In recent years there has been a significant amount of class action litigation in various jurisdictions regarding labor rates for repairs on auto claims.  The California Court of Appeal, Second Appellate District, recently affirmed a denial of class certification in one of these cases, focusing on the fact that the insurer handled each claim in a case-by-case manner, negotiating the labor rate where appropriate.

In Holzman v. Farmers Insurance Exchange, 2011 Cal. App. Unpub. LEXIS 7262 (Cal. Ct. App. Sept. 26, 2011), the plaintiff, a lawyer, had his Porsche 911 repaired at a Porsche dealer that charged $135 per hour.  Farmers concluded that the market rate in the relevant geographic area was $65 per hour, but agreed to $85 per hour for this repair.  Farmers refused, however, to pay $135 per hour.  The plaintiff sued for the difference and sought to represent a putative class of luxury vehicle owners who paid out-of-pocket for repairs in excess of the deductible.  Id. at *2-7.

The trial court denied class certification.  The Court of Appeal affirmed based on a lack of predominance.  The court focused on the need for a case-by-case determination of reasonableness, in light of the fact that Farmers negotiated the labor rate where appropriate:

Farmers’s practice of using the predominant market labor rate does not cause a member of the putative class to incur damages unless he or she is forced to pay out-of-pocket expenses that are not required by the insurance policy. Whether an insured incurs out-of-pocket expenses requires an individualized, case-by-case analysis. In some cases, Farmers negotiates a rate higher than the predominant market labor rate. The court must determine for each individual whether Farmers agreed to a higher labor rate and, if so, whether that rate was reasonable, or whether it was still so low that it violates the insurance policy, Insurance Code and/or applicable regulations. Accordingly . . . even if Farmers’s use of the predominant market labor rate were an improper claims practice, class certification is unwarranted because common questions of fact and law are not predominant.  (Id. at *27.)

As I’ve noted before on this blog, one thing insurance companies can do to reduce their class action exposure is to give front-line adjusters discretion.  While sometimes there are business reasons for a bright-line rule, or it might seem easier for adjusters to follow, when discretion is given on this kind of issue it increases the chances of defeating class certification.  If Farmers had taken a bright-line position that it would never pay more than $65 per hour in this geographic area for auto repairs, regardless of whether the vehicle is a Hyundai or a Porsche, it would have been in a more difficult position in defending against class certification.  Where adjusters have discretion to make determinations on a case-by-case basis, courts often must do the same, and that often makes class certification improper.

Tags: California, Farmers
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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.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and most of the class actions I’ve defended have been brought against insurance companies. I’ve also handled some involving products liability, managed care, health care, utilities, financial services, higher education and environmental issues.

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 work, you might find me running lines or watching a musical with my teenage daughter who hopes to be a Broadway star (or taking her to voice or dance lessons) or reading a good book.

Read more about Wystan Ackerman
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