United States District Court, E.D. Arkansas, Western Division
BOB PORTO, d/b/a BOB PORTO BUILDERS, on behalf of himself and others similarly situated PLAINTIFFS
ALLSTATE PROPERTY AND CASUALTY INSURANCE COMPANY DEFENDANT
OPINION AND ORDER
LEON HOLMES, UNITED STATES DISTRICT JUDGE.
Porto, doing business as Bob Porto Builders, commenced this
putative class action in the Circuit Court of Pulaski County
against Allstate Property and Casualty Insurance on June 6,
2017. Allstate removed the action to this Court on July 7,
2017. Porto is a licensed roofer. He works on storm-damaged
homes. Porto says he has been passed over for jobs because
Allstate forces its customers to select the roofer who
submits the lowest bid, even though Allstate knows those
roofers will not comply with Arkansas building codes. Count I
of the class action complaint alleges violations of the
Arkansas Deceptive Trade Practices Act, Ark. Code Ann.
§§ 4-88-101 through 116, and Count II seeks relief
pursuant to the Arkansas Declaratory Judgment Act, Ark. Code
Ann. §§ 16-111-101 through 117. Allstate has filed
a motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6). For the following reasons, the motion is
complaint alleges the following facts. See Document
#2. Porto has been a builder for more than twenty years. He
formerly built new homes and renovated kitchens and
bathrooms. Now he replaces the roofs of storm-damaged homes.
Porto is licensed by the Arkansas Contractors Licensing Board
to replace roofs and is familiar with the building codes.
Since January 1, 2016, Porto has bid on roofing jobs, but his
bids have been passed over for lower bids submitted by
roofers who “have no intention of replacing the roofs
consistent with Arkansas's roofing codes.” Document
#2 at 3, ¶10. According to Porto, Allstate knows that
the lower bidders will not comply with the codes but forces
its customers to select those bidders so that Allstate can
save money. Porto and other licensed roofers are damaged by
Allstate's practice because their bids are not selected.
survive a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6), a complaint must contain “a short
and plain statement of the claim showing that the pleader is
entitled to relief.” Fed.R.Civ.P. 8(a)(2). Although
detailed factual allegations are not required, the complaint
must set forth “enough facts to state a claim to relief
that is plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 1974, 167
L.Ed.2d 929 (2007). “A claim has facial plausibility
when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Ashcroft v.
Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173
L.Ed.2d 868 (2009). The Court accepts as true all of the
factual allegations contained in the complaint and draws all
reasonable inferences in favor of the nonmoving party.
Gorog v. Best Buy Co., Inc., 760 F.3d 787, 792 (8th
Cir. 2014). The complaint must contain more than labels,
conclusions, or a formulaic recitation of the elements of a
cause of action, which means that the court is “not
bound to accept as true a legal conclusion couched as a
factual allegation.” Twombly, 550 U.S. at 555,
127 S.Ct. at 1965.
alleges violations of the Arkansas Deceptive Trade Practices
Act, which protects consumers from a variety of unfair and
misleading business practices. Ark. Code Ann. §§
4-88-101 through 116. The “safe harbor provision,
” however, precludes the Act's application to
“[a]ctions or transactions permitted under laws
administered by the Insurance Commissioner” and other
regulatory bodies acting under statutory authority of the
state and federal governments. Ark. Code Ann. §
4-88-101(3). Allstate maintains that because it is a
regulated entity engaged in regulated conduct, the Act does
scope of the safe harbor provision and its interpretation by
the Arkansas Supreme Court have been the subject of much
litigation in federal court. See Tuohey v. Chenal
Healthcare, LLC, 173 F.Supp.3d 804, 809 (E.D. Ark. 2016)
(collecting cases and interpreting the safe harbor provision
broadly to preclude actions against regulated entities
engaged in regulated conduct); Gabriele v. Conagra Foods,
Inc., No. 5:14-cv-05183-TLB, 2015 WL 3904386 at *7 (W.D.
Ark. June 25, 2015) (holding “[c]onsistent with the
plain language of the ADTPA, it appears that the Arkansas
Supreme Court recognizes and applies the so-called
general-activity rule”); Williams v. State Farm
Mut. Auto. Ins. Co., No. 5:10CV00032-JLH, 2010 WL
2573196 at *4 (E.D. Ark. June 22, 2010) (reasoning that if
the safe harbor provision only applied to permitted conduct,
“the ADTPA would apply to any action or transaction
alleged to be unlawful, which would render the exceptions
listed in section 4-88-101 meaningless and doubtless run
afoul of the statutory scheme created by the Arkansas General
Assembly.”). But see Willsey v. Shelter Mut. Ins.
Co., Civil No. 12-2320, 2013 WL 4453122 at *2 (W.D. Ark.
Aug. 16, 2013) (“The Eastern District of Arkansas has
stated that the insurance activity exception of the ADTPA
excludes all insurance activity in the State of Arkansas
whether permissible or not . . . With all due respect to
these decisions, this Court does not need to engage in
speculation or conjecture regarding state law. The plain
meaning of the safe harbor provision only excludes activity
permitted by the Insurance Trade Act.”).
February 7, 2017, Chief Judge Brian S. Miller entered a
Certification Order certifying two questions to the Arkansas
Supreme Court, which under Ark. Sup. Ct. R. 6-8 may resolve
questions of Arkansas law before a federal court if the
questions are determinative and there is no controlling
precedent. Air Evac EMS Inc. v. USAble Mut. Ins.
Co., 4:16-cv-00266-BSM (E.D. Ark.). The first question
asks whether the Arkansas Supreme Court cases interpreting
the scope of the safe harbor -DePriest v. AstraZeneca
Pharm., L.P. and Arloe Designs, LLC v. Ark. Capital
Corp.-are in conflict and if so, how to resolve that
conflict. DePriest, 2009 Ark. 547, 351 S.W.3d 168;
Arloe, 2014 Ark. 21, 431 S.W.3d 277. The second
question asks whether the safe harbor applies to conduct
prohibited under laws administered by state and federal
regulators. The Arkansas Supreme Court accepted the questions
on March 2, 2017, briefing has been completed, and the court
is working to schedule oral argument. Air Evac EMS, Inc.
v. USAble Mut. Ins. Co., CV-17-103. Porto requests that
the Court refrain from ruling on whether the conduct alleged
in the complaint falls within the safe harbor provision until
the Arkansas Supreme Court answers the certified questions.
Document #20 at 3. That request is granted. Porto's
complaint must be dismissed for other reasons.
III, § 1 limits the jurisdiction of federal courts to
“Cases” and “Controversies.”
See Whitmore v. Ark., 495 U.S. 149, 155,
110 S.Ct. 1717, 1722, 109 L.Ed.2d 135 (1990). To identify
“those disputes which are appropriately resolved
through the judicial process, ” the courts consider
whether a party bringing suit has standing. See Clinton
v. City of New York, 524 U.S. 417, 430, 118 S.Ct. 2091,
2099, 141 L.Ed.2d 393 (1998). The United States Supreme Court
in Lujan v. Defenders of Wildlife explained that
standing contains three elements:
First, the plaintiff must have suffered an “injury in
fact”-an invasion of a legally protected interest which
is (a) concrete and particularized, see
[Allen, 468 U.S.] at 756, 104 S.Ct., at 3327;
Warth v. Seldin, 422 U.S. 490, 508, 95 S.Ct. 2197,
2210, 45 L.Ed.2d 343 (1975); Sierra Club v. Morton,
405 U.S. 727, 740-741, n. 16, 92 S.Ct. 1361, 1368-1369, n.
16, 31 L.Ed.2d 636 (1972);1 and (b) “actual or
imminent, not ‘conjectural' or ‘hypothetical,
' ” Whitmore, supra, 495 U.S., at
155, 110 S.Ct., at 1723 (quoting Los Angeles v.
Lyons, 461 U.S. 95, 102, 103 S.Ct. 1660, 1665, 75
L.Ed.2d 675 (1983)). Second, there must be a causal
connection between the injury and the conduct complained
of-the injury has to be “fairly ... trace[able] to the
challenged action of the defendant, and not ... th[e] result
[of] the independent action of some third party not before
the court.” Simon v. Eastern Ky. Welfare Rights
Organization, 426 U.S. 26, 41-42, 96 S.Ct. 1917, 1926,
48 L.Ed.2d 450 (1976). Third, it must be “likely,
” as opposed to merely “speculative, ” that
the injury will be “redressed by a favorable
decision.” Id., at 38, 43, 96 S.Ct., at 1924,
504 U.S. 555, 560-61, 112 S.Ct. 2130, 2136, 119 L.Ed.2d 351
(1992). The burden to establish these elements is on the
party invoking federal jurisdiction. Id. While
Allstate removed this action, Porto is considered “the
party invoking federal jurisdiction” for the purpose of
establishing standing. See DaimlerChrysler Corp. v.
Cuno, 547 U.S. 332, 343 n.3, 1861 n.3, 126 S.Ct. 1854,
164 L.Ed.2d 589 (2006). At this stage in the litigation,
Porto must merely plausibly allege that he can ...