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A class-action suit in New Jersey’s federal court alleges that title insurance companies in the state are all charging the same premiums, set by a central industry bureau, in violation of antitrust laws. The suit, In re New Jersey Title Insurance Litigation, 2:08-cv-1425, names as defendants 25 title insurance companies and the New Jersey Land Title Insurance Rating Bureau, a state-licensed title insurance rating organization that deals with state regulators in setting title insurance premiums. The case consolidates nine actions filed over the past six months, and the putative class consists of all purchasers of title insurance for New Jersey residential or commercial property from the defendant carriers over the past four years. The plaintiffs allege that collusion among carriers has pushed premiums above market rates and they seek damages based on the price differential. They also seek treble damages, costs of suit and an injunction against further premium fixing. The genesis of the current system is statutory. Since 1975, under N.J.S.A. 17:46B-1 et seq., licensed title insurance rating organizations have been allowed to submit proposed rates to the Department of Banking and Insurance on behalf of member carriers. To be a licensed TIRO, an organization need only submit a certificate of incorporation, a list of members and subscribers, a statement of qualifications and a $1,500 licensing fee. The department reviews a TIRO’s proposed rates in the same manner as those proposed by individual companies. If not unreasonably high, inadequate for the safeness and soundness of the insurers or unfairly discriminatory between risks involving comparable hazards and expenses, they are approved. Anyone opposed to the rates may request a hearing. The statute also allows title insurers and rating agencies to exchange information about claims with each other and with counterparts in other states. The New Jersey Land Title Insurance Rating Bureau thus acts as arbiter of rates for all its member insurers and takes care of the state approval process. The plaintiffs claim that the scheme violates the Sherman Antitrust Act and related regulations because the rate-setting is only rubber-stamped – not actively supervised by state government as required by the U.S. Supreme Court in FTC v. Ticor, 504 U.S. 621 (1992). The plaintiffs claim title companies’ business-garnering methods make it impossible for the state to review the reasonableness of the rates and charges collectively set. Title insurers allegedly get new lines by paying finder’s fees, gifts and other financial enticements to those making purchasing decisions, such as mortgage companies, brokers and lawyers. Since these add-ons are not distinguished from other company outlays and losses, which state regulators consider in determining overall reasonability of rates, the regulators are poorly equipped to evaluate them, the plaintiffs claim. The lawyer for the Land Title Insurance Rating Bureau, James Hallowell of Gibson, Dunn & Crutcher in New York, says the allegations are meritless “Since the bureau’s inception, it has always been authorized by New Jersey Law and actively supervised by the department,” he says. “The department has subjected the bureau’s rate and form filings to a thorough review, and on a number of occasions over the last 15 years has reduced rate increases sought.” On Aug. 5, U.S. Magistrate Judge Esther Salas in Newark set a pretrial motion schedule and gave the plaintiffs until Sept. 19 to submit a consolidated class-action complaint. The defendants will then be free to move to dismiss for failure to state a claim upon which relief can be granted, as Hallowell has stated he intends to do. David Foster of Fulbright & Jaworski in Washington, the lawyer for defendant Stewart Title Guaranty Company, said his client believes that “the allegations in the case lack merit” and that his firm “will defend the case vigorously.” Joseph DePalma, of Lite DePalma Greenberg & Rivas in Newark, has been named plaintiffs’ liaison counsel, while his defense counterpart is Liza Walsh of Connell Foley in Roseland. Delaware, New York, Ohio and Pennsylvania also have rating bureaus, and there is a similar antitrust suit pending in Philadelphia, says plaintiffs’ lawyer Daniel Allanoff of Meredith, Cohen, Greenfogel & Skirnick in Philadelphia, who is appearing in both cases.

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