In an insurance class action, the U.S. Supreme Court now has another opportunity to take up the issue of federal due process protections in state court class actions.  The Court’s decisions last term in Wal-Mart v. Dukes and AT&T v. Concepcion are of limited help to defendants in state court because, while many state courts follow federal law on class certification, they are not required to do so.  As I’ve noted before, the only way the Supreme Court can rein in state court class actions in states that choose not to follow federal precedent on class certification is by taking up a Due Process Clause challenge in a petition for certiorari from a state supreme court.  The Court had two recent opportunities to address this issue in Farmers Ins. Co. of Oregon v. Strawn (see my blog post about Strawn) and Philip Morris USA Inc. v. Jackson (see my blog post about Jackson).  Justice Scalia, acting as circuit justice, had granted a stay in Jackson, writing an opinion on the stay application explaining that “The extent to which class treatment may constitutionally reduce the normal requirements of due process is an important question.”  Nevertheless, the Court denied certiorari in both Jackson and Strawn.  Given the repeated occurrence of this important issue, perhaps the third attempt might have success.

The case now before the Court is Louisiana Citizens Property Insurance Corp. v. Oubre, No.  11-1252 (here is Louisiana Citizens’ cert petition.pdf, and a link to the docket).  This is the case I wrote about in a December 22, 2011 blog post.  The plaintiffs sought penalties under Louisiana’s bad faith statutes against Louisiana Citizens Property Insurance Corporation, the state-created insurer of last resort.  Louisiana Citizens only sells policies to people who cannot obtain them in the private market, and is funded in part by assessments imposed on all Louisiana property insurance policyholders.  The claim was that Louisiana Citizens failed to initiate loss adjustment on claims of the class members within 30 days after receiving notice of a Hurricane Katrina or Rita claim.  The Louisiana Supreme Court, in a 4-3 decision, reinstated a trial court judgment (which had been reversed by an intermediate appellate court), imposing a penalty of $5,000 for each technical violation of the statute, without any proof of bad faith conduct by Louisiana Citizens.  Even if Citizens was one day late in starting the adjustment of a claim, after suffering an unprecedented disruption of its own business activities following Katrina and Rita, a $5,000 penalty was imposed.  The total judgment is nearly $93 million before interest.  A seemingly unfair result, on which the state’s elected insurance commissioner has spoke out strongly against the decision.

Louisiana Citizens hired Ted Olson, who argued Bush v. Gore and later became President George W. Bush’s Solicitor General, to prepare its cert petition.  The thrust of the petition is that by upholding these large penalties without any evidence from the plaintiffs as to the appropriateness of the penalties on the class members’ claims, and without allowing Louisiana Citizens any opportunity to present evidence in support of reduced penalties, the Louisiana Supreme Court violated due process.  Here is a key passage from the petition (p. 14):

By relieving respondents of their burden of proving the appropriate penalty to be awarded to each class member, and depriving Citizens of its right to mount a full defense on this issue, the Louisiana Supreme Court denied Citizens its fundamental due process rights and broke sharply from this Court’s due process precedents. See, e.g., Philip Morris USA v. Williams, 549 U.S. 346, 353 (2007) (“[T]he Due Process Clause prohibits a State from punishing an individual without first providing that individual with an opportunity to present every available defense.”) (internal quotation marks omitted). It is flatly at odds with the basic notions of fairness that animate this Court’s due process jurisprudence for courts to use procedural shortcuts that eliminate individual burdens of proof and individualized defenses in order to cram thousands of disparate claims into a class-action proceeding. Cf. Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2561 (2011) (rejecting a “Trial by Formula” class-action procedure that would have applied the results from a “sample set” of claims to “the entire remaining class” because the “novel project” would deny the defendant its right “to litigate its statutory defenses to individual claims”).

While the Court seems to have had some reluctance to take this issue up in Jackson and Strawn, perhaps Oubre is a better vehicle for doing so.  The issue presented by the Louisiana Supreme Court decision seems simple and clear cut.  We shall see, the Court might take this up before its term ends in June.  In the meantime, the plaintiffs’ lawyers are trying to execute on their massive judgment by obtaining funds held by Louisiana Citizens in a bank account, and Louisiana Citizens has been trying desperately to prevent execution of the judgment.  The latest news, explained in an article by Chad Hemenway on PropertyCaualty360, is that Louisiana Citizens obtained a temporary restraining order in a state trial court.  Prior efforts to obtain stays failed in an application to Justice Scalia and in a Louisiana Supreme Court order overturning a stay imposed by a lower state court.

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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.