McCray v. Fidelity Natl Title Ins. Co., 2012 U.S. App. LEXIS 12059 (3rd Cir. 2012).

The Third Circuit recently affirmed orders dismissing federal antitrust claims based largely on the filed rate doctrine.1 Plaintiffs, a class of title insurance purchasers, alleged that the Delaware Title Insurance Rating Bureau and its members, title insurers, fixed the prices of title insurance. The complaint sought treble damages as well as injunctive relief. The district court had found that Plaintiffs antitrust claim was barred by the filed rate doctrine, which precludes antitrust suits challenging rates filed with federal or state agencies. The district court also held that the injunctive relief claim was barred by the McCarran-Ferguson Act, which exempts the business of insurance from antitrust liability. On appeal, the Third Circuit affirmed the District Courts judgment with respect to the filed rate doctrine and held that Plaintiffs lacked standing to seek injunctive relief. The filed rate doctrine bars antitrust suits based on rates that have been filed with federal or state agencies with regulatory power over the relevant industry. Plaintiffs argued that the doctrine was inapplicable for five reasons: First, Plaintiffs argued that the filed rate doctrine was limited to comprehensive regulatory regimes such as the Interstate Commerce Act. Because rate-filing is no longer required under ICA, Plaintiffs argued, the doctrine should not be extended to Delaware title insurance regime. The court rejected this argument, stating that partial deregulation of one industry does not mean that the doctrine is no longer valid in other areas. Second, Plaintiffs contended that the doctrine should not apply because there is no clear repugnancy between the antitrust laws and Delawares title insurance regulations. The court rejected this argument because the doctrine does not eliminate antitrust scrutiny or liability. Third, Plaintiffs argued that the doctrine was inapplicable because the relevant Delaware agency, the Department of Insurance (DOI), did not meaningfully review title insurance rate filings. Relying on Wileman 2 and Brown, 3 Plaintiffs contended that the meaningful review requires affirmative agency approval of the filed rates. Because the rates at issue were set by the insurers themselves and automatically become effective unless disapproved by the agency, Plaintiffs argued the doctrine did not apply. Notwithstanding Wileman and Brown, the Third Circuit ruled that neither its own precedent nor that of the Supreme Court has required a minimum level of agency approval or
1

McCray is one of two similar decisions handed down by the Third Circuit on the same day, in each case affirming a district courts decision to reject an antitrust challenge to title insurance rate-setting due to the filed rate doctrine. The other decision - In re New Jersey Title Insurance Litigation, Case No. 10-3343, 2012 U.S. App. LEXIS 12057 (3rd Cir. June 14, 2012), involves, as the name suggests, the New Jersey title insurance market and that states specific regulatory scheme. 2 Wileman Bros. & Elliott, Inc. v. Giannini, 909 F.2d 332, 337-38 (9th Cir. 1990) (refusing to apply the filed rate doctrine because the mere fact of failure to disapprove (the challenged standards)does not legitimize otherwise anticompetitive conduct.). 3 Brown v. Ticor Title Insurance Co., 982 F.2d 386 (9th Cir. 1992) (refusing to apply the filed rate doctrine due to the absence of meaningful state reviewthe law required only non-disapproval of the rates.).

regulatory review for application of the filed rate doctrine. Based on Keogh4 and Square D,5 the Court held that the doctrine applies as long as the agency has in fact authorized the challenged rate, even if the authorization was through non-disapproval. Therefore, the fact that rate filings are deemed legal unless disapproved by the DOI Commissioner does not render the doctrine inapplicable. Moreover, the distinction between agency authorization through approval or non-disapproval was meaningless, because the Commissioner was required by statute to review the rates to ensure they are not excessive, inadequate, or unfairly discriminatory. Fourth, Plaintiffs argued that the doctrine was inapplicable because they could not obtain retroactive relief directly from the DOI, which allegedly lacked authority over the challenged rates. The Court disagreed, holding that the DOI was fully empowered to regulate the rate at issue. Lastly, Plaintiffs argued that the doctrine was inapplicable because the challenged rates fall under the Kmart improper filing exception.6 Under Kmart, the filed rate doctrine does not apply where (1) there is an absence of a calculable rate; or (2) the rates are void per se under a statutory or regulatory scheme. Because Defendants never filed prospective loss costs with the DOI, Plaintiffs asserted that Defendants filings lacked the essential cost data required under DOI regulations and were therefore improper. Plaintiffs did not allege, however, that the filings were insufficient to support a reliable calculation of charges. Moreover, the prospective loss costs requirement was waived by the DOI for Defendants initial rate filing, which was permissible under Delaware law. Accordingly, the court held that the challenged rates were not void per se under a statutory or regulatory scheme, and that Defendants had properly filed their rates, justifying the lower courts application of the filed rate doctrine. Further, the court held that one of the policies underlying the filed rate doctrine, the nonjusticiability principle, supported the doctrines application. The nonjusticiability principle prevents courts from engaging in the ratemaking process, a function that regulatory agencies are more competent to perform. Awarding Plaintiffs damages would have required the lower court to calculate the legal rate but for the antitrust violations; therefore, the nonjusticiability principle required the application of the filed rate doctrine. The Court affirmed the trial courts ruling that Plaintiffs could not succeed on their injunctive relief claim. Although the district court found the claim was barred by the McCarranFerguson Act, the Third Circuit did not reach the issue, finding instead that Plaintiffs lacked standing.

Keogh v. Chicago & Northwestern Railway Co., 260 U.S. 156, 162-63 (1922) (applying the filed rate doctrine even though the relevant statute did not require the regulatory agency to expressly approve the rates filed by common carriers.). 5 Square D, 476 U.S. at 417 n.19 (holding that the filed rate doctrine applies whenever tariffs have been filed.). 6 Security Services, Inc. v. Kmart Corp., 511 U.S. 431, 443-44 (1994).