Insurance Antitrust Legalnews July 2012 • Volume 1, Number 2

Title Insurers Gain Big Antitrust Victory in the Third Circuit

by James M. Burns

On June 14, the title insurance industry received good news from the Third Circuit Court of Appeals, as the court affirmed the dismissal of two high-profile antitrust cases that have been in litigation for several years – In re: New Jersey Title Insurance Litigation and McCray v. Fidelity National Title Insurance Company. In separate opinions that, in most respects, tracked each other in terms of analysis, the appellate court affirmed lower court rulings that the Filed Rate Doctrine barred plaintiffs from asserting claims that they had overpaid for title insurance.

Specifically, plaintiffs alleged that insurers' rate filings with the New Jersey and Delaware Insurance Departments included "hidden costs" that were not disclosed to the state regulators, and that had the Insurance Departments known of these costs – which allegedly included kickbacks and rebates – the regulators would not have approved the rates. Accordingly, plaintiffs argued that the regulators had not engaged in any "meaningful" review of the rates, and therefore the Filed Rate Doctrine – which otherwise precludes antitrust suits for damages based on rates filed and approved by federal or state agencies – did not apply to their claims.

On appeal, plaintiffs renewed their argument that because there had been no meaningful rate review by the agencies, no deference to the agencies' rate-making expertise was required and that the Filed Rate Doctrine should not bar their claims. The Third Circuit, however, disagreed, holding that "the federal courts are ill-equipped to engage in the rate making process" in all circumstances, and the application of the doctrine "does not depend on whether agencies actually use their superior expertise." Because plaintiffs' antitrust claims "would require the District Court to determine the reasonable rate absent the alleged conspiracy – a function that regulatory agencies are more competent to perform," plaintiffs' damages claims were properly dismissed. In reaching this decision, the court noted that the 1st and 7th Circuits have similarly found that "meaningful" agency review of rates is not a requirement for the application of the Filed Rate Doctrine.

Turning to plaintiffs' claims for injunctive relief, which are not barred by the Filed Rate Doctrine, the Third Circuit noted that "Absent Article III standing, a federal court does not have subject matter jurisdiction...