The opinion of the court was delivered by: Block, Senior District Judge:
Dominick Servedio claims that the means by which his automobile
insurer, State Farm Insurance Company ("State Farm"), offers
additional Personal Injury Protection ("PIP") coverage constitutes a
deceptive trade practice and false advertising in violation of
sections 349 and 350 of the New York General Business Law. He also
asserts a claim for fraud under New York common law. *fn1
He seeks to represent a nationwide class of all State Farm
insureds who purchased similar coverage.
Pursuant to Federal Rule of Procedure 12(b)(6), State Farm moves to dismiss Servedio's amended complaint. It principally argues that Servedio cannot state a claim under sections 349 and 350 because the policy language for its additional PIP coverage is mandated by the New York Department of Insurance ("DOI") and, therefore, uniform throughout the industry.
For the following reasons, the Court concludes that DOI's approval of the policy language does not, as a matter of law, preclude Servedio from pursuing the claim that State Farm's implementation of the language amounts to a deceptive trade practice. It further concludes, however, that Servedio cannot state a cognizable claim for common-law fraud.
For purposes of this motion, the Court must take as true all of the allegations of Servedio's amended complaint, and must draw all inferences in his favor. See Weixel v. Board of Educ., 287 F.3d 138, 145 (2d Cir. 2002). The following facts are presented accordingly.
Servedio maintained State Farm insurance policies on three different automobiles. As required by New York law, each policy provided PIP (also known as "No Fault") coverage, under which State Farm promised to reimburse the "basic economic loss sustained by an eligible injured person on account of personal injuries caused by an accident arising out of the use or operation of a motor vehicle." Not. of Mot. to Dismiss, Ex. 1 (Policy, "Mandatory Personal Injury Protection Endorsement").*fn2 "Basic economic loss" was defined as (1) medical expenses, (2) 80% of lost wages, up to $2,000 per month for up to three years, and (3) other "reasonable and necessary" expenses of up to $25 per day for up to one year; the total benefit payable was $50,000. In addition to the named insured and his or her relatives, "eligible injured person" was defined to include any person injured by the insured automobile in New York State and any New York State resident injured by the insured automobile outside the state.
Each policy also provided an optional PIP benefit under which State Farm promised to pay "additional first-party benefits to reimburse for extended economic loss sustained by an eligible injured person." Id. ("Additional Personal Injury Protection Endorsement"). Under this provision, the definition of "eligible injured person" was expanded to include any passenger (regardless of residence or accident location) in any vehicle operated by the insured or his or her relatives. "Extended economic loss" was defined as the difference between basic economic loss under the mandatory PIP provision and basic economic loss as "recomputed in accordance with the time and dollar limits set out in the schedule." Id. For the level of coverage selected by Servedio (the "Q1" level), the time and dollar limits in question were up to $2,000 per month for up to three years for lost wages, up to $25 per day for up to one year for other expenses, and up to $50,000 in total payments.*fn3 In other words, the optional PIP coverage was subject to the same time and dollar limits as mandatory PIP coverage. Servedio paid an additional premium for the optional coverage: $1.34 on the first policy, $0.90 on the second and $1.04 on the third.
On November 8, 2008, Servedio was involved in an automobile accident, as a result of which he made a claim for PIP benefits. After his $50,000 in mandatory PIP benefits were exhausted, State Farm refused to make any additional payments under the optional PIP provision.
This suit followed. State Farm's defense is succinctly set forth in its supporting memorandum of law:
[I]f the "Q1" additional PIP option is purchased, the difference between $50,000.00 and $50,000.00 is $0, so no higher first party limits are available -- though coverage is still enhanced through the broader definition of "eligible insured person[.]"
Servedio invokes the Court's jurisdiction under the Class Action Fairness Act ("CAFA"), 28 U.S.C. § 1332(d), which gives district courts jurisdiction over state-law class actions where more than $5 million is in controversy, even if there is only minimal diversity between parties. See Holster v. Gatco, Inc., 618 F.3d 214, 216 (2d Cir. 2010).*fn4 As the party invoking federal jurisdiction, Servedio has the burden of showing a "reasonable probability that the claim is in ...