Kathleen Seabron filed a lawsuit challenging the red tape her insurance company required before paying an automobile accident claim as bad faith. After the insurer removed her claim to federal court, she turned it into a bad faith "class action" and added several other plaintiffs. The result was Seabron v. Am. Family Mut. Ins. Co., No. 11-cv0196-WJM-KMT, 2013 U.S. Dist. LEXIS 99166 (D. Colo. Jul. 16, 2013).
After hotly-contested discovery, the plaintiffs moved to certify a class. The court expressed "significant reservations" about whether the plaintiffs had met the Rule 23(a) requirements, but assumed that they had so it could focus on the problems with Rule 23(b)(3).
It held that the predominance requirement mandates looking at the evidence required to resolve the claim. In this case, because the plaintiff was challenging the process by which the insurance company evaluated claims, that evidence would be individualized. The plaintiff tried to get around problem this by characterizing the "common problem" as a "lack of uniform standards," the court recognized that a lack of uniform standards simply meant that each claim would be subject to a unique inquiry.
Plaintiffs' argument does not show that common questions predominate over individual questions because Plaintiffs cannot establish their bad faith claims by relying solely on Defendants' lack of uniform claims processing standards. ... While the lack of uniform standards is evidence that the jury can consider in deciding whether Defendants acted in bad faith, they must also consider the individual facts and circumstances of each claim to answer the ultimate question of whether Defendants' actions in a particular case were reasonable.
(Internal citation omitted.)
But, more instructively, the court also held that individual lawsuits were superior to the proposed class action. Much of its reasoning was the same as defendants usually argue, but it added one observation defense lawyers should pay attention to.
Furthermore, it appears entirely feasible for Plaintiffs to bring their claims individually. Plaintiffs' argument concerning the prohibitive cost and attorney hours associated with bringing individual suits is wholly undermined by the fact that Section 1116 awards attorney fees and costs to a successful litigant. See Colo. Rev. Stat. § 10-3-1116(1) (stating that an insured whose claim is unreasonably delayed or denied may recover "reasonable attorney fees and court costs and two times the covered benefit."); Hall v. Am. Standard Ins. Co., 292 P.3d 1196, 1200 (Colo. App. 2012) (attorneys' fees are permissible damages in a statutory bad faith claim). The Court regularly sees bad faith claims filed by individual policy holders. In fact, at the time this Order was issued, there were more than twenty active bad faith cases brought by individual plaintiffs pending in this District.
(Emphasis added.) What's the takeaway from this denial of certification? If you're arguing that a class action is not superior to individual lawsuits, don't be afraid to point to the court's actual docket.