In re Farmers Insurance Co. Wind/Hail Storm Litigation
delivered the opinion of the MDL Panel:
Rule 13 authorizes the MDL Panel to transfer “related” cases (i.e. cases involving common questions of fact) from different trial courts to a single pretrial judge if transfer will (1) serve the convenience of the parties and witnesses and (2) promote the just and efficient conduct of the litigation. See In re State Farm Lloyds Hurricane Ike Litig.,
Farmers Insurance Company (for itself and related entities) seeks creation'of an MDL pretrial court for 1565 wind-and hail-damage cases pending in 166 courts in forty-four counties.
All plaintiffs oppose the motion. (1) They argue first that the cases are not “related,” and therefore should not be transferred, because they arose from many different storms that occurred at different times in different counties. (2) Second, they argue that to grant this motion would "give Farmers a “perpetual MDL” because Farmers could use the tag-along procedure to bring newly-filed' cases into th’e pretrial court,- potentially forever. ■ (3) They also argue that any convenience for Farmers would be outweighed by the inconvenience to the plaintiffs, who would have to travel to a court far away from the counties of venue, where the property is located.
For the reasons stated below, we grant Farmers’ alternative request in part and create thrеe MDL courts -for, these cases.
I. Convenience, Efficiency, and Justice.
“Rule 13 aims to further the goals of convenience, efficiency, and justice by (1) eliminating duplicative and repetitive discovery, (2) minimizing conflicting demands on witnesses, (3) preventing inconsistent decisions on common issues, (4) reducing unnecessary travel, and (5) creating judicial efficiency through the use of a single judge.” See In re State Farm Lloyds Hidalgo County Hail Storm Litig.,
Whether it would serve the interests of convenience, efficiency, and justice to transfer the pretrial phase of 1565 bases (pending in 166 cоurts in forty-four counties) is not a difficult question. In the matter before us, transfer would further each of these goals. We have not been given any reason why it would be sensible judicial policy for dozens of trial judges to adjudicate the same issues again and again;
II. .Relatedness.
A more difficult question is whether these cases are related within the meaning of prior MDL decisions. “Relatedness is a threshold question. If cases are not related we lack authority to assign them to an MDL pretrial judge, even if such an assignment would serve the interests of convenience and efficiency.” See In re Deepwater Horizon Incident Litig.,
The issue of MDL relatedness in weather-damage insurance lawsuits has been ■fought repeatedly in MDL filings. This history of continuous and strenuous disagreement suggests that .we should take a fresh look at our weather-damage cases and clarify the rules for better guidance in future cases.
Our first weather-damage MDL motion arose from Hurricane .Rita. It involved twenty-two cases against several insurers. In In re Delta Lloyds Ins. Co.,
The next weather-damage MDL motion involved forty-two cases arising from two different hurricanes, Rita and Humbertо. In In re Texas Windstorm Ins. Ass’n Hurricanes Rita and Humberto Litig.,
In a Hurricane Ike proceeding three years later, we followed Delta and Texas Windstorm and disposed of the relatedness issue in this short passage:
These [sixty-six] cases are related because they arise from one event and the plaintiffs seek common discovery on the ground that State Farm has a “general business practice” of adjusting claims in a way that is unfairly designed to tilt the process in its favor and against the policyholder. Plaintiffs seek discovery tailored to each specific case and also discovery delving into State Farm’s broader practices in property insurance cases generally. For the reasons stated in [Texas Windstorm and Delta], which need not be repeated here, the cases are related for purposes of Rule 13.
See In re State Farm Lloyds Hurricane Ike Litig., supra,
We next applied this evolving series of decisions in In re. National Lloyds. Ins. Co. Hurricane Litig.,
By this time, it was becoming clear that business practices allegations were the main point of contention in these cases. All requests for MDL treatment in weather-damage cases before and since have involved assertions by the plaintiffs that the insurers follow standard business practices'designed to minimize payouts instead of concentrating on the individual claims.
When litigants broaden their claims to make business practices allegations and to seek discovery beyond the facts surrounding the individual policyholder’s loss— when they allege that á uniform set of practices is occurring in all their eases, for which they seek uniform extra-contractual discovery and relief—-these.generic claims transcend the individual- claims and make the cases related to each other. The allegation itself is an implicit concession that the cases-are related.
These allegatiohs have been the primary reason why we have set up pretrial courts. ‘Yet we second lawsuit, have been reluctant to hold that a “business practices” allegation, without some other kind of linkage, justifies MDL. Concerns have been expressed that we might set up an insurer-based MDL court that includes vastly different kinds of claims arising at different times' and places. Would one insurance compаny be entitled to have its own MDL court for many different kinds of cases, or for new property damage claims into the foreseeable future?
In In re National Lloyds Ins. Co. Hurricane Litig.,
For first-party insurance claims arising . out of common significant weather events against a common insurer-defendant, a party advocating use of an MDL must show more than the existence of the undisputed weather events. Instead we require a party to show two common fact questions: (1) an allegation that -the insurer handled claims in accordance with standard business practices and (2) the significant weather events occurred in “close proximity.”
The latest weather-damage deсision denied an MDL motion for twenty-six cáses that arose over a four-year span in seven counties. See In re National Lloyds Ins. Co. Hail Litig.,
We acknowledge that these decisions have not given clear guidance to litigants. Future decisions must bring more clarity to this area of the law, even if this requires us to recognize that some of the decisions perhaps made a wrong turn. But. that task will wait, for another case. In the motion before us, the “close proximity” analysis is adequate because the 1565 cases overwhelmingly consist of several discrete storms that occurred within a little more than two years. When we focus on the eight groups of cases, we conclude that each of them justifies an'MDL court. Each case in the eight major groups listed in footnote two above is related to the other cases in that group. Each storm occurred in contiguous counties over the same time period, and the same business practices allegatiоn is made. And it will serve the goals of convenience, efficiency, and justice for a pretrial court to handle the cases in each group, fop ,the reasons explained in Section I above. .An MDL court is proper for the eight storms, considered individually; and to bring the other cases into the eight-group MDL will bring efficiencies and remove the potential for conflicting rulings in all the cases. In these circumstances there is no reason why the law must require that all the cases against Farmers, considered as a whole, arose in “close proximity.”
It bears repeating that the kinds of damage, the policy lаnguage, and the ex-trarcontractual allegations are much the same in each of these cases. The. business practices alleged against Farmers are said to be actionable. • They are asserted as a foundation for voluminous discovery and for eauses'of action that each plaintiff will seek to have submitted to a jury as a basis for treble and/or punitive damages. The number of claims is enormous. Each of the eight storms listed in footnote two by itself involves more MDL lawsuits than the sixteen that were transferred.to an MDL court in Delta.
An MDL court will serve the purpоses of the statute: It will protect against multiple and conflicting demands on witnesses; prevent multiple and conflicting discovery orders, legal rulings, and trial and pretrial settings; and conserve judicial time.
We now consider three other concern's that have been expressed by some plaintiffs.
Perpetual MDL court. It is said that to grant this motion would give Farmers a “perpetual MDL” because as new storms occur and new cases are filed, Farmers could use the tag-alóng procedure to bring them into the pretrial court—рotentially forever. This will not happen because the tag-along procedure will apply only to new cases arising from storms already in the MDL. The matter before us is a collection of individual'storms. The tag-along procedure will not cover cases arising from new storms occurring after June 11, 2014.
Inconvenience. An additional concern is that it will be inconvenient for plaintiffs to attend hearings in a distant court, and that this inconvenience outweighs any convenience to Farmers. This argument appears to rest оn the assumption that parties often attend pretrial hearings.- We respectfully disagree with this implicit assumption. There is nothing in the record to contradict our understanding, based on experience, that it is rare for parties to attend discovery and other pretrial hearings. It is also our experience that pretrial evidentiary hearings requiring party testimony are rare. Concerning attendance by lawyers, we are confident that when it is expensive or difficult for them to attend hearings in a faraway county the pretrial court will fairly сonsider requests to attend by telephone or other electronic methods.
Venue., A related argument is that MDL removes cases from the county of venue. This is only partially true. When an MDL motion is granted, only the pretrial decisions are heard by the pretrial judge; when cases are ready for trial they will be remanded to the original county of venue for trial on the merits.
Notes
. We were notified recently that settlements and new filings have changed the number from 1565 to 1723. Because the briefing was completed before the number of cases was updated, this opinion will use the original number of 1565,
. The eight major storms (with the number of claims and the nearby counties in parenthe- ■ ses) occurred on the following dates:
(1) .March 28 through April 5, 2012 (335 in Hidalgo County)
(2) April 20, 2012 (294 in Cameron, Hidalgo, and Starr Counties)
(3) October 18, 2012 (33 in Hidalgo County)
(4) May 27 &'28, 2013 (57 in Hale, Potter, and Randall Counties)
(5) June 6 & 7, 2013 (121 in Cameron, Hidal-go, and Webb Counties)
(6) April 3, 2014 (84 in Collin, Dallas,’ Den-ton, and Tarrant Counties)
(7) April 23, 2014 (132 in Maverick County)
(8) May 9, 2014 (93 in Webb County)
By out count, the eight storms produced 1149 lawsuits, 73% of the 1565 total. The following nine counties had, significant numbers of insurance suits from storms during the sаme 27-month period but on dates other than the eight major storms: Bell (10), Bexar'(18), Cameron (19), Dallas (68), El-Paso (11), Harris (16), Hidalgo (100), Maverick (17), and Webb (41). These 300 claims make up another 19% of'the whole. Five of these counties were also affected by one br more of the eight major storms. .
. The discovery requests are essentially the same as those summarized in In re State Farm Lloyds Hurricane Ike Litig., supra,
Plaintiff’s experience is not an isolated case. The acts and omissions of the Defendant in this case, br similar acts and omissions, occur with such frequency that they constitute a= general business practice of Defendant with regard to handling these types of claims. Defendant’s entire process is unfairly designed to reach favorable outcomes for the company at the expense of the policyholder.
This is stated as a foundation for extra-contractual relief, including treble and punitive damages. It is a basis for seeking discovery of' documents from years past, across the entire state. The discovery concerns such things as training and education, communications from government agencies, other lawsuits, demand letters from other policyholders, etc.
Whether, and under what circumstances, the conduct alleged as standard business practices is actionable (or admissible at trial) is not for us to decide. Cf. In re National Lloyds Ins. Co.,
. By separate order we have today created three pretrial MDL courts for the major storms mentioned in footnote two above and all the other minor storms in the same time frame (Feb, 29, 2012 to June 11, 2014). The order appointing pretrial judges: (1) expressly excludes several cases in which, we have concluded there is no allegation of wrongful business practices; (2) allows lawyers to point out on rehearing that their cases are in the same category and should also remain outside the MDL court; and (3) observes that if the ■ proceedings in the remanded cases interfere with the MDL pretrial court process (through discovery conduct and-rulings, trial settings, or otherwise), Farmers may seek to remove them to a pretrial court through the tag-along procedure.
. If a given issue is being decided consistently by judges across the state, one might ask what is gained by litigating that issue repeаtedly. On the other hand, if an issue is being decided differently by different judges, one might ask why the legal system is letting .that happen. "Like cases should be treated alike” is a universally accepted principle of justice.
It is true that, over a period of time, inconsistent and contradictory legal rulings might be reviewed and harmonized by the appellate courts/' But 'discretionary rulings Would seldom be changed by appeal or mandamus because judges are generally permitted to exercise their discretion differently.
We have previously stressed the importanсe of achieving consistent rulings on common issues., See, e.g., In re State Farm Lloyds Hurricane Ike Litig., supra,
. In In re State Farm Lloyds Hurricane Ike Litig, supra, we said:
A fifth objective of the MDL process is to allocate finite judicial resources intelligently by minimizing the occasions when different judges decide the same or similar issues again and again. When one trial judge has decided an issue that is common to a set of related cases, the legal system cannot afford to let other trial judges spend time deciding the issue again. Time and energy are finite quantities, and when a judge spends docket time and effort on A and B there will be less time and energy remaining for X and Y. Rule 13’s concern for efficiency rests on the belief that unnecessary relitigation of issues, which can deprive other litigants of their fair share of courtroom time, is an extravágance that the legal system cannot afford. “To the extent that the pretrial judge’s workload does increase, that would seem to be more than offset by the decreased workload the other [] judges will collectively enjoy.”
. Members of this panel have issued strong and thoughtful separate opinions that question whether the existing rales are workable. In In re National Lloyds Ins. Co. Hurricane Litig.,
Justice Harvey Brown has suggested that the panel’s relatedness inquiry should focus "less on the geographic and temporal proximity of the storms themselves and more on the insurer’s сlaims-handling procedures implicated in the lawsuits.” For example, if the plaintiffs allege (and seek discovery concerning) a longstanding claims settlement practice, that would suggest relatedness over a long period of time. Similarly, to assert that claims handling processes span a large geographic area would suggest a corresponding large area of geographic proximity. See In re National Lloyds Ins. Co. Hail Litig.,
. The first MDL motion that emphasized the discovery implications of a “standard business practices” allegation was In re OCWEN Loan Servicing, LLC.
. The majority said that the five insurers facing six cases "have not established that-the claims against them are based'on standard practices and procedures common to [each insurer] or that the claims arise from the same standardized policy language.”-
.Rule 13.5(e)’s tag-along procedure is discussed in In re Wellington Ins. Co: Hailstorm Litig.,
. One'brief argues that Farmers “wishes'to have all cases ever brought against it or its related entities which allege mishandling of property damage ■ insurance claims arising from wind/hail storms, regardless of the underlying facts, underlying event, date, or location, transferred to an insurer-specific MDL Court,” Another says, “If its request is granted, Farmers will have succeeded in obtaining its own court system for all wind and hail claims throughout Texas, which will live on in perpetuity.” These concerns are unfounded, for the reasons stated in Section III below.
. We have rejected that kind of request (i.e. for a potentially unending MDL court) in a non-insurance case. In In re Personal Injury Litigation Against Great Lakes Dredge & Dock Co., LLC,
. In addition, as we have said before, we cannot close our eyes to a litigation reality that exists whenevеr similar-cases are pending in different courts and the plaintiffs are seeking generic "business practices” discovery—discovery beyond the case-specific issues, such as coverage, causation of damage, cost of repairs, etc. There is a powerful incentive for law firms seeking the generic discovery to present a discovery request first to the judges they think are most likely to grant it, If they obtain less than they wanted, they can try again before different judges to obtain what the earlier judges denied (or grantеd only in part). When "the issues are expanded to a defendant’s business practices generally,
. In the event that new cases outside the MDL seek business practices discovery, or threaten to interfere with the work of any рretrial court, a new MDL motion would be required unless the parties agree that the new cases can be tagged into the MDL court,
, See In re Digitek Litig.,
. See In re Texas Windstorm Ins. Ass’n Hurricanes Rita and Humberto Litig.,
. See State Farm Hurricane Ike Litig., supra,