Grossman v. GEICO Casualty Company ( 2022 )

No. 21-2789
Grossman v. GEICO Casualty Company
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN
CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE
EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
“SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A COPY OF IT ON
ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York,
on the 25th day of May, two thousand twenty-two.
PRESENT:
REENA RAGGI,
RICHARD C. WESLEY,
SUSAN L. CARNEY,
Circuit Judges.
_________________________________________
TODD GROSSMAN, INDIVIDUALLY AND ON BEHALF
OF ALL OTHERS SIMILARLY SITUATED, MUJO
PEREZIC, INDIVIDUALLY AND ON BEHALF OF ALL
OTHERS SIMILARLY SITUATED,
Plaintiffs-Appellants,
v. No. 21-2789
GEICO CASUALTY COMPANY, GEICO INDEMNITY
COMPANY, GEICO GENERAL INSURANCE
COMPANY,
Defendants-Appellees. *
_________________________________________
* The Clerk of Court is directed to amend the case caption to conform to the above.
FOR APPELLANTS: ROY T. WILLEY, IV (Eric M. Poulin, Blake
G. Abbott, on the brief), Anastopoulo Law
Firm, Charleston, SC; Edward Toptani,
Toptani Law PLLC, New York, NY.
FOR APPELLEES: DAMON VOCKE (David T. McTaggart, on
the brief), Duane Morris, LLP, New York,
NY.
Appeal from the United States District Court for the Southern District of New York
(Marrero, J.).
UPON DUE CONSIDERATION WHEREOF, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment entered on September 13, 2021, is
AFFIRMED.
Plaintiffs-Appellants Todd Grossman and Mujo Perezic bring this putative class
action against Defendants-Appellants GEICO Casualty Company, GEICO Indemnity
Company, and GEICO Insurance Company (together, “GEICO”), seeking to represent a
class of New York residents who had or purchased automobile, motorcycle, or RV insurance
policies from GEICO during the period between March 1, 2020, and the date on which they
filed their complaint. Plaintiffs allege that COVID-19-related stay-at-home orders first
implemented in March 2020 caused a dramatic reduction in driving and, in turn, driving-
related accidents, resulting in windfall profits for automobile insurance companies, including
GEICO. In April 2020, GEICO instituted a “Giveback Program” that provided a 15%
premium reduction on new or renewed policies. Plaintiffs contend that this credit was
inadequate, that GEICO’s advertising about the Giveback Program was misleading, and that
GEICO charged unconscionably excessive premiums and unjustly retained windfall profits
during the pandemic. They assert claims for breach of the covenant of good faith and fair
dealing, unjust enrichment, and violations of New York General Business Law (“GBL”)
Sections 349 and 350.
The district court dismissed Plaintiffs’ complaint for failure to state a claim and later
denied their motion for reconsideration. Plaintiffs now appeal from the judgment of
dismissal. We assume the parties’ familiarity with the underlying facts, procedural history,
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and arguments on appeal, to which we refer only as necessary to explain our decision to
affirm.
In July 2021, acting pursuant to the district court’s local and individual rules, GEICO
filed a letter in which it briefly stated its arguments for why the complaint did not state a
plausible claim and requested a pre-motion conference to discuss its planned motion to
dismiss. The district court “construe[d]” the letter as a motion to dismiss pursuant to Federal
Rule of Civil Procedure 12(b)(6) and then granted the “motion.” Grossman v. Geico Cas. Co.,
No. 21 CIV. 2799 (VM), 2021 WL 5229080, at *1 (S.D.N.Y. Sept. 13, 2021). 1 Because the
district court dismissed the complaint under Rule 12(b)(6), we review its dismissal order de
novo. See Bellin v. Zucker, 6 F.4th 463, 472 (2d Cir. 2021); Kapitalforeningen Lægernes Inv. v. United
Techs. Corp., 779 F. App’x 69, 70 (2d Cir. 2019) (summary order) (reviewing dismissal order
on pre-motion letters de novo). 2 On such review, we conclude that Plaintiffs’ complaint fails
to state a claim as a matter of law for at least two independent reasons.
1. The filed rate doctrine bars Plaintiffs’ claims
First, Plaintiffs’ claims are precluded by the filed rate doctrine, which “bars suits
against regulated utilities grounded on the allegation that the rates charged by the utility are
unreasonable.” Wegoland Ltd. v. NYNEX Corp., 27 F.3d 17, 18 (2d Cir. 1994). Under the
doctrine, “any ‘filed rate’—that is, one approved by the governing regulatory agency—is per
se reasonable and unassailable in judicial proceedings brought by ratepayers.” Id. The
doctrine is rooted, in part, in the concept that “courts should not undermine agency rate-
making authority by upsetting approved rates”—a concept known as the “nonjusticiability”
principle. Rothstein v. Balboa Ins. Co., 794 F.3d 256, 261 (2d Cir. 2015). The filed rate
1 Unless otherwise noted, in quoting caselaw and the parties’ briefing, this Order omits all alterations,
citations, footnotes, and internal quotation marks.
2 Although our review of the district court’s decision to grant dismissal under Rule 12(b)(6) is de novo, we
review for abuse of discretion the district court’s decision to construe GEICO’s pre-motion letter as itself a
motion to dismiss. See Lehmann v. Ohr Pharm., Inc., 2021 WL 5986761, at *1 n.1 (2d Cir. Dec. 16, 2021)
(summary order) (“Because the District Court manages its docket within its broad discretion, we review its
decision [to construe a letter requesting permission to file a motion for leave to amend as the substantive
motion] for abuse of discretion, not de novo, as Plaintiffs inaccurately suggest.”).
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doctrine’s application “does not depend on the nature of the cause of action the plaintiff
seeks to bring or the culpability of the defendant’s conduct or the possibility of inequitable
results.” Id. at 261–62.
Plaintiffs’ claims are barred under the filed rate doctrine because, fundamentally, they
each seek a recalculation of the insurance rates that GEICO charged during the relevant
period. These rates were approved by the New York Department of Financial Services
(“NYDFS”). New York Insurance Law provides that “[r]ates shall not be excessive,
inadequate, unfairly discriminatory, destructive of competition or detrimental to the solvency
of insurers” and charges the NYDFS Superintendent with “determining whether rates
comply with the foregoing standards,” taking into account factors specified by the statute.
N.Y. Ins. Law § 2303. Each of Plaintiffs’ claims depends on an allegation that the NYDFS-
approved rates that GEICO charged were “excessive.” App’x at 19–20, 22–23. The claims
are therefore barred under the filed rate doctrine’s nonjusticiability principle. See Rothstein,
794 F.3d at 263 (rejecting, pursuant to the nonjusticiability principle, claims against a hazard
insurance company that “rest[ed] on the premise that the rates approved by regulators were
too high”); W. Park Assocs., Inc. v. Everest Nat’l Ins. Co., 975 N.Y.S.2d 445, 452 (2d Dep’t
2013) (“[A] consumer’s claim, however disguised, seeking relief for an injury allegedly caused
by the payment of a rate on file with a regulatory commission, is viewed as an attack upon
the rate approved by the regulatory commission and, therefore, barred by the doctrine.”). 3
2. Plaintiffs fail to state a plausible claim
Second, even if Plaintiffs’ claims were not barred by the filed rate doctrine, they were
properly dismissed under Rule 12(b)(6) for the independent reason that each cause of action
fails to state a plausible claim.
3 We are not persuaded by Plaintiffs’ argument that the filed rate doctrine should not bar Perezic’s claim, in
particular, on the ground that he purchased his renewal policy before GEICO began advertising its Giveback
Program and before the reduced rate was approved by NYDFS. Perezic seeks relief for the allegedly excessive
premiums that GEICO charged pursuant to a rate that was filed with and approved by NYDFS before his
renewed policy, at the reduced rate, went into effect. Thus, the filed rate doctrine bars his claims, too.
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To start, Plaintiffs argue that GEICO breached the covenant of good faith and fair
dealing implied in every contract under New York law when it “failed to use its contractual
discretion to adjust insurance rates as described in the insurance contract.” Appellants’ Br. at
4–5. The contract provision to which Plaintiffs point provides that GEICO “may adjust [the
policyholder’s] policy premiums during the policy term if any of” the information provided
by the policyholder, placed in the policyholder’s file, and “on which the premiums are based
is incorrect, incomplete or changed.” App’x at 14. Thus, under this provision, GEICO had
no duty to act because Plaintiffs do not allege that they corrected, added to, or otherwise
changed any information in their files. Rather, they allege changed conditions as a result of a
global pandemic, not the type of changed information covered by this provision. See Day v.
GEICO Cas. Co., No. 21-CV-02103-BLF, 2022 WL 179687, at *5–6 (N.D. Cal. Jan. 20, 2022)
(finding implausible a claim for breach of the covenant of good faith and fair dealing based
on GEICO’s failure to adjust policy premiums under materially identical policy language);
Siegal v. GEICO Cas. Co., 523 F. Supp. 3d 1032, 1039–40 (N.D. Ill. 2021) (same).
Next, Plaintiffs argue that they can plead an unjust enrichment claim “in the
alternative to their breach of contract claim.” Appellants’ Br. at 38. Under New York law,
“causes of action alleging breach of contract and unjust enrichment may be pleaded
alternatively” in certain circumstances, Auguston v. Spry, 723 N.Y.S.2d 103, 106 (2d Dep’t
2001), but “only where there is a dispute over the existence, scope, or enforceability of the
putative contract,” Reilly v. Natwest Mkts. Grp. Inc., 181 F.3d 253, 263 (2d Cir. 1999); see also
Diesel Props S.r.l. v. Greystone Bus. Credit II LLC, 631 F.3d 42, 54 (2d Cir. 2011) (affirming
dismissal of unjust enrichment claim when there were binding agreements among the parties
covering subject matter in dispute). Here, the parties do not dispute that there is an express,
valid, and enforceable contract between each Plaintiff and GEICO addressing the subject
matter of this lawsuit. Accordingly, Plaintiffs have not stated a plausible unjust enrichment
claim.
As to the GBL, Plaintiffs assert claims under Section 349, for deceptive acts and
practices, and Section 350, for false advertising. Section 349 prohibits “[d]eceptive acts or
practices in the conduct of any business, trade or commerce or in the furnishing of any
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service in this state.” N.Y. G.B.L. § 349(a). Section 350 prohibits “[f]alse advertising in the
conduct of any business, trade or commerce or in the furnishing of any service in this state.”
Id. § 350. “To successfully assert a claim under either section, a plaintiff must allege that a
defendant has engaged in (1) consumer-oriented conduct that is (2) materially misleading and
that (3) plaintiff suffered injury as a result of the allegedly deceptive act or practice.” Orlander
v. Staples, Inc., 802 F.3d 289, 300 (2d Cir. 2015); see also Himmelstein, McConnell, Gribben,
Donoghue & Joseph, LLP v. Matthew Bender & Co., 37 N.Y.3d 169, 177–78 (2021) (explaining
definition of “consumer”). As Plaintiffs recognize, the “injury” component of the pleading
standard includes a causation requirement: “[T]he plaintiff must show that the defendant’s
material deceptive act caused the injury.” Gale v. Int’l Bus. Machs. Corp., 781 N.Y.S.2d 45, 47
(2d Dep’t 2004) (citing Oswego Laborers’ Loc. 214 Pension Fund v. Marine Midland Bank, N.A., 85
N.Y.2d 20, 26 (1995)).
Plaintiffs claim, in essence, that GEICO misleadingly advertised the Giveback
Program by stating on its website that “shelter in place laws have reduced driving, and we are
passing these savings on to our auto, motorcycle, and RV customers.” App’x at 13. In
Plaintiffs’ view, GEICO’s use of the term “these savings” suggested that it would provide
customers “substantial and full relief” by refunding all of GEICO’s abnormally large profits
during the pandemic, App’x at 22, not merely the 15% premium credit provided through the
Giveback Program. But Plaintiffs do not allege that they saw GEICO’s advertisements of
the Giveback Program, in particular the allegedly misleading “these savings” statement,
before they chose to renew their insurance policies. Although the complaint alleges that
Grossman “received advertisements, emails and other information from GEICO
representatives concerning the ‘Giveback,’” App’x at 13 (emphasis added), it does not allege
that he ever reviewed the advertisements. Moreover, the specific advertisement that Plaintiffs
allege misled them and caused their injury appeared on GEICO’s website, which Plaintiffs
nowhere allege that they ever visited. Finally, the complaint does not allege that Perezic ever
received or reviewed any advertisement about the Giveback Program, including the specific
advertisement at issue here. Indeed, Plaintiffs allege that Perezic chose to renew his policy
before GEICO began advertising the Giveback Program. Thus, Plaintiffs cannot show that
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the allegedly misleading advertisement caused their injury, and, for that reason—at a
minimum—they have not stated a plausible claim under GBL Sections 349 and 350. See, e.g.,
Gale, 781 N.Y.S.2d at 47 (dismissing GBL claim because the plaintiff “nowhere states in his
complaint that he saw any of these statements before he purchased or came into possession
of [the allegedly defective product]” and reasoning that “[i]f the plaintiff did not see any of
these statements, they could not have been the cause of his injury, there being no connection
between the deceptive act and the plaintiff’s injury”).
3. Plaintiffs’ procedural argument is unavailing
Finally, Plaintiffs submit that the district court erred by converting GEICO’s pre-
motion letter into a motion to dismiss and then granting the motion without full briefing or
argument. Plaintiffs raise a valid concern with the district court’s action in dismissing their
complaint without the opportunity for full briefing and in possible violation of the applicable
local rules and the district court’s stated individual practice. 4 Nonetheless, we conclude that,
in this case, any error in the district court’s dismissal order is harmless in light of the
substantial deficiencies in the complaint. See Kapitalforeningen, 779 F. App’x at 70 (treating the
district court’s failure to provide notice and an opportunity to be heard before dismissing the
complaint as “a form of harmless error” when “the parties ‘have fully briefed all the
4 Rule 7.1 of the Local Rules of the U.S. District Court for the Southern District of New York provides that
“applications for a pre-motion conference[] and similar non-dispositive matters . . . may be brought by letter-
motion.” S.D.N.Y. L.R. 7.1(d) (emphasis added). Similarly, the 2013 Committee Note to Rule 7.1 prohibits
litigants from moving to dismiss through a letter motion. See S.D.N.Y. L.R. 7.1, 2013 comm. note (“Local
Civil Rule 7.1(d) is not intended to expand the types of motions that can be made by letter-motion. For
example, motions to dismiss or motions for summary judgment may not be made by letter-motion.” (emphasis
added)). Similarly, Judge Marrero’s individual practice regarding motions to dismiss requires “the defendant
[to] communicate with the plaintiff by letter not exceeding three single-spaced pages, with a copy to the
Court, . . . setting forth the . . . pleading deficiencies in the complaint and other reasons or controlling
authorities that defendant contends would warrant dismissal.” Individual Practices of U.S. District Judge
Victor Marrero § II.B.1 (Feb. 3, 2020). The plaintiff then is accorded seven days to respond to the
defendant’s arguments or to seek leave to amend the complaint. Id. In addition, “[w]here the circumstances
warrant and the pre-motion letter contains a sufficient factual and legal statement of the matter at issue,” the
district court on its own motion “may treat such letter as constituting a motion for the relief request[ed] and
direct that it be filed as such and that the parties respond and reply by letter-briefs of specified lengths.” Id.
§ II.A.2 (emphasis added). The record contains no indication that the district court directed GEICO to file its
pre-motion letter as a motion to dismiss or allowed Plaintiffs to file further briefing before the court
dismissed Plaintiffs’ complaint, although Plaintiffs had already sent to GEICO a letter in opposition.
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questions raised on the appeal’ and the ‘issues are predominately of a legal nature’” (quoting
McGinty v. New York, 251 F.3d 84, 90 (2d Cir. 2001))). In both their motion for
reconsideration and their briefing on appeal, Plaintiffs have failed to offer any persuasive
argument for why their claims should survive dismissal or why they were ultimately
prejudiced by the district court’s action. See In re Best Payphones, Inc., 450 F. App’x 8, 15 (2d
Cir. 2011) (summary order) (affirming the district court’s judgment after finding no abuse of
discretion in its treatment of a pre-motion letter as a motion when the losing party “had the
opportunity to make the arguments necessary to preserve its [position] for appellate review”
and “ha[d] not pointed to any additional argument it would have made had it filed full
motion papers”). Thus, their complaint was properly dismissed, even if the procedure the
district court used was perhaps improper.
* * *
We have considered all of Plaintiffs’ remaining arguments and find in them no basis
for reversal. For the reasons set forth above, the judgment of the district court is
AFFIRMED.
FOR THE COURT:
Catherine O’Hagan Wolfe, Clerk of Court
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