FIFTH CIRCUIT AFFIRMS CLASS CERTIFICATION AGAINST GEICO

The Fifth Circuit Court of Appeals recently affirmed a district court’s approval of class certification in favor of a group of GEICO policyholders seeking to represent all similarly situated policyholders, claiming GEICO had failed to fully compensate them for the total loss of their vehicles.  The plaintiffs alleged GEICO had consistently failed to include title fees, registration fees, and sales tax in its calculation of ACV payments due under the collision or comprehensive coverage to policyholders who had suffered total loss of their vehicles.  Among the claims they sought to certify as a class was a claim for violation of Chapter 542 of the Texas Insurance Code, a/k/a the Texas Prompt Payment of Claims Act.

The court concluded the plaintiffs had standing to bring the claims, and all of the types of costs involved amounted to the same legal injury – breach of contract – even though the three types of costs accrue in different ways.  The court rejected GEICO’s arguments that the damages claimed were too individualized to be susceptible to class certification because recalculating the correct payment for each vehicle would be a fact-intensive process.  But Plaintiffs presented simple formulas and tables by which GEICO’s previous value determinations could be adjusted for most class members.

The Fifth Circuit also agreed with the lower court’s inclusion of Chapter 542/TPPCA claims in the class certification, noting it is a strict liability statute, and if the actual damages of the class members could be easily calculated, so too could the interest due under Chapter 542.