577 F.Supp.3d 970
D. Minn.2021Background:
- Farmers-affiliated insurers entered confidential settlement agreements with certain health-care providers that limited those providers from billing Farmers for treatment of Farmers’ insureds; Farmers did not disclose these "billing limitations" to policyholders.
- Policies sold in Minnesota purported to conform to the Minnesota No‑Fault Automobile Insurance Act and promised reimbursement for reasonable, necessary medical expenses.
- Plaintiffs (named insureds and businesses) sued alleging breach of contract, violation of the Minnesota Consumer Fraud Act (MCFA), and violation of the Minnesota Uniform Deceptive Trade Practices Act (MDTPA); they seek monetary damages and injunctive relief.
- Plaintiffs moved to certify two classes: an Injunctive Class (current policyholders) under Rule 23(b)(2) and a Damages Class (all purchasers since 1/17/2013) under Rule 23(b)(3); proposed experts (Schwartz for damages, Rothman for materiality/regulatory impact) supported certification.
- The court conducted a focused Daubert inquiry at the class‑certification stage, denied Farmers’ motion to exclude the experts, certified the Injunctive Class in full, certified the Damages Class only on the MCFA claim, and denied certification of the Damages Class on breach of contract and the MDTPA claims; it also appointed class representatives and class counsel.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Exclusion of experts (Schwartz & Rothman) | Schwartz offers a viable methodology to compute classwide damages; Rothman supports common materiality, regulatory impact, and harm. | Schwartz’s Factor is speculative, not calculated or tied to liability; Rothman offers legal conclusions and lacks foundation/qualification for materiality/harm opinions. | Denied. Under a focused Daubert review for class certification the court found plaintiffs met the preliminary admissibility burden; factual attacks go to weight, not exclusion at this stage. |
| Certification of Injunctive Class (Rule 23(b)(2)) | Billing limitations and nondisclosure are systemic; injunctive/declaratory relief would apply classwide to current policyholders. | Opposed generally. | Granted. The class is cohesive and injunctive relief would be uniform across class members. |
| Certification of Damages Class on MCFA (Rule 23(b)(3)) | MCFA relaxes individual reliance; regulatory and statutory context (No‑Fault Act & Commerce Dept.) makes materiality, reliance, and harm common; Schwartz’s model could measure classwide damages. | Individualized issues (who was denied benefits, reliance, materiality, damages) predominate; consumer surveys show immateriality; no reliable classwide damages model. | Granted as to MCFA. Court concluded common legal/regulatory questions could predominate and Schwartz’s proposed model is a plausible classwide damages method at this stage. |
| Certification of Damages Class on breach of contract and MDTPA | Policies are materially identical; uniform billing limitations breached policies and constituted deceptive trade practices. | Breach accrues only upon denial of benefits (individualized); MDTPA only provides injunctive relief and thus not a basis for classwide monetary damages. | Denied. Breach of contract requires individualized proof of attempted invocation/denial; MDTPA does not support the requested classwide damages remedy. |
Key Cases Cited
- Daubert v. Merrell Dow Pharms., 509 U.S. 579 (1993) (trial-court gatekeeping standard for expert testimony)
- Wal‑Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) (commonality requirement for class certification)
- Comcast Corp. v. Behrend, 569 U.S. 27 (2013) (model for classwide damages must be tied to liability theory)
- In re Zurn Pex Plumbing Prods. Liab. Litig., 644 F.3d 604 (8th Cir. 2011) (focused Daubert inquiry at class‑certification stage)
- Hudock v. LG Elecs. U.S.A., Inc., 12 F.4th 773 (8th Cir. 2021) (individualized reliance issues can defeat class certification in fraud cases)
- Amgen Inc. v. Connecticut Ret. Plans & Tr. Funds, 568 U.S. 455 (2013) (courts should not resolve merits at certification but class must present common proof that predominates)
- McKeage v. TMBC, LLC, 847 F.3d 992 (8th Cir. 2017) (example where uniform improper fee justified class treatment on breach theory)
- Vogt v. State Farm Life Ins. Co., 963 F.3d 753 (8th Cir. 2020) (speculative intra‑class conflicts insufficient to defeat certification)