The Court in a 4 concurring, 1 concurring on one issue, and 2 dissents gave insurance companies a victory out of the jaws of defeat. Cullen v. State Farm Automobile Insurance Company, 137 Ohio St.3d 373, 3013-Ohio-4733.
Who filed amicus briefs supporting State Farm? Among others
Nationwide Insurance Companies
American Financial Services Association
Grange Mutual Insurance Company
National Association of Insurance Companies
Ohio Insurance Institute
Ohio Chamber of Commerce
US Chamber of Commerce
The issues in the case surround class actions. The Plaintiff, representing a class of State Farm insurance customers, sued State Farm over windshield repairs. Auto insurance policies contain insurance for auto glass breakage. Typically the coverage covers the full cost of replacement, or cash reimbursement for the replacement costs, less a deductible. State Farm, however, led its insureds to “repair” their windshields with the cheaper vacuum cyanoacrylate chip repair. State Farm saved money and the insureds lost money when they went to trade their cars, and insureds were paying an insurance premium and not receiving the benefit for which they had paid.
So the class action was filed. The issue presented at the outset was whether there was a proper “class.” The trial court said there was and the Eighth District Court of Appeals agreed. The Supreme Court reversed.
To change the subject, a purpose of a class action is to make possible – to compensate parties – for injuries which individually would not be economically viable, but as a group would be viable. While State Farm was saving a lot of money, I would guess millions, each of these customers of State Farm would have little incentive to sue for the few hundred dollars they were damaged by atheir window chip. As a class, however, the customers could be identified and compensated. This is the classic situation for a class action.
The Supreme Court, however, said “NO.” It reasoned among other things, that the damages for each car would be different, depending on the age of the car, the time of the loss, the value of the car, etc. In other words apparently unless damages are exactly the same for every member of a class, there can be no class action.
Now when will this ever occur. Probably never. Consumers lose, insurers win.
Needless to say insurance companies already do this calculation every day, and with modern computers, I bet they have meticulous records of what they have done in the past, and who they did it to. To prove my point, put a chip in your windshield and then crash your car so it is totaled out and you need to negotiate with the insurance company over the value of your car before the crash. There will be a precise deduction from the value that the insurer offers you for that windshield chip and any other pre-existing damage.
Remember when one reviews the campaign contribution records form most of the Ohio Supreme Court Justices, insurance companies and their officers and employees are right up there in the top category.