The opinion of the court was delivered by: Debevoise, Senior District Judge
On February 3, 2010, Beverly Clark, Jesse J. Paul, and Marc H. Litwack (―Plaintiffs‖) filed an amended putative class action complaint against Prudential Insurance Company of America (―Prudential‖) alleging claims for fraudulent misrepresentation, fraudulent omissions, breach of the duty of good faith and fair dealing, violation of California's Unfair Competition Law, and violation of the New Jersey Consumer Fraud Act. The motion is directed at the Plaintiffs' individual claims for relief as they have yet to move for class certification. Prudential moves to dismiss all counts of the Third Amended Complaint (TAC) with the exception of Clark's claim for breach of the implied covenant of good faith and fair dealing. For the reasons set forth below, Prudential's motion to dismiss will be granted in part and denied in part.
In the original Complaint, filed December 17, 2008, the two original plaintiffs, Clark and Paul, asserted three causes of action for: (1) violation of the New Jersey Consumer Fraud Act, N.J. Stat. Ann. 56:8-1 et. seq, (―NJCFA‖); (2) breach of fiduciary duty; and (3) breach of the duty of good faith and fair dealing. Prudential moved to dismiss the individual plaintiffs' claims.
In an Opinion and Order dated September 15, 2009, the Court granted the motion in part, and denied it in part. The Court dismissed Paul's claims with prejudice, and dismissed Clark's claims for consumer fraud and breach of fiduciary duty without prejudice. Clark's claim for breach of the implied covenant of good faith and fair dealing was not dismissed. Clark v. Prudential Ins. Co. of Am., Civ. No. 08-6197, 2009 U.S. Dist. LEXIS 84093 (D.N.J. Sept. 14, 2009).
In its September 2009 Opinion, the Court applied New Jersey's choice of law analysis and determined that Clark and Paul's home states at the time they purchased their CHIP policies-California and Indiana, respectively-have the greatest interest in having their laws applied to the consumer fraud, breach of fiduciary duty, and breach of good faith and fair dealing claims. Id. at *47. The Court found that under Indiana law, each of Paul's claims was barred by the applicable statute of limitations. The Court dismissed Clark's consumer fraud claim with leave to re-plead under the appropriate California law; dismissed Clark's breach of fiduciary duty claim for failure to allege that the relationship between Clark and Prudential involved a fiduciary duty under California law; and found that Clark's claim for breach of the duty of good faith and fair dealing stated a claim under California law. Id.
Subsequently, on October 30, 2009, Clark filed an Amended Complaint, asserting claims for unfair competition and breach of the duty of good faith and fair dealing against Prudential under California law. Thereafter, the parties stipulated that Clark and Paul would file a Second Amended Complaint asserting additional claims for common law fraudulent misrepresentation and fraudulent omission. The Second Amended Complaint (SAC) was filed on November 12, 2009, and Prudential filed a motion to dismiss the SAC on December 3, 2009. After that motion was partially briefed, the parties stipulated that the Plaintiffs could file the TAC, adding Litwack as a new plaintiff. The parties agreed that the Court would address, during a single motion hearing, the issues raised in both the motion to dismiss the SAC and the motion to dismiss the TAC. For ease of reference, the Court will refer to the present motion as a motion to dismiss the TAC, as the TAC contains all of the relevant allegations.*fn1
B. Allegations of the Complaint
The TAC alleges five claims for relief: (1) fraudulent misrepresentation, on behalf of Clark, Litwack, and Paul; (2) fraudulent omissions, on behalf of Clark, Litwack, and Paul; (3) breach of the duty of good faith and fair dealing, on behalf of Clark and Litwack; (4) violation of California's Unfair Competition Law (UCL), Cal. Bus. & Prof. Code § 17200, et seq., on behalf of Clark; and (5) violation of the NJCFA on behalf of Litwack.
The following are the allegations of the TAC, which are, for the purpose of this motion only, accepted as true and construed in the light most favorable to the Plaintiffs. Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008).
Prudential is, and at all relevant times was, a corporation organized and existing under the laws of the State of New Jersey with its principal place of business in Newark, New Jersey. (TAC ¶ 15.) Prior to 2001, Prudential was a mutual life insurance company. (Id. ¶ 16.)
Prudential sold an individual health policy, known as the Comprehensive Health Insurance Policy (―CHIP‖), to individuals throughout the United States from 1973 through 1981. (Id. ¶ 1.) CHIP is a major medical insurance policy designed to provide policyholders with coverage for medical expenses, including high or unexpected medical expenses. (Id. ¶ 2.) The risk of high medical expenses is managed by Prudential through the creation of a risk pool, where a large group shares the risk that certain policyholders will generate higher than expected claims. (Id.) Large premium increases are generally not necessary in a functioning risk pool because the premiums of healthy low-cost members subsidize the higher costs of less-healthy members. (Id.) Prudential developed, marketed, and sold CHIP in the District of Columbia and all 50 states of the United States. (Id. ¶ 18.)
The CHIP stated the following regarding continuation or termination of the policy:
You may continue this Policy in force for successive premium periods of one month each by payment of the premiums as specified in the following paragraphs. However, Prudential may refuse to continue this Policy as of any Policy Date anniversary, but only if Prudential is then refusing to continue all policies with the same provisions and premium rate basis in the jurisdiction where you reside. If Prudential takes this action you will be notified not less than 31 days before the Policy Date anniversary. (Id. ¶ 20.)
ii. Prudential "Closes the Block"
In 1981, Prudential ceased selling CHIP to new policyholders (it ―closed the block‖). (Id. ¶ 1.) Prudential did not disclose to its policyholders that it had closed the block. (Id.) The block closure prevented new policyholders from entering into the CHIP risk pool. (Id. ¶ 3.) New policyholders are generally healthier, and their premiums subsidize the premiums of less-healthy policyholders, who have higher rates of claims. (Id.) Prudential knew that the result of closing the CHIP block would be that the CHIP risk pool would face an ―anti-selection crisis‖ where healthy policyholders who could secure coverage elsewhere terminated their CHIP. (Id.) With CHIP closed to new entrants, and an insufficient percentage of healthy policyholders remaining to subsidize the costs of unhealthy policyholders, Prudential knew the result would be what is called a ―death spiral.‖ (Id.) In a death spiral, repeated cycles of higher premiums and a continually shrinking number of healthy policyholders cause premiums to eventually become so high that they force policyholders to drop their policies. (Id.)
Prudential knew at the time it closed the block that the design features of the CHIP policy made a death spiral inevitable after the block was closed. (Id. ¶ 4.) For example, the CHIP policy lacked inside limits on specific policy benefits, which allowed very ill policyholders to incur massive claims. (Id. ¶ 25.) A lack of inside limits accentuates the dynamics of a death spiral. (Id.) Prudential had access to the relevant actuarial data related to the CHIP and the risk pool, and policyholders relied on Prudential's actuarial expertise in managing the pool. (Id. ¶ 27.) Although Prudential knew that massive increases in premiums in the future were inevitable because it had closed the block, it concealed these facts from policyholders. (Id. ¶ 4.) Policyholders were informed when premiums increased, but they had no reason to know that the premium increases were a result of closing the block. (Id. ¶ 5.) Prudential made uniform written representations to policyholders about individual rate increases, but in such documents it never disclosed that the reason for the rate increase was that the CHIP block had closed or that such closure made extreme rate increases inevitable. (Id.) Prudential also did not disclose that, by the time the inevitable massive increases in the premiums forced them to drop their policies, the policyholders might be unable to secure comparable coverage for medical conditions that they developed later. (Id. ¶ 6.) Because Prudential failed to disclose that closing the CHIP block would inevitably result in unaffordable premiums, policyholders were unable to make an informed choice whether to renew CHIP or search for alternative health insurance. (Id. ¶ 7.) Expert information and actuarial knowledge concerning the existence and ramifications of the block closure was in the sole possession of Prudential and, because it was not disclosed, policyholders continued to renew their CHIP policies rather than look for alternative health insurance coverage. (Id. ¶ 28.)
Plaintiffs allege that policyholders expected that they would not be forced to search for alternative health insurance because Prudential limited its right to discontinue the CHIP policy. (Id. ¶ 8.) The CHIP policy states that policyholders ―may continue this Policy in force... by payment of premiums,‖ and that Prudential retained the right to discontinue the policy ―only if Prudential is then refusing to continue all policies with the same provisions and premium rate basis in the jurisdiction where [the policyholder] reside[s].‖ (Id.)
At the time Paul purchased his CHIP policy in 1980, Prudential made written representations that,
The premiums for your plan depend on the current costs of medical care and treatment. We continually review these costs and make adjustments in the premiums you pay so that they are kept current for the ages of those insured under your plan and the area in which you live. Medical care costs have been rising in recent years also. There is also a tendency for individual costs to increase with age. As a result, you may expect that there will be an increase in your premium each year on the anniversary date of your policy. We assure you that any increase will be held to the minimum possible that is consistent with our being able to continue providing this coverage.
Clark, Litwack, and CHIP policy holders generally received substantially the same representations when they purchased the policy. (Id.)
In communications with Clark, Prudential affirmatively misrepresented the reasons for the escalating premiums. (Id. ¶ 33.) When Prudential increased Clark's rates in 1996, 1997, 1998, 1999, and 2000, it sent Clark a form letter stating that the reasons CHIP premiums were increasing was simply due to the general rising medical costs and her increasing age. (Id.) The form letters stated, in relevant part,
Several factors have caused CHIP premiums to increase. Briefly, they are:
You (and your dependent spouse if included under your policy) are a year older than last year. Claim experience indicates that the frequency and size of claims generally increases as one gets older.
Increasing Cost of Medical Care
The cost of medical care continues to rise at a rate greater than the general rate of inflation. New medical equipment and complex medical procedures have resulted in remarkable advances in medical care, but they are expensive. Your CHIP benefits automatically adjust to the higher levels of health care costs.
The Plaintiffs allege, on information and belief, that all CHIP policy holders received the same form letters. (Id.)
In 1978, Clark, who is currently a resident of Vancouver, British Columbia, purchased CHIP from Prudential in San Diego, California, where she then resided. (Id. ¶ 12.) Clark also lived in Arizona for a period of time during which she had her CHIP. Her premium in 1982 was $149.66 per month (or $1,795.92 per year). (Id.) Prudential did not inform Clark that (1) it had closed the block for CHIP, (2) the closure would eventually force her policy into a death spiral, (3) her premiums were increasing because the block was closed, or (4) she might be unable to secure coverage for medical conditions she developed subsequent to the closure of the block if she were forced to terminate her CHIP due to high premiums. (Id.) From 2002 to 2004, Clark's premiums increased from $1,458.71 per month to $4,217.65 per month (or from $17,504.52 to $50,611.80 per year). (Id. ¶ 5.) In September 2005, Prudential notified Clark that her premium was scheduled to increase to $5,699 per month (or $63,388 per year). (Id. ¶ 36.) Clark then stopped making her payments and Prudential terminated her policy on September 12, 2005. (Id.) In response to correspondence with an attorney representing Clark and an inquiry from the California Department of Insurance, Prudential continued to state that Clark's CHIP premiums were rising because of her increasing age and the higher medical costs of the insured group. (Id. ¶ 37.) The TAC alleges that had Prudential disclosed the block closure and its implications, she would have discontinued her policy and purchased less expensive alternative insurance. (Id. ¶ 38.)
In 1980, Paul, who was then and is currently a resident of Indiana, purchased CHIP from Prudential. His initial premium was $25.50 per month (or $306 per year). (Id. ¶ 13.) Prudential did not inform him that (1) its closure of the block would make his policy vulnerable to an inevitable death spiral, (2) his premiums were increasing because the block was closed, or (3) he might be unable to secure coverage for medical conditions he developed subsequent to the closure of the block if he were forced to terminate his CHIP due to high premiums. (Id.) From 2002 to 2006, Paul's premiums increased from $715.99 per month to $3,057.45 per month (or from $8,591.88 to $36,689.40 per year). (Id. ¶ 40.) In 2007, Prudential notified Paul that his premium was scheduled to increase to $4,284.11 per month (or $51,409.32 per year). (Id. ¶ 41.) Shortly after this increase, Paul stopped making payments and his policy was terminated. (Id.) Even after Paul initiated an investigation in 2003, Prudential stated, in response to an inquiry from the Indiana Department of Insurance, that his premium increases were due to his increasing age and the higher medical costs of the insured group. (Id. ¶ 42.) If Paul had been informed about the block closure and its implications, he would have discontinued his CHIP policy and purchased less expensive alternative insurance. (Id. ¶ 43.)
In 1979, Litwack, who was then and is currently a resident of New Jersey, purchased CHIP from Prudential. (Id. ¶ 14.) After Litwack increased his deductible to $300, his premium in 1984 was $77.48 a month (or $929.76 a year). (Id.) Prudential did not inform him that (1) its closure of the block would make his policy vulnerable to an inevitable death spiral, (2) his premiums were increasing because the block was closed, or (3) he might be unable to secure coverage for medical conditions he developed subsequent to the closure of the block if he were forced to terminate his CHIP due to high premiums. (Id.) From 2007 to 2009, Litwack's premium increased from $1,353.49 to $2,068.68 per month (or from $16,241.88 to 24,824.16 per year). In 2009, Litwack increased his deductible from $300 to $5,000 in order to reduce his monthly premiums. The higher deductible reduced his 2009 premium to $1,327.67 per month (or $15,932.04 per year). In 2010, Prudential again raised his monthly premium to $1,682.67 (or $20,192.04 per year). (Id. ¶ 45.) If Prudential had disclosed the block closure and its implications, Litwack would have discontinued his CHIP policy and purchased less expensive alternative insurance. (Id. ¶ 43.)
The Plaintiffs seek to maintain this action as a class action, though they have not yet moved for certification of the class. They also seek (1) compensatory damages; (2) punitive or exemplary damages; (3) a permanent injunction against Prudential enjoining it from engaging in the practices alleged in the TAC; (4) a refund of all moneys acquired from Litwack and the putative New Jersey subclass by means of the unlawful practices; (5) a restoration of all money or property acquired by Prudential by means of unfair competition; (6) trebling of damages under the NJCFA; (7) declaratory relief; (8) trebling of damages under the California Civil Code § 3345; and (9) reasonable attorneys' fees and costs.
The TAC states claims for (1) fraudulent misrepresentation, on behalf of Clark, Litwack, and Paul; (2) fraudulent omissions, on behalf of Clark, Litwack, and Paul; (3) breach of the duty of good faith and fair dealing, on behalf of Clark and Litwack; (4) violation of the UCL on behalf of Clark; and (5) for violation of the NJCFA on behalf of Litwack.
Prudential argues that the common law fraud claims for each of the Plaintiffs are deficient. Specifically, Prudential asserts that (1) Clark's common law fraud claims should be dismissed for failure to properly plead a misrepresentation, omission or causation, and because they are barred by the relevant statute of limitations; (2) Paul's common law fraud claims fail to properly plead injury, a duty to disclose, a material misrepresentation, or causation; and (3) Litwack's common law fraud claims fail to properly plead a material omission or misrepresentation.
Additionally, Prudential argues that Clark's claims under the UCL should fail (1) as barred by the statute of limitations; (2) because she is ineligible for the equitable relief available under the UCL; and (3) for failure to state a claim. Moreover, if the Court does decide to allow Clark's UCL claim to proceed, she should be barred from collecting treble damages. Prudential also asserts that Clark's claim under the UCL is not subject to the treble damages under California Civil Code § 3345.
Prudential asserts that Litwack's claims are all barred by the filed rate doctrine. In the alternative, Litwack's claim for breach of the implied covenant of good faith and fair dealing fails to state a claim, and his claim under the NJCFA fails to plead ascertainable loss or unlawful conduct.
Federal Rule of Civil Procedure 12(b)(6) permits a court to dismiss a complaint for failure to state a claim upon which relief can be granted. When considering a motion under Rule 12(b)(6), the Court must accept the factual allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997). The Court's inquiry ―is not whether plaintiffs will ultimately prevail in a trial on the merits, but whether they should be afforded an opportunity to offer evidence in support of their claims.‖ In re Rockefeller Ctr. Prop., Inc., 311 F.3d 198, 215 (3d Cir. 2002).
The Supreme Court recently clarified the standard for a motion to dismiss under Rule 12(b)(6) in two cases: Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). The decisions in those cases abrogated the rule established in Conley v. Gibson, 355 U.S. 41, 45-46 (1957), that ―a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim, which would entitle him to relief.‖ In contrast, the Court in Bell Atlantic held that ―[f]actual allegations must be enough to raise a right to relief above the speculative level.‖ 550 U.S. at 545. The assertions in the complaint must be enough to ―state a claim to relief that is plausible on its face.‖ Id. at 570. The plausibility standard requires that the facts alleged ―allow the court to draw the reasonable inference that the defendant is liable for the conduct alleged‖ and demands ―more than a sheer possibility that a defendant has acted unlawfully.‖ Iqbal, 129 S.Ct. at 1949; see also, Phillips v. County of Allegheny, 515 F.3d 224, 234-35 (3d Cir. 2008) (in order to survive a motion to dismiss, the factual allegations in a complaint must ―raise a reasonable expectation that discovery will reveal evidence of the necessary element,‖ thereby justifying the advancement of ―the case beyond the pleadings to the next stage of litigation.‖).
When assessing the sufficiency of a complaint, the Court must distinguish factual contentions -- which allege behavior on the part of the defendant that, if true, would satisfy one or more elements of the claim asserted -- from ―[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements.‖ Iqbal, 129 S.Ct. at 1949. Although for the purposes of a motion to dismiss the Court must assume the veracity of the facts asserted in the complaint, it is ―not bound to accept as true a legal conclusion couched as a factual allegation.‖ Id. at 1950. Thus, ―a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth.‖ Id.
B. Litwack's Claims and the Filed Rate Doctrine
The Court will begin by addressing the filed rate doctrine since Prudential asserts that it should bar all of Litwack's claims, including his asserted causes of action under the NJCFA, and his common law claims for fraudulent misrepresentation, fraudulent omission, and breach of the duty of good faith and fair dealing. Prudential asserts that the filed rate doctrine bars claims seeking monetary damages or refunds that either directly or effectively would result in the policyholder paying less than the approved rate. Litwack argues that the filed rate doctrine does not bar his claims since this suit challenges communications to policyholders, rather than the calculation or approval of CHIP premium rates.
Generally, the filed rate doctrine provides that a rate filed with and approved by a governing regulatory agency is unassailable in judicial proceedings brought by ratepayers. Alston v. Countrywide Fin. Corp., 585 F.3d 753, 763 (3d Cir. 2009).The doctrine has developed as federal common law, which allows the Court to ―fill in the interstices of the doctrine by drawing on state law.‖ In re Pa. Title Ins. Antitrust Litig., 648 F. Supp. 2d 663, 673 (E.D. Pa. 2009) (citing Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90, 97-98 (1991)). The Court will focus principally on New Jersey law for guidance because this case involves the doctrine's application to a New Jersey regulatory agency's rate-making with regards to the CHIP policy. See id.
Prudential asserts that New Jersey jurisprudence and the relevant statutes governing the regulation of health insurance in the State of New Jersey require application of the filed rate doctrine to bar Litwack's claims. When a federal court applies state substantive law, it should apply the law as decided by the highest court of the state whose law governs the action. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938); Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358, 1373 (3d Cir. 1996). When a state's highest court has not addressed the precise question before the court, a federal court must predict how the state's highest court would resolve the issue. Borman v. Raymark Indus., Inc., 960 F.2d 327, 331 (3d Cir. 1992). Although not dispositive, decisions of state intermediate appellate courts should be accorded significant weight in the absence of an indication that the highest state court would rule otherwise. Rolick v. Collins Pine Co., 925 F.2d 661, 664 (3d Cir. 1991), cert. denied, 507 U.S. 973 (1993).
The filed rate doctrine provides that a rate filed with and approved by a governing regulatory agency is unassailable in judicial proceedings brought by ratepayers. Alston v. Countrywide Fin. Corp., 585 F.3d 753, 763 (3d Cir. 2009) (citing Wegoland Ltd. v. NYNEX Corp., 27 F.3d 17, 18 (2d Cir. 1994)).The doctrine is considered to have originated in Keogh v. Chicago & Northwestern Railway Co., 260 U.S. 156, 161-65 (1922), in which the Supreme Court of the United States determined that the Interstate Commerce Commission's approval of freight rates submitted by the defendants precluded a private antitrust action seeking damages on the basis of those rates.
The filed rate doctrine's application is only necessary when one of its core purposes is implicated. Smith v. SBC Communications, Inc., 178 N.J. 265, 275 (2004) (citing AT&T v. Central Office Tel., Inc., 524 U.S. 214, 223 (1998)). The two core policy goals of the doctrine are (1) the non-discrimination strand, or the prevention of price discrimination by carriers as among ratepayers; and (2) the non-justiciability strand, or the preservation of the role of regulatory agencies in approving reasonable rates and the exclusion of the courts from the rate-making process. Fax Telecomms., Inc. v. AT&T, 138 F.3d 479, 489 (2d Cir. 1998); H.J., Inc. v. Nw. Bell Tel. Co., 954 F.2d 485, 488 (8th Cir. 1992). The non-discrimination strand is premised in part on the concept that awarding damages to plaintiffs while leaving less litigious customers paying the filed rates would be discriminatory. See Goldwasser v. Ameritech Corp., 222 F.3d 390, 402 (7th Cir. 2000). The non-justiciability strand reflects the courts' general reluctance to substitute their judgment for the judgment of the regulatory agency vested with primary authority to make such decisions and the courts' limited ability to determine the reasonableness of rates. See AT&T v. JMC Telecom, LLC, 470 F.3d 525, 535 (3d Cir. 2006). Thus, part of the ―focus for determining whether the filed rate doctrine applies is the impact the court's decision will have on agency procedures and rate determinations.‖ H.J., Inc., 954 F.2d at 489; JMC Telecom, 470 F.3d at 535 (dismissing negligent misrepresentation claim because ―to rule otherwise would force the courts to determine what the reasonable rate would be in order to assess damages.‖).
Where applicable, the doctrine prevents a customer from enforcing contract or tort rights that contradict the tariff. JMC Telecom, 470 F.3d at 532 (citing Central Office, 524 U.S. at 226).
The effect of the doctrine is that ―[r]egardless of the carrier's motive -- whether it seeks to benefit or harm a particular customer -- the policy of nondiscriminatory rates is violated when similarly situated customers pay different rates for the same services.‖ Central Office, 524 U.S. at 223 (citing MCI Telecomms. Corp. v. AT&T, 512 U.S. 218, 229 (1994)). ―Thus, even if a carrier intentionally misrepresents its rate and a customer relies on the misrepresentation, the carrier cannot be held to the promised rate if it conflicts with the published tariff.‖ Central Office, 524 U.S. at 222 (citing Kansas City S. R. Co. v. Carl, 227 U.S. 639, 653 (1913)); see also Weinberg v. Sprint Corp., 173 N.J. 233. 243 (2002) (―[T]he filed rate doctrine bars money damages.where the damage claims are premised on state contract principles, consumer fraud, or other basis on which plaintiffs seek to enforce a rate other than the filed rate.‖); Richardson v. Standard Guar. Ins. Co., 371 N.J. Super. 449, 470 (App. Div. 2004) (―[T]he doctrine precludes a claim for damages which would indirectly cause the application of rates different from the filed rates.‖)
Accordingly, there is no fraud exception to the filed rate doctrine. JMC Telecom, 470 F.3d at 535. Where fraud is present, the courts have left enforcement to the regulators, who are best situated to discover when regulated entities engage in fraud and to remedy fraud when it arises. Wegoland, 27 F.3d at 21. Additionally, fraud may be difficult to prove because under the doctrine, ―[a]ll customers are conclusively presumed to have constructive knowledge of the filed tariff under which they receive service.‖ Fax Telecomms., 138 F.3d at 489. In short, a filed tariff is said to ―conclusively and exclusively enumerate the rights and liabilities of the contracting parties.‖ Marcus v. AT&T, 138 F.3d 46, 56 (2d Cir. 1998). The doctrine bars a plaintiff ―from seeking relief, whether equitable or legal, for having been misled by unconscionable sales practices which caused [a] plaintiff to enter into a contract consistent with the filed rate.‖ Richardson, 371 N.J. Super. at 470. ―Although the filed rate doctrine produces harsh results.such equitable concerns have been rejected by the Supreme Court.‖ JMC Telecom, 470 F.3d at 533 n.11 (citing Central Office, 524 U.S. at 223; Maislin Indus. v. Primary Steel, Inc., 497 U.S. 116, 128 (1990)).
As a preliminary matter, the Court will explore the development of the filed rate doctrine in New Jersey with respect to two issues; first, the application of the doctrine to state (as well as federal) rate-making, and second, the doctrine's relevance in the context of insurance regulation.
The Appellate Division of the Superior Court of New Jersey reasoned in a recent opinion that the filed rate doctrine should apply to state as well as federal rate-making. Richardson, 371 N.J. Super. at 462. The Appellate Division cited cases from various federal courts of appeals in support of this finding. See id. (citing Wegoland, Ltd. v. NYNEX Corp., 27 F.3d 17, 20 (2d Cir. 1994); Taffet v. Southern Co., 967 F.2d 1483, 1494 (11th Cir. 1992), cert. denied, 506 U.S. 1021 (1992); H.J. Inc. v. Northwestern Bell Tel. Co., 954 F.2d 485, 488 (8th Cir. 1992), cert. denied, 504 U.S. 957 (1992)). Accordingly, the Court finds that the filed rate doctrine may be applied to rate-making by a New Jersey regulatory agency.
Second, although the filed rate doctrine traditionally applied to public utilities and common carriers, the Appellate Division has held that it also applies to insurance regulation. Richardson, 371 N.J. Super. at 463. The plaintiff in Richardson alleged that the sales practices of three insurance companies and a credit card company fraudulently induced her to purchase various insurance policies, including credit interruption of income insurance, combined credit life and credit disability insurance, and credit family leave insurance. Id. at 458-59. In determining that the filed rate doctrine should apply to insurance rate-making, the Appellate Division found that (1) many other jurisdictions had applied the doctrine to insurance industry ...