2014 COA 2
Colo. Ct. App.2014Background
- Plaintiffs (Maxwells and Hill) brought a putative class action against USAA alleging fraudulent concealment, bad faith, and CCPA violations for failing to disclose post-DeHerrera that UM/UIM coverage is person-based (class one) and that adding coverage on additional vehicles mainly covered nonresident relatives/guests (class two).
- Maxwell I (Colo. Ct. App.) reversed summary judgment, holding USAA's form/OBNI exclusion could be misleading and material issues of fact existed about whether insureds thought coverage was per-vehicle.
- After remand plaintiffs moved for class certification under C.R.C.P. 23(b)(8); the trial court held a five-day evidentiary hearing and denied certification, concluding individualized reliance issues predominated and that the filed rate doctrine barred premium-refund damages on the initial-purchase theory.
- At certification the trial court admitted State Farm retention data (SF Data) showing most notified insureds retained UM/UIM on all vehicles; plaintiffs sought exclusion as hearsay/irrelevant.
- The court credited USAA expert and circumstantial evidence (low premiums, customer loyalty, inconvenience of switching) that some reasonable insureds would have retained class two coverage even if properly informed, defeating a classwide reliance inference.
- On a separate CRCP 56(h) ruling the court applied the filed rate doctrine to the insurance industry and held it precludes refund of UM/UIM premiums for additional vehicles where that damages theory would require second-guessing DOI-approved rates.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether SF Data admissible at certification | SF: SF Data is hearsay and irrelevant absent proof SF gave adequate notice | USAA: Business records exception; data is relevant circumstantial evidence of nonreliance | Admissible under business-records exception; relevance goes to weight not admissibility |
| Whether plaintiffs must prove reliance to satisfy predominance | Reliance need not show each would have acted differently; materiality suffices and reliance may be inferred | USAA: Plaintiffs must show reliance (inferred or direct); evidence shows some would reasonably keep coverage | Reliance is an element and may be inferred from uniform nondisclosure, but that inference can be rebutted |
| Whether defendant may rebut reliance inference with circumstantial evidence at certification | Plaintiffs: Allowing circumstantial rebuttal improperly invades merits and impermissibly weighs evidence | USAA: May introduce circumstantial/ expert evidence showing reasonable alternative explanations for conduct | Court: Trial court may consider circumstantial evidence (including expert testimony) to rebut the inference without unduly prejudging the merits; denial of certification affirmed |
| Whether the filed rate doctrine applies and bars refund-of-premiums damages | Plaintiffs: Doctrine shouldn't bar consumer fraud damages; premiums may be refunded (or partial rescission) | USAA: Doctrine applies to insurance and bars damages that would require evaluating reasonableness of DOI-filed rates | Filed rate doctrine applies to Colorado insurance regulation; it bars damages (premium refunds) that would implicate reasonableness of filed rates, so refund theory on initial-purchase claim is precluded |
Key Cases Cited
- DeHerrera v. Sentry Ins. Co., 30 P.3d 167 (Colo. 2001) (UM/UIM benefits follow persons, not vehicles)
- Jackson v. Unocal Corp., 262 P.3d 874 (Colo. 2011) (trial court must rigorously analyze evidence at class-certification and may consider expert opinions)
- BP Am. Prod. Co. v. Patterson, 263 P.3d 103 (Colo. 2011) (focus on whether plaintiff can prove elements on a classwide basis; caution about classwide proof of reliance)
- Farmers Ins. Exch. v. Benzing, 206 P.3d 812 (Colo. 2009) (standard for reviewing class-certification denial)
- Keogh v. Chicago & N.W. Ry. Co., 260 U.S. 156 (U.S. 1922) (origin of filed-rate doctrine limiting judicial second-guessing of filed rates)
- U.S. W. Commc'ns, Inc. v. City of Longmont, 948 P.2d 509 (Colo. 1997) (discussing filed-rate rationales and extension to state-regulated rates)
- Showpiece Homes Corp. v. Assurance Co. of Am., 88 P.3d 47 (Colo. 2004) (scope of DOI authority and interaction with consumer-protection claims)
- Garcia v. Medved Chevrolet, Inc., 263 P.3d 392 (Colo. 2011) (permitting comparison of circumstantial/individual evidence when assessing class certification)