Monthly Archives July 2013

In Halvorsen v. Auto-Owners Ins. Co., 718 F.3d 773 (8th Cir. July 3, 2013), an Eighth Circuit panel consisting of Judges Loken, Smith, and Benton reversed the District court’s certification of a class of North Dakota insureds asserting breach of contract and bad faith claims based on the denial of personal injury protection (“PIP”) claims though the insurer’s Reasonable & Customary (“R&C”) deductions.  Under the R&C system, AOI would employ claim reviewers to review PIP claims and recommend denial of coverage for claims above the “80th percentile” – ie, the amount charged by eighty percent of the medical providers in the geographic area for comparable services.  The District Court denied certification to a parallel group of Minnesota insureds because Minnesota law mandated that all no-fault insurance claims for less than $10,000.00 be arbitrated, hence causing profound numerosity and typicality problems.   But the District Court certified a class consisting essentially of…

Plaintiff’s complaint alleged that Nissan’s dashboards were defective and sought only compensatory damages.  Two years before trial, Plaintiff avoided removal under CAFA based on the amount in controversy; the amount in controversy was (at most) $2,858,000, thus falling short of CAFA’s $5,000,000 jurisdictional requirement. Then, in December 2012, on the eve of trial, Plaintiff submitted jury instructions that sought punitive damages (even though the operative complaint neither expressly stated a claim for punitive damages, nor alleged facts that could have supported a punitive damages award). Nissan filed a notice of removal based on those jury instructions.  The district court held that the notice of removal was timely, but remanded the case because it was not removable:  there was no claim for punitive damages in the operative complaint, and therefore it was legally impossible for the class to recover more than $5,000,000. The Eighth Circuit affirmed the district court’s remand order,…

In a pair of decisions, the Tenth Circuit this week decertified two class actions involving gas-well owners in Kansas and Oklahoma who claimed they were underpaid royalties owed by XTO, a company that buys and produces gas from wells.  The pair of decisions illustrates that commonality is getting more scrutiny after Dukes. The dispute centered on IDM, the implied duty of marketability.  In many states - including Kansas and Oklahoma – there is an implied duty of marketability in gas leases.  That duty requires the lessee to bear the full cost of making the gas marketable (i.e. gathering, compressing, and processing the gas into a marketable product).  So, once a gas-well lessor and a lessee agree on a royalty to be paid per unit of gas, then the lessee must bear the full costs of making the gas marketable and may not deduct those costs from the agreed-upon royalty. In…

Cy pres - A French term for "ok, close enough" - can be tricky. The wrong has been righted, but either the class has been fully compensated, or the compensation is too de minimis or impractical to allocate and distribute. What to do? Give it away to charity, but not just any charity. This issue confronted the Court in In re Bank of America Corp. Sec. Litig., 2013 WL 3212514 (E.D. Mo., June 24, 2013). In that securities fraud MDL, the global settlement of $490,000,000.00 had been approved, and all class members had been paid. Yet, due to problems locating class members, duplicate payments, restitution, and interest, class counsel found themselves with $2,734,136.69 remaining in the kitty. This was even after the claim administrator had been caught embezzling $5,000,000.00 from the fund. Not a bad problem to have, but a problem nonetheless. After rejecting the motion of the claims administrator…

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