J. Strauss, Turke & Strauss LLP, Madison, WI, for Plaintiffs.

Richard Irving Werder, Jr., Pro Hac Vice, Robert Francis Longtin, Pro Hac Vice, Quinn Emanuel Urquhart & Sullivan, LLP, New York, NY, Stephen Broome, Pro Hac Vice, Quinn Emanuel Urquhart & Sullivan LLP, Los Angeles, CA, Alicia Cobb, Quinn Emanuel Urquhart & Sullivan LLP, Seattle, WA, for Defendant.

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS

RICARDO S. MARTINEZ, CHIEF UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

This matter comes before the Court on Defendant Healthy Paws Pet Insurance, LLC ("Healthy Paws")’s Motion to Dismiss Plaintiffs’ amended class action complaint, Dkt. #28. Plaintiffs oppose Healthy Paws’ motion. Dkt. #35. The Court finds oral argument unnecessary to resolve the underlying issues. Having reviewed the relevant briefing and the remainder of the record, the Court GRANTS Healthy Paws’ motion to dismiss.

II. BACKGROUND

Defendant Healthy Paws markets and administers pet insurance policies to consumers for insurance companies, with its principal place of business in Bellevue, Washington. Dkt. #25 at ¶¶ 3-5. The insurance companies underwriting the policies advertised and administered by Healthy Paws include ACE American Insurance Company ("ACE"), Indemnity Insurance Company of North America ("Indemnity"), and Westchester Fire Insurance Company ("Westchester"), which are subsidiaries of parent company CHUBB Ltd. Id. Pursuant to a General Agency Agreement dated October 1, 2012 between Healthy Paws and the insurance companies, Healthy Paws takes responsibility for selling and administering policies through advertising, website development, policy quoting, issuance, servicing, and claims adjudication.

Plaintiffs allege that Healthy Paws misrepresented the basis for changes to a policyowner's monthly premiums. This alleged misrepresentation is contained in (1) the insurance policy, (2) a sample policy document posted on Healthy Paws’ website ("the Sample Policy"); and (3) a "Frequently Asked Questions" page on Healthy Paws’ website ("the FAQ page"). The insurance policy for Plaintiffs Benanav, Kowalski, and Thomas contain the same language under paragraph I(5):

MONTHLY PREMIUM: Your monthly premium is set forth on your declarations page. Monthly premiums may change for all policyholders to reflect changes in the costs of veterinary medicine. We will notify you at least sixty (60) days in advance of such change.

Dkt. #25 at ¶¶ 28, 36, 51 (emphasis added). Plaintiffs contend that these statements mislead them to believe that their premium would only increase as the costs of veterinary medicine increased. Id. at ¶ 6. The Sample Policy repeats the same language stating that policy premiums may change "to reflect changes in the costs of veterinary medicine." Id. at ¶ 46. Furthermore, when Plaintiff Kowalski purchased her policy in 2011, Healthy Paws stated the following on its FAQ page:

Will my premiums increase over the life of my pet?

Due to the increasing cost of new technology and advances in veterinary care, your rates will increase slightly each year. These slight increases provide you the opportunity to offer your pet the best medical and diagnostic options available today. Keep in mind your rates will never go up to due to making claims. And all pet insurance companies, no matter how they try to market their benefits, will raise rates to keep up with the rapidly rising cost of veterinary care.

Dkt. #25 at ¶ 41 (emphases added). Healthy Paws posted a similar statement on its FAQ page when Plaintiffs Benanav and Thomas purchased their policies in 2012 and 2014, respectively:

Will my premiums increase over the life of my pet?

Due to the increasing cost of new technology and advances in veterinary care, your rates will increase slightly each year. Our plan has factored the expected increase in the cost of veterinary care into your rates so that the annual premium increases are manageable. These manageable annual increases provide you the opportunity to offer your pet the best medical and diagnostic options available today. Rest assured, we will never penalize you with higher rates for making claims. It's not your fault your pet is unlucky! All pet insurance companies, no matter how they market their benefits, will raise rates periodically to keep up with the rapidly rising cost of veterinary care.

Dkt. #25 at ¶ 42 (emphases added).

Between 2011 and 2014, Steven Benanav, Monica Kowalski, and Katherine Thomas purchased pet insurance policies through Healthy Paws. Id. at ¶¶ 14-16. After purchasing their pet insurance, Plaintiffs discovered that their policy premiums increased each year at a rate that allegedly exceeded the general rising costs of veterinary medicine. Mr. Benanav claims that his premiums increased by over 300% between 2013 and 2020, starting with a $33.85 monthly premium in January 2013 to his current payment of $104.50 in 2020. Id. at ¶¶ 66-68. Ms. Thomas purchased insurance in July 2014, and her monthly premiums increased from $40.61 in 2014 to $54.53 in 2020. Id. at ¶¶ 74-77. Ms. Kowalski purchased her policy in 2011 for her dogs Lola, Olive and Jenks. Id. at ¶¶ 83-90. Jenks passed away in 2015, but Ms. Kowalski's premiums for Lola and Olive, respectively, increased from $25.41 and $31.44 per month in 2011 to $69.18 and $86.36 in 2020.

Plaintiffs contend that notwithstanding Healthy Paws’ representations to the contrary, their monthly pet insurance premiums increase based on factors besides changes in the cost of veterinary medicine, such as the pet's age. Dkt. #25 at ¶ 51. As evidence of Healthy Paws’ misrepresentation, Plaintiffs cite to a correction at the bottom of a 2019 New York Times article which stated, "An earlier version of this article, using information supplied by Healthy Paws Pet Insurance, misstated how a pet's age affects premiums for the company's policies. The pet's age affects the premium at the time of enrollment and as the pet gets older, not just at enrollment. " Id. at ¶ 56 (emphasis added). Plaintiffs also cite to a statement from Healthy Paws’ customer service team responding to a complaint posted on the Better Business Bureau website. In this statement, Healthy Paws confirmed that several factors besides the general rising cost of veterinary medicine affect the premium:

In accordance with the terms of the Pet Health Insurance Policy and the associated rating rules, monthly premiums may change for all policyholders. Premiums are determined based on the rates and rating rules filed and approved within each state's Department of Insurance, which reflect the cost of treatment advances in veterinary medicine, your individual pet's breed, gender, age, and other factors, in addition to the overall claims experience for the program within the region your pet resides.

Id. at ¶ 58 (emphasis added). Plaintiffs also cite to a report from the Nationwide Purdue Index stating that the costs of veterinary medicine only rose by 21.1% from the end of 2014 through the end of 2018. Id. at ¶¶ 69-70. In contrast, Plaintiff Benanav's premiums rose by 65.4% during this four-year period.

On March 19, 2020, Plaintiffs brought this action against Healthy Paws on behalf of themselves and those similarly situated. Dkt. #1. Plaintiffs filed their amended complaint on June 8, 2020 alleging violations of the Washington Consumer Protection Act, RCW § 19.86, et seq. ("WCPA") on behalf of all plaintiffs, the California Unfair Competition Law Cal. Bus & Prof. Code § 17200, et seq. ("UCL") on behalf of Plaintiff Benanav and the California class, the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1, et seq. ("ICFA") on behalf of Plaintiff Kowalski and the Illinois class, and the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1, et seq. ("CFA") on behalf of Plaintiff Thomas and the New Jersey class. Dkt. #25 at ¶¶ 101-145. Plaintiffs seek compensatory, consequential, statutory and punitive damages, and declaratory and injunctive relief to address Healthy Paws’ ongoing deceptive conduct. Id. at 24. On July 15, 2020, Healthy Paws moved to dismiss Plaintiff's amended complaint. Dkt. #28.

III. DISCUSSION

A. Request for Judicial Notice

"Generally, on a 12(b)(6) motion, the District Court should consider only the pleadings." Shaver v. Operating Engineers Local 428 Pension Trust Fund, 332 F.3d 1198, 1201 (9th Cir. 2003). However, the Court may consider "materials incorporated into the complaint by reference, and matters of judicial notice." New Mexico State Inv. Council v. Ernst & Young LLP , 641 F.3d 1089, 1094 (9th Cir. 2011). Healthy Paws requests that the Court consider two categories of materials: (1) documents included in Plaintiffs’ insurance policies that were not attached to the Amended Complaint; and (2) the insurance rate filed by Markel Insurance Company with the California Department of Insurance. Dkt. #30. Healthy Paws’ request for judicial notice is GRANTED IN PART as set forth below.

First, Healthy Paws moves the Court to consider additional pages from the policy terms that Plaintiffs omitted from their exhibits to the Amended Complaint. Id. at 4. Specifically, Healthy Paws attaches the endorsement page, signature, declaration, and notice pages for each of these policies. Healthy Paws argues that these documents are properly considered under the "incorporation by reference" doctrine, given that the incomplete agreements attached to the Amended Complaint "presented the Court with only a portion of their entire insurance policies." Id. at 4. Under the "incorporation by...