Plaintiffs’ lawyers seeking to certify classes against insurance companies are likely to frequently cite the Sixth Circuit’s recent decision in Young v. Nationwide Mutual Insurance Company, Nos. 11-5015 et al., 2012 U.S. App. LEXIS 18625 (6th Cir. Sept. 5, 2012).  Although the opinion does not make it clear, this decision appears to conflict with some decisions by other circuits on class certification, and it potentially raises the bar for defendants in defeating class certification in some circumstances.

The plaintiffs in Young claimed that the insurer defendants overcharged them for local government premium taxes in Kentucky by incorrectly determining which taxing jurisdiction their properties were located in.  The opinion indicates that the plaintiffs’ contention was that these errors were made on 1% or less of the policies at issue.  Id. at *22.  The plaintiffs sought to certify putative subclasses of insureds of a particular insurer in Kentucky who purchased insurance during a particular time period “and who were charged local government taxes on their payment of premiums which were either not owed, or were at rates higher than permitted.”  Id. at *6.  The Eastern District of Kentucky certified these subclasses, and the Sixth Circuit affirmed on abuse of discretion review.  The Sixth Circuit rejected the insurers’ contentions on several points (notably, Judge Suhrheinrich did not sign onto the opinion, joining only in the judgment):

  • Fail-Safe Classes:  The insurers argued that the proposed subclasses were improper “fail-safe” classes because the classes were defined as people who were overcharged, and thus deciding who the class members were would require a merits determination.  The Sixth Circuit rejected this argument, stating that “a ‘fail-safe’ class is one that includes only those who are entitled to relief,” and that “Plaintiffs’ classes will include both those entitled to relief and those not.”  Id. at *12.  The court noted that the insurers asserted that they would not be liable to some persons who were overcharged (one example of this appears to be because the policyholder provided incorrect information that led to the error in determining their taxing district).
  • Ascertainability:   The insurers contended that the class was not administratively feasible to identify because numerous individual determinations would be required to determine who was overcharged.  The Sixth Circuit found it sufficient that the plaintiffs proffered an expert witness, who had survived some Daubert scrutiny, and opined that the class could be identified through the insurers’ electronic records and geocoding software, along with some manual file review.  The opinion does not indicate how many files would need to be manually reviewed.  The Sixth Circuit noted that some courts have found certification appropriate notwithstanding a need to review individual files to identify class members.  It agreed with the district court that if the need for a manual file review were dispositive, “defendants against whom claims of wrongful conduct have been made could escape class-wide review due solely to the size of their businesses or the manner in which their business records were maintained.”  Id. at *18.  The court seemed to ignore that insurers and other corporations cannot anticipate what kinds of records might be needed for some class action suit that might be filed against them years later.
  • Numerosity:  The Sixth Circuit agreed with the district court that numerosity was satisfied because a 1% error rate was found based on prior settlements of related actions and market conduct examinations performed by the Kentucky Department of Insurance.  At a 1% error rate there would be approximately 270 to 9,000 class members per insurer.  Id. at *22. 
  • Commonality and Typicality:  The court found commonality and typicality satisfied, explaining that “[b]ecause Plaintiffs allege both a single practice or course of conduct on the part of each Defendant – the failure to implement a geocoding verification system – that gives rise to the claims of each class member and a single theory of liability . . . .”  Id. at *27.  This seems contrary to how other courts have viewed the commonality and typicality requirements.  Every class action plaintiffs’ attorney worth their salt is going to allege a common theory and suggest some manner of attempting to prove liability on a classwide basis.  Most courts in recent years have focused not on merely whether there is a common theory of liability but how the claims and defenses of the parties would be presented at trial and whether it would be feasible to present both sides’ cases in a classwide trial without trying many individual claims.  The Sixth Circuit’s opinion fails to explain how, as a matter of law, the plaintiffs could require insurers to use a particular type of software (a geocoding verification system) in determining local premium tax rates in Kentucky.  It might be a good thing to do but how is it a mandatory legal requirement?
  • Predominance:  The court found predominance satisfied based on the alleged common theory of failing to use the geocoding software, and rejected the defendants’ arguments that individual evidence would be necessary, for example, to show that some policyholders provided incorrect information to their insurer.  Id. at *31-32.  Again, this seems to be contrary to the way that other courts have been looking at predominance.  The court does not explain how many instances the defendants were able to demonstrate where individual inquiries would be required.  Defendants are in the strongest position in defending against class certification when they can show that individual inquiries would be necessary on a significant percentage of the putative class claims.

This opinion is one that, unless it is overturned en banc or by the Supreme Court, I would expect to see cited by plaintiffs’ lawyers regularly in support of class certification, particularly in the Sixth Circuit.  It might also lead to more class action filings in that circuit.  Notably, earlier this year, the Sixth Circuit issued another significant opinion affirming class certification in In re Whirlpool Corp. Front-Loading Washer Prods. Liab. Litig., 678 F.3d 409 (6th Cir. 2012).  Both Young and Whirlpool were authored by Judge Stranch.

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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.