Delaware Legislative Update: McCray, et al. v. Fidelity National Title Insurance Company, et al.

September 2010Newsletters In the Zone

The U.S. District Court for the District of Delaware recently ruled that Delaware title insurance companies’ collective rate setting practices are governed by the state laws of Delaware and are thus exempt from the provisions of the Sherman Act.

The plaintiffs in this case brought an action against 20 defendants, which included title insurance companies and the State of Delaware Insurance Rating Bureau, alleging the title insurance companies conspired with one another to fix the price of title insurance in Delaware.

The plaintiffs claim violations of the federal antitrust law (the Sherman Act).

In Delaware, the Department of Insurance regulates title insurance. Title insurers must file their rates with the Department of Insurance (DOI). This may be done through membership in a licensed rating bureau. The filed rates may be charged unless the Delaware Insurance Commissioner disapproves the rate. In this case, the only rate filing with the DOI was effective as of February 1, 2004.

The plaintiffs alleged the title insurers in Delaware set uniform rates that have not changed since 2004 and claimed the Sherman Act is not preempted by the McCarran-Ferguson Act, which confers antitrust immunity over the “business of insurance” to the extent it is regulated by state law so long as the conduct is not an “agreement to boycott, coerce or intimidate.” The defendants contended the plaintiffs’ claim is barred by the McCarran-Ferguson Act as well as other doctrines.

The court found that the plaintiffs’ Sherman Act claims challenge the rate making process for title insurance in Delaware. Delaware law permits title insurance companies to comply with the rate filing requirements through membership in a licensed rating bureau, and in Delaware, the DOI regulates title insurance. Accordingly, the court found the defendants collective rate setting practices are the “business of insurance,” and Delaware law governs these practices. Thus, the McCarran-Ferguson Act’s exemption provision bars the plaintiffs’ Sherman-Act claim.

For more information, please contact Michael J. Isaacs at 302.622.4213 or [email protected]