Class action trials are so rare that there is little guidance in court opinions on how these cases should be tried, other than hypothetical discussions in class certification decisions regarding how trials might be conducted.  In Strawn v. Farmers Insurance Company of Oregon, recently reported in Legal Newsline and the Soha & Lang Coverage Blawg, the Oregon Supreme Court recently decided an appeal from a judgment after a trial in an insurance class action.  Reading between the lines of the opinion teaches a few lessons about trying these cases.

The plaintiff claimed that Farmers improperly reduced benefit payments for personal injury protection (PIP) coverage under auto insurance policies, by using “cost containment software.”  This software analyzed medical expenses in comparison with a database of charges for particular services in the region, and allowed Farmers to select a particular percentile (it chose the 80th percentile) as a cutoff for what it would pay for a particular service.  The claim was that this process was arbitrary and a breach of the contractual obligation to pay “reasonable and necessary” medical expenses.  (The issue presented in this case is similar to one raised in a recent class action filing against Nationwide that I posted about.)  A class was certified and the case was tried to a jury.  A judgment in favor of the class was entered for approximately $900,000 in compensatory damages and $8 million in punitive damages.  The court of appeals found that the punitive award exceeded constitutional limits.   

The issues that Farmers raised before the Oregon Supreme Court were: (a) that it was improperly precluded from presenting individualized evidence to show that class members’ medical expenses were unreasonable; and (b) that plaintiffs failed to demonstrate class-wide reliance.  The Oregon Supreme Court rejected Farmers’ arguments on appeal, finding that the trial court had not actually barred individualized evidence, and that reliance could be inferred from the purchase of the auto policy where the terms of PIP coverage were statutorily mandated.  The supreme court agreed with the plaintiff that the constitutional issue should not have been reached by the court of appeals because no appeal was taken to the court of appeals from the trial court’s waiver ruling.  The trial court had ruled that Farmers had waived the constitutional issue by not asking for a jury instruction limiting the amount that could be awarded, and not asking for the jury to be sent back for re-deliberation after it made its award, and Farmers did not appeal the waiver ruling to the court of appeals.

The key lesson I see here is that a defendant may be better off making every attempt to try a class action as if it were a trial of thousands of individual cases.  Even if the plaintiff has the burden of proof and you think they cannot meet that burden with aggregate, class-wide evidence, consider putting on your own individualized evidence.  Ideally the trial court will recognize how individualized evidence is necessary and relevant, and decertify the class.   If the trial court does not allow such individualized evidence, this may well preserve good arguments (including due process arguments) for appeal.  Sometimes defendants may think that because they lost on class certification, the trial must be limited to only the named plaintiff’s claim or that evidence can only be presented in a global, aggregated fashion.  Not necessarily.  There are really no “rules” on how class actions must be tried.  Here, the court seems to suggest that Farmers should have tried to introduce individual evidence on how it handled particular PIP claims where it had a good defense.  Similarly, on the reliance issue, Farmers might have been able to develop evidence showing that some class members did not rely on what was in the policy (the Oregon Supreme Court disavows making any presumption of reliance).  This may have required depositions of a sample of putative class members in order to work up that issue for trial.  Thinking outside the box and almost disregarding the certification of a class potentially can be a good strategy in trying an insurance class action.  

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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.