In Schumacher v. State Auto. Mut. Ins. Co., No. 13-cv-00232, 2015 U.S. Dist. LEXIS 11857 (S.D. Ohio Feb. 2, 2015), the Southern District of Ohio struck class allegations from a putative class action alleging breach of the duty of good faith and fair dealing, fraud, fraudulent inducement, and violations of the Ohio Deceptive Trade Practices Act, in connection with a homeowners endorsement marketed and offered by State Automobile Mutual Insurance Company (“State Auto”).
State Auto offers an endorsement known as its “Defender Endorsement,” which State Auto marketed as providing “100% replacement cost coverage” and an additional amount of insurance, up to 25% of policy limits, for a loss to a dwelling that exceeded the liability limit of the policy. The named plaintiff alleged that “100% replacement cost coverage” in the Defender Endorsement created the impression that a homeowner needed the endorsement to be adequately insured, even though the policy already provided such protection as long as the structures were insured at 80% of their full replacement cost.
Policyholders with the Defender Endorsement also give State Auto full authority to adjust the limits on their dwelling coverage (and corresponding premiums) in accordance with property evaluations made by State Auto. To this end, State Auto implemented an “Insurance-to-Value” (ITV) programs which allowed State Auto increase policyholders’ coverage limits (resulting in higher premiums being paid). In doing so, however, such increases effectively eliminated any chance that State Auto would be required to provide the 25% bonus guaranteed by the Defender Endorsement.
The named plaintiff alleged that State Auto had intentionally overstated the costs to rebuild their homes, such that they were being charged for a benefit that they did not need, and would never realize in the event of an occurrence. The named plaintiffs sought to represent a multi-state putative class comprised of class members in Ohio and nine other mid-west and eastern States.
State Auto moved to strike the class allegations. State Auto pointed out that, even according to the allegations in the plaintiffs’ complaint, policyholders would receive a “standard work sheet” and speak with third-party representatives regarding documenting the value of their home. As such, State Auto argued that the class was not ascertainable because there was no means to objectively determine whether a particular coverage increase for a class members was made unilaterally by State Auto under the guise of providing adequate replacement coverage, rather than being the result of collaboration with a policyholder (who had in fact made a significant improvement in his/her home to justify the increased valuation). The District Court agreed with State Auto, holding that there was no objective means to ascertain class members without conducting a property-by-property inquiry, such that the proposed class was not ascertainable.
Likewise, the District Court held that commonality and predominance could never be satisfied as and rejected the plaintiffs’ argument that State Auto had engaged in a “common course of conduct” sufficient to create class-wide liability. Instead, the District Court concluded that individual issues would ultimately overwhelm any common question as State Auto’s liability would ultimately hinge on a case-by-case analysis of every insureds’ home and its replacement costs. Because the District Court found commonality and predominance lacking, it likewise concluded that the superiority and typicality prongs of Fed. R. Civ. P. 23 were not satisfied, and therefore struck the class allegations from the plaintiffs’ complaint.
