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Lewis v. First American Insurance Co.

United States District Court, D. Idaho

August 1, 2017

DEBORAH LEWIS, Plaintiff,
v.
FIRST AMERICAN INSURANCE COMPANY, Defendant.

          MEMORANDUM DECISION AND ORDER

         Pending before the Court in the above entitled matter is Defendant's Objection to the November 15, 2012 Order issued by United States Magistrate Judge Larry M. Boyle (Dkt. 209) denying Defendant's Motion to Decertify Class (Dkt. 188). (Dkts. 210, 232.) Having fully reviewed the record, the Court finds that the facts and legal arguments are adequately presented in the briefs and record. Accordingly, in the interest of avoiding further delay, and because the Court conclusively finds that the decisional process would not be significantly aided by oral argument, this matter shall be decided on the record before this Court without oral argument.

         For the reasons set forth below, the Court grants Defendant's Motion to Decertify Class (Dkt. 188). The initial justifications underlying the class certification decision have not withstood the test of time. Rather, the Court finds that the transactional nature of the liability inquiry undermines the findings of predominance and commonality necessary to maintain class certification under Rule 23. In addition, practical limitations on discovery and associated difficulties in ascertaining the class members also reflect that the class action is simply unmanageable.

         PROCEDURAL HISTORY

         This Class Action Complaint was originally filed by Plaintiff Deborah Lewis against Defendant First American Title Insurance Company (“First American”) on November 28, 2006. (Dkt. 1.) Plaintiff brought the case pursuant to Federal Rule of Civil Procedure 23 on behalf of herself and others similarly situated who she alleges were overcharged for title insurance when refinancing their homes.

         Plaintiff, an Idaho resident, claims on her own behalf that Defendant overcharged her by at least $364 in a mortgage refinance transaction. It is undisputed that First American may only charge rates consistent with its filed rate manual. Consistent with the Idaho Rate Manual, a 50% discount rate, the “resissue rate, ” must be applied when a title policy is issued within two years of a previous title insurance policy on the same property by the same owner. More specifically, the Idaho Rate Manual states that the reissue rate must be applied if either: (1) “[t]he prior policy or a copy thereof is presented to the issuing company and shall be retained in the issuing company's file” or (2) “in the absence thereof, reasonable proof of [prior] insurance is provided to the using company.” (Dkt. 53-2, p. 23.)

         Initially, Plaintiff sought certification of a five-state class including residential consumers in Idaho, Washington, Oregon, New Mexico, and Arizona. (Dkt. 50). On February 24, 2010, the Court granted class certification but only for residential customers in the State of Idaho. (Dkt. 95.) The Court defined the class as follows:

All persons in the state of Idaho who, in connection with a mortgage refinancing transaction: (a) paid a premium for the purchase of residential title insurance from First American Title Ins. Co.; (b) had either an unsatisfied mortgage from an institutional lender and prior title policy insurance, or a deed to a bona fide purchaser in the chain of title within two years of the payment of the premium provided in the Title Insurance Rate manual in Idaho; and (c) did not receive the discount specified in the Manual.

(Dkt. 95).

         At the class certification stage, First American argued that it did not have the data necessary to identify potential class members in any state including Idaho. (Dkt. 53). In support of this argument, First American submitted affidavits describing the records it maintains specific to title policies it issues directly and through independent agents. As a result of limitations in how this data was collected and stored, First American argued that an unmanageable, file-by-file review of closing documents would be required in order to both ascertain class members and determine liability.

         First American uses a computer system referred to as “FAST” to store data on the policies First American issues directly. (Dkt. 53-12). The FAST system contains data on the title policies issued in Idaho and scanned, imaged copies of the title abstract and examination for these transaction, as well as the closing file if First American handled the closing. Id. It is not possible to run a query on this system to identify policies issued at a particular rate. Id.

         Furthermore, before January 2008, First American did not use an electronic database or other computer system to track policies issued in Idaho through independent agents. Id. Thus, the information specific to policies issued through independent agents before 2008 had to be obtained directly from the independent agents.

         At the class certification stage, the Court determined that: (1) examining each class member's file would be “an almost automatic process” to identify whether the customer had a prior title insurance policy and (2) Defendant must have “the ability to easily collect each class member's title insurance policy.” (Dkt 95.) The Court found it “strained credulity” to suggest that the Defendant lacked the ability to compile information on insurance policies it issued- whether they were issued directly or through independent agents. Id.

         A year following class certification, on May 10, 2011, the Court issued a Case Management Order (Dkt. 125). In this Order, the Court made clear that Plaintiff has “the burden of completing class notice and performing the necessary associated tasks.” Id. These associated tasks included ascertaining potential class members and developing a proposed class mailing list. Id.

         In order to identify class members, Plaintiff required discovery from both First American as well as the independent agents that issued First American policies but are non-parties to this litigation. Initially, the close of discovery was set for May 5, 2011. However, that deadline was extended to December 7, 2011.

         First American produced the documents and electronic data it had in its possession responsive to Plaintiffs' discovery requests regarding the identification of class members. (Dkt. 188-1, p. 11, Dkt. 210, p. 10).) This included: (1) data from the FAST system for transactions involving First American's direct operations; (2) data from the STARS system for transactions since 2008 involving independent agents; and (3) millions of pages of documents from its electronically stored closing files comprising the over 11, 000 transactions reflected in the FAST data. (Dkts. 152 at 6-8; Dkt. 189, Ex. 1.) In contrast, Plaintiff ran into obstacles when seeking to obtain similar documents and electronically stored information from the independent agents. (Dkt. 173.)

         On December 21, 2011, Plaintiff submitted a partial proposed list of class members and requested additional time to obtain information regarding policies issued through independent agents. (Dkt. 153.) Because Plaintiff had not been able to obtain information through the independent agents, her proposed list was limited to those policies issued directly through First American; the list did not identify individuals who purchased a policy issued through the independent agents. (Dkt. 152 at 9-11.)

         Defendant filed two statements in response to Plaintiff's proposed class list arguing that it was inadequate. (Dkts. 152, 158-171.) Defendant's substantive review of Plaintiff's proposed class list revealed that 91 percent of the transactions on the list did not meet the Court's class definition, because the proposed class members were not entitled to the reissue rate, received it, or received an even larger discount. (Dkt. 158.) Plaintiff filed a response arguing an overly inclusive class list was permissible under the law; Defendant's arguments regarding inaccuracies in the class list were premature arguments on the merits of Plaintiff's case; and to the extent the Court found it appropriate to further refine the proposed class list, Defendant should be required to produce documents in a search-friendly, usable format. (Dkt. 175.)

         On April 2, 2012, Plaintiff filed a Motion to Compel the discovery requested from the independent agents. (Dkt. 173.) The motion was opposed by these non-parties. (Dkt.179.)[1]

         On June 1, 2012, Defendant filed a Motion to Decertify the Class. (Dkt. 188.) Defendant made two primary arguments in support of the motion. First, Defendant argued there was no common method to identify the class or adjudicate liability. Instead, the parties required an unmanageable, file-by-file analysis. Second, Defendant argued intervening United States Supreme Court authority, Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 388 (2011), made clear that Plaintiff could not rely upon allegations alone but had to provide evidence to support her contention that class certification was appropriate.

         On November 15, 2012, the magistrate judge issued an order denying the Motion to Decertify the Class and granting Plaintiff's Motion to Compel (“2012 Order”). (Dkt. 209.) The 2012 Order also granted Defendant's Motion for Leave to File Supplemental Statement (Dkt. 158) and stated that the Court reviewed the parties' filings related to Plaintiff's proposed class list as background for deciding the pending motions to compel and decertify. Id.

         Ultimately, the 2012 Order concluded that the Idaho Rate Manual's “reasonable proof” language “prevents decertification because it is a factual matter that cannot be determined at this stage of the litigation.” Id. at 12. It appears that the 2012 Order relies on two assumptions: (1) Defendant's Motion to Decertify depends on a finding that direct evidence of a prior policy is a prerequisite to class membership and liability and (2) the reasonable proof ...


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