The District Court of Idaho recently decertified a title insurance reissue rate class action, finding the initial justifications for class certification have “not withstood the test of time.” Under the Idaho Rate Manual, customers are entitled to a 50 percent discount when a title policy is issued within two years of a previous policy on the same property by the same owner. Seven years ago, the court granted class certification for a class of Idaho residential customers of First American Title Insurance Co. (“First American”) who were allegedly not given this discount and overcharged while refinancing their title residential insurance policies.
The subsequent discovery process was riddled with obstacles as plaintiff struggled to develop a workable and accurate proposed list of class members, culminating in a proposed list of which 91 percent of the individuals were ineligible under the class definition. First American moved to decertify the class in 2012, but a magistrate judge denied that motion. This decision arose from the court’s review of that denial and First American’s objections to it.
First, the court faulted the magistrate’s presumption that decertification was only necessary if direct proof of a prior insurance policy was required. The magistrate judge correctly found that liability on the unjust enrichment claims could be based on “reasonable proof of a prior policy” rather than just direct proof. However, the court noted, determining whether “reasonable proof” existed would require highly individualized inquiries for each plaintiff to assess First American’s liability. Additionally, the court cited Wal-Mart Stores, Inc. v. Dukes to suggest the question of “reasonable proof of a prior policy” was not one that could be answered with common evidence. Such individualized inquiries undermined the magistrate’s finding of predominance under Rule 23(b)(3).
Second, the court found the plaintiff’s struggles in accurately identifying possible class members revealed the class to be unmanageable, further undermining the finding of predominance. First American’s records and computer systems posed considerable problems and rendered the customer identification method far from the “almost automatic process” the court assumed it would be when originally certifying the class.
Finally, the court noted how many other courts addressing reissue rate cases have declined to certify classes or decertified class actions. The “common threads” among those cases are the exact issues the court identified here: there is no common proof to determine liability and there are no common questions capable of class-wide determination.
Thus, the court found the magistrate’s order clearly erroneous and granted First American’s motion to decertify.