Where a named plaintiff’s insurance policy was issued by an insurance company that is part of a group of insurance companies that share the same parent company, can the named plaintiff bring a putative class action only against the company that dealt with and allegedly injured her, or can she sue the entire group of companies on a theory that they operate jointly?  The Second Circuit recently held that a named plaintiff has standing to sue only the company that allegedly injured her.  This outcome is something that I think many insurance companies and defense counsel had presumed was the correct result, but there had not been much appellate precedent directly addressing it. 

In Mahon v. Ticor Title Ins. Co., No. 10-3005-cv, 2012 U.S. App. LEXIS 12947 (2d Cir. Jan. 25, 2012), the plaintiff alleged that she and members of a putative class were improperly overcharged for title insurance on refinance transactions because they were charged the full rate for a new mortgage instead of the discounted refinance rate.  (This has been a fairly hot issue in title insurance class actions – see the Title Insurance page of this blog for more updates.)  She purchased her policy from Chicago Title Insurance Company, but, in addition to suing Chicago Title, she also sued Ticor Title Insurance Company and Ticor Title Insurance Company of Florida.  Her theory was that, under the “juridical link” doctrine adopted by the Ninth Circuit, she could sue the Ticor entities “because Chicago Title and the Ticor entities are wholly-owned subsidiaries of the same parent company, share resources in Connecticut, coordinated in drafting their premium rate schedules, and operate in the same manner with respect to overcharging Connecticut borrowers in refinance transactions . . . .”  Id. at *4. 

Judge Thompson of the District of Connecticut ruled that plaintiff had no standing to sue the Ticor entities because she was not injured by them, finding that the “juridical link” doctrine was inapplicable because it relates only to class certification and not to Article III standing.  On appeal, the plaintiff agreed with the district court that the “juridical link” doctrine did not impact standing, but argued that Article III standing could be established as long as only one defendant caused injury.  

The Second Circuit disagreed with the plaintiff and affirmed.  It explained that “[d]emonstrating that the defendant’s allegedly unlawful conduct caused injury to the plaintiff herself is thus generally an essential component of Article III standing,” and that “[plaintiff’s] proposed interpretation of Article III – that it permits suits against non-injurious defendants as long as one of the defendants in the suit injured the plaintiff – is unprecedented.”  Id. at *9.  The Second Circuit further explained that whether Rule 23 would allow class representation could not impact standing because a rule of civil procedure could not modify the constitutional requirement of Article III standing.  Id. at *12-13.  The Second Circuit disagreed with a Seventh Circuit opinion, Payton v. County of Kane, 308 F.3d 673 (7th Cir. 2002), which had concluded that class certification should be decided before standing, based on dictum of the Supreme Court in Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999).  The Second Circuit noted that in some cases it may be more efficient for a federal court to resolve class certification before standing where it finds certification to be improper, but certification should not necessarily come before standing.  It found the juridical link doctrine to be separate from issues of standing.  Judge Hall, however, issued a concurring opinion disagreeing “with the majority’s implication that the juridical link doctrine and Article III standing are wholly independent,” noting that “there will be cases in which the presence of a juridical link will suggest that Article III is also satisfied.”  Id. at *19-20 (Hall, J., concurring in the judgment).  Judge Hall’s opinion suggested that the “juridical link” doctrine is properly applicable only in cases where the plaintiff asserts a public interest or public right (e.g., where suit is brought against government officials arising out of government action), not where private interests are at stake.  Judge Hall’s opinion does not appear to dilute the strength of this decision insofar as it impacts insurance cases. 

Insurers that find themselves with a putative class action filed not only against the company that issued coverage to the named plaintiff(s) but also against the parent company or other companies in the corporate family now have a powerful new weapon in seeking dismissal of the entities that had no contractual relationship with the named plaintiff(s).

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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.