A new Sixth Circuit opinion in two putative class actions involving rates for title insurance demonstrates several lessons generally applicable to insurance class actions.  In Randleman v. Fidelity National Title Insurance Company, the plaintiffs claimed that title insurers failed to provide proper discounts for refinancing of mortgages.  The applicable Ohio rate manual provided that “[w]hen a refinance loan is made to the same borrower on the same land, the following [discounted] rate will be charged . . . provided the Insurer is given a copy of the prior policy, or other information sufficient to enable the Insurer to identify such prior policy . . . .”  (Emphasis added.)  The named plaintiffs, when they refinanced their mortgages, did not ask for a discount or submit evidence to their title insurer of the existence of a prior policy.  The district court in Randleman initially certified a class, on the theory that if Fidelity National was aware that the transaction was a refinancing, that would mean in nearly all instances that a prior title insurance policy had been issued (the court assumed that lenders would not finance a property without title insurance).  After certification, Fidelity National was able to establish, by taking depositions of lenders, that Ohio lenders often rely on attorneys’ opinion letters or title guarantees in lieu of title insurance.  Based on this new evidence, the district court decertified the class.  In a companion case (Hickman), class certification was denied for similar reasons.  The Sixth Circuit affirmed the denial of class treatment because: (a) the class proposed in Randleman was an improper “fail-safe” class; (b) determining whether defendants had notice of a prior title policy, which was necessary for class members to establish an entitlement to a discount, required an individualized analysis and thus predominance was not satisfied; and (c) a proposed subclassing plan would not solve the lack of predominance.

I see several key takeaways from this decision: 

  • Sometimes defendants need to take extensive discovery in a class action.  Discovery in class actions is frequently one-sided, with the plaintiffs attempting to take extensive discovery from the defendant, and the defendant taking no affirmative discovery except for deposing the named plaintiffs.  But there are times when defense counsel needs to think outside the box and consider taking discovery from third parties or from members of the proposed class.  Here, the defendants apparently did not take discovery from the lenders until after the judge certified the class, but they were permitted to take this discovery later and were fortunate enough to convince the judge to change his mind about certification. 
  • Watch out for fail-safe class definitions.  The Sixth Circuit explained that the class the district court initially certified was an improper “fail-safe class” because the class was defined as people who were entitled to receive a discount but did not receive one.  The Sixth Circuit wrote that this is improper because “[e]ither the class members win or, by virtue of losing, they are not in the class and, therefore, not bound by the judgment.”  It is not unusual for plaintiffs to propose a fail-safe class.  Here, it appears this was overlooked in the district court. 
  • Whether subclassing can overcome a lack of predominance remains an open issue.  This opinion describes a vague proposal for subclassing involving identifying which lenders required title insurance, followed by a trial on unidentified class-wide issues.  The Sixth Circuit says this would not overcome predominance, although it does not provide a detailed explanation of its reasoning, and it declines to weigh in on a circuit split on whether a subclassing plan can overcome predominance.


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Photo of Wystan Ackerman Wystan Ackerman

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you…

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you have something to say.  For those looking for my detailed law firm bio, click here.  If you want a more light-hearted and hopefully more interesting summary, read on:

People often ask about my unusual first name, Wystan.  It’s pronounced WISS-ten.  It’s not Winston.  There is no “n” in the middle.  It comes from my father’s favorite poet, W.H. (Wystan Hugh) Auden.  I’ve grown to like the fact that because my name is unusual people tend to remember it better, even if they don’t pronounce it right (and there is no need for anyone to use my last name because I’m always the only Wystan).

I grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state.  I’ve always had strong interests in history, politics and baseball.  My heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox).  I think it was my early fascination with Lincoln that drove me to practice law.  I went to high school at The Williams School in New London, Connecticut, where I edited the school newspaper, played baseball, and was primarily responsible for the installation of a flag pole near the school entrance (it seemed like every other school had one but until my class raised the money and bought one at my urging, Williams had no flag pole).  As a high school senior, my interest in history and politics led me to score high enough on a test of those subjects to be chosen as one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified my interest in law and government.  One of my mentors at Williams was of the view that there were far too many lawyers and I should find something more useful to do, but if I really had to be a lawyer there was always room for one more.  I eventually decided to be that “one more.”  I went on to Bowdoin College, where I wrote for the Bowdoin Orient and majored in government, but took a lot of math classes because I found college math interesting and challenging.  I then went to Columbia Law School, where I was lucky enough to be selected as one of the minions who spent their time fastidiously cite-checking and Blue booking hundred-plus-page articles in the Columbia Law Review.  I also interned in the chambers of then-Judge Sonia Sotomayor when she was a relatively new judge on the Second Circuit, my only connection to someone who now has one-ninth of the last word on what constitutes the law of our land.  I graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole, one of the largest Connecticut-based law firms.  At the end of 2008, I was elected a partner at Robinson+Cole.

I’ve worked on class actions since the start of my career at Skadden.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and I was fortunate to have the opportunity to work on some prominent class actions arising from the 2004 hurricanes in Florida and later Hurricane Katrina, including cases involving the applicability of the flood exclusion, statutes known as valued policy laws, and various other issues.  My interest and experience in class actions gradually led me to focus on that area.

In Connecticut courts I’ve defended various kinds of class actions that go beyond insurance, including cases involving products liability, securities, financial services and consumer contracts.

My insurance class action practice usually takes me outside of Connecticut.  I’ve had the pleasure of working on cases in various federal and state courts and collaborating with great lawyers across the country.  While class actions are an increasingly large part of my practice, I don’t do exclusively class action work.  The rest of my practice involves litigating insurance coverage cases, often at the appellate level.  That also frequently takes me outside of Connecticut.  A highlight of my career thus far was working on Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court’s first Class Action Fairness Act case.  I was Counsel of Record for Standard Fire on the cert petition, and had the pleasure of working with Ted Boutrous on the merits briefing and oral argument.

I started this blog because writing is one of my favorite things to do and I enjoy following developments in class action law, writing about them and engaging in discussion with others who have an in interest in this area.  It’s a welcome break from day-to-day practice, keeps me current, broadens my network and results in some new business.

When I’m not at my desk or flying around the country trying to save insurance companies from the plaintiffs’ bar, or attending a conference on class actions or insurance litigation (for more on those, see the Seminars/Programs page of this blog), I often can be found playing or reading with my young daughter, helping my wife with her real estate and mortgage businesses, reading a book about history or politics, or watching the Boston Red Sox (I managed to find bleacher seats for Game 2 of the 2004 World Series when Curt Schilling pitched with the bloody sock).  When the weather is good I also love to take the ferry to Block Island, Rhode Island and ride a bike or walk the trails there. If you go, I highly recommend the Clay Head Trail.