Ohio Supreme Court Adopts Comcast and Wal-Mart Standards For Class Certification; Reverses Class Certification Due To Predominating Individualized Issues

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Last week, the Ohio Supreme Court denied class certification in Cullen v. State Farm Mutual Automobile Insurance Company, Slip Opinion No. 2013-Ohio-4733 (Nov. 5 , 2013).  In a 5-2 decision, the Court overruled the trial and appellate courts, holding that the class failed because it did not meet class certification requirements Ohio Rule of Civil Procedure 23(B)(2) or (3).  The class was insufficient under 23(B)(2) because the declaratory relief was more than incidental to monetary damages and failed under 23(B)(3) because a rigorous analysis of evidence indicated that individual questions prevailed over issues common to the class.  In so holding, the Court relied heavily on the United States Supreme Court’s recent decision in Comcast Corp. v. Behrend, 133 S.Ct. 1426, 185 L.Ed.2d 515 (2013) and its predecessor Wal-Mart Stores, Inc. v. Dukes, 31 S.Ct. 2541, 180 L.Ed.2d 374 (2011).  

In Cullen, plaintiff Michael Cullen sued State Farm Auto Insurance for its failure to disclose benefits available to policyholders with claims for windshield damage.  Ohio Rule 23 closely mirrors Federal Rule 23.  Rule 23(A) requires, (1) the class is so numerous that joinder of all members is impracticable; (2) there must be questions of law or fact common to the class; (3) the claims or defenses of the representative parties must be typical of the claims or defenses of the class; and (4) the representative parties must fairly and adequately protect the interests of the class.  In addition to Rule 23(A), a proposed class has to meet the requirements of Rule 23(B)(1), (2), or (3).  The plaintiff in Cullen sought certification under Rule 23(B)(2) and (B)(3). 

Relying upon the Supreme Court’s decision in Wal-Mart, the Ohio Supreme Court held that the plaintiff’s claim fell short of the 23(B)(2) standard, which prohibits class certification where class members are entitled to individualized awards of money damages.  Wal-Mart, 31 S.Ct. 2541, 2557.  The Court in Cullen held that money damages are permissible in class actions when incidental to the requested declaratory relief; in the instant case, individualized determinations of plaintiffs’ liability would not be incidental to, but would rather be derived from, any foundational declaration against State Farm.

Likewise, the Ohio Supreme Court held that the plaintiff failed to meet his burden under Rule 23(B)(3) because individualized issues overwhelmed questions common to the putative class.  Examples of issues unique to individual putative class members include proof about what individual policyholders knew regarding their policy choices when selecting repair or replacement options, which of several policies a class member actually had, and the value, age, and condition of a particular windshield.

The dissent, authored by Just William O’Neill (and joined in by Justice Paul Pfeifer) argued that the plaintiff had met his burden for class certification and that in Ohio, a plaintiff need not show that common questions actually predominate over individual ones, but rather that a “colorable claim” is sufficient, and here has been established, for class certification under Rule 23.  The majority, however, essentially incorporates recent developments in federal class action law as guided by Comcast and Wal-Mart for the proposition that a trial court, in conducting a “rigorous analysis” into factual disputes, may examine underlying merits of the plaintiff’s claim to the extent that the merits are determinative of whether Rule 23 has been satisfied.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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