School’s Out, But Civil Procedure Class Is In A Tale of a Tenacious Class Action Defendant Ford v. Progressive Specialty Insurance Co., No. 2:21-cv-04147 (E.D. Pa. Mar. 5, 2025). It is no surprise that the court denied class certification in this case. After a collision with an underinsured vehicle, the plaintiff sought to stack underinsured motorist coverage between his motorcycle policy and another policy that covered two additional automobiles. However, the plaintiff had signed a statutorily mandated stacking waiver that, pursuant to Pennsylvania Supreme Court holdings, was only enforceable in certain circumstances. The plaintiff sought certification of a class of policyholders who were denied uninsured or underinsured motorist coverage due to the stacking waiver or household/regular-use exclusion. The parties conducted extensive class-certificationrelated discovery, but the plaintiff could only identify 98 potential class members. In opposition to class certification, the insurer submitted an employee declaration assessing the claim files and circumstances of each of those denials. The insurer was able to whittle the putative class down to only eight potential class members. Nonetheless, the court conducted a thorough analysis of each Rule 23 element. It found that the plaintiff had not established numerosity, commonality, typicality, or adequacy. Individual issues would predominate because there were several individual issues related to assessing each claim denial, including who was at fault for the underlying accident, whether denial of coverage was appropriate under the stacking waiver under Pennsylvania law, and whether there was another valid basis for denial. Despite the plaintiff’s failing on every requirement, the court still reached analysis of whether it could partially certify a class under Rule 23(c)(4)—a seldom-used rule that allows courts to maintain a class as to “particular issues.” As described by the court, it could potentially “manufacture predominance through the nimble use of such carving.” It declined to do so due to the number of legal and factual variables between insureds. But this case serves as a reminder of the potential usefulness of extensive class discovery and the importance of diligence in opposing the Rule 23 considerations even when the outcome seems clear. n The Unbearable Lightness of Declaratory Relief Siino v. Foresters Life Insurance & Annuity Co., No. 23-16176 (9th Cir. Apr. 1, 2025). We’ve previously covered the trends in class actions brought under California’s no-lapse statutes, which set forth certain notice requirements before a life insurance policy issued in California may lapse. In December, the Ninth Circuit held that to recover damages related to the lapse, the lack of a statutorily compliant notice must have caused the lapse and alleged harm. In April, the Ninth Circuit clarified whether policyholders could use a tailored declaratory relief claim to circumvent the causation requirement. In addition to a breach of contract claim, the plaintiff sought a declaration that the 9 8 insurer failed to comply with the no-lapse statutes and that her policy remained valid without the need to pay back overdue premiums. The plaintiff held onto the first part of her claim—a declaration that the insurer violated the statutory notice requirements—through some weaving. The Ninth Circuit first addressed whether the district court abused its discretion in considering the declaratory relief claim at all. The Ninth Circuit decided that the declaratory relief claim did not duplicate the breach of contract claim because it did not require evidence of damages and could serve a useful purpose by addressing the additional idea of whether the plaintiff was required to pay back overdue premiums. Next, the Ninth Circuit addressed the declaratory relief claim in two parts. It upheld a declaration that the insurer violated the no-lapse statutes because that declaration could not be used as an offensive “sword” allowing the plaintiff to collect damages. Instead, it would merely serve as a “shield” in case the insurer sought payment of overdue premiums. The Ninth Circuit reversed a declaration that the policy remained valid because the plaintiff had not shown that her injury was caused by the lack of notice. We could see district courts reaching a different outcome when exercising discretion about the usefulness of a mere declaration of a statutory violation. But regardless, the holding left the plaintiff with a seemingly hollow remedy. In other lapse litigation news, we note that the California Supreme Court has agreed to review whether the nolapse statutes apply to policies that originated in other states. n Counting Amount in Controversy Chickens Farmers Direct Property & Casualty Insurance Co. v. Perez, No. 23-3320 (9th Cir. Mar. 6, 2025). In many instances, we recommend that insurers choose to litigate in California federal courts over state courts when possible. Particularly for defendant insurers, considerations include the slightly more defendantfriendly “plausibility” pleading standard in federal court, the necessity of conducting a Rule 26(f) conference before starting discovery, and more robust procedures for expert disclosures. So we welcome this Ninth Circuit ruling, which clarifies the “amount in controversy” requirement for federal diversity jurisdiction in declaratory judgment actions. In this action disputing coverage obligations related to an underlying lawsuit, the court held that the amount in controversy was not capped at the $25,000 policy limit but instead included anticipated underlying future defense fees and costs that there was “at least an arguable basis” the insurer would incur. The court adopted a rule that the party seeking diversity jurisdiction must establish, by a preponderance of the evidence, a “legal possibility” of the controversy exceeding $75,000. This aligns with similar holdings in other circuits that have addressed this issue (including the Third, Fourth, Fifth, Sixth, Eighth, and Tenth Circuits). n
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