In Re Title Insurance Antitrust Cases.

702 F.Supp.2d 840

In re TITLE INSURANCE ANTITRUST CASES.

Case No. 1:08CV677.

United States District Court,N.D. Ohio,Eastern Division.

March 31, 2010.

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Bruce K. Cohen, Daniel B. Allanoff, Steven J. Greenfogel, Meredith Cohen Greenfogel & Skirnick, Eugene A. Spector, Jonathan M. Jagher, William G. Caldes, Jay S. Cohen, Spector, Roseman, Kodroff & Willis, Andrew L. MacKerer, Mager & Goldstein, Chad A. Carder, Gerald J. Rodos, Jeffrey B. Gittleman, Barrack, Rodos & Bacine, Philadelphia, PA, Barbara J. Felt, Vincent J. Esades, Heins, Mills & Olson, James S. Reece, Michael E. Jacobs, Richard M. Hagstrom, Zelle, Hofmann, Voelbel, Mason & Gette, Minneapolis, MN, Daniel R. Karon, Goldman, Scarlato & Karon, Walter W. Noss, Scott & Scott-Chagrin Falls, Roger W. Van Deusen, Van Deusen & Wagner, Cleveland, OH, Lee Albert, Murray, Frank & Sailer, Leslie Wybiral, Louis F. Burke, Law Office Of Louis F. Burke, Roger J. Bernstein, Bernstein Nackman & Feinberg, Christopher J. Gray, New York, NY, Todd B. Naylor, Jeffrey S. Goldenberg, John C. Murdock, Murdock, Goldenberg, Schneider & Groh, Cincinnati, OH, Chris T. Nolan, Perantinides & Nolan, Akron, OH, Anthony D. Shapiro, Steve W. Berman, Hagens, Berman Sobol, Shapiro, Seattle, WA, Jayne A. Goldstein, Shepherd Finkelman Miller & Shah, Weston, FL, Natalie Finkelman Bennett, Shepherd Finkelman Miller & Shah, Media, PA, Brian P. Kopp, Betras, Maruca, Kopp & Harshman, Canfield, OH, David R. Scott, Scott & Scott, Colchester, CT, Krishna B. Narine, Huntingdon Valley, PA, Kirk G. Smith, Samuel D. Edwards, Shepherd Smith Edwards & Kantas, Houston, TX, Christopher L. Lebsock, Michael P. Lehmann, Hausfeld, San Francisco, CA, Jennifer Sarnelli, Joseph J. Depalma, Lite Depalma Greenberg & Rivas, Newark, NJ, for Plaintiffs.

Arthur M. Kaufman, Deborah A. Coleman, Robert J. Fogarty, Steven A. Goldfarb, Hahn, Loeser & Parks, Patricia A. Screen, Brouse McDowell, Kerin L. Kaminski, Giffen & Kaminski, Cleveland, OH, James I. Serota, Kenneth A. Lapatine, Stephen L. Saxl, Greenberg Traurig, Mark A. Robertson, Fulbright & Jaworski, David G. Greene, Kevin J. Walsh, Locke Lord Bissell & Liddell, New York, NY, David M. Foster, Fulbright & Jaworski, Washington, DC, Gerard D. Kelly, Kevin M. Fee, Sidley Austin, Chicago, IL, Russell J. Kutell, Frost Brown Todd, Edward A. Matto, Diane E. Burke, Steptoe & Johnson, Columbus, OH, for Defendants.

MEMORANDUM OPINION

SARA LIOI, District Judge.

On September 7, 2009, Magistrate Judge Benita Pearson filed a Report and Recommendation (Doc. No. 102) resolving the Defendants' dispositive motions. Both Plaintiffs and Defendants filed timely objections to the Report. (Doc. Nos. 104 and 105, respectively.)

Upon de novo review of those portions of the Report to which the parties have made objection, this Court hereby ADOPTS, in part, and REJECTS, in part, the Report and Recommendation of the Magistrate Judge. As set forth more fully below, Defendants' Joint Motion (Doc. No. 43) and Defendant Old Republic International Corporation's motion to dismiss (Doc. No. 41) are GRANTED, and these consolidated cases are DISMISSED.

This Court's review of the Magistrate Judge's Report and Recommendation is governed by 28 U.S.C. § 636(b), which requires a de novo decision as to those portions of the document to which objection is made. Because the parties objected only to those portions of the Magistrate Judge's Report and Recommendation relating to the application of the filed rated doctrine and the McCarran-Ferguson Act to the claims in the Consolidated Complaint, as well as the manner in which the claims were to be dismissed, the remainder of the Report-including its account of the factual and procedural history of the case-is hereby accepted as written. Thus, the Court will only provide a brief review of the facts and procedural posture sufficient to adequately frame the issues presented by the various objections.

BACKGROUND

The named Plaintiffs in these consolidated cases ¹ are individuals who have purchased title insurance from certain Defendants at some time between March 2004 and the present. These Plaintiffs seek to bring a class action on behalf of all individuals who have purchased title insurance in Ohio during the relevant time period. (Case No. 1:08CV677, Doc. No. 36, Consolidated Complaint at ¶ 10(a)-(h).) Defendant insurers are alleged to have sold title insurance in Ohio during the relevant period, either directly or through subsidiaries. ( Id. at ¶¶ 11-19.) Plaintiffs further allege that a number of the Defendant insurers are members of Defendant Ohio Title Insurance Rating Bureau (OTIRB), and that Defendant insurers charge the rates set by the OTIRB for their insurance policies. ( Id. at ¶¶ 11-19, 21, 24; insurers and OTIRB shall be collectively referred to as “Defendants.”)

The Ohio Revised Code governs the sale of title insurance in the State of Ohio, and, particularly, those regulations set forth in Title 39. While a review of the relevant regulations appears in the Magistrate's Report, the Court finds it necessary to briefly sketch out the administrative landscape. Ohio Rev.Code § 3935.04(A) requires all title insurers to file with the superintendent of insurance “every form of a policy, endorsement, rider, manual, minimum class rate, rating schedule, or rating plan, and every other rating rule, and every modification of any of them, which it proposes to use.” Insurers may satisfy their obligation to make such filings by subscribing to, or becoming a member of, a licensed rating bureau. Ohio Rev.Code § 3935.04(B). The parties agree that OTIRB is a licensed rating bureau under § 3935.04(B).

Where insurers belong to a rating bureau, they may permit the bureau to submit on their behalf proposed rates, along with supporting information, for consideration by the Department of Insurance. Ohio Rev.Code § 3935.04(A). The superintendent “shall review filings as soon as reasonably possible [...].” § 3935.04(C). A proposed rate becomes final thirty (30) days after it is filed, “unless it is disapproved by the superintendent within the waiting period.” § 3935.04(D).

During the waiting the period, the superintendent may require the insurer, or its bureau, to submit additional information in support of its requested rate. He may also find that the filing does not comply with the Ohio Revised Code. § 3935.05(B). Once a rate submitted by a bureau has been approved by the Department of Insurance (or has not been disapproved after the expiration of the 30 day waiting period), however, the rate becomes the only legal rate. As such, the insurer members are not permitted to charge a different rate for title insurance, unless the insurer successfully petitions the superintendent for permission to deviate from the filed rate. §§ 3935.04(H); 3935.07.

At no time does the State of Ohio relinquish its right to monitor and control the rates charged for title insurance. At any time after the waiting period has expired, the superintendent may find that the filed rate no longer meets the requirements of § 3935.01 to § 3935.17, and he shall, after a hearing and upon due notice, issue a determination that the rate is no longer effective. § 3935.05(C).

Any person or organization aggrieved by a filed rate may submit a written application requesting a hearing before the superintendent. If (after the hearing) the superintendent finds the application to have merit, he shall issue a decision setting forth his reasons for finding that the rate is no longer effective. § 3935.05(D).

At the heart of these consolidated actions is the allegation that Defendants have conspired to fix prices for title insurance in violation of § 1 of the Sherman Act, 15 U.S.C. § 1, and Ohio's Valentine Act, Ohio Rev.Code § 1331.01 et seq. (Cons. Compl. at ¶¶ 49, 58, 66.) According to Plaintiffs, Defendant insurers use the OTIRB to set and charge “supracompetitive” rates. ( Id. at ¶¶ 49-50, 52.) Allegedly hidden within these inflated rates are unlawful kickbacks and other charges unrelated to title insurance or the services provided in connection with title insurance. ( Id. at ¶¶ 49-50.) These allegations form the basis of Plaintiffs' sole causes of action under the Sherman Act (“the federal claims”) and the Valentine Act (“the state claims”). Plaintiffs seek damages and injunctive relief for both the federal and state claims.

Defendant Stewart Information Services Corporation (Stewart) filed a motion to dismiss for lack of personal jurisdiction (Doc. No. 40); Defendant Old Republic International Corporation (Old Republic) moved to dismiss for failure to state a claim under the Sherman and Ohio Valentine Acts, and for improper venue and personal jurisdiction (Doc. No. 41); and all Defendants filed a joint motion to dismiss on the grounds that Plaintiffs' claims were barred by the filed rate doctrine and by the McCarran-Ferguson Act (Doc. No. 43). The Court permitted Plaintiffs to conduct limited discovery prior to responding to these dispositive motions.

Once fully briefed, the motions were referred to Magistrate Judge Benita Pearson for the preparation of a Report and Recommendation. The Magistrate Judge conducted a hearing on the motions on May 26, 2009. Thereafter, she issued a Report and Recommendation, wherein she recommended that Defendants' joint motion be granted on the grounds that the federal and state antitrust claims were barred by the filed rate doctrine and/or the McCarran-Ferguson Act, and that Old Republic's motion to dismiss be granted on the ground that Plaintiffs failed to state a claim against it. She also recommended that all corporate parent Defendants be dismissed without prejudice, that both of the claims in the Consolidated Complaint be dismissed without prejudice against the remaining Defendants, and that Stewart's motion be denied as moot. (Report at 56.)

Plaintiffs object to the Magistrate Judge's conclusion that their...