This is a guest blog post by my friend Seth Schmeeckle, a partner with Lugenbuhl, Wheaton, Peck, Rankin & Hubbard in New Orleans and Baton Rouge, Louisiana. Seth and I worked together on defending a number of Hurricane Katrina insurance class actions. As you may recall, he did a previous guest post regarding the Louisiana Supreme Court’s decision to adopt the Wal-Mart v. Dukes approach to commonality in Price v. Martin, 79 So. 3d 960 (2011). Here is Seth’s post:
The Louisiana Fourth Circuit Court of Appeal recently dealt another blow to the embattled Louisiana Citizens Fair Property Insurance Corporation (“Citizens”), affirming a lower court’s decision to deny Citizens’ motion to decertify a class action arising out its handling of claims for damages caused by Hurricanes Katrina and Rita. Orrill v. La. Citizens Fair Plan, 2011-1541 (La. App. 4 Cir. 6/13/12), 2012 La. App. LEXIS 861. In denying the request to decertify the class, the court made clear that a motion to decertify is not intended to be a re-hashing of the arguments previously advanced and decided in the context of a certification hearing, and is instead governed by an entirely separate framework, namely, whether there has been a material change in fact, law or circumstance since the initial certification decision. According to the Louisiana Fourth Circuit, the trial court may only decertify where evidence of such a material change is presented, and the court’s decision will be reviewed for an abuse of discretion
The certification issue in Orrill has been litigated in both the trial and appellate courts for the past several years. After a proposed class settlement was vacated in April 2010 due to conflicts between the settling class members, see Orill v. AIG, Inc., 38 So. 3d 457 (La. Ct. App. 4 Cir. 2010), the matter was remanded back to the trial court, where the class was redefined to include:
All present or past insureds of [Citizens] who, on or after August 29, 2005, provided notification of loss resulting from Hurricane Katrina and/or Rita to [Citizens] notwithstanding whether loss adjustment was initiated within thirty (30) days after notification of loss, whose claims were not followed by written offer to settle within thirty (30) days after receipt of satisfactory proof of loss.
Citizens consented to this redefinition, but cautioned that it would file a motion to decertify the class if the parties could not subsequently reach a settlement agreement. After negotiations failed, Citizens filed a motion to decertify that relied in large part upon the same analysis the trial court utilizes in deciding an initial motion to certify a class. The trial court rejected Citizens’ arguments, emphasizing that the proper analysis was whether a material change in the facts, law or circumstances had occurred since the initial certification decision, and holding that the failure to consummate a settlement agreement did not constitute a material change. Finding no abuse of discretion, the appellate court affirmed the denial of the motion to decertify.
The import of the court’s decision is two-fold. First, it serves to warn class action defendants that the failure to reach a settlement agreement is not a “material change” warranting decertification of a class, even where the defendant may have consented to the class definition with the express goal of facilitating a settlement. Second, it clarifies that the “heightened commonality” analysis articulated by the Supreme Court in Walmart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011) and adopted by the Louisiana Supreme Court in Price v. Martin, 79 So. 3d 960 (2011), is largely irrelevant in the context of a motion to decertify a class. One possible exception to this latter point, which could have been but apparently was not argued by Citizens, may exist where a class was certified prior to the decision in Price. In that instance, it may be possible to argue that the heightened commonality analysis adopted in Price, which seemingly precludes certification where liability will turn on the resolution of individual issues, constitutes a “material change” in the law that would have prevented certification if it had been had been in place at the time the initial decision was made. It is a subtle distinction in posture, but perhaps one that is significant enough to mandate a different result.