Strawn v. Farmers Insurance
256 P.3d 100
Or.2011Background
- Strawn filed a class action against Farmers Insurance Company of Oregon alleging breach of contract and fraud in its PIP claims handling under ORS 742.524(1)(a) and related practices.
- Farmers allegedly reduced medical payments to the 80th percentile of bills in a medical billing database for insured injuries.
- The trial court certified the class and the jury awarded approximately $900,000 in compensatory damages and $8 million in punitives against Farmers.
- The Court of Appeals affirmed liability but held the punitive damages issue differently; this court granted review to reconsider; the prior opinion was issued in 2011.
- The court granted reconsideration to address Farmers’s due process arguments and ex parte communications, ultimately adhering to the prior opinion with respect to liability and punitive damages, while Balmer, J., concurred in part and dissented in part on the reconsideration process.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether classwide reliance can be inferred in fraud class actions | Strawn argues inference of reliance is supported by evidence; not an immutable rule | Farmers contends the decision alters state law requiring individualized reliance | Inference permitted; Newman not overruled; no per se rule requiring individualized proof |
| Whether the decision creates a novel due process issue regarding punitive damages | Strawn contends no novel procedural bar; relies on prior analysis | Farmers argues the ruling creates new, inconsistent due-process constraints | Not novel; due process not violated; proper bases for punitive damages preserved |
| Whether ex parte communications require recusal or rehearing relief | Strawn argues potential conflicts; seeks rehearing | Farmers seeks recusal and remand for discovery | Ex parte contacts not a basis for rehearing; petition denied; reconsideration allowed without modifying prior ruling |
Key Cases Cited
- Newman v. Tualatin Development Co. Inc., 287 Or. 47 (1979) (classwide reliance not universally required; context-specific reliance allowed)