Free Response to Motion - District Court of Colorado - Colorado

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 1 of 46

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 00-cv-01841-LTB-PAC RICKY EUGENE CLARK, on behalf of himself and all others similarly situated, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Defendant.

STATE FARM' RESPONSE OPPOSING S PLAINTIFF' MOTION FOR CLASS CERTIFICATION S

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 2 of 46

TABLE OF CONTENTS I. II. III. IV. V. INTRODUCTION............................................................................................................4 BACKGROUND .............................................................................................................5 RESPONSE TO PLAINTIFF' STATEMENT OF FACTS .............................................8 S STANDARDS FOR CLASS CERTIFICATION ............................................................10 ARGUMENT.................................................................................................................12 A. Clark cannot maintain this case as a class action because he no longer has standing to pursue the class claims against State Farm.........................................12 Clark' class definition is overbroad because it includes members whose s claims are time-barred, members who have no standing, and members who have suffered no damages....................................................................................14 1. The statute of limitations bars all claims that accrued before August 24, 1997......................................................................................15 Class members whose claims accrued on or after November 30, 1998 cannot state a claim for relief..........................................................18 Class members who did not either receive wage loss benefits or receive the maximum amount of medical and/or rehabilitation benefits cannot state a claim for relief..............................................................................19

B.

2.

3.

C.

This case does not satisfy the requirements of Rule 23(a). ...................................20 1. 2. 3. 4. This case does not satisfy the numerosity requirement of Rule 23(a)(1)...21 No common questions of law or fact exist for all class members. ............24 Clark is an inadequate class representative. .............................................28 Clark' claims are not typical of the claims of the class members............31 s

D.

This case cannot satisfy the requirements of Rule 23(b)(2). .................................34 1. Rule 23(b)(2) certification would be improper because money damages predominate..............................................................................34

2

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 3 of 46

2. E.

The behavior complained of is not generally applicable to the class. .......38

This case cannot satisfy the requirements of Rule 23(b)(3). .................................39 1. Common questions of law or fact do not predominate. ............................39 a. Clark I requires a case-by-case analysis of the equitable date of reformation. .................................................................................41 Differing policy dates and dates of loss will implicate differing State Farm actions during the class period. ...................................41 Individual damage determinations would predominate. ................42

b.

c. 2.

A class action is not the superior method for adjudicating this controversy. ............................................................................................45

VI.

CONCLUSION..............................................................................................................45

3

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 4 of 46

I. INTRODUCTION Plaintiff Ricky Eugene Clark first filed this putative class action in August 2000. As the Court is aware, Clark alleges that he and a putative class of State Farm insureds are entitled to receive additional PIP benefits because of State Farm' inclusion of the Pedestrian Limitation in s its automobile insurance policies issued before 1998. Since Clark commenced this case, his claims have been dismissed, reinstated, the subject of a three-day evidentiary hearing to this Court, the basis for four separate cases in the Tenth Circuit Court of Appeals, and finally adjudicated, resulting in a judgment of $132,276.02 that has now been paid to Clark. Most recently, Clark' counsel unsuccessfully attempted to add three new plaintiffs to the case, and to s amend the class definition. Nearly seven years after this action was commenced, Clark has now moved to certify this case as a class action on behalf of a newly-amended putative class. Because Clark' claims have been fully adjudicated, however, his attempt to certify a class must s fail. Moreover, Clark' proposed class definition is defective because it impermissibly s includes members whose claims are time-barred, who have no standing to assert claims against State Farm, or who indisputably have suffered no damages. Clark' proposed class cannot be s certified because it also fails to meet the requirements of Rule 23(a) of the Federal Rules of Civil Procedure. An examination of State Farm' actual data ­ rather than unfounded speculation by s an unqualified affiant ­ illustrates that the class is not so numerous as to make joinder impracticable. There are no substantive common issues of fact or law that would make the case appropriate for class treatment. Clark is not an adequate class representative because all of his claims have been adjudicated. Finally, Clark' claims are not typical of the class claims, nor s

4

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 5 of 46

could any purported class representative' claims be typical of a class, because of the s individualized equitable considerations mandated by the Tenth Circuit. Clark' proposed class likewise fails to satisfy the requirements of Rule 23(b). Clark s does not seek primarily declaratory relief, but rather money damages on behalf of the class members. Consequently, certification under Rule 23(b)(2) is inappropriate. Nor can the class be certified under Rule 23(b)(3) because common issues do not predominate, in light of the individualized equitable considerations the Tenth Circuit requires in determining the nature of any reformation remedy that might be awarded, and because a class action is not the superior method for resolving this dispute. For all of these reasons, the Court should deny the Motion for Class Certification. II. BACKGROUND The factual background, legal backdrop, and procedural history of this protracted dispute have been stated in considerable detail in this Court' prior opinion regarding the effective date s of reformation. Clark v. State Farm Mut. Auto. Ins. Co., 292 F. Supp. 2d 1252 (D. Colo. 2003) (Clark II). The recent briefs submitted by State Farm concerning the proposed amended class definition and the motion to intervene also summarize the relevant case law, facts, and procedural history. See State Farm' Response Opposing Motion to Intervene (June 4, 2007), s Docket No. 214, at 2­ State Farm' Response Brief Regarding Plaintiff' Proposed Amended 6; s s Class Definition (Nov. 20, 2006), Docket No. 188, at 2­ State Farm refers the Court to that 7. background information, and will not repeat it here. For purposes of the question of class certification, the following facts are material and not genuinely disputed:

5

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 6 of 46

A.

Clark filed this case in August 2000, alleging that he was entitled to unlimited PIP

benefits because State Farm, by including the Pedestrian Limitation in its automobile insurance policies, failed to make an adequate offer of enhanced PIP benefits as required by Colorado Revised Statutes § 10-4-710. See Class Action Complaint and Jury Demand (Aug. 24, 2000), Docket No. 1. This Court dismissed the case in June 2001, concluding that Brennan v. Farmers Alliance Mut. Ins. Co., 961 P.2d 550 (Colo. Ct. App. 1998), would not apply retroactively to Clark' claims. See Order Granting Defendant' Motion to Dismiss (June 20, 2001), Docket No. s s 16. B. In 2003, the Tenth Circuit reversed this Court' dismissal of the case, and further s

decided that Clark was entitled to reformation of the insurance policy under which he received benefits as a matter of law. Clark v. State Farm Mut. Auto. Ins. Co., 319 F.3d 1234, 1244 (10th Cir. 2003) (Clark I). The case was remanded to this Court to determine the effective date of that policy reformation. Id. C. On December 19, 2003, following a three-day evidentiary hearing, this Court

concluded: (1) the effective date of reformation was the date of its Order; (2) Clark was entitled to the P4 level of PIP benefits; and (3) the statutorily-authorized aggregate limit of $200,000 on PIP benefits would be imposed on Clark' damages. Clark II, 292 F. Supp. 2d at 1268-69. s Judgment was entered in favor of Clark in the amount of $132,276.02. Id. at 1269. D. On December 30, 2005, the Tenth Circuit affirmed this Court' December 19, s

2003 Order in its entirety. Clark v. State Farm Mut. Auto. Ins. Co., 433 F.3d 703, 714 (10th Cir. 2006) (Clark III). The court further affirmed that the policy reformation should apply to

pedestrians only. Id. at 714. The court of appeals then remanded the case to this Court for

6

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 7 of 46

further proceedings, including class certification proceedings. See id. (noting the " subsequent class certification proceedings"that would follow the Clark III opinion). After the Clark III decision, beginning on approximately February 3, 2006, State Farm communicated to Clark' counsel its intent to pay Clark the amount of the judgment, for which it s previously had posted a supersedeas bond. See Expedited Motion to Deposit Funds with Court and to Release Supersedeas Bond (Feb. 13, 2006), Docket No. 158, at 3-4 & Exhs. 1 & 2 to that Motion. Clark' counsel clearly understood the significance of such a payment, as they initially s refused to accept payment of the judgment and post-judgment interest without imposing certain conditions on the payment: We cannot accept any monies for Mr. Clark that limit his ability to serve as a class representative. If you will concede that his accepting these monies has no impact on his ability to serve as a class representative, or pursue any other claims that he may yet have, we can discuss the amounts further. See id. at Exh. 2 to the Motion. By March 16, 2006, however, the parties agreed to an

arrangement where State Farm would pay the judgment and post-judgment interest to Clark, without any conditions. See Stipulated Motion for Entry of Order Regarding Payment of

Judgment to Clark (Mar. 16, 2006), Docket No. 169. The payment was then made, and the supersedeas bond was released. Nearly seven years after this action was commenced, on May 14, 2007, Roy McIntosh, Florinda Reed, and Matthias Hobza filed a Motion to Intervene in the case. Clark also filed his Motion for Class Certification on May 14, 2007. Briefing on the Motion for Class Certification was stayed upon agreement of the parties, and by an order of the Court, until the Court ruled on the Motion to Intervene. The Court denied the Motion to Intervene as untimely on June 26, 2007. State Farm now submits this Response to the Motion for Class Certification.

7

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 8 of 46

III. RESPONSE TO PLAINTIFF' STATEMENT OF FACTS S Throughout the Motion for Class Certification, Clark attempts to make much of the fact that State Farm did not pay the amount of the December 19, 2003 judgment to Clark immediately upon entry. Clark fails to mention that the judgment has since been paid. Shortly after the judgment was entered, on February 12, 2004, State Farm posted a supersedeas bond in the amount of $140,000 with this Court, as permitted by Rule 62(d) of the Federal Rules of Civil Procedure. See Notice of Supersedeas Bond (Feb. 12, 2004), Docket No. 124. State Farm pursued certain issues on appeal to the Tenth Circuit in Case No. 04-1022. Simultaneously, Clark pursued other issues on appeal in Case No. 04-1023. On December 31, 2005, the Tenth Circuit issued the Clark III decision, resolving Case Nos. 04-1022 and 04-1023. On January 23, 2006, the Tenth Circuit issued its mandate and the case was remanded to this Court. See Mandate of United State Court of Appeals (Jan. 23, 2006), Docket No. 154. From January 16, 2004, when the parties filed their Notices of Appeal, until January 23, 2006, therefore, the Tenth Circuit retained jurisdiction over this case and the supersedeas bond was posted with the Court' s registry. On February 3, 2006, State Farm contacted Clark' counsel regarding satisfaction of the s judgment awarded by this Court. See Expedited Motion to Deposit Funds with Court and to Release Supersedeas Bond (Feb. 13, 2006), Docket No. 158, at 3-4 & Exhs. 1 & 2 to that Motion. As explained above, Clark initially refused to accept payment of the judgment without imposing certain conditions. After extended negotiations, and State Farm being required to file ­ and then withdraw ­ a motion with this Court, Clark finally agreed to accept payment of the judgment without any conditions. State Farm delivered a check for $136,072.54, representing

8

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 9 of 46

the amount of the judgment plus interest that had accrued since December 19, 2003, to Clark' s counsel on March 21, 2006. See Notice of Payment of Judgment; and Motion to Enter Order Regarding Supersedeas Bond (Mar. 24, 2006), Docket No. 172, at Exh. 1 to the Notice. The timing of State Farm' satisfaction of the judgment has no relevance to the Court' resolution of s s the Motion for Class Certification. The fact that State Farm has paid the judgment, however, does impact the Court' resolution of the Motion, and the significance of that payment is s explained in more detail below. Clark also attempts to minimize the fact that, since Clark III, State Farm has engaged in a voluntary program of making additional payments of extended PIP benefits to a group of individuals identified as a result of the rulings in this litigation. On May 3, 2007, State Farm supplemented its discovery responses in this litigation to explain: On December 30, 2005, the Tenth Circuit Court of Appeals issued the socalled Clark III decision, 433 F.3d 703, affirming the District Court' rulings in s Clark II in their entirety. In response to the Clark III decision, State Farm reevaluated whether it had an obligation to pay additional enhanced PIP benefits to any of its insureds. State Farm concluded that, with respect to a specific group of insureds, it may owe certain enhanced PIP benefits. As a result, State Farm decided to undertake a voluntary program of examining claims and, where appropriate, paying additional enhanced PIP benefits to PIP claimants who satisfied the following criteria: (1) (2) (3) (4) (5) were injured as pedestrians, but could not also be classified as a named insured, spouse, or any relative; and had a date of loss between August 1, 1997 and December 31, 1998; and received any wage loss payment; or received medical or rehabilitation benefits equal to, or in excess of, $50,000; but who had not received aggregate PIP benefits of $200,000.

9

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 10 of 46

With respect to that group of PIP claimants, State Farm sent letters to each claimant' last known address, explaining that they may be entitled to additional s PIP benefits. Approximately 115 such letters were sent. For those claimants who had received wage loss payments under the P1 formula, State Farm re-calculated the wage loss benefits in accordance with the P4 formula, based on information contained in the claims file, and sent a check to the claimant along with the letter. For those claimants who had received medical or rehabilitation benefits equal to, or in excess of, $50,000, State Farm' letter asked the claimant to contact a claim s representative to discuss additional information that might be needed to determine whether they were entitled to additional medical or rehabilitation benefits. State Farm did not pay additional PIP benefits to any claimants who were involved in litigation with State Farm at the time. For the letters that were returned to State Farm as undeliverable, State Farm retained Rust Consulting to locate current addresses for those claimants. State Farm then re-sent letters to the addresses located by Rust Consulting, using the same process as described above. For those claimants who could be located, who contacted State Farm, and who met all of the above-described criteria established by State Farm, their claims were processed under the P4 level of coverage as they would be in the normal course of business. In addition, interest that had accrued on any additional PIP benefits owed was calculated from December 30, 2005 through the date of payment, and included in the payments. Approximately 65 claimants have received and negotiated checks for additional PIP benefits as a result of this voluntary program by State Farm. Defendant State Farm' Second Supplemental Discovery Responses (May 3, 2007), attached as s Exh. 1, at 1-2. State Farm has submitted, as Exhibits 2 and 3 hereto, sworn declarations from State Farm employees Cindy Marshall and Michelle Ohaion-Muniz, regarding the details of this voluntary payment program. The significance of this program is addressed in more detail below. IV. STANDARDS FOR CLASS CERTIFICATION A party seeking to certify a class is required to show, under a strict burden of proof, that all requirements of Federal Rule of Civil Procedure 23 are clearly met. Reed v. Bowen, 849 F.2d 1307, 1309 (10th Cir. 1988); Gen. Tel. Co. v. Falcon, 457 U.S. 147, 161 (1982) (class actions " may only be certified if the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied" City P' ); ship Co. v. Jones Intercable, Inc., 213 F.R.D. 576,

10

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 11 of 46

578 (D. Colo. 2002); Kohn v. Am. Hous. Found. Inc., 178 F.R.D. 536, 539 (D. Colo. 1998). A class action can be certified only after a " rigorous analysis"of the requirements set forth in Rule 23. Colo. Cross-Disability Coal. v. Taco Bell Corp., 184 F.R.D. 354, 356 (D. Colo. 1999); In re Synergen, Inc. Sec. Litig., 154 F.R.D. 265, 267 (D. Colo. 1994). Although courts may not determine the merits of the substantive claims, Colo. Cross-Disability Coal., 184 F.R.D. at 356, they must sometimes " analyze the elements of the claims and defenses of the parties"in order to properly evaluate a motion for class certification. Commander Props. Corp. v. Beech Aircraft Corp., 164 F.R.D. 529, 534 (D. Kan. 1995) A rigorous analysis is necessary because certification of a class dramatically increases the stakes in a lawsuit and creates enormous pressure for a defendant to settle, regardless of the merits of the case. Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 165 (3d Cir. 2001); Kline v. Coldwell, Banker & Co., 508 F.2d 226, 238 (9th Cir. 1974) (Duniway, J., concurring); Szabo v. Bridgeport Machs., Inc., 249 F.3d 672, 675 (7th Cir. 2001). State Farm ­ as well as the absent class members whose rights would be determined ­ are entitled to the protection of a rigorous judicial review before a class is certified. Szabo, 249 F.3d at 677. Clark selectively quotes from various cases out of context, urging the Court to accept all of the allegations in his Complaint as true, and to short-circuit a rigorous review of the Motion for Class Certification. See Memorandum in Support of Motion for Class Certification

(hereinafter the " Mot. for Class Cert." at 3-4. In J.B. ex rel. Hart v. Valdez ­ a case cited by ) Clark ­the Tenth Circuit warned that the court need not blindly rely on conclusory allegations in the complaint, and may consider the legal and factual issues presented by the complaint in deciding whether the plaintiff has satisfied the requirements of Rule 23. See 186 F.3d 1280,

11

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 12 of 46

1290 n.7 (10th Cir. 1999). Similarly, in Adamson v. Bowen ­ also cited by Clark ­ the Tenth Circuit observed that " merits may become intertwined with proper consideration of other the issues germane to whether the case should be certified as a class action." Adamson v. Bowen, 855 F.2d 668, 676 n.12 (10th Cir. 1988); see also Shook v. El Paso County, 386 F.3d 963, 974 (10th Cir. 2004) (reaffirming the notion in Adamson that there may be reasons why the merits become intertwined with resolution of a motion for class certification, so that certain meritsrelated issues may guide the court' class certification decision). Thus, the Court is free to ­and s should ­ consider the merits of claims asserted by Clark and the putative class, to the extent those issues bear on the Rule 23 requirements, though it must refrain from actually deciding the merits of those claims. V. ARGUMENT A. Clark cannot maintain this case as a class action because he no longer has standing to pursue the class claims against State Farm. Clark lacks standing to assert the claims alleged against State Farm, and thus cannot allege the existence of a legally identifiable class. " claim cannot be asserted on behalf of a [A] class unless at least one named plaintiff has suffered the injury that gives rise to that claim." Wooden v. Bd. of Regents, 247 F.3d 1262, 1288 (11th Cir. 2001) (emphasis added); see also Pettit v. New Mexico, 375 F. Supp. 2d 1140, 1149 (D.N.M. 2004). It is not enough to assert an injury at the outset of the litigation; rather, a named plaintiff must maintain the injury that provides him standing throughout the course of the litigation. Powder River Basin Res. Council v. Babbitt, 54 F.3d 1477, 1484-85 (10th Cir. 1995) (citing Gollust v. Mendell, 501 U.S. 115, 126 (1991)). A representative plaintiff who somehow loses his " personal stake" in the outcome of

12

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 13 of 46

the litigation before its completion (i.e., a plaintiff whose injury is remedied) no longer has a " case or controversy"capable of being heard by the federal courts. Id. live For example, where a plaintiff' alleged injury at the time it filed suit was the state' s s refusal to reimburse the plaintiff for its attorney' fees, and the Wyoming Supreme Court s thereafter ordered the defendant to pay those fees, the plaintiff " lost the injury on which its When a plaintiff no standing was originally based." Powder River Basin, 54 F.3d at 1484-85. " longer has an injury, the Article III requirements of a case or controversy are no longer met." Id. at 1485. In this case, Clark is the only named or representative plaintiff, and all of his claims have been adjudicated. Clark' alleged injury is the denial of extended PIP benefits. Those benefits s now have been paid to him. See Notice of Payment of Judgment; and Motion to Enter Order Regarding Supersedeas Bond (Mar. 23, 2006), Docket No. 171. Accordingly, Clark no longer has a " case or controversy"and lacks standing to pursue his claims against State Farm, both live in his individual and representative capacities. For that reason alone, the Motion for Class Certification should be denied. See Wooden, 247 F.3d at 1288. Clark nevertheless seeks certification of the following class: All pedestrians who received No-Fault benefits under a Colorado State Farm automobile insurance policy where the governing policy documents at the time of the accident were issued prior to January 1, 1999. Excluded from the Class are all State Farm executives, their legal counsel, and their immediate family members, the Court and its staff, and all employees of proposed Class Counsel. Mot. for Class Cert. at 1. This class is improper because it includes numerous persons who are not entitled to relief on the claims contained in the Complaint either because their claims are time-barred, because they have no standing, or because they have suffered no damages. In

13

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 14 of 46

addition, the proposed class fails to meet the requirements of Rule 23. As explained in more detail below, there are numerous reasons why the proposed class cannot be certified in this case. B. Clark' class definition is overbroad because it includes members whose claims are s time-barred, members who have no standing, and members who have suffered no damages. Before addressing the requirements of Rule 23, the Court first must evaluate whether Clark has alleged an identifiable, sufficiently defined class. The class definition " of critical is importance"because it identifies the persons who may recover damages or other relief. Manual for Complex Litigation (4th ed. 2006) § 21.222. The defined class " must not be so broad as to include individuals who are without standing to maintain the action on their own behalf." See Oshana v. Coca-Cola Co., 225 F.R.D. 575, 580 (N.D. Ill. 2005), aff' 472 F.3d 506 (7th Cir. d, 2006); Gustafson v. Polk County, 226 F.R.D. 601, 607 (W.D. Wis. 2005); Morris v. Travelers Indemnity Co., No. 05-cv-00727, 2006 WL 166597, *8 (D. Colo. Jan. 19, 2006). As discussed below, however, Clark' class definition is fatally overbroad because ­ on s its face ­ it includes numerous individuals who cannot state a claim as a matter of law. The proposed class cannot be certified because it contains members whose claims are barred by the statute of limitations. See Bullick v. City of Philadelphia, 110 F.R.D. 518, 519 (E.D. Penn. 1986) (" The only proper class members are those whose claims are not time-barred" King v. ); Wright, No. 92 C 1564, 1995 WL 579546 at *2 (N.D. Ill. Sept. 30, 1995) (where plaintiffs conceded that the proposed class was overbroad when it included members whose claims were barred by the statute of limitations). Class certification also should be denied because

certification is not appropriate when the class definition is so broad that it includes members who lack standing. See O' Neill v. Gourmet Sys. of Minnesota, Inc., 219 F.R.D. 445, 452-53 (W.D.

14

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 15 of 46

Wis. 2002); McElhaney v. Eli Lily & Co., 93 F.R.D. 875, 878 (D.S.D. 1982); Kister v. Ohio Bd. of Regents, 365 F. Supp. 27, 33 (S.D. Ohio 1973), aff' 414 U.S. 1117 (1974). Moreover, d, where, as here, the class definition does not make it reasonably clear that the proposed class members have sustained an injury warranting relief, the class claims fail to demonstrate an actual case or controversy under Article III of the Constitution. Adashunas v. Negley, 626 F.2d 600, 604 (7th Cir. 1980); O' Neill v. The Home Depot U.S.A., Inc. --- F.R.D. ---, No. 05-61931, 2006 WL 4579687 at *9 (S.D. Fla. Dec. 27, 2006); see also Owen v. Regence Bluecross Blueshield of Utah, 388 F. Supp. 2d 1318, 1334 (D. Utah 2005) (noting that the proposed class definition was overbroad where " many of the proposed class members have suffered no damages" Clark' ). s proposed definition suffers from all of these flaws, and the Motion for Class Certification should be denied. 1. The statute of limitations bars all claims that accrued before August 24, 1997.

The class definition proposed by Clark is flawed because it contains individuals whose claims are barred by the statute of limitations. All of the claims of the putative class members arise out of the No-Fault Act. When the No-Fault Act was in effect in Colorado, the statute of limitations was three years for all claims relating to the Act. See Colo. Rev. Stat. § 13-80101(1)(j) (2002) (indicating a three-year statute of limitations for " [a]ll actions under the ` Colorado Auto Accident Reparations Act' part 7 of article 4 of title 10, C.R.S." This is the , ). standard for determining whether an individual' claims are timely filed. In re Estate of Scott, s 735 P.2d 924, 926 (Colo. Ct. App. 1986). Indeed, in Nelson v. State Farm Mutual Automobile Insurance Co., 419 F.3d 1117 (10th Cir. 2005), the Tenth Circuit acknowledged that the No-Fault statute of limitations ­rather than

15

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 16 of 46

a laches analysis ­ applies to claims such as those presented here. The court held that " the district court properly applied CAARA' statute of limitations to Mr. Nelson' claim for s s reformation because his lawsuit was based on an alleged violation of CAARA and requested benefits." Nelson, 419 F.3d at 1120. Nelson, like Clark, asserted a putative class action claim for reformation based on an alleged violation of the No-Fault Act, and sought to recover additional benefits under the No-Fault Act. Under the rule established by the Tenth Circuit in Nelson, the three-year statute of limitations contained in the No-Fault Act applies to all of the claims brought by litigants such as Clark and all individuals within Clark' proposed class. s The question, therefore, is when the putative class members'claims arose. In Colorado, a cause of action accrues " when litigation could first have been successfully maintained." Daugherty v. Allstate Ins. Co., 55 P.3d 224, 226 (Colo. Ct. App. 2002) (quoting Flatiron Paving Co. v. Great Sw. Fire Ins. Co., 812 P.2d 668, 670 (Colo. Ct. App. 1990)). All of the putative class claims ­ and specifically the claim for reformation ­ are based on the allegation that State Farm failed to comply with the No-Fault Act by including the Pedestrian Limitation in its automobile insurance policies. The No-Fault Act itself does not contain language indicating when a cause of action under the No-Fault Act accrues. Instead, Colorado Revised Statutes § 1380-108(8) is applied in determining when the putative class members'claims accrued: A cause of action for losses or damages not otherwise enumerated in this article shall be deemed to accrue when the injury, loss, damage, or conduct giving rise to the cause of action is discovered or should have been discovered by the exercise of reasonable diligence. Colo. Rev. Stat. § 13-80-108(8) (emphasis added). In other words, the putative class members' claims accrued when they discovered, or should have discovered by the exercise of reasonable diligence, either the injury, loss, damage, or conduct giving rise to their claims.

16

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 17 of 46

The record already developed in this case establishes that, shortly following an automobile accident, injured persons are sent a letter informing them what level of benefits they will receive. See Transcript of Hearing Re Date of Reformation (Nov. 3, 2003) at 111:15-112:4, attached as Exh. 4. Individuals within the proposed class definition knew, on or about the date such a letter was sent to them, that they would not be receiving extended PIP benefits. The discovery record shows that those letters from State Farm further directed injured persons to consult the State Farm Policy (which contained the Pedestrian Limitation from 1975 to 1998) for more details regarding their benefits. See Letter of July 22, 1996 from State Farm to Plaintiff, Defendant' Exh. R in Hearing Re Date of Reformation, attached as Exh. 5; see also Folks v. s State Farm Mut. Auto. Ins. Co., Order and Memorandum of Decision, No. 04-cv-00243-EWNBNB, 20 (D. Colo. June 30, 2005) (Nottingham, J.) attached as Exh. 6. The inclusion of the Pedestrian Limitation in State Farm' insurance policy is the basis s for all of the putative class members'claims. Thus, by the date an injured person received the initial benefits letter from State Farm, notifying the claimant that he would receive only P1 benefits and referring him to the policy, he knew or should have known all of the facts necessary to bring his claims. See Exh. 6 at 20. This date will closely approximate the date of the accident, as the letters are sent out within 30 days after an accident. See Exh. 2 at 2, ¶ 6. Each of the putative class member' claims for reformation therefore accrued no later than a month after s the date of their accident, and that is the date from which the statute of limitations begins running. Because a three-year statute of limitation applies to the claims in this case, any putative class member whose claims arose more than three years prior to commencement of their action would be time-barred.

17

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 18 of 46

The doctrine of class action tolling, however, extends the statute of limitations somewhat for the putative class members. Under the doctrine announced in American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), the statute of limitations is tolled for putative members of a class action while class certification is pending. See Am. Pipe, 414 U.S. at 550-54. Accordingly, since the date this action was filed ­ August 24, 2000 ­ the claims of putative class members have been tolled. Any putative class member whose claims accrued within three years of the filing of this case ­that is, they received a PIP benefits letter on or after August 24, 1997 ­is not time-barred. Every other person contained within the proposed class definition, however, is precluded from bringing their claims at this time. See also, e.g., Martin Marietta Corp. v. Lorenz, 823 P.2d 100, 102 (Colo. 1992) (noting that, even when a case is applied retroactively to allow claims to go forward, the statute of limitations still applies); Baker v. Aetna Cas. & Sur. Co., 454 A.2d 1092, 1094 (Pa. Super. Ct. 1982); Fairbanks v. Travelers Ins. Co., 486 A.2d 469, 470 (Pa. Super. Ct. 1984); Gurnee v. Aetna Life and Cas. Co., 433 N.E. 2d 128, 131 (N.Y. 1982). The proposed class thus cannot be certified because of its significant overbreadth, including many individuals for whom the statute of limitations has expired. 2. Class members whose claims accrued on or after November 30, 1998 cannot state a claim for relief.

In addition to including individuals whose claims arose too early, Clark' proposed class s also is flawed because the " end date" is improper. Specifically, under Clark' alleged class s definition, the temporal duration of the proposed class would not end until after all State Farm insureds received new policy documents on or after January 1, 1999. Mot. for Class Cert. at 1. That date presumably was selected because of Clark' belief that " defect [in the Policy] was s the

18

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 19 of 46

cured on the first issuance after the [complying] coverage existed and was offered." Plaintiff' s Brief in Support of Amended Class Definition (Oct. 27, 2006), Docket No. 185, at 3. The factual record already developed in this case, however, demonstrates that State Farm eliminated the Pedestrian Limitation from all of its policies with the issuance of Endorsement 6850AJ in November 1998, and not in January 1999. See Transcript of Hearing Re Date of Reformation (Nov. 4, 2003) at 337:8-339:3, attached as Exh. 4. Thus, even under Clark' theory s of the case, the class definition should be cut off after all State Farm policyholders received a renewal notice after November 30, 1998. Judge Nottingham, however, in a related case, has gone further. In the case of Virgil Stickley v. State Farm Mutual Automobile Insurance Co., No. 04-cv-01685-EWN-OES, the court held that the issuance of Endorsement 6850AJ in itself was sufficient to cure the defect in State Farm' policies. See Order & Memorandum of Decision (Nov. 18, 2005), attached as Exh. s 7. This Court should likewise conclude that the class definition must be cut off for any Because the class definition

individual whose claims accrued after November 30, 1998.

proposed by Clark includes individuals whose claims accrued after the policy defect had been cured and therefore have no standing, it is overbroad and may not be certified. 3. Class members who did not either receive wage loss benefits or receive the maximum amount of medical and/or rehabilitation benefits cannot state a claim for relief.

Not all injured pedestrians who received PIP benefits necessarily have standing to seek reformation. Only those pedestrians deprived of benefits they would have received under a policy providing them extended PIP coverage sustained an injury as a result of the Pedestrian

19

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 20 of 46

Limitation.

Clark' alleged class definition, however, is much broader than just those s

pedestrians who suffered damages. The minimum coverage required under basic PIP policies was $50,000 in medical costs, $50,000 in rehabilitation costs, and payment for wage loss for up to 52 weeks in an amount computed by the formula set forth in the No-Fault Act. Colo. Rev. Stat. § 10-4-706 (2002). The formula for computing wage loss claims was different under policies with enhanced PIP coverage. Compare Colo. Rev. Stat. § 10-4-706(1)(d) with § 10-4-710(2)(a)(II). In addition, policies with enhanced PIP coverage did not contain limits on medical or rehabilitation benefits, except for the $200,000 aggregate limit. Only pedestrians who had a wage loss claim or whose medical or rehabilitation claims exceeded $50,000 would be entitled to recover any additional benefits under a reformed policy. Those putative class members who did not receive the

maximum level of benefits available to them under a basic PIP policy have not, as a matter of law, suffered any damages. Such individuals would not have standing to seek reformation because they were not deprived of any benefits as a result of the Pedestrian Exclusion. Their inclusion in the putative class therefore renders the class definition overbroad and unsuitable for certification. See, e.g., Adashunas, 626 F.2d at 604 (damages must be " real, immediate or direct' Owen, 388 F. Supp. 2d at 1334 (noting that the proposed class must be limited to ); individuals who have suffered actual damages). C. This case does not satisfy the requirements of Rule 23(a). In addition to being fatally overbroad, the proposed class also cannot be certified because it fails to satisfy Federal Rule of Civil Procedure 23. To obtain certification of a class, Plaintiff must satisfy a two-step analysis. First, Plaintiff must meet all of the prerequisites listed in Rule

20

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 21 of 46

23(a). Second, the proposed class must fall into one of three categories described in Rule 23(b). Kohn v. American Housing Foundation, Inc., 178 F.R.D. 536, 539 (D. Colo. 1998). Rule 23(a) dictates that a class may be certified only if: (1) the proposed class is so numerous that joinder of all members is impracticable (the " numerosity requirement" ); (2) there are questions of law or fact common to the class (the " commonality requirement" ); (3) the class representatives'claims are typical of the class (the " typicality requirement" ); and (4) the class representatives will " fairly and adequately protect the interests of the class" (the " adequacy requirement" ). Fed. R. Civ. P. 23(a). Clark fails on all four accounts. 1. This case does not satisfy the numerosity requirement of Rule 23(a)(1).

Before certifying a proposed class, the court must find that the " class is so numerous that joinder of all members is impracticable." Fed. R. Civ. P. 23(a)(1). This entails an inquiry to determine whether joinder is impracticable in the circumstances of the particular case. Gen. Tel. Co. v. E.E.O.C., 446 U.S. 318, 330 (1980). Although the movant need not show the exact number of members in the class to satisfy its burden under Rule 23(a)(1), Colorado CrossDisability Coal., 184 F.R.D. at 358, he must put forth some credible evidence of the expected class size. Robidoux v. Celani, 987 F.2d 931, 935 (2d Cir. 1993). Conclusory allegations are insufficient. Sandlin v. Shapiro & Fishman, 168 F.R.D. 662, 666 (M.D. Fla. 1996). The numerosity requirement may not be presumed, however, to be satisfied by a particular number. Trevizo v. Adams, 455 F.3d 1155, 1162 (10th Cir. 2006) (stating that this circuit has specifically

21

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 22 of 46

declined to adopt this presumption, and that " there is no set formula to determine if the class is so numerous that it should be so certified" ). Clark attempts to establish the numerosity requirement by relying on statistics from the National Highway Traffic Safety Administration and an Affidavit from Stephen Strzelec, a former employee of State Farm. See Mot. for Class Cert. at 14-16. On that basis, Clark speculates that the proposed class contains over 3000 members. This number, however, is nothing more than a guess, and it is an unnecessary guess when State Farm already has provided the actual data necessary to determine the number of individuals in a well-defined class. Specifically, in supplemental discovery responses served on May 3, 2007, State Farm provided detailed information regarding its efforts to locate pedestrians to whom it might owe additional PIP benefits following the Clark III decision. See Exh. 1. As explained in more detail in the Marshall and Ohaion-Muniz Affidavits submitted as Exhibits 2 and 3 to this Response, State Farm undertook a voluntary program of locating PIP claimants who might qualify for additional PIP benefits under the rulings issued in this case, and paying claimants additional benefits when appropriate. In the course of that process, State Farm determined that there were ­ at most ­ 115 pedestrians to whom State Farm might owe additional PIP benefits. This number was derived by looking at the properly-defined group of insureds to whom State Farm might owe additional PIP benefits as a result of this litigation. See Exh. 2 at 2-4. Specifically, the following criteria were applied in locating the group of 115 pedestrians: (1) (2) were injured as pedestrians, but could not also be classified as a named insured, spouse, or any relative; and had a date of loss between August 1, 1997 and December 31, 1998; and

22

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 23 of 46

(3) (4) (5)

received any wage loss payment; or received medical or rehabilitation benefits equal to, or in excess of, $50,000; but who had not received aggregate PIP benefits of $200,000.

Criterion (1) was used in order to ensure that the PIP claimants identified suffered injury causally related to State Farm' inclusion of the Pedestrian Limitation. If a pedestrian could also be s classified as one of the other classes of insureds to whom PIP benefits are payable, the Pedestrian Limitation would not have affected the PIP benefits paid to them. See Exh. 2 at 2, ¶ 5. Criterion (2) was used in order to eliminate those pedestrians whose claims are barred either because of the statute of limitations or because the policy under which they received benefits already had been amended to eliminate the Pedestrian Limitation at the time of their accident. See Exh. 2 at 2-3, ¶ 6. A more detailed analysis of those issues is provided above. Criteria (3) and (4) were necessary in order to ensure that the pedestrians that State Farm contacted had a possibility of having incurred unreimbursed damages. In other words, if the pedestrians had not either

received some wage loss payment (which is calculated differently under the P1 and P4 level of benefits) or exhausted the medical or rehabilitation benefits available to them, then there were no additional PIP benefits that had been denied to them. See Exh. 2 at 3, ¶¶ 7-8. Finally, criterion (5) was used pursuant to this Court' ruling in Clark II, and the Tenth Circuit' affirmance of that s s ruling in Clark III, that the $200,000 aggregate limit would apply to all pedestrians who might be entitled to policy reformation. See Exh. 2 at 3-4, ¶ 9. Using those criteria, all founded in the law of the case and the law of this jurisdiction, State Farm electronically searched its claim files and arrived at the conclusion that there were 115 pedestrians to whom it might owe additional PIP benefits. See Exh. 2 at 4, ¶ 12; Exh. 3 at 4,

23

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 24 of 46

¶ 10. Mr. Strzelec himself has testified in this case that such a search of State Farm' electronic s claim system would generate 90-95% of the claim files sought. See Exh. 4 at 180:3-9. At most, 115 is the number of persons contained in a properly defined class for this case. The actual number of class members who might be able to state claims for relief, however, is even fewer. Once State Farm identified the 115 individuals to whom it might owe additional PIP benefits, it attempted to contact those claimants. See Exh. 3 at 4, ¶ 10. Where State Farm was able to contact the identified pedestrians, it re-adjusted their claims under the P4 level of benefits. See Exh. 3 at 3-5. Accordingly, 65 identified pedestrians have now received additional wage loss benefits, medical expense payments, or rehabilitation payment expenses, so that they have received the maximum amount of enhanced PIP benefits available to them under the rulings of this case. See Exh. 3 at 6, ¶ 21. The only remaining claimants who might be entitled to additional PIP benefits under the theory advanced in this litigation are the 50 pedestrians who State Farm has been unable to locate. Given the relatively small number of potential claimants who remain with viable claims, it is simply not the case that joinder of these individuals would be impracticable. See, e.g., Trevizo, 455 F.3d at 1162 (holding that 84 plaintiffs " not such an overwhelmingly large is number as to be prohibitive of joinder" Accordingly, Plaintiffs have failed to meet their burden ). regarding numerosity and class certification should be denied. 2. No common questions of law or fact exist for all class members.

Rule 23(a)(2) requires the existence of questions of law or fact common to the putative class and is often referred to as the commonality requirement. Although the commonality requirement may be satisfied by a single issue common to the class, not every common issue

24

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 25 of 46

satisfies this requirement. See J.B. ex rel. Hart, 186 F.3d at 1288; Sprague v. General Motors Corp., 133 F.3d 388, 397 (6th Cir. 1998). The common issue must be an issue " resolution of the which will advance the litigation." Sprague, 133 F.3d at 397. Moreover, courts have denied class certification for lack of commonality where proof of a claim would require demonstrating facts particular to each plaintiff. Forman v. Data Transfer, Inc., 164 F.R.D. 400, 403 (E.D. Penn. 1995) (" courts have been unwilling to find commonality where the resolution of ` common issues' depends on factual determinations that will be different for each class plaintiff" ). Determining whether a plaintiff has satisfied the commonality requirement is committed to the discretion of the Court, because the Court is best able to " determine the facts of the case, appreciate the consequences of alternative methods of resolving the issues ... and to select the most efficient method for their resolution." Trevizo, 455 F.3d at 1163. Clark contends that commonality is " easily"satisfied in this case because " class members seek the same relief as the result of the same course of conduct." Motion for Class Cert. at 1718. Clark is mistaken. Because State Farm' course of conduct regarding extended PIP claims s changed over the proposed class period, and because each putative class member' claims would s need to be individually adjudicated in order to determine properly the effective date of reformation, Clark' proposed " s common" questions are inherently individualized, and require inquiry into the particular circumstances of each member' claim in order to advance the s termination of the litigation. Clark I held that the rule in Brennan should apply retroactively. Clark I, 319 F.3d at 1241-42. Because the equitable remedy of reformation must be determined from the " particular circumstances of each case,"the Tenth Circuit remanded Clark I to the district court for further

25

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 26 of 46

proceedings. Id. at 1243 (emphasis added). The Tenth Circuit directed the district court to conduct a fact-intensive inquiry regarding " appropriate factors"bearing on the effective date all of reformation, including: (1) the degree to which reformation from a particular effective date would upset past practices on which the parties may have relied and whether State Farm anticipated the rule in Brennan; (2) how reformation from a particular effective date would further or retard the purpose of the rule in Brennan; (3) the degree of injustice or hardship reformation from a particular effective date would cause the parties. Id. at 1243-44. The Clark I court instructed that this Court should evaluate these factors based on the " strength of the equitable and policy considerations underlying each" and the relevant evidence in the case. Id. at 1244. Here, the starting point for relief for any class member would be policy reformation. In order to determine the timing and scope of reformation, this Court would need to apply the Clark I reformation analysis to each class member. Of the factors enumerated in Clark I, none will be the same for the class as a whole, therefore requiring an individual determination of the proper date of reformation for each class member. Plaintiff proposes a class period spanning over six years ­ from July 1992 until January 1, 1999, and purportedly including over 3,000 members. See Mot. for Class Cert. at 15 n.20.1 Each of these class member' claims would have arisen on s different dates and under different State Farm policies. These differing factual circumstances s would require a different analysis of the reformation factors enumerated in Clark I. Clark' facile assertion that the Court could conduct " single reformation hearing to establish the a
1

Clark offers no explanation for why he has selected a date of 1992 to " begin"the class period. As explained above, however, any claims that arose before August 24, 1997 are barred by the statute of limitations.

26

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 27 of 46

appropriate date for reformation," Mot. for Class Cert. at 11, is factually incorrect and inconsistent with the Tenth Circuit' rulings in Clark I. s For example, for those class members whose claims arose before Brennan was announced, the court' reformation analysis under factor one will necessarily involve different s considerations of State Farm' actions than in the post-Brennan era. The analysis of the second s factor also differs among class members, depending on whether the policy at issue was purchased before or after Brennan. Under factor three, the injustice or hardship visited upon the parties will be of varying degrees depending upon the date of reformation, which may be one of at least four different dates.2 The degree of injustice or hardship will also necessarily vary based upon the individual circumstances of the putative class member. Also, during the time of Clark' alleged class period, State Farm took several actions that s will impact questions of liability, damages, and the timing and scope of any potential reformation for class members. Because each class member' claims will have arisen under a different policy s purchase date and date of loss, any given claim may implicate any one of several actions taken by State Farm during the class period. Some actions will apply to some class members, while other actions will not, depending on the facts for each class member. For example, before 1998, State Farm claims personnel processed pedestrian claims in accordance with the language of the Pedestrian Limitation. Beginning in February 1998, in response to Brennan, State Farm claims personnel processed pedestrian claims as if the Pedestrian Limitation did not exist. See Exh. 4 at

Under Clark I, potential reformation dates include, among others: (1) the date the policy was issued; (2) the date the trial court in Brennan reformed the policy; (3) the date of the Brennan decision; and (4) the date the district court on remand reforms the contract. Clark I, 319 F.3d at 1243.

2

27

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 28 of 46

539:2-540:6. In November 1998, after Brennan became final in August 1998, State Farm sent endorsement 6850AJ to all Colorado policyholders, which eliminated the Pedestrian Limitation from its policies. See Exh. 4, at 337:8-338:25. A chronology of key dates related just to Clark' individual claims illustrates how State s Farm' actions changed over the course of the proposed class period. See Chronology of Key s Dates, Defendant' Exh. W in Hearing Re Date of Reformation, attached as Exh. 8. A similar s chronology of dates would need to be established for each putative class member, in order to determine the policies and provisions governing the claims and State Farm' actions in s processing each claim. In sum, the Court would have to hold a series of mini-trials to determine the individual equities at issue for reformation of each alleged class member' policy. Because this requires the s resolution of individual issues for each putative class member, Clark' proposed class does not s satisfy the Rule 23(a)(2) commonality requirement. 3. Clark is an inadequate class representative.

Clark cannot adequately represent the class because he no longer has any stake in the outcome of this litigation. Rule 23(a)(4) requires that a proposed class representative fairly and adequately protect the interests of the class. Reed, 849 F.2d at 1309. An adequate class representative must " part of the class and possess the same interest and suffer the same injury be as the class members." Spivak v. Petro-Lewis Corp., 120 F.R.D. 693, 695 (D. Colo. 1987) (quoting East Texas Motor Freight v. Rodriguez, 431 U.S. 395, 403 (1977)) (internal quotations omitted). Whether Clark is an adequate class representative is a question " constitutional of dimension, since it would violate due process"to adjudicate the absent class members'claims

28

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 29 of 46

without an adequate representative. In re Storage Tech. Corp. Sec. Litig., 113 F.R.D. 113, 117 (D. Colo. 1986); Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 812 (1985). When the named representative' claims are fully adjudicated before class certification, s and therefore moot, the representative cannot adequately and zealously represent the class under Rule 23(a)(4). Reed, 849 F.2d at 1312; see also, e.g., Harris v. Peabody, 611 F.2d 543, 545 (5th Cir. 1980) (holding that the named plaintiff was inadequate under Rule 23(a)(4) where her individual claims were moot and " longer coextensive with the interest of the other members no of the class" Culver v. City of Milwaukee, 277 F.3d 908, 912 (7th Cir. 2002) (affirming the ); district court' decertification of a class action and holding that the named plaintiff was s " presumptively inadequate" when his individual claims become moot through no deliberate action by the defendants); Larry James Oldsmobile-Pontiac-GMC Truck Co. v. General Motors Corp., 175 F.R.D. 234, 239 (N.D. Miss. 1997) (holding that the named plaintiff was no longer an adequate class representative where plaintiff settled his individual claims and no longer had a personal stake in the outcome of the litigation). Here, Clark has no remaining individual claims to pursue in this litigation. His claims have been finally adjudicated, and the judgment was paid well over a year ago. Clark provides no legal support for his bare assertion that " [h]is adequacy as a Class representative cannot be impacted by this Court' adoption of State Farm' proposal to adjudicate Mr. Clark' claim prior s s s to adjudicating this motion for class certification." Mot. for Class Cert. at 21. Clark' lack of s any personal stake in the outcome of this litigation is precisely why he is an inadequate representative: although his individual claims are fully adjudicated and paid, absent class

29

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 30 of 46

members will be bound by the outcome of this action without the reassurance that their claims are being pursued by an individual with interests " coextensive"with their own. Furthermore, Clark cannot demonstrate that any putative class member would be harmed if the Court finds that he is an inadequate class representative. Reed, 849 F.2d at 1313 (10th Cir. 1988) (considering whether putative class members would be harmed by dismissal of the action where named plaintiffs were deemed inadequate because their individual claims were mooted before certification). Should the Court decline to certify the class, the putative class members may choose to file their own individual actions against State Farm. If individual actions are filed by members of the alleged class after class certification is denied, the doctrine of class action tolling would apply to save their individual claims from a statute of limitations defense. See, e.g., Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 353-54 (1983). This case would have no effect ­ through res judicata, collateral estoppel, stare decisis, or otherwise ­ on the putative class members'right to bring separate actions. Thus, because putative class members may bring their own individual actions, they will not suffer any harm if Clark is found to be an inadequate class representative. Clark cannot identify any reason why the Court should ignore his moot claims and permit him to represent a class in which he has no coextensive interest. See Reed, 849 F.2d at 1313 (affirming the denial of class certification in part because plaintiffs provided no evidence of any " counterbalancing reasons to suggest the class should be certified despite the mootness of the named plaintiffs'claims" Clark lacks any stake in this litigation. His claims have been fully ). adjudicated and paid. He no longer has any interest in this litigation that would cause him to vigorously and fairly represent the class. Moreover, no putative class member would be harmed

30

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 31 of 46

if the Court determines that Clark is an inadequate class representative. For all of these reasons, Clark fails to meet the standard of adequate class representation under Rule 23(a)(4). 4. Clark' claims are not typical of the claims of the class members. s

Clark also fails to demonstrate that his claims are typical of the claims of the proposed class. To meet the typicality requirement, Clark must show that he is a member of the proposed class, that he has interests coextensive with the class, and that he has suffered the same injury as the proposed class members. Commander Prop. Corp., 164 F.R.D. at 535. " plaintiff' claim is A s typical if it arises from the same event or practice or course of conduct that gives rise to the claims of other class members, and if his or her claims are based on the same legal theory." In re Am. Medical Sys., Inc., 75 F.3d 1069, 1082 (6th Cir. 1996) (citing 1 Herbert B. Newberg & Alba Conte, Newberg on Class Actions, § 3-13, at 3-76 (3d ed. 1992)). The typicality requirement ensures that the class representative' claims resemble the s class' claims so that " pursuing and defending his own self interest in the litigation, [the class s in representative will] be concomitantly advancing or defending the interests of the class." Dubin v. Miller, 132 F.R.D. 269, 274 (D. Colo. 1990). Thus, this requirement is closely related to both the commonality and the adequacy of representation requirements under Rule 23(a)(2) and (4). In re Intelcom Group, Inc. Sec. Litig., 169 F.R.D. 142, 149 (D. Colo. 1996) (" requirement of The typicality dovetails into the requirement of adequacy of representation." Shook v. Bd. of ); County Comm' No. 02-cv-00651, 2006 WL 1801379 at *10 (D. Colo. June 28, 2006) (noting rs, that the typicality requirement is " closely related to the test for the common-question prerequisite" Here, Clark cannot satisfy the typicality requirement because the class claims do ).

31

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 32 of 46

not arise out of a common legal theory or a single course of conduct. Moreover, because Clark' s claims are fully adjudicated, they are not typical of the claims of the class. Clark' conclusory assertion that he satisfies the typicality requirement because " s absent Class members share Plaintiffs'claims against State Farm, sue under the same legal theory, and seek the same remedies: reformation and the payment of benefits due"belies the individualized nature of each putative class member' possible claims. Mot. for Class Cert. at 20. State Farm' s s course of conduct regarding extended PIP benefits evolved over the proposed six-plus year class period. Clark, however, wrongly asserts that prior to January 1, 1999, " State Farm' acts and s omissions have occurred in the exact same manner." Mot. for Class Cert. at 2. Because State Farm' actions changed over the course of time, see supra at V.C.2, the material facts of each s class member' claims depend on his individual circumstances. See Newton v. Southern Wood s Piedmont Co., 163 F.R.D. 625, 633 (S.D. Ga. 1995) (plaintiff' claims not typical, where facts s needed to establish liability depended upon " individualized inquiries" ). Additionally, each class member' remedy ­ reformation ­ must be individually s adjudicated in light of the specific circumstances pertaining to that insured. Clark I, 319 F.3d at 1243-44; see supra at V.C.2. For each class member, the Court would need to determine an appropriate reformation date, in accordance with the specific factors enumerated in Clark I. See id. Despite Clark' assertion that the Court could determine the appropriate reformation date for s each class member in " single reformation hearing," Mot. for Class Cert. at 11, this would a require the Court to ignore Clark I. The law of this case requires that the effective date of reformation be determined separately for each individual member of the putative class. The

32

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 33 of 46

effective date of reformation for Clark is not typical of the effective date of reformation for the remainder of the class. Further, after determining the appropriate date of reformation for each class member' s claims, the Court still would need to individually determine the appropriate amount of additional PIP benefits ­ if any ­ to which each class member may be entitled. For example, Clark' s individual claims did not include claims for additional medical or rehabilitation benefits, but rather only additional wage loss benefits. Clark II, 292 F. Supp. 2d at 1269. For any putative class member claiming medical and rehabilitation benefits, the Court would need to determine that those benefits were " reasonable and necessary"and incurred as a result of the accident. See Exh. 3 at 5, ¶ 16. Similarly, for wage loss benefits, the Court would need to determine that any lost wages incurred over a year after the accident were actually the result of the incident. See id. The resolution of Clark' individual damages does nothing to further the adjudication of the s potential class members'damages. Clark' contention that each putative member' damages s s may be determined " easily and mechanically"by taking " difference between $200,000 and the the amounts they have already been paid"wrongly assumes that every putative class member is entitled to additional PIP benefits up to the $200,000 cap. Mot. for Class Cert. at 13 n.17.

Without conducting individual inquiries into each class member' claims, Clark cannot possibly s know that each class member is entitled to the maximum level of benefits. The atypicality of Clark' claims is illustrated by the fact that even though his claims are fully adjudicated, they do s nothing to resolve the individual claims of the putative class members. Finally, Clark' claims are atypical of the class because his claims are fully adjudicated s and paid. When a named plaintiff' claims are moot, or when a named plaintiff lacks standing to s

33

Case 1:00-cv-01841-LTB-KLM

Document 221

Filed 07/26/2007

Page 34 of 46

bring his claims, his claims are not typical of the class. See Rector v. City and County of Denver, 348 F.3d 935, 950 (10th Cir. 2003) (" definition, class representatives who do not By have Article III standing to pursue the class claims fail to meet the typicality requirements of Rule 23." Adamson, 855 F.2d at 675. Because