The opinion of the court was delivered by: WARD
This is an action founded upon diversity of citzenship. See 28 U.S.C. § 1332. Defendant moves pursuant to Rule 12(b)(1) and 12(b)(6), Fed. R. Civ. P., for an order dismissing the complaint on the grounds of primary jurisdiction, failure to exhaust state administrative or judicial remedies, and failure to state a claim on which relief can be granted. For the reasons that follow, the motion is granted in part and denied in part, and the action is stayed to permit plaintiffs to present their grievance in the first instance to the appropriate state administrative agency.
Plaintiffs allege in the complaint that they are insurance brokers licensed to do business in New York. In this action, they purport to represent "themselves and all other insurance brokers similarly situated." Complaint at 1. Defendant, Allstate Insurance Company ("Allstate"), is an Illinois corporation with its principal place of business in that state.
The instant lawsuit arises out of the parties' participation in the New York Automobile Insurance Plan ("NYAIP" or "Plan"). The Plan, in which all insurers licensed to provide automobile insurance in New York must participate, provides for the "equitable apportionment among such insurers of applicants for [automobile] insurance who are in good faith entitled to but are unable to procure it through ordinary methods." N.Y. Ins. Law § 5301. Under the terms of the Plan, which was approved originally by the New York Superintendent of Insurance ("Superintendent") and is subject to his continuing oversight, see id., a "high-risk" applicant for automobile insurance who qualifies is assigned to a participating insurer, who then must provide insurance coverage to the applicant and commissions to the responsible insurance broker or agent ("producer of record") subject to various conditions of the Plan. See generally Defendant's Memorandum of Law, Addendum A (copy of the Plan or NYAIP).
The Plan is administered by a governing committee ("Committee") composed of elected and appointed representatives of participating insurance companies and brokers or agents, and by a manager. See N.Y. Ins. Law § 5302; see also NYAIP § 4. The Committee is required to meet "as often as may be required to perform the general duties of administration of the Plan." NYAIP § 5. In addition, the Committee is required to meet at least twice a year with a liason committee representing the major associations of insurance agents in the state. Id. The Plan is subject to amendment either by the Committee or at the direction of the Superintendent. N.Y. Ins. Law § 5301(b). Applicants for insurance under the Plan, persons already insured under the Plan, and participating insurers may appeal any ruling or decision of the Committee to the Superintendent. Id. § 5304(a); see also NYAIP § 19. Furthermore, any order, regulation or decision of the Superintendent is subject to judicial review in a proceeding brought under Article 78 of the New York Civil Practice Law. N.Y. Ins. Law § 326(a).
In the complaint, plaintiffs allege that Allstate, as a participating insurer under the Plan, is often assigned high-risk accounts for automobile insurance that were originally written by independent brokers, members of the purported plaintiff class. "Sometime after such assignments," plaintiffs contend, "Allstate has transferred the account from a plaintiff broker to one of its own affiliate brokers, many times without the consent of either the insured or the broker." Complaint at P8. By so doing, plaintiffs argue, defendant has "maliciously 'pirat[ed]' away these accounts and commissions in complete disregard of the wishes of the brokers and their insureds." Id. On the basis of these allegations, plaintiffs assert claims against defendant of prima facie tort, tortious interference with contractual relations, and deceptive acts and practices in the conduct of a business under N.Y. Gen. Bus. Law § 349(h). Plaintiffs seek $10 million in compensatory and $50,001,000 in punitive damages.
In the instant motion, defendant raises three grounds for dismissing the complaint. First, Allstate argues that plaintiffs' grievance is a matter properly within the primary jurisdiction of the New York administrative agencies charged with overseeing the assignment of high-risk auto insurance accounts in the state. Second, defendant charges that plaintiffs also have failed to exhaust their administrative and judicial remedies before the Committee of the NYAIP, the Superintendent, and the New York courts. Third, defendant contends that in any event the complaint fails to state a viable cause of action under New York law.
At oral argument on defendant's motion, the Court and the parties explored at some length the applicability of the doctrines of primary jurisdiction and exhaustion of administrative remedies to the instant case. In a subsequent submission to the Court, defendant confirmed that in the event the Court dismissed or stayed the action on the basis of primary jurisdiction or failure to exhaust administrative remedies, Allstate would raise no jurisdictional objection to plaintiffs' timely application to the NYAIP, the Superintendent or the New York courts. Affidavit of Charles Platto (sworn to Dec. 20, 1985). Because the Court concludes below that the instant action should be stayed under principles of primary jurisdiction, the Court finds it unnecessary to consider Allstate's alternative arguments concerning the viability of plaintiffs' claims under New York law.
The judicial doctrines invoked here primary jurisdiction and exhaustion of administrative remedies arise from similar principles of administrative law and address some of the same concerns. Both doctrines, for example, presume the desirability of presenting certain issues or disputes in the first instance to an administrative agency that possesses specialized knowledge or experience in the relevant field. Under either doctrine, primary resort to an administrative agency equipped to address a particular question serves both to preserve the integrity of the administrative process involved and to promote consistency in the interpretation and application of the relevant regulatory scheme. At the same time, resort to available administrative procedures promotes judicial economy by avoiding needless litigation of matters that can effectively be resolved at the agency level. Cf. United States v. Western Pacific R.R. Co., 352 U.S. 59, 64-65, 1 L. Ed. 2d 126, 77 S. Ct. 161 (1956) (primary jurisdiction doctrine) with McKart v. United States, 395 U.S. 185, 193-95, 23 L. Ed. 2d 194, 89 S. Ct. 1657 (1969) (exhaustion of administrative remedies); see generally 4 K. Davis, Administrative Law §§ 22:1 & 26:1 (1983 ed.).
The doctrines differ, however, in emphasis and, at times, application. As Professor Davis has explained, the primary jurisdiction doctrine was developed "to guide a court in determining whether and when it should refrain from or postpone the exercise of its own jurisdiction so that an agency may first answer some question presented." 4 K. Davis, supra, § 22:1 at 81. The Supreme Court, for example, has interpreted the doctrine to authorize courts "to refer specific issues to an agency for initial determination" even where the plaintiff's "common-law rights and remedies survive and the agency in question lacks the power to confer immunity from common-law liability." Nader v. Allegheny Airlines, Inc., 426 U.S. 290, 303, 48 L. Ed. 2d 643, 96 S. Ct. 1978 (1976).
While the primary jurisdiction doctrine stresses the resolution of particular issues by an agency rather than the courts, the exhaustion doctrine emphasizes available administrative procedures that must or should be invoked before a particular question is presented to the courts for review. Thus, "the most common application of the exhaustion doctrine is in cases where the relevant statute provides that certain administrative procedures shall be exclusive." McKart, supra, 395 U.S. at 93. Frequently, the exhaustion doctrine is applied where the question presented for judicial review concerns the legitimacy of an agency's exercise of decision-making power. See, e.g., ITT Continental Baking Co. v. United States, 559 F. Supp. 454 (S.D.N.Y. 1983); Bruan, Gordon & Co. v. Hellmers, 502 F. Supp. 897, 906-08 (S.D.N.Y. 1980) (on motion for reconsideration). At the same time, a court will not require that administrative remedies be exhausted where the agency action being challenged is plainly beyond the agency's jurisdiction, Touche Ross & Co. v. Securities and Exchange Comm'n, 609 F.2d 570, 575-76 (2d Cir. 1979), or where the administrative remedies available are plainly inadequate, T.I.M.E.-DC, Inc. v. Management-Labor Welfare & Pension Funds, 756 F.2d 939, 945 (2d Cir. 1985).
In the instant case, jurisdiction is founded upon the diverse citizenship of the parties, and therefore the Court must look for guidance to the law of New York, the forum state. Arrowsmith v. United Press Int'l, 320 F.2d 219 (2d Cir. 1963) (en banc). Of particular interest to the Court in ruling on the instant motion to dismiss, then, are cases in which the New York courts have dismissed or stayed similar actions - under either ...