In industries other than insurance, arbitration provisions have become a key technique used to defend against class actions. The U.S. Supreme Court has made it quite clear over the last few years that it will enforce the use of an arbitration provision that requires arbitration of individual claims and essentially bars the filing of class actions. (See my June 25 blog post for more thoughts on this.) While insurers, based on current policy provisions, do not have the arbitration option in defending many class actions, there are some cases that do offer a similar option, based on the appraisal provisions in property and auto insurance policies. These provisions typically allow either the insurer or the insured to insist that a dispute over the value of damage to a building or automobile be resolved by an informal, alternative dispute resolution mechanism called appraisal. Somewhat similar to arbitration, a three-member panel of appraisers will decide the value of the damaged property, but they do not have the authority to make legal determinations, such as interpreting an insurance policy coverage provision. In the right kind of class action (one premised on valuation), appraisal can sometimes be invoked by the insurer on the claim(s) of the named plaintiff(s). Once the dispute is resolved by appraisal, that should end the case because the named plaintiff’s own claim becomes moot, and the named plaintiff no longer has standing to proceed with the case.

A recent decision on this issued by a Nevada federal court is Herrera v. Allstate Fire & Casualty Company, Case No. 2:13-cv-00908-MMD-PAL (D. Nev. Dec. 6, 2013). The plaintiff’s vehicle sustained a total loss in an automobile accident. She alleged that Allstate miscalculated the fair market value of her vehicle, in violation of a Nevada regulation. After being sued, Allstate invoked the appraisal provision, moved to compel appraisal, and sought to stay or dismiss the case pending completion of the appraisal. The court granted the motion to compel appraisal and stayed the lawsuit. It explained that “[t]he Policy requires ‘full compliance’ with its terms before commencement of litigation. Because Defendants have initiated the appraisal process under the Policy, Plaintiff is contractually required to submit to the appraisal process before bringing suit.” Id. at *4-5.

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Photo of Wystan Ackerman Wystan Ackerman

Wystan Ackerman is a partner in Robinson+Cole’s Insurance + Reinsurance Group and handles a diverse range of property insurance litigation, including large business interruption cases, class actions, other complex litigation, and appeals. He also has substantial experience representing insurance companies in putative class…

Wystan Ackerman is a partner in Robinson+Cole’s Insurance + Reinsurance Group and handles a diverse range of property insurance litigation, including large business interruption cases, class actions, other complex litigation, and appeals. He also has substantial experience representing insurance companies in putative class actions involving homeowners’ insurance coverage and market conduct/claim-handling practices. He has been prominently involved in high-profile property insurance litigation concerning the September 11th catastrophe and Hurricane Katrina, and Chinese-made drywall. Based in the insurance capital of Hartford, Connecticut, Wystan writes the blog Insurance Class Actions Insider, which was selected by Lexis Nexis as a top insurance blog for 2011.

Wystan 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. He always had strong interests in history, politics and baseball and his heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox). Wystan says it was his early fascination with Lincoln that drove him to practice law. As a high school senior, he was one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified his interest in law and government. He went on to Bowdoin College, where he wrote for the Bowdoin Orient and majored in government. After Bowdoin, he went on to Columbia Law School. He also interned in the chambers of then-Judge Sonia Sotomayor on the Second Circuit. Wystan graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole.

When Wystan’s not at his desk, flying around the country trying to save insurance companies from the plaintiffs’ bar, or attending a conference on class actions or insurance litigation he often can be found watching “Dora the Explorer” or reading or playing whiffleball with his young daughter, helping his wife with her business, Option Realty, reading a book about history or politics, or watching the Boston Red Sox.

Read Wystan’s rc.com bio.

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