Numerous class actions have been filed against title insurance companies claiming that they failed to properly discount rates when policies were reissued, typically in connection with refinancing of properties.  (For more on this, see, for example, my August 2, 2012 post.)  Contrary to some prior decisions in federal courts, the Kentucky Court of Appeals recently affirmed a class certification order.

In Stewart Title Guaranty Company v. Finney, No. 2011-ca-000499-me, 2012 Ky. App. Unpub. LEXIS 817 (Ky. Ct. App. Nov. 2, 2012), the claim was that the title insurer improperly charged  rates based on an unapproved 1994 rate manual rather than a 1999 rate manual, and failed to apply a reissue discount.  The Kentucky Court of Appeals applied what it described as a “very limited review” standard under which it would have to find a “clear abuse of discretion” in order to reverse the class certification order.  Id. at *5.  The court also suggested that “there exists a presumption in favor of class certification,” relying on a 1968 decision of the Tenth Circuit (there is no such presumption in modern federal law).  Id. at *8.  On the key issues of predominance and superiority, the court reasoned as follows in distinguishing federal decisions:

Stewart suggests that the only way it is capable of gathering the necessary evidence to litigate its liability with respect to each prospective subclass member is to conduct a very intensive, very costly canvass of its agents’ records. Stewart repeatedly emphasizes the difficulty of proving these facts for each class member due to the nature of their relationship to their agents. The circuit court concluded, to the contrary, that Stewart possessed the ability to perform audits and reviews of its agents’ records and was therefore easily capable of gathering this information. The Finneys contend Stewart should not be rewarded for less than the best business practices, and that any other issues, like the rates and discount used for Stewart’s customers, may be resolved by generalized proof. Since the parties’ arguments give rise to the possibility that this case includes both common questions resolved by generalized proof and individualized inquiries needed for Reissue Subclass eligibility, the dispute is resolved by determining whether individualized inquiries predominate over the common questions.

. . .

The Finneys’ claim is based upon common questions relating to the 1994 Rate Manual, which do not require resolution by individualized inquiries. Where, as here, giving the rate discount to an eligible insured is mandatory, resolution of the question is routine. Which customers should have received the discount is determinable by the criteria Stewart itself created in its 1999 Rate Manual.

. . .

The improper application of the 1994 Rate Manual and the resulting failure to give insureds the proper reissue discount are provable by general proof of directives which the “agents monolithically followed.” Thus, the circuit court did not abuse its discretion.

. . .

The circuit court found the class action to be manageable. More specifically, it found that Stewart had the ability to audit and identify the eligible members, even if it must sort through thousands of closing files, which its agents are contractually required to keep. It found that a large class size is not sufficient to deny certification. We agree.

Id. at *14-17, 21.

Unlike most federal courts, the Kentucky Court of Appeals was comfortable imposing a substantial burden on the insurer to review thousands of files to identify class members and perhaps for other purposes as well.  What the court does not address is what the trial would look like.  Once the insurer performs the onerous review, presumably the insurer will have a defense to many of the claims and would want to put on those individual defenses at trial, leading to what would not be truly a class action trial but a mass-trial of individual claims.

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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.