Opinion ID: 1198871
Heading Depth: 1
Heading Rank: 2

Heading: judicial abstention, the ucl and primary jurisdiction

Text: It is a truism that UCL litigation over industry-wide economic practices hampers rather than advances effective regulation. Several recent private UCL suits seeking to short-circuit complex regulatory schemes have been dismissed on that common ground. As one Court of Appeal wrote in dismissing a suit seeking court-created regulation of [insurance] brokers ( Crusader Ins. Co. v. Scottsdale Ins. Co. (1997) 54 Cal.App.4th 121, 138, 62 Cal.Rptr.2d 620), [i]nstitutional systems are ... in place to deal with [the issue]. There is no need or justification for the courts to interfere.... ( Ibid. ) Wolfe v. State Farm Fire & Casualty Ins. Co. (1996) 46 Cal.App.4th 554, 53 Cal.Rptr.2d 878, is on all fours. Plaintiff sought a judgment that a refusal to include earthquake damage in homeowners insurance policies violated the UCL; the Court of Appeal dismissed: Assuming... [plaintiff] can state a cause of action ... that by itself does not permit unwarranted judicial intervention in an area of complex economic policy. ( Id. at pp. 564-565, 53 Cal.Rptr.2d 878, fn. omitted; see also Samura v. Kaiser Foundation Health Plan, Inc. (1993) 17 Cal.App.4th 1284, 1301-1302, 22 Cal.Rptr.2d 20 [UCL suit challenging health policy reimbursement provision; courts cannot assume general regulatory powers over health maintenance organizations through [the UCL]]; California Grocers Assn. v. Bank of America (1994) 22 Cal.App.4th 205, 218, 27 Cal.Rptr.2d 396 [UCL challenge to bank assessments on NSF checks; [j]udicial review of one service fee charged by one bank is an entirely inappropriate method of overseeing bank service fees].) Because these cases implicated complex regulatory issues, their resolution in a private UCL suit was inappropriate. Either the Legislature had imposed its own regulatory solution, or UCL litigation was the wrong medium. And because regulatory proceedings were more appropriate, these courts abstained, refusing to exercise jurisdiction under the UCL. The reasoning of these cases applies here, where plaintiffs, by leveraging the UCL, want to require the Superior Court of El Dorado County to assume the regulatory jurisdiction of the Department of Insurance. That the insurance industry is highly regulated suggests a related doctrine may apply  primary jurisdiction. We invoked that doctrine in Farmers Ins. Exchange v. Superior Court (1992) 2 Cal.4th 377, 6 Cal.Rptr.2d 487, 826 P.2d 730 ( Farmers ), a case presenting the same mix of economic, policy and regulatory issues. The Attorney General sued to require auto insurers to offer the Good Driver Discount adopted as part of Proposition 103 (Ins.Code, §§ 1861.02, 1861.05; enacted by the voters in Nov. 1988). Relying on provisions of the Insurance Code, we concluded that considerations of judicial economy, and concerns for uniformity in application of the complex insurance regulations, supported initial resort to the Insurance Commissioner. ( Farmers, supra, 2 Cal.4th at p. 396, 6 Cal. Rptr.2d 487, 826 P.2d 730.) It is not simply that a single superior court judge hearing a single UCL case is a poor choice to resolve a myriad of complicated fact and policy issues tied to the economics, risks, cost and availability of title insurance. It is that given the scope of its administrative authority and depth of regulatory experience, the Department of Insurance is likely to prove better at the job. In this case, the practical meaning of primary jurisdiction is the virtual plenary jurisdiction of the department over insurance and insurers and their business practices. It can employ resources to develop an accurate picture of the economics of title insurance, its costs, availability, and industry practices; it can determine the forces behind plaintiffs' complaint; if warranted, it can prescribe an industry-wide remedy. It was to support the use of broad administrative powers in highly regulated businesses that primary jurisdiction was invented. Just as we took advantage of the commissioner's resources in Farmers, supra, 2 Cal.4th 377, 6 Cal.Rptr.2d 487, 826 P.2d 730, we ought to do so here. Whether proceedings before the department increase the availability of title insurance for tax deeds is not the point. Primary jurisdiction does not oust the courts; it enables them to bring the investigative and policy resources of experts to bear on complex regulatory issues.