Defense Motion to Dismiss Class Action Granted because Florida State Law Prohibiting “Sliding” in Connection with Sale of Ancillary Insurance Products is a Regulatory Statute and does not Authorize a Private Right of Action to Support Class Action Against Insurer
Plaintiffs filed a putative class action lawsuit in Florida against Direct General Insurance alleging a violation of a Florida state law that prohibits the act or practice of “sliding” with respect to the sale of certain ancillary insurance products. Buell v. Direct General Ins. Agency, Inc., 488 F.Supp.2d 1215 (M.D. Fla. 2007). The underlying statute – Florida Statutes, § 626.954(1)(z) – is part of Florida’s statutory scheme concerning unfair insurance trade practices, id., at n.4. The district court granted a defense motion to dismiss the class action complaint, but ruled that while plaintiffs may not amend to allege a class action, the plaintiffs could amend to assert individual claims, id., at 1216. On plaintiffs’ motion for rehearing, the district court dismissed the class action with prejudice, concluding that the underlying statute did not give rise to private rights of action.
Following the district court’s May 1, 2007, entry of an order dismissing the third amended class action complaint without prejudice to plaintiffs filing individual claims within 10 days, plaintiffs moved the court to reconsider its ruling and permit them to file a fourth amended class action complaint. Buell, at 1216. Defense attorneys countered with a motion requesting that the court modify its order dismissing the class action complaint so as to bar the filing of individual claims, id. The defense motion was premised on its prior argument that the underlying Florida statute did not provide for private rights of action; the district court originally rejected this argument based on its interpretation of the Eleventh Circuit decision in Davis v. Travelers Indem. Co., 800 F.2d 1050 (11th Cir. 1986). Id. The basis for the new defense motion was that post-Davis appellate opinions by Florida state courts, including the Florida Supreme Court, “had undermined Davis to the extent that Davis no longer represented the law of Florida with regard to how a court determines whether an alleged statutory violation bestows a private right of action on an individual.” Id. After initially denying the motion, the district court reversed its position and explained at page 1217:
Measured against what the Court has now divined to be the law of Florida, the Court concludes that there is absolutely no evidence in the language of the UITPA that the Florida legislature intended to create a private cause of action against an insurance company or its agents for violating the specific sliding provisions of section 626.9541(1)(z).
At bottom, the district court concluded that section 626.9541(1)(z) was simply a regulatory statute, Buell, at 1217. The district court’s new analysis included a discussion of the Florida statutory scheme, where it found support for its conclusion that the Florida legislature did not intend to create a private right of action under the statute, see id., at 1218. Based on the district court’s reevaluation of the law, it modified its order so as to dismiss the class action complaint without leave to amend, and therefore denied plaintiffs’ motions, id., at 1218-19.