“Primary jurisdiction . . . applies where a claim is originally cognizable in the courts, and . . . enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body.”
How later courts described this case
- “Primary jurisdiction . . . applies where a claim is originally cognizable in the courts, and . . . enforcement of the claim requires the resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body.”
Written by the judges who cited it.
The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
BASIT MIAN, §
Plaintiff, §
§
v. § CIVIL ACTION NO. 4:20-00536
§
PROGRESSIVE COUNTY MUTUAL §
INSURANCE COMPANY, J.D. §
POWER, and MITCHELL §
INTERNATIONAL, INC., §
Defendants. §
MEMORANDUM AND ORDER
Before the Court in this putative class action for breach of contract and bad
faith is Plaintiff Basit Mian’s (“Plaintiff’s”) Motion for Reconsideration [Doc. # 45]
(“Motion”). Defendant Progressive County Mutual Insurance Company
(“Progressive”) responded,1 and Plaintiff replied.2 The Motion is ripe for decision.
Based on the parties’ briefing, pertinent matters of record, and relevant legal
authority, the Court denies Plaintiff’s Motion.
1 Progressive County Mutual Insurance Company’s Opposition to Plaintiff’s Motion
to Reconsider [Doc. # 46] (“Response”).
2 Plaintiff Basit Mian’s Reply Brief in Support of Motion for Reconsideration [Doc.
# 49] (“Reply”).
I. BACKGROUND
A full summary of this case’s factual background can be found in the Court’s
June 10, 2020 Memorandum and Order [Doc. # 43] (the “Prior Order”).
Plaintiff is the former owner of a vehicle insured by Progressive and damaged
in a car accident in April 2019.3 Following the accident, Progressive determined
that the Vehicle was a “total loss.”4 Progressive used a Work Center Total Loss
(“WCTL”) report—a valuation methodology developed through a joint partnership
between J.D. Power and Mitchell International, Inc. (the “Valuation Defendants”
and, together with Progressive, “Defendants”)—to determine that the pre-crash cash
value of Plaintiff’s vehicle was $8,364.60.5
Plaintiff filed this action on behalf of himself and others similarly situated
claiming that Progressive’s WCTL reports were “statistically invalid and do[] not
result in a proper valuation for total loss vehicles in Texas.”6 Plaintiff brought claims
for breach of contract and bad faith against Progressive,7 claims for tortious
3 Plaintiff’s Original Petition [Doc. # 1-3] (“Complaint”) ¶¶ 17-19.
4 Id. ¶ 19. Vehicles are typically determined to be “total losses” when the estimated
repair costs exceed either the value of the vehicle or 80% of the pre-crash value of
the vehicle. Id. ¶ 54.
5 Id. ¶¶ 24, 28.
6 Id. ¶ 35.
7 Id. ¶¶ 90-103.
interference with performance of a contract and breach of contract against the
Valuation Defendants,8 and claims for civil conspiracy against all Defendants.9
Defendants moved to dismiss Plaintiff’s claims or, alternatively, to stay the
case under the primary jurisdiction doctrine.10 The Court granted in part and denied
in part Defendants’ motions, dismissing without prejudice Plaintiff’s claim against
the Valuation Defendants for breach of contract and staying the remaining claims
under the primary jurisdiction doctrine.11 Plaintiff now moves the Court to
reconsider its Prior Order staying the case.12
II. LEGAL STANDARD
The Federal Rules of Civil Procedure do not specifically provide for motions
for reconsideration. See Shepherd v. Int’l Paper Co., 372 F.3d 326, 328 n.1 (5th Cir.
2004). Courts, however, retain the power to revise interlocutory orders before
entering judgment adjudicating the parties’ claims, rights, and liabilities under Rule
54(b), and a motion urging the court to change an order or judgment is generally
8 Id. ¶¶ 104-120.
9 Id. ¶¶ 121-127.
10 See Progressive County Mutual Insurance Company’s Motion to Dismiss or,
Alternatively, to Stay [Doc. # 19]; J.D. Power’s and Mitchell International, Inc.’s
Motion to Dismiss Pursuant to Rule 12(b)(6) [Doc. # 21].
11 See Prior Order at 21-22.
12 See Motion.
considered a motion to alter or amend under Rule 59(e). See, e.g., Hazim v. Schiel
& Denver Publishing Ltd., H-12-1286, 2015 WL 5227955, at *2 (S.D. Tex. Sept. 8,
2015).
Rule 59(e) “serves the narrow purpose of allowing a party to [1] correct
manifest errors of law or fact or [2] to present newly discovery evidence.” Templet
v. HyrdoChem Inc., 367 F.3d 473, 479 (5th Cir. 2004). Motions under Rule 59(e)
are “not the proper vehicle for rehashing evidence, legal theories, or arguments that
could have been offered or raised before the entry of judgment.” Id. To be entitled
to relief under Rule 59(e), Plaintiff “must clearly establish” either a “manifest error
of law or fact,” or “present newly discovered evidence.” Rosenzweig v. Azurix
Corp., 332 F.3d 854, 863-64 (5th Cir. 2003).
III. DISCUSSION
Plaintiff argues the Court committed manifest error and should revise its
ruling on primary jurisdiction for three reasons. Plaintiff contends (1) the Texas
Department of Insurance (“TDI”) has no jurisdiction to review the WCTL
methodology; (2) legal exceptions preclude application of the primary jurisdiction
doctrine in this case, and (3) the Court failed to balance the benefits of agency
determination with the costs to the parties before invoking the primary jurisdiction
doctrine.13 The Court addresses each of Plaintiff’s arguments in turn.
A. Jurisdiction of the Texas Department of Insurance
Plaintiff first argues that the Court’s decision to stay the case in favor of
resolution of certain issues by TDI was manifest error because TDI does not have
jurisdiction to review the WCTL methodology.14 Plaintiff claims that TDI lacks
jurisdiction to review the WCTL methodology because there is no Texas law or
regulation specifically describing how insurers should estimate actual cash value of
total loss vehicles.15 Plaintiff’s argument is not persuasive.
Application of the primary jurisdiction doctrine does not require a statute or
regulation on the exact question at issue, only that the question fall within the scope
of the agency’s jurisdiction. See U.S. v. Western Pac. R. Co., 352 U.S. 59, 63-64
(1956) (“Primary jurisdiction . . . applies where a claim is originally cognizable in
the courts, and . . . enforcement of the claim requires the resolution of issues which,
under a regulatory scheme, have been placed within the special competence of an
administrative body.”). Indeed, if TDI had already promulgated precise guidance
on how to estimate the cash value of total loss vehicles that regulatory guidance
13 Motion at 3-6.
14 Id. at 3.
15 Id.
would inform courts in determining the legality of the WCTL procedures and
assumptions and there would be less reason to refer that question to the agency. TDI
has broad authority to regulate insurance practices including claims settlement
practices.16 Plaintiff’s claims fall squarely within the arena of Progressive’s
16 Title 10, Subtitle C of the Texas Insurance Code sets out a statutory scheme
governing automobile insurance, including policy forms, id. § 1952.051, required
coverage, id. § 1952.0515, the types of personal injuries covered by policies with
personal injury protection; id. § 1952.151the manner in which motor vehicles must
be repaired pursuant to an insurance policy, id. § 1952.301-05, when insurers must
make payment of benefits, id. § 1952.156, and penalties for failure to timely pay
claims, id. § 1952.157. The Subtitle also gives TDI broad authority to “adopt and
enforce reasonable rules necessary to carry out the provisions of this subtitle. Id.
§ 1951.002.
Title 5 of the Texas Insurance Code, titled “Protection of Consumer Interests,”
prohibits all insurers from engaging in certain deceptive or unfair business practices,
including “unfair settlement practices” such as “misrepresenting to a claimant a
material fact or policy provision relating to coverage at issue.” Id. § 541.060(1).
Title 5 gives TDI authority to “examine and investigate the affairs of a person
engaged in the business of insurance in this state to determine whether the person
has or is engaged in an unfair method of competition or unfair or deceptive act or
practice,” id. § 541.101, and to “adopt and enforce reasonable rules the
commissioner determines necessary to accomplish the purposes of this chapter.”
§ 541.401.
TDI has used its broad authority to issue bulletins explaining the Department’s
position on insurance settlement practices, including how to calculate actual cash
value of covered property, Commissioner’s Bulletin # B-00450-98 (June 12, 1998),
available at https://www.tdi.texas.gov/bulletins/1998/b-0045-8.html, and
Commissioner’s Bulletin # B-0068-08 (Sept. 29, 2008), available at
https://www.tdi.texas.gov/bulletins/2008/cc70.html, whether insurers must pay for
an automobile’s diminished value, Commissioner’s Bulletin # B-0027-00 (April 6,
2000), available at https://www.tdi.texas.gov/bulletins/2000/b-0027-0.html, and
insurers’ contracts with auto repair facilities and related disclosures to consumers,
Commissioner’s Bulletin # B-0026-11 (June 20, 2011), available at
https://www.tdi.texas.gov/bulletins/2011/cc25.html and Commissioner’s Bulletin
settlement practices, and the Court concludes it was not manifest error to find TDI
has jurisdiction to review the WCTL methodology.
Plaintiff next argues that even if TDI does have jurisdiction to review the
WCTL methodology, referring Plaintiff’s claims to the agency does not further the
fundamental purposes of the primary jurisdiction doctrine.17
Referral under the primary jurisdiction doctrine is appropriate where “(a) it
will promote even-handed treatment and uniformity in a highly regulated area, or
when sporadic action by federal courts would disrupt an agency’s delicate regulatory
scheme; or (b) the agency possesses expertise in a specialized area with which the
courts are relatively unfamiliar.” Elam v. Kansas City S. Ry. Co., 635 F.3d 796, 811
(5th Cir. 2011); see also Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84
S.W.3d 212, 221 (Tex. 2002).
Referral of Plaintiff’s claims to TDI furthers both of these goals. The Supreme
Court of Texas has recognized that uniform application of laws and regulations is
particularly important in the insurance industry, especially where, as here, the policy
provision or practice is used by different insurers across the state. See National
Union Fire Ins. Co. v. CBI Indus., 907 S.W.2d 517, 522 (Tex. 1995); Beacon Nat.
# B-0022-07 (May 22, 2007) available at
https://www.tdi.texas.gov/bulletins/2007/cc21.html.
17 Motion at 3-4.
Ins. Co., 86 S.W.3d at 272 (“[T]he supreme court [of Texas] has recognized the
importance of uniformity, especially when policy provisions are identical across the
country.”). “[S]poradic action” by courts determining the propriety of a valuation
methodology is unlikely to result in uniformity in the context of used cars, where
variables such as make, model, year, condition, mileage, and upgrades lead to large
differences in value among vehicles. Elam, 635 F.3d at 811. For example, the
WCTL methodology could fairly value certain cars, but systematically undervalue
other types of cars. A court asked to opine on the fairness of the WCTL methodology
in the context of a one-year-old Toyota Camry could reach a very different
conclusion than a Court asked to opine on the fairness of the methodology as it
relates to a thirty-year-old sports car. TDI, on the other hand, has the authority and
expertise to evaluate the WCTL methodology generally and ensure that its
conclusions are applied consistently throughout the state. Beacon Nat. Ins. Co., 86
S.W.3d at 272 (“Resolution of the issues raised by [insurer] potentially impact all
insurers writing homeowner coverage in Texas. The issues should first be addressed
in a broader administrative proceeding, not in two party litigation.”).
Plaintiff argues that TDI does not possess expertise to evaluate the WCTL
methodology because, he claims, this case involves “complex mathematical,
statistical and electronic database development and analysis issues, not insurance
issues.”18 Plaintiff’s argument ignores the obvious context in which those
mathematical, statistical, and database development and analysis issues arise. The
settlement of an insurance claim does not cease to be an insurance issue simply
because the focus of the dispute necessitates mathematical or statistical calculations.
Plaintiff’s claims turn on the propriety of an insurance claims settlement practice on
which TDI is equipped to opine.19 The Court concludes that it was not manifest
error to find that TDI had jurisdiction to investigate the WCTL methodology.
Plaintiff argues this case is analogous to Litton Systems v. Southwestern Bell
Telephone Co., 539 F.2d 418 (5th Cir. 1976), where the Fifth Circuit reversed as an
abuse of discretion the district court’s stay of the case under the primary jurisdiction
doctrine. The plaintiff in that case claimed that the defendant’s tying of telephone
18 Motion at 2.
19 The Texas Court of Appeals came to a similar conclusion in Beacon National
Insurance Co., finding that an insurer’s claim that it had no duty to repair or replace
a multi-layer roof under the terms of an insurance policy:
[i]nvolve[d] many more complex issues than simple contract
interpretation. TDI’s enforcement of insurer claims handling
practices is necessarily informed by court interpretations of policy
language. However, the issues raised by [insurer’s] complaints
implicate other questions concerning such matters as structural
engineering, residential construction, and premium rating. TDI can
better address, at least initially, these fact-based questions and apply
its regulatory expertise and historical perspective to these issues.
86 S.W.2d at 272.
equipment and services violated the Sherman Act. Id. at 419. In response, the
defendant argued that it was immune from antitrust laws because state regulations
“compel[ed] it to charge certain rates and employ certain marketing practices.” Id.
at 422. The Fifth Circuit found that the defendant was not immune because “[n]o
state statute, case, regulation, or ruling has been cited as suggesting even remotely
that the acquiescence [of the agencies] in the asserted tying arrangements [was] the
product of any coherent state policy.” Id. at 424. Crucially, the Fifth Circuit did not
hold that the primary jurisdiction doctrine was inapplicable because there was no
statute or regulation on point, but because the lack of any relevant statute or
regulation directly governing the defendant’s conduct meant that defendant could
not claim immunity from antitrust laws. Id. Litton Systems is inapposite here.
Progressive does not claim to be immune from Plaintiff’s claims under the limited
state action doctrine. WCTL reports are used by multiple insurers in Texas, and this
putative class action highlights the need for uniform rules regarding the
methodology for creation of the reports. The experts at TDI are well-equipped to
make this threshold determination. The Court again concludes that referring the case
to TDI furthers the purposes of the primary jurisdiction doctrine.
B. Exceptions to the Primary Jurisdiction Doctrine
Plaintiff next argues, for the first time, that even if the primary jurisdiction
doctrine could apply here, Plaintiff’s claims fall within two established exceptions
to its application. As a threshold matter, this argument could have been raised
previously and is therefore an inappropriate basis for reconsideration.20 In an
abundance of caution and for the sake of clarity, the Court will nevertheless briefly
address this new argument.
The Texas Supreme Court has recognized two exceptions to the primary
jurisdiction rule: “(1) Where the issue is one inherently judicial in nature . . . the
courts are not ousted from jurisdiction, unless the Legislature, by a valid statute, has
explicitly granted exclusive jurisdiction to the administrative body. . . . (2) The
primary jurisdiction does not apply when the administrative agency is powerless to
grant the relief sought and has no authority to make incidental findings which are
essential to the granting of the relief.” Lake Country Estates, Inc. v. Toman, 624
S.W.2d 677, 681 (Tex. App.—Fort Worth 1981) (citing Foree v. Crown Central
Petroleum Corp., 431 S.W.2d 312, 316 (Tex. 1968)) (internal quotation marks and
citations omitted). Neither exception applies here.
20 See, e.g., Banister v. Davis, 140 S. Ct. 1698, 1703“courts will not address new
arguments or evidence that the moving party could have raised before the decision
issued.”); Gleason v. Markel Am. Ins. Co., 774 F. App’x 203, 204 (5th Cir. 2019)
(finding district court did not err in refusing to consider new arguments on motion
for reconsideration); In re La. Crawfish Producers, 852 F.3d 456, 462 (5th Cir.
2017) (same); LeClerc v. Webb, 419 F.3d 405, 412 n.13 (5th Cir. 2005) (same).
Plaintiff attempts to recast this case as a simple claim for breach of contract
and conspiracy, arguing that these are “inherently judicial” questions.21 Plaintiff’s
argument is not persuasive. The parties do not dispute the relevant facts, the
governing law, or the terms of the contract at issue. Rather, this case turns on
complex statistical analyses that are not “inherently judicial” and are better assessed
by TDI. See Beacon Nat. Ins. Co., 86 S.W.2d at 272 (“While courts alone are
authorized to construe written contracts and adjudicate rights thereunder, this case
involves many more complex issues than simple contract interpretation. . . . the
issues raised by [insurer’s] complaints implicate other questions concerning such
matters as structural engineering, residential construction, and premium rating. TDI
21 Plaintiff argues this case is analogous to other cases in which courts have applied
the “inherently judicial” to the primary jurisdiction doctrine. See Motion at 11-12
(citing Dolenz v. Sw. Bell Telephone Co., 730 S.W.2d 44, 44 (Tex. App.—Houston
[14th Dist.] 1987); Mitz v. Teas State Bd. of Veterinary Med. Examiners, 278
S.W.3d 17, 23 (Tex. App.—Austin 2009); Manchester Terminal Corp. v. Texas TX
Marine Transp., Inc., 781 S.W.2d 646, 651 (Tex. App.—Houston [14th Dist.]
1981)). None of these cases involved claims predicated on a factual issue within
the expertise of an agency and accordingly are not persuasive here. At issue in
Dolenz was whether a plaintiff had to exhaust his administrative remedies before
bringing tort claims against a telephone company. 730 S.W.2d at 45. Mitz involved
claims that the Texas State Board of Veterinary Medical Examiners’ regulation of
equine dentistry was unconstitutional. The plaintiff in Manchester asked the court
to determine whether certain emissions constituted trespass or nuisance, but did not
challenge defendant’s environmental permits or ask the court to “make a
determination regarding an acceptable level of emissions of air contaminants.” 781
S.W.2d at 650.
can better address, at least initially, these fact-based questions and apply its
regulatory expertise and historical perspective to these issues.”).
Nor is TDI powerless to grant the relief sought. Plaintiff argues that the
agency is powerless to award him money damages on his common law claims. This
overstates the issue referred to TDI. The Court has referred to TDI only the predicate
factual question of the validity of the WCTL methodology, an “incidental finding[]
which [is] essential to the granting of the relief.” Lake Country Estates, 624 S.W.2d
at 681. As discussed in Section III.A, supra, TDI certainly has the authority to
resolve that question. Plaintiff may proceed with his common law claims once TDI
has answered the threshold question of whether the WCTL methodology is valid.
C. Balancing Test
Plaintiff argues that the Court committed manifest error in failing to perform
a balancing test before staying the case. Plaintiff claims that the Fifth Circuit in
Occidental Chemical Corporation v. Louisiana Public Service Commission, 810
F.3d 299 (5th Cir. 2016), required courts to balance the benefits of agency
determination with the delay and cost that seeking such a determination would cause
the parties in application of the primary jurisdiction doctrine.22 Plaintiff goes on to
22 Motion at 20-21 (citing Occidental Chem. Corp. v. Louisiana Pub. Service
Commission, 810 F.3d 299, 309-10 (5th Cir. 2016)).
argue that, had the Court performed this balancing test, it would have found the delay
and expense of staying the case outweighed any benefits of referral to TDI.
Plaintiff failed to raise this issue before the Prior Order, and it is therefore an
inappropriate basis for reconsideration.23 Nevertheless, the Court briefly addresses
this argument.
Occidental Chemical teaches that courts invoking the doctrine of primary
jurisdiction consider the likely benefits of agency referral and weigh those benefits
against any prejudice or costs that may accrue to the parties as a result of agency
referral. 810 F.3d at 302 (“a district court with subject matter jurisdiction may, under
appropriate circumstances, defer to another forum, such as an administrative agency,
which also has non-exclusive jurisdiction, based on its determination that the
benefits of obtaining aid from that other forum outweigh the need for expeditious
litigation.”). Occidental Chemical does not require that, in performing this
balancing test, courts must explicitly weigh every conceivable harm or
inconvenience, including those not mentioned by the parties. See RPV, Ltd. as
Trustee for Village Trust v. Netsphere, Inc., 771 F. App’x 532, 536 (5th Cir. 2019)
(arguments not raised are generally deemed waived). In opposing Progressive’s
motion to stay the case, Plaintiff never argued that referral to TDI would harm him
23 See, e.g., Banister, 140 S. Ct. at 1703; Gleason, 774 F. App’x at 204; In re La.
Crawfish Producers, 852 F.3d at 462; LeClerc, 419 F.3d at 412 n.13 (5th Cir. 2005).
in any way.24 Additionally, the merits of the balancing test weigh in favor of agency
referral because there are considerable benefits to TDI’s input in this putative class
action. Referring to TDI the question of the validity of the WCTL methodology
allows for complex statistical questions to be answered by experts and the creation
of uniform and consistent rules, which will inform the legal issues Plaintiff seeks to
apply broadly to possibly hundreds of class members. The Court did not commit
manifest error in weighing the benefits and harms of agency referral.
IV. CONCLUSION
The Court did not commit manifest error in concluding in the Prior Order that
TDI has jurisdiction to determine the validity of the WCTL methodology, that
referral to the agency would further the purpose of the primary jurisdiction doctrine,
and that established exceptions to the primary jurisdiction doctrine are inapplicable
here. The Court also did not commit manifest error in balancing the benefits and
harms of agency referral in its Prior Order. For the foregoing reasons it is
ORDERED that Plaintiff’s Motion is DENIED. It is further
ORDERED that on or before November 19, 2020, Plaintiff must file with
the Texas Department of Insurance an administrative complaint against Progressive
based on Progressive’s use of the WCTL methodology to value Plaintiff’s vehicle.
24 See Plaintiff’s Response in Opposition to Defendant Progressive’s Motion to
Dismiss [Doc. # 33].
Plaintiff shall file with the Court on or before November 30, 2020 a status report
attaching a copy of his administrative complaint against Progressive. Plaintiff’s
failure to timely file an administrative complaint against Progressive or to file a copy
of any such complaint with the Court will result in his claims being dismissed
without prejudice. It is further
ORDERED that Plaintiff and Progressive shall submit a joint status report
regarding the progress of Plaintiffs administrative complaint and any rulings by TDI
every three months thereafter.
SIGNED at Houston, Texas, this 215+ day of October, 2020.
Ang
SENIOR UNI STATES DISTRICT JUDGE
16
P\ORDERS\I-20201536Reconsideration docx. 201020806