Class Action Alleging Fidelity Failed to Disclose and Provide Discounted Title Insurance Rates to Homeowners as Part of Refinance Transactions Entitled to Class Action Treatment Ohio Federal Court Holds
Plaintiffs filed a class action lawsuit against their title insurance carrier, Fidelity National Title, alleging that the cost it charged insureds for insurance issued in connection with refinance transactions; specifically, the class action alleged that plaintiffs “have been injured and wronged by defendant’s failure to charge them a lower premium,” as required by Ohio law, “even though they were not named insureds under the title insurance policy.” Randleman v. Fidelity National Title Ins. Co., ___ F.Supp.2d ___ (N.D. Ohio January 31, 2008) [Slip Opn., at 1]. Of course, homeowners typically pay for title insurance, both for themselves and for their lenders, id., at 2. Defense attorneys filed a motion to dismiss the class action to the extent it asserted claims for breach of implied-in-fact contract and unjust enrichment, which the district court denied. See Randleman v. Fidelity National Title Ins. Co., 465 F.Supp.2d 812, 827 (N.D. Ohio 2007). Plaintiffs then filed a motion to certify the litigation as a class action, id. The trial court concluded that the matter may proceed as a class action.
Like all other title insurers doing business in Ohio, Fidelity belongs to the Ohio Title Insurance Rating Bureau (OTIRB) and files its insurance rates with the Ohio Superintendent of Insurance. Randleman, at 2. “The OTIRB files a manual of rates with the Ohio Department of Insurance (ODI), setting forth the rates title insurers will charge for policies.” Id. The rates in the manual are binding on title insurers, and the listed rates are mandatory though Ohio law provides for certain discounted rates, id., at 2-3. The class action complaint alleged that plaintiffs refinanced their Ohio home and paid a non-discounted rate for a title policy for their lender, id., at 3. The class action further alleged that plaintiffs had refinanced within the time period that would have qualified them to receive a discounted reissue rate, and that “they were overcharged $213.57.” Id., at 4. Plaintiffs’ class action certification motion argued that Fidelity systematically failed to provide discounts “despite knowledge that particular consumers are entitled to the discounted rate.” Id., at 5. Defense attorneys opposed class action treatment on the ground that “the issue of knowledge of the discount on the part of each individual class member would be determinative, and would require individualized adjudication of ‘as to the knowledge and practices of the particular lender, mortgage broker, agent, and borrower involved in the transaction’…, and thus, individual adjudication of each class member’s claim.” Id. Plaintiffs countered that Fidelity’s non-disclosure or a homeowner’s lack of knowledge is not an element of the causes of action underlying the class certification motion, so individual trials would not be required. Id., at 5-6.
The court found that the commonality requirement of Rule 23(a)(2) had been met because plaintiffs’ claims “concern whether they were eligible for and entitled to the discounted rate under Fidelity’s filed rates, whether they failed to receive that rate as a result of Fidelity’s systematic wrongdoing, whether Fidelity was unjustly enriched, and whether they sustained damages,” all of which are “issues and questions…shared by all members of the proposed class and are identical in all material respects.” Randleman, at 9-10. The court found no “material variations” in the central issues of the case, and that “‘[t]he existence of routine and standardized practices giving rise to numerous claims weigh in favor of finding commonality, as well as typicality.’” Id., at 11 (citation omitted). (We summarize the remaining Rule 23(a) elements in the Note, below.) And with respect to Rule 23(b)(3)’s predominance and superiority requirements, the court held that each of the four factors a court considers for guidance – viz., “(A) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in a particular forum; and (D) the difficulties likely to be encountered in the management of a class action,” id., at 14 – weighed in favor of certification, see id., at 14-20. The court recognized that Fidelity’s interest in a homeowner’s knowledge of the discount is “a fair and proper question,” but concluded that “any homeowner who did not get the discount lacked knowledge.” Id., at 20 n.7. The court noted that “[a]dopting this viewpoint will eliminate the need for individual determination of whether the homeowner knew about the discount.” Id.
The district court also concluded that class action treatment was the superior means of resolving the dispute. The amounts at issue were too minor to likely be resolved individually, and the court reiterated its conclusion that management of the class action would not result in thousands of mini-trials. Randleman, at 20-23. Accordingly, the federal court granted plaintiff’s motion for class certification, id., at 23.
NOTE: Rule 23(a)(1) numerosity was not at issue, as the class included tens of thousands of insureds. Randleman, at 9. The court also concludes that the claims of the putative class members were typical within the meaning of Rule 23(a)(3), id., at 11-12, and that the adequacy requirement of Rule 23(a)(4) had been satisfied, id., at 12-13.