3 Fla. L. Weekly Supp. 721a

Insurance — Automobile — Cancellation of policy — Refund of unearned premiums — Class actions — Certification of class — Plaintiff challenging procedure whereby insurer calculated refund from date contained in notice of cancellation rather than from earlier cancellation date specified in “Three-Option Letter” in which insurer demanded additional premiums and stated that, if insured took no action, policy would be canceled on certain date — Action is suitable for resolution as class action — Plaintiff established numerosity, commonality, typicality and adequacy of representation — Plaintiff further established that common questions of law and fact predominate over individual questions and that class representation is superior to other available methods for disposing of controversy

Affirmed at 22 Fla. L. Weekly D1537a
Additional ruling in this case at 4 Fla. L. Weekly Supp. 260a

JOSE M. RODRIGUEZ, et al., Plaintiffs, vs. UNION AMERICAN INSURANCE COMPANY, Defendant. 11th Judicial Circuit in and for Dade County, General Jurisdiction Division. Case No. 93-02469 CA 30. April 8, 1996. Murray Goldman, Judge.

ORDER CERTIFYING CLASS ACTION

THIS CASE came to be heard by the Court on Plaintiff’s Motion To Certify Class Representation. The Court held a preliminary hearing on April 3, 1995, reserved ruling on the motion, and granted the parties leave to conduct discovery on class issues. (Order On Plaintiff’s Motion To Certify Class, dated April 10, 1995). The Court subsequently resumed the hearing on the subject motion on November 16, 1995, November 30, 1995, December 11, 1995, and February 1, 1996. The Court considered deposition and oral testimony of witnesses proffered by the parties. The Court heard oral argument of the parties’ counsel during the hearing and considered written argument thereafter. The Court has reviewed relevant portions of the case’s record. Being advised of all relevant matters, the Court below makes its findings of fact and conclusions of law, according to Fla.R.Civ.P. 1.220(d)(1).

FINDINGS OF FACT

Substantive Issues

1. In his Second Amended Class Action Complaint, Plaintiff JOSE M. RODRIGUEZ [“RODRIGUEZ”], for himself and others similarly situated, seeks a declaration of rights with respect to the cancellation of automobile insurance policies issued by Defendant, UNION AMERICAN INSURANCE COMPANY [“UNION”]. Particularly, RODRIGUEZ asks the Court to determine whether he and the putative members of the class are entitled to an additional refund of unearned premium, following the cancellation of their policies.

2. RODRIGUEZ purchased an automobile insurance policy from UNION for a 5/15/92 to 5/15/93 coverage period. The policy’s initially quoted price was $852. Rodriguez financed the policy’s premium as permitted by Florida Statutes §627.826, et seq. On 7/27/92, according to Florida Statutes §627.7282, UNION demanded from RODRIGUEZ, in the colloquially known “Three-Option Letter”, an additional premium of $866. The third option provided:

YOU MAY TAKE NO ACTION AND YOUR POLICY WILL BE CANCELED ON 09/09/92. UNLESS CANCELED PRIOR TO THIS DATE FOR ANY OTHER PROPER REASON, AND WE WILL THEN REFUND ANY UNEARNED PREMIUMS.

3. RODRIGUEZ neither paid the additional premium nor requested cancellation of the policy, i.e., took no action. On 11/17/92 UNION mailed RODRIGUEZ a notice of cancellation, terminating the policy on 11/29/92. Upon cancellation, UNION returned to the premium finance company the portion of the premium — calculated at the $1,718 adjusted rate ($852 + $866) — it determined corresponded to the 11/30/92 to 05/15/93 balance of the policy’s period.

4. RODRIGUEZ contends that he is entitled to a larger refund, covering the period which begins following the date UNION stated on the third option of the three-option letter that the policy would be canceled, i.e., from 9/9/92 to 5/15/93.

5. Upon the parties’ cross motions for summary judgment, the Court determined that RODRIGUEZ’ position is correct, leaving only the question of damages for additional determination. (Order Granting Plaintiffs’ Motion For Summary Judgment and Denying Defendant’s Motion For Summary Judgment, dated August 7, 1995.)

Class Size

1. UNION concedes that the number of putative class members exceeds 20,000. UNION asserts that, based on this Court’s summary judgment ruling, it has begun to refund to putative class members the unearned premium at issue in this case, i.e., for the period between the cancellation date stated in its three-option letters and the cancellation dates listed on the notices of cancellation.

Common Cancellation Practice

1. UNION does not dispute that it was its normal and customary practice to cancel its insureds’ policies for non-payment of additional premium on a date subsequent to the cancellation dates stated in the three-option letters. UNION’s policy processing is computer automated; the cancellations are performed according to specified data processing parameters. UNION asserts that it has “corrected” the practice, so that its cancellation notice dates now coincide with its three-option letter (option # 3) cancellation dates.

2. However UNION maintains that the discrepancy in the dates generally amounted to a few days. Thus, it limited the above-mentioned refund to insureds whose policies it effectively canceled not more than six (6) days beyond the date stated in the three-option letters.

3. UNION contends that in Plaintiff’s instance the period between the two dates at issue was so large (nearly three months) because it was precluded from canceling the policy by the Florida Department of Insurance’s regulations promulgated as a result of Hurricane Andrew. However, UNION neither adduced evidence nor argued that it would have canceled Plaintiff’s policy on the date stated on the three-option letter were it not for Hurricane Andrew and the regulations. Neither did UNION specify which of the regulations applied to Plaintiff’s cancellation, or why Plaintiff’s cancellation occurred on a date much later than called for by the regulations’ cancellation moratorium. Thus, although some class members’ damages may be atypically high, the underlying basis for liability is essentially the same for all class members.

4. Union failed to demonstrate that it had implemented a specific practice or procedure resulting in its compliance with the emergency regulations.

Q. Mr. Torgas, you really don’t know exactly what the requirements or provisions of this so-called 4ER92-3 are, you can’t really interpret what that document states, can you?

A. No.

Q. In other words — let me rephrase the question. Can you say whether the company in fact even complied with that document?

A. I can tell you that the company attempted to comply with this document, yes.

Q. I’m not asking whether it attempted, I’m asking you do you know whether the company complied with the document.

MS. McMURRAY: Objection. This is the same —

THE COURT: Sustained

Transcript, November 30, 1995 hearing, at 52-53 (emphasis added). Neither did it demonstrate the implementation of specific practices and procedures aimed at identifying individuals to whom the emergency rules might have applied, or how it otherwise modified its usual cancellation practice (other than with respect to the length of time between the dates at issue).

4. The Court finds that RODRIGUEZ’ and the putative class members’ claims emanate from a core of common operative facts: UNION’s practice of canceling the policies on a date subsequent to those indicated on its three-option letters.

5. Thus, the overwhelming majority of factual and legal issues presented in this case are common to RODRIGUEZ and the putative members of the class, and do not involve RODRIGUEZ’ individual conduct. Conversely, the focus of the legal and factual issues in dispute in this litigation is upon UNION’s conduct — the manner and methods it employed to alter, modify or amend its insureds’ policy periods following the assessment of additional premiums. For example, with respect to any insured whose policy UNION canceled as a result of the insured’s failure to pay an additional premium, the Court must determine (and in part it has already done so): Can UNION charge any premium for the period between the cancellation dates stated in the three-option letter and the notices of cancellation?

6. The principal legal questions are dispositive of the case. If, for example, consistent with section 627.7282 UNION can cancel the policies whenever it sees fit and charge its insureds at the higher rate, then neither RODRIGUEZ nor anyone else will be entitled to a refund of any amount.

Typical Refund Claim

1. UNION has attempted to dissociate Plaintiff from other insureds it subjected to the cancellation practice at issue. However RODRIGUEZ’ transaction with UNION was a simple purchase and cancellation of automobile insurance, whose components are: (a) insured goes to agent; (b) insured buys insurance at a quoted premium; (c) insured pays the quoted premium (out of pocket or financed); (c) defendant UNION assesses a higher premium; (d) UNION mails insured a three-option letter; (e) insured does nothing in response to the three-option letter; (f) UNION cancels the policy on a date subsequent to the date stated in the three-option letter.

2. The record is devoid of evidence which indicates that the particular transaction at issue, including the cancellation of the policy, was atypical. There was no circumstance inherently specific to RODRIGUEZ which would single him out and set him apart from the thousands of UNION insureds he seeks to represent. As mentioned, the complained-of procedure was essentially a mechanical function performed by UNION’s computers.

Representation

Counsel

1. The Court finds that RODRIGUEZ has retained competent counsel who possesses the necessary experience to and who will properly and vigorously prosecute this case on behalf of the class.

Plaintiff

2. The Court finds that RODRIGUEZ will adequately represent the class of persons who claim they should receive an additional refund as a result of UNION’s cancellation practice.

3. RODRIGUEZ, like the members of the class he seeks to represent, has an interest in receiving a refund of the unearned premium at issue. RODRIGUEZ understands his claim and the material issues in this case. RODRIGUEZ has the desire to prosecute this case for himself and the members of the class to redress UNION’s overcharges.

4. RODRIGUEZ’ refund claim is consistent with and not even remotely antagonistic to the refund claims of UNION’s other insureds.

5. The Court finds that RODRIGUEZ will adequately represent the class.

Maintainability

Predominant Questions

1. The Court finds that the questions of law and fact common to the claims and defenses of RODRIGUEZ and members of the class predominate over any questions of law or fact affecting only individual members of the class. There are common threshold issues to be resolved (or which have been resolved) by the Court, and if necessary, a jury.

Superior Method

2. Because, for example, the amounts of the individual claims at issue (see refund check of JUAN ESPINO) are relatively small, the Court finds that class representation is superior to other available methods for the fair and efficient adjudication of this controversy. The filing of multiple lawsuits over claims averaging a few dollars is at a minimum an unnecessary additional burden on the courts of the State of Florida.

3. The class action device for the claims at issue provides the members of the class with a remedy they may not have even known existed, for a harm they would have likely never perceived. A class action enables the class to maintain those potentially very small claims against UNION, and allows one court to dispose of them efficiently.

4. The issues of liability being essentially legal ones, and the data necessary to compute damages (refunds) being readily available to UNION (it having started to make refunds unilaterally), the Court finds that this action is manageable as a class.

5. Defendant has admitted that as a result of this action, it has begun to make the premium refunds sought by Plaintiffs to more than 22,000 putative class members (including JUAN ESPINO, whose motion for leave to join this action as a plaintiff is pending before the Court). The Court finds that UNION has attempted to moot this action by voluntarily desisting from the very practice RODRIGUEZ has challenged in this case — canceling the putative class members’ policies subsequent to the date of cancellation indicated in the three-option letters — by paying the insureds a refund.

6. The Court rejects Defendant’s assurances that it has otherwise made the prospective class whole. Defendant has taken this action unilaterally, without the Court’s supervision or scrutiny. Defendant has admitted that it has begun making refunds to insureds whose policies were canceled less than 6 days after the date indicated on the three-option letters.

7. Facially, at a minimum, there remain for determination the following questions: (a) Did Plaintiff make the refund to all putative class members or merely to a subset thereof? (b) Did Defendant refund the proper amount to the each insured?

8. UNION’s refund attempt illustrates that this case is suitable for resolution as a class action.

CONCLUSIONS OF LAW

Elements

1. Plaintiff seeks certification of the proposed class according to Fla.R.Civ.P. 1.220(b)(3). Thus, Plaintiff must establish the elements prescribed by section (a) for Rule 1.220: (1) numerosity; (2) commonality; (3) typicality; (4) adequacy of representation. Plaintiff must also establish, according to section (b), that his claims are maintainable as a class action.

Numerosity

1. The first element Plaintiff must establish, numerosity, requires that “the members of the class [be] so numerous that separate joinder of each member is impracticable”. Rule 1.220(a)(1). Unquestionably this case meets this requirement. The Court finds that a class in excess of twenty thousand insureds is sufficiently large; separate joinder of the members would be impracticable. Broin v. Phillip Morris Companies, Inc., 641 So.2d 888 (Fla. 3d DCA 1994).

Commonality

2. The second criterion, commonality, requires that “the claim or defense of the representative party raise[ ] questions of law or fact common to the questions of law or fact raised by the claim or defense of each member of the class”. Rule 1.220(a)(2). As the Court noted in Broin:

“The threshold of `commonality’ is not high. Aimed in part at `determining whether there is a need for combined treatment and a benefit to be derived therefrom,’ the Rule requires only that resolution of the common questions affect all or a substantial number of the class members”. Jenkins v. Raymark Indus., Inc., 782 F.2d 468, 473 (5th Cir. 1986) (citations omitted). Rule 1.220 does not require denial of class certification “merely because the claim of one or more class representative arises in a factual context that varies somewhat from that of other Plaintiffs”.

Broin, at 890 (emphasis added).

3. As the court explained in Broin, “[c]laims that arise from different factual contexts may be plead as a class action if they present a question of common interest” Broin, at 890 (citing Love v. General Dev. Corp., 555 So.2d 397, 398 (Fla. 3d DCA 1989)).

4. The commonality requirement is also met where, as here, the defendant asserts common, if not identical defenses to a plaintiff’s claims — e.g., that it may charge a premium consistent with section 627.7282. “Class treatment will aid judicial efficiency and economy, and is warranted to avoid duplicitous litigation of these common issues”. Broin, at 891.

5. The alleged factual variances between Plaintiff’s claim and those of the class pale by comparison to the common attributes of the action.

Although claims may arise from different factual contexts, they may be pled as a class action if the subject of the action presents a question of common or general interest, and where all members of the class have a similar interest in obtaining the relief sought. The common or general interest must be in the object of the action, in the result sought to be accomplished in the proceedings, or in the question involved in the action. There must be a common right of recovery based on the same essential facts.

Love v. General Development Corporation, 555 So.2d 397, 398 (Fla. 3rd DCA 1989) (citations omitted; emphasis added). Plaintiff — as did all members of the putative class — was charged a premium for a period of time subsequent to the date of cancellation listed on the three-option letters.

6. RODRIGUEZ’ claims are sufficiently similar to those of members of the prospective class:

It would be a perversion of the spirit behind rule 1.220, and the cases interpreting the rule, to hold as defendants urge, that plaintiffs’ class action allegations fail because plaintiffs do not present identical claims. If class actions were dependent on class members presenting carbon copy claims, there would be few, if any, instances of class action litigation. It is virtually impossible to design a class whose members have identical claims.

Broin v. Philip Morris, Inc., at 891.

Typicality

1. The typicality requirement of Rule 1.220(a)(3) prescribes that “the claim or defense of the representative party is typical of the claim or defense of each member of the class”. RODRIGUEZ and members of the class all claim financial injuries as a result of UNION’s overcharges. The Court finds that this case meets the typicality requirement, as defined in Broin and the cases cited therein. See Estate of Bobinger v. Deltona Corp., 564 So.2d 739, 745 (Fla. 2d DCA 1990); Jenkins v. Raymark Industries, Inc., 782 F.2d 468, 473 (5th Cir. 1986); Pottinger v. City of Miami, 720 F.Supp. 955 (S.D. Fla. 1989).

2. The variations in the nature of Plaintiff’s claim which Defendant contends set his individual claim apart from the putative class’ claims are not significant for purposes of the inquiry at hand:

Federal Rule 23 and, by analogy, Florida Rule 1.220, do not require that class certification be denied merely because the claim of one or more class representatives arises in a factual context that varies somewhat from that of other plaintiffs. [citation omitted]. The court’s primary concern in considering the typicality and commonality of claims should be whether the representative’s claim arises from the same practice or course of conduct that gave rise to the remaining claims and whether the claims are based on the same legal theory.

Powell v. River Branch Property Owners Association, Inc., 522 So.2d 69, 70 (Fla. 2nd DCA 1988).

3. Plaintiff’s claim arises from precisely the cancellation practice Defendant effectively confessed it should not have implemented.

Adequacy of Representation

Plaintiff

1. According to Rule 1.220(a)(4), the Court must find that “the representative party can fairly and adequately protect and represent the interest of each member of the class”. The requirement of adequacy of representation looks to both the class representatives and their counsel. Jenkins v. Raymark Industries, Inc., 782 F.2d 468, 472 (5th Cir. 1986). According to the criteria elucidated in Broin, Babinger and Pottinger, the Court concludes that the adequacy of representation requirement has been met in this case. RODRIGUEZ has interests in common with the proposed class members; he and his attorneys will properly prosecute this case as a class action.

Counsel

2. The Court finds that RODRIGUEZ’ attorneys are qualified, experienced and able to conduct this litigation as a class action. Sosna v. Iowa, 95 S.Ct. 553, 559; Griffin v. Carlin, 755 F.2d 1516, 1533 (11th Cir. 1985).

Maintainability

Predominance

1. Rule 1.220(b)(3) requires that common question of law and fact predominate over individual questions. The Court finds that the questions of law and fact common to RODRIGUEZ and the class he seeks to represent predominate over any questions of law or fact affecting only individual members of the class. Accordingly, this is precisely the type of controversy which ought to be resolved by a class action:

The first two counts of the counterclaim — violation of the consent judgment, and violation of statutes and rules — both meet the requirements of rule 1.220(b); both clearly concern matter of common interest to the entire class.

Lanca Homeowners, Inc. v. Lantana Cascade of Palm Beach, LTD, 541 So.2d 1121, 1124 (Fla. 1989) (emphasis added).

Superiority

2. Rule 1.220(b)(3) requires that class representation be superior to other available methods for disposing of the controversy at hand. The Court finds that a class action is superior to any other method of fair adjudication. The record in this case reveals that, because Defendant’s conduct was overwhelmingly uniform, class treatment will efficiently resolve the active and the inchoate disputes between Defendant and a large number of its insureds.

The Class

1. Therefore, based upon the aforementioned considerations, the Court finds that this case may proceed as a class action according to Fla.R.Civ.P. 1.220(b)(3).

2. The Court defines the class as:

UNION AMERICAN INSURANCE COMPANY INSUREDS “WITHIN THE STATE OF FLORIDA” WHOSE AUTOMOBILE INSURANCE POLICIES WERE CANCELED AS A RESULT OF NON-PAYMENT OF AN ADDITIONAL PREMIUM.

3. According to Fla.R.Civ.P. 1.220(d)(1), this class definition is “conditional and may be altered or amended before entry of a judgment on the merits.” The Court, for notice purposes, has defined the class as broadly as possible, subject to later refinement, if appropriate or necessary.

We agree with appellees’ suggestion that the court in its discretion might later determine that its original definition (which perhaps was devised primarily to fulfill notice requirements as broadly and fairly as possible) is too broad and accordingly modify it.

Aetna Life Insurance Company, v. DeAngelis, 317 So.2d 106, 107 (Fla. 3rd DCA 1975).

4. The Court designates JOSE M. RODRIGUEZ as Class Representative.

5. The Court designates Carlos Lidsky and Carlos Lidsky, Attorney At Law P.A., as Class Counsel.

6. In reaching the foregoing conclusions, the Court has considered all relevant facts and circumstances, including but not limited to:

(a) The respective interest of each class member in individually controlling the prosecution of separate class claims or defenses.

(b) The nature and extent of any pending litigation to which any class member might be a party, and in which any fact or law question in dispute in the subject litigation is to be adjudicated.

(c) The desirability of concentrating the litigation in the forum where the subject action is to be adjudicated.

(d) The difficulties likely to be encountered in the management of the claim or defenses on behalf of the class.

Notice

1. The Court finds that the identities of the class members are ascertainable by reasonable means from UNION’s records. Pursuant to Rule 1.220(d)(2), as soon as practicable, notice of the pendency of this litigation shall be provided to members of the class by mail and publication.

2. The Court directs Class Counsel to prepare and file proposed forms of notice for the Court’s consideration and approval within thirty (30) days from the date of this Order, or as soon thereafter as practicable.

3. The Court will promptly hold a hearing after the number, identity and location of class members is ascertained from the Defendant or through discovery, to evaluate and determine who will bear the cost, content, timing and mechanics of providing the notice to members of the class.

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