Keeling v. Esurance Insurance
2011 U.S. App. LEXIS 19598
| 7th Cir. | 2011Background
- Keeling v. Esurance involves Illinois class-action fraud claims that UIM premiums were charged despite policy restrictions rendering coverage worthless.
- Esurance removed to federal court under CAFA § 1453; class >100 members with minimal diversity; representative argues AIC < $5M.
- District court remanded, finding AIC below $5M; Esurance seeks interlocutory appeal under § 1453(c)(1).
- Esurance issued ~50,000 policies with the contested clause; five-year window yields net premium $613,894 and no claims paid.
- District court treated restitution as principal and prospective relief as nontrivial; concluded $4.4M punitive damages would be required but not legally possible.
- Seventh Circuit reverses, holding the amount-in-controversy inquiry cannot ignore potential injunctive relief and punitive damages; case remanded for merits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| CAFA jurisdiction given potential damages and relief | Keeling argues AIC < $5M, district court misapplied threshold. | Esurance contends punitive damages and restitution could push >$5M, satisfying CAFA. | Not legally impossible to exceed $5M; CAFA jurisdiction proper to review. |
| Valuation of prospective injunctive relief in AIC | Prospective relief costs about $1.5M PV; cannot be ignored. | Relief would require only form changes; cost minimal. | Prospective relief materially affects AIC and cannot be ignored in calculation. |
| Whether punitive damages could exceed the threshold | Punitive damages could potentially push AIC over $5M in Illinois. | Punitive award would be unlikely, but not legally impossible. | Not legally impossible to obtain >$5M with punitive damages; remand for merits. |
Key Cases Cited
- St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283 (U.S. 1938) (base rule for jurisdictional uncertainty in diversity suits)
- Back Doctors Ltd. v. Metropolitan Property & Casualty Ins. Co., 637 F.3d 827 (7th Cir. 2011) (CAFA and amount-in-controversy considerations in class actions)
- Rising-Moore v. Red Roof Inns, Inc., 435 F.3d 813 (7th Cir. 2006) (damages and multipliers in class actions context)
- Brill v. Countrywide Home Loans, Inc., 427 F.3d 446 (7th Cir. 2005) (class-action damages considerations)
- Gehrett v. Chrysler Corp., 379 Ill.App.3d 162 (Ill. App. 2008) (Illinois punitive damages multipliers in fraud cases)
- Bates v. William Chevrolet/GEO, Inc., 337 Ill.App.3d 151 (Ill. App. 2003) (affirmation of high multipliers in Illinois fraud cases)
- Pacific Mutual Life Ins. Co. v. Haslip, 499 U.S. 1 (U.S. 1991) (constitutional limits on punitive-damages multipliers)
- State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (U.S. 2003) (limits on punitive damages in relation to harm and wealth)
- Empress Casino Joliet Corp. v. Balmoral Racing Club, Inc., 651 F.3d 722 (7th Cir. 2011) (en banc consideration of damages standards)