The Montana Supreme Court’s recent decision in Diaz v. Blue Cross and Blue Shield of Montana, 2011 Mont. LEXIS 433 (Mont. Dec. 21, 2011) is an interesting example of how some state supreme courts are effectively ignoring or side-stepping the U.S. Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011).  I have not seen any state supreme court squarely take on the Wal-Mart opinion and and reject it, but some courts seem to be simply ignoring Wal-Mart.  This case is a good example of that.

Diaz involved a healthcare benefit plan for state employees.  The claim was that persons injured in auto accidents were entitled to essentially be paid twice for medical expenses – both by the tortfeasor’s insurer and by the state employee healthcare plan.  The contention was that the state healthcare plan was not entitled to subrogation rights against the tortfeasor’s insurer under the “made whole doctrine” as applied in Montana.

The Montana Supreme Court held that certain statutes were not applicable to the third-party administrators sued in the case, but that the trial court had abused its discretion in denying class certification.  While the court noted that it had previously relied on federal authority on class certification, and noted Wal-Mart’s holding on certification of Rule 23(b)(2) classes, the court simply ignored what Wal-Mart had to say about commonality and consideration of the merits at the class certification stage.  The court explained that commonality was not a stringent threshold and that “[a]ll that is necessary . . . is an allegation of a standardized, uniform course of conduct by defendants affecting plaintiffs.”  Diaz, at *16.  This was a quote from a 2005 federal district court opinion that had been quoted in a later Montana Supreme Court decision.  It is plainly inconsistent with Wal-Mart’s holding that commonality requires a common issue that is one where “determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.”  Wal-Mart, 131 S. Ct. at 2551. The trial court in Diaz seemed to be applying that type of standard, focusing on whether individual determinations would be needed on each claim.  The state supreme court majority, however, found it sufficient that there was a common issue of whether the state was improperly exercising subrogation rights without first making a “made whole” determination.  Whether that was an issue that would satisfy Wal-Mart’s commonality test is unaddressed.

The Montana Supreme Court went on to conclude that the trial court, “in determining that individualized made-whole determinations were necessary here, erroneously delved into the merits of [the plaintiffs’] claims.”  Diaz, at *25.  Again, this seems inconsistent with Wal-Mart’s instruction that “[f]requently th[e] rigorous analysis [required for class certification] will entail some overlap with the merits of the plaintiff’s underlying claim.  That cannot be helped.”  Wal-Mart, 131 S. Ct. at 2551.  The Montana Supreme Court’s conclusion on this point also seems  inconsistent with the basic nature of a class certification determination.  If the trial court cannot decide whether an individual determination is required on each claim, how can it properly decide class certification?

The court also seems to reject or side-step Wal-Mart’s unanimous holding on Rule 23(b)(2).  The opinion is unclear on this point, but it seems to ignore the fact that damages would have to be individualized, and the injunctive or declaratory relief purportedly sought (returning money until fact-specific determinations were made) would be a temporary step towards an individualized determination.

There is a strong dissent by Justice Rice beginning with the statement that “I believe the Court has become so lost in the forest that it cannot see the controlling legal principles for all the trees.”  Diaz, at *32 (Rice, J., dissenting).  The dissent focuses on the prior history of the case, which included a prior appeal to the state supreme court.  Justice Rice suggests essentially that the majority had transformed the nature of the plaintiff’s claims and “re-made” the case into a different one than the case the trial court had decided. 

There is nothing inherently wrong with a state supreme court disagreeing with the U.S. Supreme Court on class certification issues, if it is consistent with due process.  But if a state supreme court is going to do so, particularly where the state rule is identical to the federal rule and the state court has followed or adopted federal law, in my view the state court should explain its departure from the U.S. Supreme Court.  It should address Wal-Mart on its merits and reach a reasoned conclusion, not ignore Wal-Mart or side-step it.  Only a rigorous analysis by state supreme and appellate courts will further the development of class action law.

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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.