Drawdy v. Nationwide Ins. Co. of America ( 2022 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 EASTERN DISTRICT OF CALIFORNIA 6 7 THOMAS DRAWDY, individually No. 2:22-cv-00271-JAM-KJN and on behalf of all others 8 similarly situated, 9 Plaintiff, ORDER GRANTING DEFENDANT’S MOTION TO DISMISS 10 v. 11 NATIONWIDE INSURANCE COMPANY OF AMERICA, 12 Defendant. 13 14 I. BACKGROUND 15 This action concerns the adequacy of the premium refund 16 Nationwide Insurance Company of America (“Defendant” or 17 “Nationwide”) provided to California auto policyholders during 18 the COVID-19 pandemic. See Compl., ECF No. 1. Thomas Drawdy 19 (“Plaintiff”), one such policyholder, purchased Nationwide 20 insurance for both his personal automobile and a recreational 21 vehicle before the start of the pandemic and its associated 22 government shutdown and stay-at-home orders. Id. ¶ 13. Due to 23 the pandemic, Plaintiff “barely drove” either of his vehicles in 24 2020. Id. ¶ 15. 25 Nationwide provided its insureds, including Plaintiff, with 26 a one-time refund of $50. Id. ¶ 16. Plaintiff received his $50 27 refund on May 7, 2020. Id. Plaintiff asserts this refund was 28 “not sufficient to compensate him for the overpayment of premiums 1 due to the associated decrease in driving and risks stemming from 2 the COVID-19 pandemic.” Id. ¶ 17. In support of this assertion, 3 he cites to various bulletins issued by the California Insurance 4 Commissioner regarding premium refunds during the pandemic. Id. 5 ¶¶ 20-25. 6 Plaintiff brings a single claim for violation of the 7 California Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code 8 § 17200 et seq., on behalf of a class of California residents who 9 purchased personal automobile, motorcycle, or RV insurance from 10 Nationwide covering March 1, 2020, through March 1, 2021. Id. at 11 9-11. He claims Defendant’s “retention of, and failure to 12 refund, premiums” is “unfair because it allowed Nationwide to 13 retain refunds that are not based on an accurate assessment of 14 risks, and was an unfair and unreasonable application of approved 15 rates.” Id. ¶ 39. 16 Defendant moves to dismiss the complaint under Federal Rules 17 of Civil Procedure 12(b)(1) and 12(b)(6). See Mot., ECF No. 8.1 18 Plaintiff opposed the motion. See Opp’n, ECF No. 11. Defendant 19 replied, see Reply, ECF No. 12, and filed a notice of 20 supplemental authority, see Not., ECF No. 15. 21 II. OPINION 22 A. Request for Judicial Notice 23 Defendant requests the Court take judicial notice of seven 24 exhibits: (1) the CDI Bulletin 2020-3 issued April 13, 2020; 25 (2) the Nationwide Refund Letter to Thomas Drawdy; (3) the CDI 26 27 1 This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled 28 for July 12, 2022. 1 Amended Bulletin 2020-8 issued December 3, 2020; (4) the 2 February 1, 2021 Nationwide Insurance Company of America COVID- 3 19 CA reporting form; (5) the CDI Bulletin 2021-03 issued on 4 March 11, 2021; (6) the CDI 2020 CA Property & Casualty Market 5 Share Report for Private Passenger Auto by Group Written 6 Premium; and (7) the March 16, 2022 Order in Rose v. GEICO 7 Casualty Co., Case No. 3:21-cv-00385-DPJ-FKB, 2022 WL 1438551 8 (S.D. Miss. Mar. 16, 2022). Def.’s Req. for Judicial Notice 9 (“RJN”), ECF No. 8-2. Plaintiff does not object to the request 10 as to Exhibits 1, 3, 5, and 7, but does object as to Exhibits 2, 11 4, and 6. Opp’n at 13-14. After careful consideration of the 12 parties’ arguments, applicable caselaw, and the documents 13 themselves, the Court finds Exhibits 1, 3, 4, 5, 6, and 7 to be 14 proper subjects of judicial notice and thus grants Defendant’s 15 request as to those documents. See Lee v. City of Los Angeles, 16 250 F.3d 668, 689-690 (9th Cir. 2001). However, the Court takes 17 judicial notice only of the existence of these documents and 18 declines to take judicial notice of their substance, including 19 any disputed or irrelevant facts within them. Id. at 690. 20 With respect to Exhibit 2, Plaintiff argues it is a non- 21 public document with no evidence in the record confirming if it 22 was sent, when it was sent, whether Plaintiff received it, or 23 any other authenticating evidence. Opp’n at 13. Defendant 24 counters that this exhibit is a proper subject of judicial 25 notice because it is based on Plaintiff’s own allegations that 26 (1) Nationwide provided a refund for March and April 2020, and 27 that (2) he received a refund from Defendant on May 7, 2020. 28 Reply at 2-3 (citing to Parrino v. FHP, Inc., 146 F.3d 699, 706 1 (9th Cir. 1998)). However, Defendant fails to explain why 2 judicial notice is necessary when the Court already has 3 Plaintiff’s allegations regarding Nationwide’s refund before it. 4 See Compl. ¶ 16. Indeed, Defendant states the Court “can” take 5 judicial notice, not that it “must.” Reply at 3 n.2. 6 The Court declines to take notice of this non-public 7 document which is unnecessary to the determination of this 8 motion. Defendant’s request is denied as to Exhibit 2. 9 Plaintiff asks the Court to take judicial notice of the 10 Insurance Commissioner’s Brief filed in Rejoice!. Pl.’s RJN, 11 ECF No. 11-1. As this is a matter of public record and 12 therefore a proper subject of judicial notice, the Court grants 13 Plaintiff’s request. See Lee, 250 F.3d at 690. Again, however, 14 the Court takes notice only of the existence of this document, 15 not of any disputed or irrelevant facts within. Id. 16 B. 12(b)(1) Motion 17 A defendant may move to dismiss for lack of subject matter 18 jurisdiction pursuant to Federal Rule of Civil Procedure 19 12(b)(1). Fed. R. Civ. P. 12(b)(1). Faced with a Rule 12(b)(1) 20 motion, plaintiff bears the burden of proving the existence of 21 the court’s subject matter jurisdiction. Thompson v. McCombe, 22 99 F.3d 352, 353 (9th Cir. 1996). 23 Here, Defendant raises two arguments for dismissal under 24 Rule 12(b)(1). Mot. at 10-14. First, Defendant contends 25 Plaintiff’s claim falls within the Insurance Commissioner’s 26 exclusive jurisdiction over the setting of insurance rates. Id. 27 at 10-13. However, as Plaintiff points out, three California 28 district courts have rejected that argument and distinguished 1 the same California caselaw cited by Nationwide here. Opp’n at 2 2-6 (citing to Day v. GEICO Casualty Company, Case No. 21-cv- 3 02103-BLF, 2022 WL 179687 (N.D. Cal. Jan. 20, 2022); Rejoice! 4 Coffee Co., LLC v. Hartford Fin. Serv. Group, Inc., Case No. 20- 5 cv-06789-EMC, 2021 WL 5879118 (N.D. Cal. Dec. 9, 2021); and 6 Boobuli’s LLC v. State Farm Fire & Casualty Co., 562 F.Supp.3d 7 469 (N.D. Cal. 2021)). The California Insurance Commissioner 8 has also rejected Defendant’s position. Id. at 6-7. In spite 9 of this unanimous weight of authority against its position, 10 Defendant asks the Court to find otherwise that these Northern 11 District cases were “wrongly decided.” Mot. at 12. Defendant 12 directs the Court to four out-of-circuit decisions from 13 Mississippi, Missouri, New York, and Nevada. Id. at 11 14 (collecting cases). But the Court agrees with Plaintiff that 15 these decisions interpreting other state’s insurance codes have 16 no bearing on the present analysis of Plaintiff’s UCL claim 17 which is governed by California insurance law. Opp’n at 5-6. 18 Moreover, the Court agrees with the detailed exclusive 19 jurisdiction analysis in Day, Rejoice!, and Boobuli’s. See 2022 20 WL 179687, at *3-5; 2021 WL 5879118, at *3-7; 562 F.Supp.3d at 21 477-484 (“In sum, State Farm’s exclusive jurisdiction argument 22 fails because [plaintiff] is not seeking to challenge the rate 23 itself, but the misapplication of the rate in light of changed 24 circumstances given the COVID-19 pandemic.”). This Court too 25 finds that Plaintiff’s challenge is to the application of 26 approved rates, not to the rates themselves, and therefore does 27 not fall within the Insurance Commissioner’s exclusive 28 jurisdiction. Defendant’s argument for dismissal on exclusive 1 jurisdiction grounds thus fails. 2 However, Defendant’s second argument - that the Court 3 should dismiss this case under the primary jurisdiction doctrine 4 - has merit. Mot. at 13-14; Reply at 5. “The primary 5 jurisdiction doctrine allows courts to stay proceedings or to 6 dismiss a complaint without prejudice pending the resolution of 7 an issue within the special competence of an administrative 8 agency.” Clark v. Time Warner Cable, 523 F.3d 1110, 1114 (9th 9 Cir. 2008); see also Syntek Semiconductor Co., Ltd. v. Microchip 10 Tech. Inc., 307 F.3d 775, 781 (9th Cir. 2002) (“[T]he doctrine 11 of primary jurisdiction is committed to the sound discretion of 12 the court when ‘protection of the integrity of a regulatory 13 scheme dictates preliminary resort to the agency which 14 administers the scheme.’”) Courts consider whether application 15 of the doctrine “will enhance court decision-making and 16 efficiency by allowing the court to take advantage of 17 administrative expertise” and “whether application will help 18 assure uniform application of regulatory laws.” Chabner v. 19 United of Omaha Life Ins. Co., 225 F.3d 1042, 1051 (9th Cir. 20 2000). 21 As an initial matter, Plaintiff does not dispute the Court 22 has the authority to dismiss this action pursuant to the primary 23 jurisdiction doctrine. See Opp’n at 7-8. Rather the dispute is 24 over whether the Court should apply the doctrine. Id.; see also 25 Reply at 5. Defendant argues it should because it would be more 26 appropriate for the Insurance Commissioner, who has the relevant 27 technical expertise, to consider Plaintiff’s claim. Reply at 5. 28 The Court agrees. Further, Plaintiff had the opportunity in nee enn mean nn nn nn nn nnnee 1 opposition to explain why the Court, as opposed to the 2 Commissioner, should consider Plaintiff’s claim yet failed to do 3 so. See Opp’n at 7-8. Plaintiff generally contends the primary 4 jurisdiction doctrine “does not require that all claims within 5 an agency’s purview be decided by the agency” nor “is it 6 intended to secure expert advice for the courts from regulatory 7 agencies every time a court is presented with an issue 8 conceivably within the agency’s ambit.” Cohen v. ConAgra 9 Brands, Inc., 16 F.4th 1283, 1291 (9th Cir. 2021) (internal 10 citation and guotation marks omitted). This may be so, but 11 Plaintiff does not explain why application of the doctrine here 12 would not “enhance court decision-making and efficiency by 13 allowing the court to take advantage of administrative 14 expertise.” Chabner, 225 F.3d at 1051. 15 Accordingly, the Court applies the primary jurisdiction 16 doctrine and grants Defendant’s motion to dismiss without 17 | prejudice. See Clark, 523 F.3d at 1114. Because the Court 18 dismisses under the primary jurisdiction doctrine, the Court 19 does not reach the parties’ additional 12(b) (6) arguments. See 20 Mot. at 6-10; see also Opp’n at 9-13. 21 IIl. ORDER 22 For the reasons set forth above, the Court GRANTS 23 Defendant’s motion to dismiss. 24 IT IS SO ORDERED. 25 | Dated: July 28, 2022 26 27 a 7 Yond JOHN A. MENDEZ 28 SENIOR UNITED*STATES DISTRICT JUDGE