Opinion
Civil 3:16-CV-1534
10-19-2022
SAMANTHA SAYLES, Plaintiff, v. ALLSTATE INSURANCE CO., Defendant.
Mannion Judge
REPORT AND RECOMMENDATION
Martin C. Carlson United States Magistrate Judge
I. Introduction
In the case we are called upon to consider the next chapter in a longstanding legal saga. Some six years ago, on July 26, 2016, this case was removed by the defendant, Allstate Insurance Company, to federal court. (Doc. 1). Samantha Sayles' state court complaint was styled as a class action lawsuit which challenged what was alleged to be Allstate's practice of compelling policy claimants to undergo independent medical examinations (IME) without first making a showing of good cause and obtaining a court order. (Doc. 1-1). According to Ms. Sayles, this practice by Allstate violated the provisions of Pennsylvania's Motor Vehicle Financial Responsibility Law, 75 Pa. Con. Stat. §1796, (PMVFRL) which imposed a prior court order requirement upon such insurance examinations. In her complaint, on behalf of this putative class of insurance policy claimants, Sayles sought a 1 declaratory judgment that Allstate's practice violated the PMVFRL, along with damages and attorneys' fees. (Id.)
At the time that Sayles filed her lawsuit, the answer to this legal question regarding whether this insurance company practice violated the PMVRFL was clouded in some uncertainty, with courts reaching competing and conflicting conclusions regarding the interplay between this state law and Allstate's practice of seeking physical examinations without the benefit of a prior court order. This legal uncertainty was the subject of extensive proceedings before this court and the Court of Appeals. Litigation of this threshold issue consumed much of the first several years of this lawsuit. Ultimately, this issue was only resolved in 2019, after the Third Circuit certified this question to the Pennsylvania Supreme Court, which ruled that:
[I]nsurers are required to follow Section 1796(a) when seeking to compel an insured to submit to an IME, when the insured has refused to voluntarily comply with such a request, and any insurance policy which purports to set requirements by which an insurer may compel an insured to undergo an IME is required to comport with that section.Sayles v. Allstate Ins. Co., 656 Pa. 99, 122, 219 A.3d 1110, 1124 (2019).
We now turn to the question of whether Sayles may maintain a class action in federal court pursuing damages claims on behalf of a purported class of policy claimants. This motion for class certification is fully briefed and is, therefore, ripe for resolution. In this setting we are mindful of the fact that, a “class action is ‘an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.' ” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 348, 131 S.Ct. 2541, 2550, 180 L.Ed.2d 374 (2011) (quoting Califano v. Yamasaki, 442 U.S. 682, 700-701, 99 S.Ct. 2545, 61 L.Ed.2d 176 (1979)). Given the nature of class actions as an exception to the general rule favoring litigation of individual claims, “[c]lass certification is proper only ‘if the trial court is satisfied, after a rigorous analysis, that the prerequisites' of Rule 23 are met.” In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 309 (3d Cir. 2008) (quoting Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 161, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982)) (emphasis added).
In this case, following a rigorous analysis of Rule 23 's multi-faceted requirements, for the reasons set forth below we conclude that class certification is not appropriate in this case. Therefore, we recommend that the plaintiff's motion to certify this case as a class action be denied.
II. Factual Background and Procedural History
This case most assuredly does not present a tabula rasa. Quite the contrary, over the past six years, this litigation has commanded the attention of at least five judges of this court, as well as the Third Circuit Court of Appeals, and the Pennsylvania Supreme Court. As a result of this litigation the issues before us have been substantially narrowed and focused.
This lawsuit began its way in federal court on July 26, 2016, when Allstate removed Ms. Sayles' complaint from the Court of Common Pleas of Pike County. (Doc. 1). Ms. Sayles' state court complaint was cast as a class action brought against Allstate on behalf of the plaintiff and others similarly-situated Allstate insureds. (Doc. 1-1). In her complaint, Ms. Sayles alleged that she had been injured in a 2015 motor vehicle accident at a time when she was insured through Allstate. (Id., ¶¶ 1315). According to the complaint, Allstate had refused to accord benefits to Sayles. Instead, citing to provisions of its policy Allstate ordered Ms. Sayles to submit to an IME by a doctor of its choosing as a condition for consideration of her claim. (Id., ¶¶ 16-37). Notably, Ms. Sayles alleged that Allstate sought to compel her and others to undergo IME examinations without first obtaining a court order directing the examination or making a showing of good cause. (Id.)
According to Sayles, this insurance company practice violated Section 1796(a) of the PMVFRL, which provides that:
(a) General rule.--Whenever the mental or physical condition of a person is material to any claim for medical, income loss or catastrophic loss benefits, a court of competent jurisdiction or the administrator of the Catastrophic Loss Trust Fund for catastrophic loss claims may order the person to submit to a mental or physical examination by a physician. The order may only be made upon motion for good cause shown. The order shall give the person to be examined adequate notice of the time and date of the examination and shall state the manner, conditions and scope of the examination and the physician by whom it is to be performed. If a person fails to comply with an order to be examined, the court or the administrator may order that the person be denied benefits until compliance.75 Pa. Cons. Stat. § 1796(a). Sayles' complaint construed this statutory text as prescribing the sole and exclusive path for obtaining an IME from an insurance policy claimant in Pennsylvania. Since Allstate's alleged practice of unilaterally requiring IME exams without the benefit of a court order, or finding of good cause, did not satisfy these statutory requirements, Sayles asserted that with respect to herself and other class members Allstate violated the PMVFRL when it conditioned consideration of a claim upon completion of an IME.
Based upon these averments, Sayles brought individual and class claims seeking a declaratory judgment that Allstate must follow the court order requirements of § 1796(a) when seeking to compel a claimant to submit to an IME. (Id., Count I). Sayles' complaint also asserted individual and class claims for damages based upon this alleged violation of the requirements of § 1796(a). (Id., Count II). With the issues in this lawsuit framed in this fashion, the threshold question presented by Sayles' complaint was the issue of whether Allstate's alleged practice of unilaterally requiring IME exams without the benefit of a court order, or finding of good cause, violated § 1796(a).
In addition, Sayles' original complaint brought a series of additional claims under the Pennsylvania Unfair Trade Practices Act, Pennsylvania's Insurance Bad Faith Act, as well as common law claims of breach of the duty of fair dealing, unjust enrichment, and intentional misrepresentation. (Id., Counts III-VIII). These claims were dismissed. (Docs. 35, 36). Sayles subsequently filed an amended complaint, (Doc. 54), which only pursues her PMVFRL claims and a companion breach of contract claim. (Doc. 54). Thus, currently the gravamen of this litigation is the allegation that Allstate's practices violated the PMVFRL.
As to this issue the courts were divided, a fact which was recognized by the district court in 2017 when it ruled upon a motion to dismiss filed by Allstate. (Doc. 35). Because of the legal uncertainty surrounding this threshold question, Allstate sought, and obtained, leave to appeal this question to the United States Court of Appeals for the Third Circuit. (Docs. 37, 41, 42). The Court of Appeals, in turn, certified this state law question regarding the interplay between § 1796(a) and the terms of the Allstate policy to the Pennsylvania Supreme Court for its determination. On November 20, 2019, more than three years after this lawsuit commenced, the Pennsylvania Supreme Court definitely resolved this issue, holding that:
[I]nsurers are required to follow Section 1796(a) when seeking to compel an insured to submit to an IME, when the insured has refused to voluntarily comply with such a request, and any insurance policy which purports to set requirements by which an insurer may compel an insured to undergo an IME is required to comport with that section.Sayles, 219 A.3d at 1124. Accordingly, the State Supreme Court concluded that: “these IME policy provisions manifestly conflict with, and are repugnant to, the statutory protections for individuals insured under automobile insurance policies regarding the conduct of IMEs as established by the General Assembly in Section 1796(a); consequently, they are void as against the public policy of this Commonwealth.” Id. at 1126-27. Given this definitive ruling by the state's highest court, the Third Circuit remanded this case to the district court for further proceedings. Sayles v. Allstate Ins. Co., No. 17-3463, 2019 WL 11317938 (3d Cir. Dec. 27, 2019).
With this merits issue definitively resolved, we now turn to the question of whether Sayles may maintain a class action lawsuit for damages in light of the determination that Allstate's policy provisions were void as against public policy. For her part, Sayles has moved for class certification, arguing that there exists a putative class of some 151 individuals as to whom the evidence satisfies Rule 23(a)'s requirements of numerosity, commonality, typicality, and adequacy of representation. Sayles also alleges that the criteria of Rule 23(b)(3) are satisfied since questions common to the class predominate over individual questions and because the class action device is superior to other methods to adjudicate Plaintiff's and the class members' claims. (Doc. 89). For its part, Allstate opposes class certification in this case, contending that Sayles' motion fails to satisfy the exacting prerequisites of Rule 23 on numerous scores. This motion is fully briefed and is, therefore, ripe for resolution.
For the reasons set forth below, it is recommended that the motion for class certification be denied.
III. Discussion
A. Class Certification Standard of Review
It is well settled that:
The class action is “an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.” Califano v. Yamasaki, 442 U.S. 682, 700-701, 99 S.Ct. 2545, 61 L.Ed.2d 176 (1979). In order to justify a departure from that rule, “a class representative must be part of the class and ‘possess the same interest and suffer the same injury' as the class members.” East Tex. Motor Freight System, Inc. v. Rodriguez, 431 U.S. 395, 403, 97 S.Ct. 1891, 52 L.Ed.2d 453 (1977) (quoting Schlesinger v. Reservists Comm. to Stop the War, 418 U.S. 208, 216, 94 S.Ct. 2925, 41 L.Ed.2d 706 (1974)).Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 348-49. Because class action litigation is an exception to the general rule favoring litigation of individual claims by specific plaintiffs: “[t]o determine whether the putative class has satisfied ... all applicable Rule 23 [class action certification] requirements[], the District Court must conduct a ‘rigorous analysis' of the evidence and arguments presented.” In re Lamictal Direct Purchaser Antitrust Litig., 957 F.3d 184, 190-91 (3d Cir. 2020).
Motions for class certification are governed by Rule 23 of the Federal Rules of Civil Procedure, and entail a multi-faceted analysis. At the outset, the party seeking class certification must satisfy the threshold requirements of Rule 23(a) which sets the following four prerequisites for class certification:
(a) Prerequisites. One or more members of a class may sue or be sued as representative parties on behalf of all members only if:
(1) the class is so numerous that joinder of all members is impracticable;
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and
(4) the representative parties will fairly and adequately protect the interests of the class.
Each of these four threshold requirements-numerosity, commonality, typicality and adequacy-are, in turn, defined by case law to require specific and exacting showings. For example, with respect to Rule 23's numerosity requirement, the Court of Appeals counsels us that:
Under Rule 23, the proposed class must be “so numerous that joinder of all members is impracticable.” Fed.R.Civ.P. 23(a)(1). This “rule prevents putative class representatives and their counsel, when joinder can be easily accomplished, from unnecessarily depriving members of a small class of their right to a day in court to adjudicate their own claims.” Marcus, 687 F.3d at 594-95. As with every Rule 23 requirement, plaintiffs must show the class is numerous enough by a preponderance of the evidence. Steak 'n Shake, 897 F.3d at 483-84. We presume joinder is impracticable when the potential number of class members exceeds forty. Id. at 486. This is a guidepost: showing the number of class members exceeds forty is neither necessary nor always sufficient. Marcus, 687 F.3d at 595. “The text” of Rule 23(a)(1) is “conspicuously devoid of any numerical minimum required for class certification.” Inre Modafinil Antitrust Litig., 837 F.3d 238, 249 (3d Cir. 2016). But while a class of forty-one does not automatically satisfy Rule 23(a)(1), a putative class that size faces a relaxed burden under our precedent. By contrast, the “inquiry into impracticability should be particularly rigorous when the putative class consists of fewer than forty members.” Id. at 250.
In recent opinions, we have given the numerosity requirement “real teeth.” Steak 'n Shake, 897 F.3d at 484. When plaintiffs cannot directly identify class members, they “must show sufficient circumstantial evidence specific to the products, problems, parties, and geographic areas actually covered by the class definition to allow a district court to make a factual finding. Only then may the court rely on ‘common sense' to forgo precise calculations and exact numbers.” Marcus, 687 F.3d at 596. And “where a putative class is some subset of a larger pool, the trial court may not infer numerosity from the number in the larger pool alone.” Hayes v. Wal-Mart Stores, Inc., 725 F.3d 349, 358 (3d Cir. 2013).Allen v. Ollie's Bargain Outlet, Inc., 37 F.4th 890, 895-96 (3d Cir. 2022).
Further:
A class may be certified only if “there are questions of law or fact common to the class.” Fed.R.Civ.P. 23(a)(2). “Commonality requires the plaintiff to demonstrate that the class members have suffered the same injury. This does not mean merely that they have all suffered a violation of the same provision of law.” Dukes, 564 U.S. at 349-50, 131 S.Ct. 2541 (citation and quotation marks omitted). Instead, the claims “must depend upon a common contention.” Id. at 350, 131 S.Ct. 2541. “That common contention, moreover, must be of such a nature that it is capable of classwide resolution-which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” Id. This test ensures that the “claims can productively be litigated at once.” Id. When deciding whether the class raises a common question, “the court cannot be bashful. It must resolve all factual or legal disputes relevant to class certification, even if they overlap with the merits-including disputes touching on elements of the cause of action.” Marcus, 687 F.3d at 591 (quotation marks omitted).Id., at 900. With respect to this commonality requirement, “[w]hat matters to class certification . . . is not the raising of common ‘questions'-even in droves- but rather, the capacity of a class-wide proceeding to generate common answers apt to drive the resolution of the litigation. Dissimilarities within the proposed class are what have the potential to impede the generation of common answers.” Ferreras v. Am. Airlines, Inc., 946 F.3d 178, 185 (3d Cir. 2019) (quoting Wal-Mart Stores, Inc. v. Dukes, 564 U.S. at 350)) (emphasis in original).
Moreover, under Rule 23(a), the party seeking to certify a class action must show both that the claims of the representative plaintiff are typical of those of the class as a whole, and that the representative party will adequately advance and protect the interests of this putative class. These two factors are frequently considered together since as a practical matter, oftentimes “[t]he adequacy-of-representation requirement ‘tend[s] to merge' with the commonality and typicality criteria of Rule 23(a).” Amchem Prod., Inc. v. Windsor, 521 U.S. 591, 626, 117 S.Ct. 2231, 2251, 138 L.Ed.2d 689 n. 20 (1997). “The requirement of typicality is imposed to prevent certification when ‘the legal theories of the named plaintiffs potentially conflict with those of the [class] absentees.'” Boley v. Universal Health Servs., Inc., 36 F.4th 124, 133 (3d Cir. 2022). Moreover,
To avoid conflict, typicality seeks to ensure “the interests of the class and the class representatives are aligned ‘so that the latter will work to benefit the entire class through the pursuit of their own goals.' ” Newton, 259 F.3d at 182-83 (quoting Barnes v. Am. Tobacco Co., 161 F.3d 127, 141 (3d Cir. 1998)). In evaluating typicality, we focus on whether the class representatives' legal theory and claim, or the individual circumstances on which those theories and claims are based,
are different from those of the class. In re Schering Plough Corp. ERISA Litig., 589 F.3d 585, 597-98 (3d Cir. 2009).Id.
I
In addition, Rule 23(a) requires that “the representative parties will fairly and adequately protect the interests of the class.” Fed.R.Civ.P. 23(a)(4). In practice, the primary purpose of Rule 23(a)'s adequacy requirement is:
“[T]o determine whether the named plaintiffs have the ability and the incentive to vigorously represent the claims of the class.” In re Cmty. Bank of N. Va. Mortg. Lending Pracs. Litig., 795 F.3d 380, 393 (3d Cir. 2015). Thus, for a class representative to be adequate, she must “have a minimal degree of knowledge about the case and have no conflict of interest with class counsel and members of the class[.]” In re Suboxone (Buprenorphine Hydrochlorine & Naloxone) Antitrust Litig., 967 F.3d 264, 272 (3d Cir. 2020) (cleaned up).Duncan v. Governor of Virgin Islands, 48 F.4th 195, 209 (3d Cir. 2022).
However, satisfying these four threshold prerequisites for class certification is only the first step in the multi-faceted analysis required by law. Once Rule 23(a)'s initial class certification criteria are met, the Court must also consider the provisions of Rule 23(b), which sets further limits on class certification, stating that:
(b) A class action may be maintained if Rule 23(a) is satisfied and if:
(1) prosecuting separate actions by or against individual class members would create a risk of:
(A) inconsistent or varying adjudications with respect to individual class members that would establish incompatible standards of conduct for the party opposing the class; or
(B) adjudications with respect to individual class members that, as a practical matter, would be dispositive of the interests of the other members not parties to the individual adjudications or would substantially impair or impede their ability to protect their interests;
(2) the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole; or
(3) the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. The matters pertinent to these findings include:
(A) the class members' interests in individually controlling the prosecution or defense of separate actions;
(B) the extent and nature of any litigation concerning the controversy already begun by or against class members;
(C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and
(D) the likely difficulties in managing a class action.Fed. R. Civ. P. 23(b).
Parties seeking class certification frequently rely upon Rule 23(b)(3)'s “predominance” requirement to satisfy their burden of proof and persuasion under Rule 23(b). “ ‘To assess predominance, a court ... must examine each element of a legal claim through the prism of Rule 23(b)(3)' by determining whether each element is ‘capable of proof at trial through evidence that is common to the class rather than individual to its members.' ” In re Suboxone (Buprenorphine Hydrochlorine & Naloxone) Antitrust Litig., 967 F.3d 264, 269 (3d Cir. 2020) (citations omitted). Therefore, “[t]he predominance requirement ‘asks whether the common, aggregation-enabling, issues in the case are more prevalent or important than the non-common, aggregation-defeating, individual issues.' ” Ferreras, 946 F.3d at 185. In practice:
The commonality and predominance requirements are closely linked. But the Rule 23(b)(3) predominance requirement is “far more demanding than the commonality requirement” found in Rule 23(a). In re Hydrogen Peroxide, 552 F.3d at 311 (internal quotation marks omitted). In fact, “where an action is to proceed under Rule 23(b)(3), the commonality requirement is subsumed by the predominance requirement.” Danvers Motor Co., Inc. v. Ford Motor Co., 543 F.3d 141, 148 (3d Cir. 2008) (internal quotation marks omitted). If the commonality requirement cannot be met, then the more stringent predominance requirement obviously cannot be met either. Cf. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 623-24, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997) (“Even if Rule 23(a)'s commonality requirement may be satisfied. . ., the predominance criterion is far more demanding.”).Id.
Finally, when making a class certification determination, we are enjoined that:
Class “certification is proper only if the trial court is satisfied, after a rigorous analysis” that all of the necessary Rule 23 requirements have been fulfilled. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350-51, 131 S.Ct. 2541, 180 L.Ed.2d 374 (2011). The Rule “does not set forth a mere pleading standard.” Id. at 350, 131 S.Ct. 2541. . . . A rigorous analysis requires that factual determinations be made by a preponderance of the evidence. Mielo v. Steak ‘n Shake Operations, Inc., 897 F.3d 467, 483-84 (3d Cir. 2018). Thus, although a trial court has “broad discretion to control proceedings and frame issues for
consideration under Rule 23[,]” “a class may not be certified without a finding that each Rule 23 requirement is met.” In re Hydrogen Peroxide, 552 F.3d at 310. Prior to certifying a class, a district court must resolve every dispute that is relevant to class certification. Id. at 320.Ferreras, 946 F.3d at 183.
This exacting burden for class certification means that class certification decisions cannot rest upon speculation or supposition. Instead, the scope and nature of the proposed class must be readily ascertainable based upon the evidence. In this regard: “[i]n determining whether the ascertainability requirement is satisfied, [the court] must determine that the plaintiff has (1) ‘defined [the class] with reference to objective criteria,' and (2) identified a ‘reliable and administratively feasible mechanism for determining whether putative class members fall within the class definition.' ” Kelly v. RealPage Inc., 47 F.4th 202, 222 (3d Cir. 2022).
B. The Motion for Class Certification Should Be Denied.
In this case, Sayles invites the Court to certify the following class of plaintiffs under Rule 23:
All persons injured in motor vehicle accidents and insured under Pennsylvania auto insurance policies issued by defendant which provided for medical benefits coverage whom defendant required or directed to submit to insurance physical exams without Court order directing insured to submit to physical exams and who then had medical benefits denied based on defendant's medical exam actions.(Doc. 89).
As we construe it, this proposed class definition has four essential elements.
To qualify as a class member each putative plaintiff must: (1) be insured under Pennsylvania auto insurance policies issued by defendant which provided for medical benefits coverage but required or directed the insureds to submit to insurance physical exams without Court order directing insured to submit to physical exams; (2) be injured in motor vehicle accidents; (3) be called upon to submit to an IME; (4) and must be denied benefits based upon the IME results.
Applying these class selection criteria, Allstate identified some 151 instances between 2004 and November 2019 in which Allstate issued letters to customers calling for the customers to undergo an IME as a condition to consideration of an injury claim without first obtaining court authorization based upon a showing of good cause. Of these 151 insureds, 137 attended IME examinations; two refused; and twelve did not attend the scheduled IME examinations.
Following the Pennsylvania Supreme Court's decision in November of 2019, which declared the Allstate policy provision void Allstate avers that it ceased this practice entirely.
The parties' pleadings characterize Allstate's letter to these customers in different ways, with the plaintiff asserting that it compelled customers to attend an IME, and Allstate suggesting that its customers voluntarily agreed to these examinations. Allstate's form IME examination notice letter, a copy of which is attached to the motion to certify this class action, states as follows:
Pursuant to our contract (policy) Section Proof of Claim: Medical Reports, an insured must submit to mental and physical examinations by physicians selected by Allstate when and as often as we may reasonably require. During the time all pending bills won't be paid until the Independent Medical Exam is completed. Once the review comes back, all bills will be processed per the results of the Independent Medical Exam review. This process will take approximately 60 days.(Doc. 89-2, at 14). For purposes of our class certification analysis, we conclude that the letter is cast in words of command, rather than requests for voluntary compliance. Therefore, we decline Allstate's invitation to treat the IME process initiated through this letter as a wholly voluntary process.
With respect to the 137 individuals who attended IME examinations, 130 persons did not dispute the results of the IME. Those IME results are otherwise unclear. Thus, we cannot tell whether the IME led to the grant or denial of a specific claim. We only know that the results were not further challenged. The remaining seven who did dispute their IME results filed lawsuits which have now all been resolved. In addition, the two persons who refused to undergo an IME as part of this procedure also filed lawsuits which have been resolved. Once these insureds are accounted for, there remain only twelve putative class plaintiffs who received a notice from Allstate calling for them to attend an IME but chose not to attend. As to these twelve individuals, Allstate avers that one claimant was not denied benefits, leaving eleven other putative plaintiffs. According to Allstate the claims of three of these insureds are time-barred, an argument Sayles disputes, potentially leaving only eight remaining, unresolved cases which may fit these class criteria.
On these essentially undisputed facts, Sayles argues that she has fully satisfied Rule 23's ascertainability, commonality, numerosity, typicality and predominance requirements. Sayles also argues that the tenacity and vigor of her pursuit of this case amply illustrates that she is an adequate class representative. Therefore, Sayles invites us to certify a class consisting of all 151 insureds, all of whom she contends meet the class criteria. In contrast, Allstate argues that the differences and distinctions within this purported class illustrates that essential elements of commonality, typicality, ascertainability, numerosity, and predominance cannot be satisfied.
Mindful of the fact that after rigorous analysis the plaintiff must show by a preponderance of the evidence that all class criteria are met, we find that interrelated questions of ascertainability, commonality, numerosity, and lack of predominance preclude class certification in this case. In conducting this analysis, we begin by considering the putative class proffered by Sayles, a class consisting of 151 persons who received letters from Allstate between 2004 and 2019 calling upon them to undergo IME examinations. Sayles posits that this is an appropriate class for Rule 23 class certification purposes because it is ascertainable, sufficiently numerous, and shares common issues which predominate over any individual collateral claims. The premise behind Sayles' argument on this score is her view that the alleged violation of § 1796(a) through Allstate's issuance of letters to these 151 individuals calling for IME examinations, standing alone, identifies a legal infraction which meets all of these class certification prerequisites.
If these other hurdles could be overcome we find that Sayles and her counsel, who have pursued this litigation with commendable skill and zeal, are certainly adequate class representatives. Further, if these other legal obstacles could be scaled, Sayles might well meet the typicality standard, but the lack of predominance and commonality means that we cannot readily define a class for purposes of conducting this typicality analysis.
We disagree. At the outset, we cannot say that all 151 putative class members share an essential common element of the purported class; namely, the class requirement that all class members had medical benefits denied based on defendant's medical exam actions. This aspect of commonality is missing because it appears that 130 of the 151 putative class members underwent an IME but never further challenged the IME results. Thus, as to these 130 putative class members we cannot ascertain the outcome of their claims or definitively state that the IME led to a wrongful denial of benefits. Since an element of this purported class was that all class members had medical benefits denied based on defendant's medical exam actions, the absence of further information regarding the outcomes in these 130 cases undermines both the commonality and the ascertainability of this purported class. Simply put, our inability to discern whether any of these claims were denied, or why these 130 claims did not proceed forward after the IME makes it difficult to conclude following rigorous analysis that these 130 insureds' cases share common and ascertainable elements.
For example, it is entirely possible that the IMEs confirmed the insureds' claims which were paid, thus resulting in no further claims actions. In this scenario, the putative class member would not meet Sayles' proposed class criteria since these claimants had not been denied benefits. On the other hand, it is also possible in these IME examinations revealed that the insureds' claims were meritless. Meritless claimants would stand in an entirely different posture than persons whose claims were wrongfully denied based upon a compelled IME. It would be incongruous to certify a class consisting both of people who properly received benefits following IME examinations and those who were properly denied benefits following the same type of IME exams.
Moreover, with respect to the damages claims of those individuals who refused to undergo an IME, failed to attend the IME, or had a claim denied after undergoing an IME, we cannot find that common issues regarding Allstate's policy calling for such examinations without a court order predominate over the individualized merits assessment of each specific claim. Recognizing that “[t]he predominance requirement ‘asks whether the common, aggregation-enabling, issues in the case are more prevalent or important than the non-common, aggregation-defeating, individual issues,' ” Ferreras, 946 F.3d at 185, we conclude that with respect to the putative class prayer for compensatory damages “[w]hile obstacles to calculating damages may not preclude class certification, the putative class must first demonstrate economic loss on a common basis.” Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 189 (3d Cir. 2001). Here, aside from an abstract legal injury caused by the technical violation of § 1796(a), a major component of any claimed class member loss would be the benefits denied by Allstate based upon the results of a compelled IME examination in violation of state law. As to each class member, however, the calculation of these damages would involve some individualized assessment of insureds' injuries. Accordingly, ‘[b]ecause economic loss cannot be presumed, ascertaining which class members have sustained injury means individual issues predominate over common ones.” Id. at 189.
In our view, what remains in this case at present are simply these damages claims since the Pennsylvania Supreme Court's 2019 ruling has mooted any requests for declaratory relief.
The individualized nature of this assessment and evaluation is further complicated in the instant case by the fact that only seven of the 137 individuals who attended IME examinations later filed lawsuits, and all of these lawsuits have now all been resolved. In addition, the two persons who refused to undergo an IME as part of this procedure also filed lawsuits which have been resolved. Thus, as to these putative class plaintiffs, an assessment of their individualized compensatory damages claims would have to also factor in the resolution of their prior lawsuits.
Beyond these difficulties in ascertaining the appropriate class and identifying common issues which predominate over specific individual claims, there remain questions regarding whether Rule 23's numerosity requirements can be met here, once these problematic class members are excluded. For example, if we exclude the 130 instances in which an IME was conducted but never further challenged for reasons that remain unclear, and the nine instances in which individuals have already litigated insurance claims to a conclusion, from the plaintiff's proposed 151 person class, what remains is a putative class consisting of eleven insureds, three of whom may be time-barred from pursuing claims. When considering whether such a discrete number of claimants satisfies Rule 23's numerosity requirement we are reminded that “inquiry into impracticability [of joinder for numerosity purposes] should be particularly rigorous when the putative class consists of fewer than forty members.” In re Modafinil Antitrust Litig., 837 F.3d 238, 250 (3d Cir. 2016). Therefore, when subjected to this particularly rigorous examination, any effort to designate this remaining eleven person cadre as a class action should be rejected since it is clear that aggregates of fifteen plaintiffs or less “would be too small to meet the numerosity requirement.” Gen. Tel. Co. of the Nw. v. Equal Emp. Opportunity Comm'n, 446 U.S. 318, 330, 100 S.Ct. 1698, 1706, 64 L.Ed.2d 319 (1980).
Finally, given the relatively small dollar volume of these specific claims, Sayles argues that class certification provides a superior means for addressing individual damages claims. While we accept that particular claims may be relatively discrete, there are several rejoinders to this argument as an independent ground justifying class certification. At the outset, while the small dollar volume of individual claims might present a barrier to the pursuit of specific claims in federal court, where our diversity jurisdiction is only triggered by claims which exceed $75,000, it does not present an absolute barrier to litigation of these claims. The state courts stand ready to address these claims. Moreover, as a legal matter the small dollar volume of individual claims, by itself, “is not a basis for excusing plaintiffs from proving the essential elements” necessary for class certification. In re Merrill Lynch, 191 F.R.D. 391, 398 (D.N.J. 1999), affd sub nom. Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154 (3d Cir. 2001). Here, these essential elements for class certification are lacking, and those deficits in proof cannot be overcome by reference to the modest dollar volume of these specific claims.
Thus, in evaluating this motion for class certification we conclude as we began by noting that: “[c]lass certification is proper only ‘if the trial court is satisfied, after a rigorous analysis, that [all of] the prerequisites' of Rule 23 are met.” In re Hydrogen Peroxide Antitrust Litig., 552 F.3d at 309 (quoting Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 161 (1982)) (emphasis added). In the instant case, our rigorous, fact-driven analysis leads us to conclude that the plaintiff has not met the requirements for class certification in this case. Therefore, we recommend that the motion to certify this case as a class action be denied.
IV. Recommendation
Accordingly, for the foregoing reasons IT IS RECOMMENDED that the Plaintiff's motion for class certification (Doc. 89) be DENIED.
The Parties are further placed on notice that pursuant to Local Rule 72.3:
Any party may object to a magistrate judge's proposed findings, recommendations or report addressing a motion or matter described in 28 U.S.C. § 636 (b)(1)(B) or making a recommendation for the disposition of a prisoner case or a habeas corpus petition within fourteen (14) days after being served with a copy thereof. Such party shall file with the clerk of court, and serve on the magistrate judge and all parties, written objections which shall specifically identify the portions of the proposed findings, recommendations or report to which objection is made and the basis for such objections. The briefing requirements set forth in Local Rule 72.2 shall apply. A judge shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made and may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge. The judge, however, need conduct a new hearing only in his or her discretion or where required by law, and may consider the record developed before the magistrate judge, making his or her own determination on the basis of that record. The judge may also receive further evidence, recall witnesses or recommit the matter to the magistrate judge with instructions.