In re Farmers Insurance Co. Wind/Hail Storm Litigation 2
OPINION
delivered the opinion of the MDL Panel.
Earlier this year Farmers Insurance Company asked for an MDL pretrial court to handle wind and hail claims that arose from June 12, 2014 through January 8, 2016. When Farmers’ Motion to Transfer was filed, it covered 186 cases pending before 76 courts in 27 counties. The numbers have fluctuated with the passage of time, as new cases were filed and older cases settled. A pretrial court was established by orders issued in April and June, with an оpinion to follow.
This is the tenth MDL motion since 2008 involving insurance claims for weather damage.
This MDL Panel may transfer cases to a pretrial court if they are related and transfer will further the goals of convenience, efficiency, and justice.
Whether the cases are related is a more difficult issue. It is difficult largely because of our concern that to gather cases from different storms into one pretrial court simply because they involve аllegations of unlawful business practices might result in a perpetual pretrial court. This might happen as new storms periodically cause damage and produce new lawsuits that could be added tо the pretrial court through the tag-along procedure.
With this concern in mind, in 2013 we announced a “close proximity” limit: “Cases. are related where one or more significant weather events occurring in close proximity form, the framework of the litigation, and the litigation involves allegations of similar standard business practices.” In re National Lloyds Ins. Co. Hurricane Litig.,
For the reasons stated below, we have сoncluded that the “close proximity” limit is not properly part of the relatedness inquiry, and that concerns about pretrial courts lasting indefinitely should be addressed through the tag-along procedure.
In thеse storm-damage cases the plaintiffs allege that the insurer follows unlawful business practices routinely, in all cases. A typical, standard pleading says the plaintiffs experience “is not an isolated case” and the insurer’s actions “occur with such frequency that they constitute a general business practice.”
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 a uniform set of practices is occurring in all their cases, for which they seеk 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.
The main argument against MDL motions in weather-damage cases has been that a business practices MDL court might never end, as later cases are continually tagged in. The argument is that an insurer should not be entitled to a perpetual pretrial court that includes all future business practices cases. But when a standard assertion of fact (standard business practices) is pleaded against an insurer in storm after storm, that аllegation places a common issue into all the cases and makes them related.
A different question is whether a long-lasting pretrial court would further the goals of convenience, efficienсy, and justice. This is a question for the pretrial court. When later cases arise after the June 12, 2014 to January 8, 2016 period and are tagged into the pretrial court, upon request that court will consider whether the stated MDL goals will be served.
All this leads to two conclusions. First, insurance claims involving weather damage on different dates in different counties are related when the plaintiffs allege that the insurer, follоws standard or common business practices that are said to be unlawful- and to justify extra-contractual discovery and relief. Such an allegation,
The possibility of a never-ending pretrial “business prаctices” court should not prevent the creation of a pretrial court in the first instance. The possibility should not be considered prematurely, before it has ripened into a real prospеct. Instead, as time passes this concern should be presented to the pretrial court through the tag-along procedure. If and when a pretrial court threatens to become perpеtual because the same claim is asserted perpetually, that issue may be raised when cases are tagged into the court. If a defendant faces allegations that prove to be repetitive and perhaps perpetual, it may well be entitled to have those related and recurring assertions handled consistently by one pretrial court instead of several. The pretrial court will be familiar with the business practices issues; it will be able to assess them in the light of its experience. If motions to remand are filed, that court may then assess whether the later cases threaten to make the pretrial court never-ending, and whether to continue adding cases to the pretrial court will serve the goals of convenience, efficiency, and justice. The pretrial court will hear аrgument and decide the issue—based on facts and not on predictions and possibilities. Upon proper request, the pretrial court’s decisions will be subject to review by this panel.
Notes
. The nine earlier cases are: In re Farmers Ins. Co. Wind/Hail Storm Litig.,
. Under Rule 13.2(f) cases are related if they "involve one or more common issues of fact.”
. As we said last year, "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 somé of the decisions perhaps made a wrong turn.” Farmers (2015),
. We may transfer related cases from different trial courts to a pretrial court 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.,
. What we said in Farmers (2015) is true in the present case: "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; or for the same witnesses to be deposed (or the same documents produced) repeatedly; or for the same lawyers to face conflicting trial settings. And the fifth goal—allocating finite judicial resourсes intelligently—seems especially compelling ....”
. In re Wellington Ins. Co.,
Administrative Rule 13 lets litigants add cases to an existing MDL pretrial proceeding without filing a new motion for transfer. Rule 13.5(e) creаtes a tag-along procedure by which cases related to those already pending in an MDL pretrial court (but not subject to the initial MDL order) can be designated as tag-along cases. Once dеsignated, tag-along cases are in the MDL proceeding unless the pretrial court grants a timely motion to remand them to the original trial courts. Any party dissatisfied with the pretrial court’s remand decision may file a motion for rehearing of that decision with the MDL Panel.
. "[W]e 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.' " In re State Farm Lloyds Hidalgo Cty. Hail Storm Litig.,
. The typical business practices allegations are summarized more fully in Farmers (2015),