Appellate Courthouse in New York City (Second Circuit). Image courtesy of New York Pubic Library.
To recap a discussion that was started here on Thursday, March 3, 2016:
The old notion about lawsuits was that people and some businesses filed complaints for no good reason. The lawsuits and the people who filed them were mostly thought of as frivolous. They served no purpose, it was thought, other than to cost the defendants time and money.
Today lawsuits are judged by whether the judge thinks the lawsuit is "plausible" from the beginning. This test was thought up by a Federal judge, naturally. "Plausible" means not just "possible" but whether a judge thinks that the lawsuit is "believable," somewhere between the merely "possible" and the definitely "probable" (although the opinions expressed by judges in decided cases are much closer to declarations that the judges have to be convinced that the lawsuit is believable meaning probably true, or they will throw out the lawsuit).
Using this subjective procedure, perhaps insupportable complaints have been replaced by definitely unsupported judgments.
Under the plausibility test, again meaning whether a judge thinks that a complaint or a lawsuit has a believable if not probably true story to tell, plaintiffs and defendants both can file exhibits either to show the judge that the complaint is plausible, or to show the judge that it is not.
This is what happened in an insurance case in which the defendants raised an affirmative defense called the filed rate doctrine. When we started this discussion, we promised that we would illustrate how the plausibility test determines outcomes, by taking a look at how judges look at motions to dismiss insurance cases because of the filed rate doctrine.
In Rothstein v. Balboa Insurance Co., 794 F.3d 256 (2d Cir. 2015), the defendants filed their motion to dismiss and they filed exhibits to show the trial judge that the force-placed insurance complaint in that case was just not plausible. The trial judge still thought that the complaint was plausible anyway. The appellate judges thought otherwise, and reversed with directions to grant the defendants' motion to dismiss the complaint because of the filed rate doctrine. Judgment for the defendant on a motion to dismiss.
The appellate panel unfortunately was mistaken in what the defendants' exhibits said about the law of one state, New Hampshire. The appellate panel misread the exhibits to reflect the opposite of what the New Hampshire Insurance Commissioner had to say. See Dennis J. Wall, "Force-Placed Insurance Rothstein v. Balboa Insurance Co. (2d Cir.)," 37 Insurance Litigation Reporter 435 (October 2015), available for download at www.lenderforceplacedinsurance.com.
However, the appellate panel did not say what they thought the exhibits revealed about the law of the other two states at issue in that case, namely, New York and Texas. For the panel, although not for the trial judge it bears repeating, it was enough to dismiss the complaint based on the defendants' allegation that the complaint was implausible and the defendants did not apparently have to do any more than say so.
At any rate, that is all that the appellate panel needed to hear before they ordered the complaint dismissed, i.e., that the defendants said that the complaint was implausible under the filed rate doctrine.
Was the appellate panel correct in not looking to whether the state laws at issue would authorize the filed rate doctrine defense to be applied?
Or is more required to prove that the filed rate doctrine defense applies than was required in Rothstein, at least on appeal?
In further articles, we will take a look at the answers to those questions.
Please Read The Disclaimer. ©2016 by Dennis J. Wall, author of "Lender Force-Placed Insurance Practices" (American Bar Association 2015). All rights reserved.
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