Wright v. United Servs. Auto. Ass'n

1

CHRISTOPHER WRIGHT, ROBERT MANNING, ELLIOT CHEFITZ, and JOSHUA STEISS, individually and on behalf of those similarly situated, Plaintiffs, v. UNITED SERVICES AUTOMOBILE ASSOCIATION and USAA GENERAL INDEMNITY COMPANY, Defendants.

Civil Action No. 1:23-cv-11155-ADB

United States District Court, D. Massachusetts

November 5, 2024

MEMORANDUM AND ORDER

BURROUGHS, D.J.

Defendants United Services Automobile Association (“United Services”) and USAA General Indemnity Company (“GIC” and, together with United Services “USAA” or “Defendants”) have asked this Court to certify its May 15, 2024 order denying their Motion to Dismiss to the U.S. Court of Appeals for the First Circuit for interlocutory appeal pursuant to 28 U.S.C. § 1292(b). [ECF Nos. 30, 31]; see also Wright v. United Servs. Auto. Ass'n, No. 23-cv-11155, 2024 WL 2186850, at *5 (D. Mass. May 15, 2024). Specifically, USAA seeks an immediate appeal regarding “whether the filed-rate doctrine bars plaintiffs' claim that they were overcharged for insurance” in violation of Massachusetts law. [ECF No. 31 at 7]. Plaintiffs Christopher Wright, Robert Manning, Elliot Chefitz, and Joshua Steiss, on behalf of themselves and others similarly situated (collectively “Plaintiffs”), oppose the motion. [ECF No. 42 (“Opposition” or “Opp.”)]. For the reasons set forth below, Defendants' Motion is GRANTED.

I. BACKGROUND

A. Factual Background^[1]

Plaintiffs allege that USAA engages in unfair and deceptive practices by segregating current and former U.S. military servicemembers among risk pools for private passenger automobile insurance (“PPA”) based on rank which, they assert, is an impermissible proxy for income. See [ECF No. 8 (“Amended Complaint” or “Am. Compl.”) ¶¶ 75-84]; Mass. Gen. Laws ch. 93A, § 2(a). Specifically, Plaintiffs assert that USAA relies on policyholders' military “pay grade” to assign them to insurance pools, in violation of Massachusetts insurance regulations that prohibit “determining] [a policyholder's] placement . . . within an Insurance Company Group” based on “occupation” or “income.” 211 Mass. Code Regs. § 79.04(12)(h)-(i); see also Mass. Gen. Laws ch. 175E, § 4(a) (providing that insurance rates “shall not be excessive or inadequate . . . nor shall they be unfairly discriminatory”); [Am. Compl. ¶¶ 55-60]. The gravamen of Plaintiffs' allegations is that USAA assigns policyholders at pay grades between E-1 and E-6 to a pool with higher premiums (and which GIC manages) than policyholders at pay grade E-7 or above (whose pool is managed by United Services), and in doing so, illegally “determine[s] placement” based on “occupation” or “income.” [Am. Compl. ¶ 76].

Plaintiffs seek injunctive relief “prohibiting United Services and GIC from placing E-1 to E-6 Policyholders into a separate affiliate from E-7 and Above Policyholders.” [Am. Compl. at 18]. Because Massachusetts insurers must submit proposed PPA insurance rates to the Commissioner of the Massachusetts Division of Insurance for approval before the rates may go into effect, see Mass. Gen. Laws. ch. 175A § 6(a), Plaintiffs further ask for an injunction (1) directing USAA “to submit to the Commissioner within a reasonable time a proposed rating plan for the combined E-7 and Above Policyholders and E-1 to E-6 Policyholders,” (2) “prohibiting United Services and GIC from using maximum military pay grade as a rating factor in [a new] common company,” and (3) “requiring United Services and GIC to respond to any concerns of the Commissioner until approval is gained for a proposed rating plan.” [Am. Compl. at 18]. Finally, Plaintiffs ask for “restitution and/or damages to be calculated . . . based on the rating plan approved by the Commissioner.” [Id.]

B. Procedural History

1. Denial of Rule 12(b)(6) motion

Defendants moved to dismiss under Rule 12(b)(6), contending (1) that Plaintiffs had not stated a claim under Chapter 93A and (2) that the filed-rate doctrine, which precludes courts from reviewing utility and insurance rates set by regulatory agencies, barred Plaintiffs' claims. See [ECF No. 12 (“Mot. to Dismiss”) at 10]. Plaintiffs opposed, arguing that the filed-rate doctrine did not apply in this case because: (1) the Amended Complaint did not challenge the rates approved by the agency; (2) the First Circuit has not held that the filed-rate doctrine applies to state agencies; and (3) even if applicable, the doctrine does not bar the injunctive relief sought. [ECF No. 21 (“Opp. to Mot. to Dismiss”) at 10-17]. The Court denied the motion on May 15, 2024, concluding that “at this stage at least, Plaintiffs have plausibly alleged that Defendants' practice of placing policy holders into different affiliates based on their pay grade violates Chapter 93A,” and that a ruling on the filed-rate doctrine was therefore not necessary because, even assuming the doctrine applied to state agencies, at least some of Plaintiffs' requested relief would “not [be] barred by the filed-rate doctrine.” Wright, 2024 WL 2186850, at *5.

2. Motion to Certify for Interlocutory Appeal

On June 12, 2024, Defendants moved for the Court to certify to the First Circuit whether the filed-rate doctrine requires dismissal of this case. [ECF Nos. 30, 31]. Plaintiffs opposed on July 3, 2024, [ECF No. 42], and Defendants filed a reply on July 17, 2024, [ECF No. 43]. The parties presented oral argument on the pending motions on August 14, 2024. [ECF Nos. 46, 47].

II. DISCUSSION

A. Legal Standard

Ordinarily, federal circuit courts have jurisdiction only over appeals from “final decisions” of district courts in civil cases, 28 U.S.C. § 1291, but Congress has conferred appellate jurisdiction over interlocutory orders under limited circumstances, including when the district court certifies such an order for review,^[2] see 28 U.S.C. § 1292(b). Pursuant to section 1292(b), three requirements must be satisfied to warrant interlocutory review: the order (1) must “involve[e] a controlling question of law,” (2) “as to which there is substantial ground for difference of opinion,” and (3) as to which “an immediate appeal from the order may materially advance the ultimate termination of the litigation.” Id. Interlocutory certification is “meant to be used sparingly.” Camacho v. P.R. Ports Auth., 369 F.3d 570, 573 (1st Cir. 2004).

B. Analysis

1. The applicability of the filed-rate doctrine presents a controlling question of law whose resolution would materially advance the termination of this lawsuit (factors 1 and 3).

“A question of law is ‘controlling'” within the meaning of § 1292(b) “if reversal would terminate the action.”^[3] Meijer, Inc. v. Ranbaxy Inc., 245 F.Supp.3d 312, 315 (D. Mass. 2017) (quoting Philip Morris, Inc. v. Harshbarger, 957 F.Supp. 327, 330 (D. Mass. 1997)). “Typically, when an order is certified for interlocutory appeal, the question will potentially dispose of the entire lawsuit.” In re Pharm. Indus. Average Wholesale Price Litig., No. 05-cv-11084, 2008 WL 163644, at *1 (D. Mass. Jan. 16, 2008). “Such questions typically implicate a pure legal principle that can be resolved without extensive consultation to the record.” Meijer, 245 F.Supp.3d at 315.

The Court agrees with USAA that whether the filed-rate doctrine bars all of the relief Plaintiffs request in this case presents a controlling question of law. The position USAA took in its motion to dismiss, and the argument it seeks to present before the First Circuit, is that the filed-rate doctrine bars both the injunctive and monetary relief that Plaintiffs request. [Mot. to Dismiss at 8-9]. Adopting USAA's position would thus result in the termination of the case. Defendants argue that the filed-rate doctrine operates as a “threshold question,” akin to “jurisdiction and preemption,” [ECF No. 31 at 8], and notes that the First Circuit has described the doctrine in similar terms.^[4] See Breiding v. Eversource Energy, 939 F.3d 47, 52 (1st Cir. 2019) (characterizing the filed-rate doctrine as “a form of deference and preemption, which precludes interference with the rate setting authority of an administrative agency” (quoting Wah Chang v. Duke Energy Trading & Mktg., LLC, 507 F.3d 1222, 1225 (9th Cir. 2007))). If the Court of Appeals adopts USAA's position, its mandate to this Court would almost certainly require dismissal of all pending claims, thus “terminating] the action.” Meijer, 245 F.Supp.3d at 315.^[5] For the same reason, the Court believes that interlocutory review would “materially advance” the “termination of th[is] litigation.” 28 U.S.C. § 1292(b); see also Meijer, 245 F.Supp.3d at 315 (finding that this requirement is “closely tied” to the “controlling-question-of-law element” and was satisfied where, as here, reversal would likely terminate litigation).

2. Substantial grounds for difference of opinion exist concerning the applicability of the filed-rate doctrine (factor 2).

“A substantial ground for a difference of opinion arises where an issue involves ‘one or more difficult and pivotal questions of law not settled by controlling authority.'” Meijer, 245 F.Supp.3d at 315 (quoting Philip Morris, 957 F.Supp. at 330). The filed-rate doctrine issue in this case involves such a question of law, is not settled by controlling authority, and presents substantial grounds for material differences of opinion.

As the Court noted in its ruling on the motion to dismiss, “it is not clear” whether under First Circuit precedent the filed-rate doctrine “applies to Massachusetts state agencies” and if so, whether federal or state law is the source of the doctrine. Wright, 2024 WL 2186850, at *5 (citing Arroyo-Melecio v. P.R. Am. Ins. Co., 398 F.3d 56, 73 (1st Cir. 2005)). In Arroyo-Melecio, the First Circuit opined that “it is simply not the case that any...