Oregon Judge Dismisses Auto Insurance Class Action Claims for Lack of Standing

The federal district court in Oregon recently addressed an insured’s standing to represent a purported class action against a group of related insurance companies in Carranza v. GEICO General Ins. Co., 2014 WL 6998088, No. 13-cv-1932-HZ (D. Or. Dec. 9, 2014).  The court ultimately concluded that the insured did not have standing to assert claims against two of the three insurers and dismissed the class action claims against them.  The court did, however, provide the insured with leave to amend the class action to cure the standing issue.

The case concerned an insured that had an insurance policy that covered two vehicles.  The policy provided the insurer would “pay for the collision loss to the owned auto or non-owned auto for the amount of each loss less the applicable deductible.”  The policy included a provision providing that “losses arising out of a single occurrence shall be subject to no more than one deductible.”  The insured’s two vehicles collided with one another.  The insurer charged the insured a deductible for each vehicle.  The insured filed suit as a class action on behalf of all other similarly situated individuals.

The class action was filed against a parent insurer and two of its subsidiaries—one of which wrote the policy involved in the insured’s claim.  The parent insurer and non-issuing subsidiary moved to dismiss the insured’s class action claims on the ground that the insured did not have privity of contract with them and, therefore, lacked standing to assert the claims.  The insured responded that she had standing in her claims against the insurers because there is a special relationship between the parent company and the two subsidiaries, such that all three should be treated as a single entity.  The insured also requested that the court adopt the “juridical link doctrine,” which would permit the claims to proceed.  The district court agreed with the insurers and dismissed the claims against them, finding that the insured lacked standing.

Initially, the court pointed to the fact that the complaint did not have any allegations that would support the claim of a special relationship between the three insuring entities.  The court further found, however, that even if the complaint included that information, the case was indistinguishable from other Ninth Circuit precedent holding that an insured lacked standing to represent a class when the insured did not purchase a policy from that insuring entity.  Those cases held that at least one named class plaintiff must have standing to assert a claim against each defendant before that person can purport to represent a class.

Next, the insured argued the court should adopt the “juridical link doctrine,” which has been adopted by other federal circuit courts of appeal.  Under the juridical link doctrine, a plaintiff without a cause of action against a specific class defendant may still maintain an action against the defendant where the plaintiffs as a whole have suffered an identical injury as the result of a conspiracy or concerted scheme, or where the claims are otherwise juridically related in a manner that suggests a single resolution would be expeditious.  The court declined the insured’s invitation, however, because the Ninth Circuit has yet to expressly adopt the doctrine and its sister district courts have likewise refused to adopt it under similar circumstances.

The lawyers of Maloney Lauersdorf Reiner frequently represent clients in insurance coverage disputes.  Please contact us with any questions about this case or any other matter you see analyzed in the MLR Insurance Coverage Blog.

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