490 F.Supp.3d 1291
N.D. Ill.2020Background
- In March 2020 Christine Dowding bought a cruise and roundtrip airfare and purchased travel insurance from Nationwide that covered trip cancellation for illness or quarantine.
- Before departure Dowding developed bronchitis, submitted a physician’s note, and filed a claim for cruise and airfare reimbursement.
- Carnival refunded the cruise price; Frontier issued a travel voucher for the airfare (usable within 90 days); Nationwide closed Dowding’s claim, refunded her premium, and declined payment.
- Dowding sued in Illinois court (removed to federal court) asserting breach of contract, violation of 215 ILCS 5/154.6 (improper claims practice), and the Illinois Consumer Fraud Act; she also pleaded a putative class of similarly situated Illinois policyholders.
- Nationwide moved to dismiss for failure to state a claim and to strike the class allegations under Rule 23.
- The Court dismissed claims tied to the refunded cruise (standing/injury) but denied dismissal as to the airfare-related claims on Counts I–III and denied the motion to strike the class allegations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract (airfare) | Dowding says Policy covers cancellations for illness/quarantine and Nationwide must reimburse airfare; the Frontier voucher is not equivalent to cash to her. | Nationwide contends reimbursement cannot exceed amounts prepaid and paying cash plus leaving the voucher would make plaintiff more than whole. | Denied dismissal as to airfare: voucher value may be less than cash to Dowding, so she plausibly alleges she was not made whole and states breach for airfare. Cruise-related breach claims dismissed. |
| 215 ILCS 5/154.6 (improper claims practice) | Nationwide closed the claim at Carnival’s instruction without investigation or adequate explanation, amounting to vexatious and unreasonable conduct. | Nationwide implies there may be legitimate defenses or bona fide coverage disputes. | Denied dismissal as to airfare: allegations plausibly show failure to investigate or explain denial; cruise-related portion dismissed. |
| Illinois Consumer Fraud Act (ICFA) | Nationwide advertised coverage for illness/quarantine but allegedly refused to investigate/pay, deceiving consumers and causing injury. | Nationwide argues justification for denial and that its actions were not deceptive or actionable. | Denied dismissal as to airfare: plaintiff adequately pleaded deceptive practice, causation, and damages; cruise claims dismissed. |
| Motion to strike class allegations | Putative class: Illinois policyholders whose travel insurance claims were closed/denied without consideration on/after Mar 1, 2020; Dowding claims typicality/common issues. | Nationwide argues class fails commonality/typicality because policy language and claims may differ across members. | Motion to strike denied: court finds potential defects speculative at pleading stage and declines to strike before class discovery, though commonality/typicality concerns may remain. |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for pleading)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (application of Twombly plausibility standard)
- W. Bend Mut. Ins. Co. v. Schumacher, 844 F.3d 670 (7th Cir. 2016) (courts accept allegations as true at motion-to-dismiss stage)
- Berger v. Nat'l Collegiate Athletic Ass'n, 843 F.3d 285 (7th Cir. 2016) (pleading standards and Rule 12(b)(6) review)
- Bell v. City of Chicago, 835 F.3d 736 (7th Cir. 2016) (pleading and inference guidance)
- Citizens First Nat'l Bank of Princeton v. Cincinnati Ins. Co., 200 F.3d 1102 (7th Cir. 2000) (when insurer conduct is not vexatious under §154.6)
- Phillips v. Prudential Ins. Co. of Am., 714 F.3d 1017 (7th Cir. 2013) (§154.6 extracontractual remedy explanation)
- Kasalo v. Harris & Harris, Ltd., 656 F.3d 557 (7th Cir. 2011) (court may strike class allegations pre-certification in limited circumstances)
- Heller Fin., Inc. v. Midwhey Powder Co., 883 F.2d 1286 (7th Cir. 1989) (motions to strike class allegations are disfavored)