The Ohio Supreme Court recently issued an opinion reversing the certification of a class in a case against State Farm involving repair vs. replacement of windshields on auto claims.  In Cullen v. State Farm Mutual Automobile Ins. Co., 2013 Ohio 4733 (Ohio Nov. 5, 2013), the plaintiffs alleged that State Farm had a practice of improperly encouraging insureds to accept a purportedly “temporary” repair of their windshield instead of having it replaced at a higher cost.  The trial court certified a class and the appellate court affirmed, but the Ohio Supreme Court reversed.

The Ohio Supreme Court adopted the U.S. Supreme Court’s recent opinions in Wal-Mart v. Dukes and Comcast v. Behrend with respect to the “rigorous analysis” required for class certification, and the need for a ruling on a merits issue that overlaps with a class certification issue. 

There has been a recent trend of plaintiffs’ lawyers focusing on Rule 23(b)(2) as a potential avenue to certification of declaratory and/or injunctive relief claims, without the need for predominance of common issues of law or fact.  Typically these declaratory/injunctive relief claims are really nothing more than a request for money damages in disguise, or a means to obtain money damages.  This case was no exception to that trend.  Significantly, the Ohio Supreme Court held that “claims for declaratory relief that merely lay a foundation for subsequent determinations regarding liability or that facilitate an award of damages do not meet the requirement for certification” under Rule 23(b)(2).  (Id. at ¶ 27.)  The court relied on the Seventh Circuit’s opinion in Kartman v. State Farm Mut. Auto. Ins. Co., 634 F.3d 883 (7th Cir. 2011) (blog post), which is particularly helpful to insurers in defending against certification under Rule 23(b)(2).

In addressing Rule 23(b)(3), the point I found particularly significant was that the Ohio Supreme Court found that the appellate court had erred by failing to consider whether State Farm’s defenses raised individualized issues.  The importance of defenses in deciding class certification is often overlooked or underemphasized.  Without remanding for further factual analysis, the Ohio Supreme Court found that the lower courts had abused their discretion in certifying the class under Rule 23(b)(3).  The court explained that:

In sum, the determination of preloss and postrepair condition, the preloss value and the costs to repair or replace a particular windshield, and the individual knowledge and consent of each class claimant entail inspection of tens of thousands of automobiles and an individualized assessment of the damages each class member sustained, if any.

(Id. at ¶ 50.)