NEW ORLEANS (Legal Newsline) - The Washington Legal Foundation (WLF), a public-interest law firm, has asked a federal appeals court to decertify a class of USAA life insurance policyholders, who are alleging that the company breached their life insurance policies by considering “unlisted factors” when setting their cost of insurance rates.
An amicus filed by WLF with the Fifth Circuit Court of Appeals said that a district court’s class certification in Spegele v. USAA Life Ins. Co. “not only creates a glaring intra-class conflict by forcing injured and uninjured policyholders into a single class in violation of Rule 23 [federal rules of procedure covering class actions], but it papers over crucial choice-of-law and statute-of-limitations questions that are unavoidably individualized.”
In addition, the WLF brief says that the district court’s order “allows class members who lack Article III standing to sue in federal court, and sidesteps the vital gatekeeping function for expert evidence that Rule 702 [testimony by expert witnesses] and Daubert demand.”
The brief argues that for a dispute to be justiciable under Article III of the Constitution, every claim brought in federal court must seek to redress an “injury in fact” caused by the defendant.
“But when, as here, a district court certifies a class containing many individuals who have suffered no injury, it violates Article III’s standing requirement,” the amicus says.
Furthermore, the amicus argues, the district court certified a class with no evidence, including that from an expert witness, that the “proposed class is susceptible to a classwide damages award.”
“Left to stand, the district court’s watered-down approach to the admissibility of contested expert evidence would dramatically lower the bar for class certification,” the amicus said. “That is no small matter. The very fact of certification gives a class-action plaintiff inordinate leverage in settlement negotiations.”
The U.S. supreme Court is set to hear arguments in a related case, TransUnion LLC v. Ramirez, that, according to the SCOTUSBlog, will determine whether Article III “permits a damages class action when the vast majority of the class suffered no actual injury, let alone an injury anything like what the class representative suffered.”