THOMPSON et al v. STATE FARM FIRE AND CASUALTY COMPANY
ORDER DENYING 80 Motion for Reconsideration and DENYING 81 Motion for Reconsideration. Ordered by US DISTRICT JUDGE MARC THOMAS TREADWELL on 5/19/2016. (tlh)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
JOHN THOMPSON and LEIGH ANN
THOMPSON, Individually and on
Behalf of All Others Similarly Situated,
STATE FARM FIRE AND CASUALTY
CIVIL ACTION NO. 5:14-CV-32 (MTT)
The Plaintiffs have moved for reconsideration of the Court’s Order denying their
supplemental motion for class certification under Rule 23(b)(2), and Defendant State
Farm has moved for reconsideration of the Court’s Order granting in part and denying in
part the Plaintiffs’ motion for class certification under Rule 23(b)(3). (Docs. 80; 81). For
the following reasons, both motions are DENIED.
1. Plaintiffs’ Motion for Reconsideration
The Plaintiffs previously moved the Court to certify a class of all State Farm
homeowners insurance policyholders in the state of Georgia and enter a declaratory
judgment regarding the scope of their insurance coverage. (Doc. 19). The Plaintiffs
later filed a “supplemental motion” for class certification in order to “add a corresponding
injunction to the declaratory relief requested” in their prior motion. (Doc. 42). The Court
denied the Plaintiffs’ initial request for relief after determining that it lacked subject
matter jurisdiction over their claim for a declaratory judgment. (Doc. 47). For the same
reasons, the Court determined it lacked subject matter jurisdiction over their claim for
injunctive relief. (Doc. 79). The Plaintiffs now ask the Court to reconsider its denial of
their supplemental motion for class certification. (Doc. 81).
In its Order finding it lacked subject matter jurisdiction over the Plaintiffs’ claim for
declaratory relief, the Court noted that the Plaintiffs must show there is a “substantial
likelihood” they will suffer future injury in order to invoke the Court’s authority to
adjudicate their dispute. (Doc. 47 at 10) (quoting Malowney v. Fed. Collection Deposit
Grp., 193 F.3d 1342, 1347 (11th Cir. 1999)). The Plaintiffs agree they have this burden.
(Doc. 81 at 3) (quoting Malowney, 193 F.3d at 1347). Because the Plaintiffs’ injury is
contingent upon their townhouse suffering damage, the Court also determined that the
“practical likelihood” this contingency will occur is the salient question. (Doc. 47 at 10)
(quoting GTE Directories Publ’g Corp. v. Trimen Am., Inc., 67 F.3d 1563, 1569 (11th
Cir. 1995)). Again, the Plaintiffs agree this is the “focus.” (Doc. 81 at 3) (quoting GTE
Directories, 67 F.3d at 1569). In their prior motions, the Plaintiffs failed to offer any
evidence to satisfy these tests and simply argued that they “would not need to buy
insurance if this practical likelihood did not exist.” (Doc. 47 at 10). The Court
determined that the “mere possibility” the Plaintiffs’ townhouse might suffer damage in
the future is too remote to satisfy the case-or-controversy requirement and that they
could not “rely solely on the prior damage to their townhouse and State Farm’s alleged
denial of their claim for diminished value to establish that they face a substantial risk of
future harm.” (Doc. 47 at 11). “Without any evidence suggesting that the Plaintiffs will
suffer future injury,” the Court concluded that it lacks jurisdiction over their claim. (Doc.
47 at 11).
The Plaintiffs now ask the Court to reconsider its denial of their supplemental
motion “under the appropriate probabilistic-injury standard.” (Doc. 81 at 2). They argue
that “probabilistic, not inevitable, injury is all that is required to confer standing” and say
that the Court’s prior holding “suggests [they] must be subject to an inevitable future
injury rather than just a probabilistic injury.” (Doc. 81 at 1-2). In their view,
“‘[p]robabilistic’ does not require any specific degree of certainty or that future harm is
certain.” (Doc. 81 at 3). To the extent some degree is required, they say they have
uncovered evidence they were previously unaware of that suggests there is “as much
as a 10% probability” their townhouse will suffer damage in any “given year.” (Doc. 81
at 2). The Plaintiffs’ evidence consists of two internet articles. The first appears to be a
sales brochure of some sort that gives no basis for its contention that there is a 1 in 10
chance of an insured making a claim of some unspecified kind.1 The other, more
reliable article if anything contradicts their claim because it says that 5.3% of insured
homes had a claim in 2014.2 Based on these “data,” the Plaintiffs argue “there is a
probability that [they] will suffer another loss to their home and [State Farm] will then
improperly fail to assess and pay for diminished value.” (Doc. 81 at 5).
Base Rate Neglect – Help Yourself by Knowing the Odds, Financial Planning Association,
visited May 17, 2016) (“That [sic] fact that is disregarded, however, is that the odds of filing a claim in a
given year are only one in 10. … A good understanding of the mind’s tendency to neglect underlying
percentages can help you save, spend, and invest more wisely.”).
Homeowners and Renters Insurance, Insurance Information Institute, http://www.iii.org/factstatistic/homeowners-and-renters-insurance (last visited May 17, 2016).
The Court doubts that it must unquestionably accept there is “as much as” a 10
percent chance the Plaintiffs’ townhouse will suffer damage in any given year.3 State
Farm, however, fails to offer any evidence of its own and does not contest the Plaintiffs’
evidence, apart from arguing that it does not reference the Plaintiffs, State Farm, or the
state of Georgia. (Doc. 85 at 4). Instead, State Farm argues that even if the 10 percent
chance were accurate, the Plaintiffs still cannot invoke the Court’s jurisdiction.
Therefore, the Court will consider whether this “fact,” as the Plaintiffs argue,
“establishes a probabilistic injury necessary to demonstrate [their] substantial likelihood
of future harm.” (Doc. 81 at 4).
It is one thing to say, as many courts have, that probabilistic harm is sufficient to
confer Article III standing. See, e.g., Fla. State Conference of the NAACP v. Browning,
522 F.3d 1153, 1162-63 (11th Cir. 2008); Mulhall v. UNITE HERE Local 355, 618 F.3d
1279, 1288 (11th Cir. 2010). It is yet another to say what probabilistic harm means.
Dictionaries tell us that the adjective probabilistic means “of, relating to, or based on
probability.”4 If strict probability is the standard, that is, more likely to happen than not,5
then probabilistic standing would be a narrow concept and of no help to the Plaintiffs
here. Perhaps probabilistic standing is not that strict or that formulaic. But neither does
probabilistic standing extend, as some advocate, to any plaintiff who faces even a slight
risk of harm from a defendant’s anticipated conduct. See F. Andrew Hessick,
If a question of fact is relevant to determining whether a plaintiff has satisfied the Rule 23 prerequisites
for class certification, the Court must “actually decide it and not accept it as true or construe it in anyone’s
favor.” Brown v. Electrolux Home Prods., Inc., --- F.3d ---, 2016 WL 1085517, at *4 (11th Cir. 2016).
Although not technically a Rule 23 prerequisite, “any analysis of class certification must begin with the
issue of standing.” Griffin v. Dugger, 823 F.2d 1476, 1482 (11th Cir. 1987).
Merriam–Webster Online Dictionary, http://www.merriam-webster.com/dictionary/probabilistic (last
visited May 17, 2016).
See Probability, Black’s Law Dictionary (10th ed. 2014).
Probabilistic Standing, 106 Nw. U.L. Rev. 55 (2012). The truth, it seems, is that
probabilistic standing is a matter of degree and is not capable of precise definition.
Relying on the Eleventh Circuit’s decisions in Browning and Mulhall, the Plaintiffs
first argue they do not need to show with “any specific degree of certainty” that they will
suffer future harm. (Doc. 81 at 3). Browning offers little support for the Plaintiffs’ cause
because of the statistical certainty there that at least one member of the organizational
plaintiffs would suffer injury. 522 F.3d at 1163-64 (noting that with 20,000 members it is
“highly unlikely” that not a single member will be injured and concluding that “someone
is certain to get injured in the end”). It certainly cannot be said that the Plaintiffs will
almost certainly suffer a loss. Similarly, the plaintiff’s First Amendment rights in Mulhall
were “at imminent risk of invasion” because an agreement his employer entered into
with a labor union “substantially increase[d] the likelihood” that he would be unionized
against his will. 618 F.3d at 1288; see also GTE Directories, 67 F.3d at 1569
(concluding that the “practical likelihood” the contingencies would occur was “very high”
and “almost inevitable”). The Plaintiffs do not argue their interests are at imminent risk
of invasion or otherwise address whether there is “‘a realistic danger of sustaining a
direct injury as a result’ of the challenged action.” Mulhall, 618 F.3d at 1288 (quoting
Browning, 522 F.3d at 1161). Clearly, these cases do not stand for the proposition that
any chance of injury is sufficient to confer jurisdiction.
Apart from these cases, the Plaintiffs rest heavily on the Seventh Circuit’s
decision in Bankers Trust Company v. Old Republic Insurance Company, 959 F.2d 677
(7th Cir. 1992). While Bankers Trust is instructive, it is not helpful to the Plaintiffs.
There, Bankers Trust sued Old Republic’s insured and, while that case was pending,
filed a declaratory judgment action against Old Republic to determine whether Old
Republic’s excess policy provided coverage for Bankers Trust’s existing claim against
Old Republic’s insured. To be sure, there were many contingencies that would have to
occur before Bankers Trust would be in a position to collect the proceeds of Old
Republic’s policy. Bankers Trust would have to get its case against the insured to a
jury, and it would then have to receive an award in excess of the insured’s primary
insurance coverage (and apparently another excess carrier who had a layer of coverage
below Old Republic’s). That none of these contingencies might occur did not change
the fact that there was a “real disagreement” whether Old Republic’s existing policy
provided coverage for Bankers Trust’s existing claim against the insured and that this
dispute “seriously threaten[ed]” Bankers Trust’s “legally protectable interest” in that
policy. Id. at 681-82. “Of course,” the Seventh Circuit clarified, “this doesn’t mean that
any probability, however slight, of injury is enough to permit a suit to be maintained in
federal court. We are dealing with matters of degree.” Id. at 681.
Here, there is certainly a real disagreement between the Plaintiffs and State
Farm concerning their prior loss and the State Farm policy they had then. But unlike in
Bankers Trust, the loss that is the subject of the Plaintiffs’ claim for injunctive relief has
not yet occurred, and State Farm has not yet taken a position on that loss.6 The
Plaintiffs do not say when their townhouse will suffer a covered loss and thus cannot
say their State Farm policy will still be in force when they suffer this possible loss. They
In fact, it now appears that State Farm may be willing to acknowledge that it does have a duty to assess
and pay for diminished value. (Doc. 74 at 278:1-279:7, 280:2-7). As State Farm argues in its response,
even if the Plaintiffs submit another claim at some point in the future, “there is no way to know now what
they will claim or what State Farm will pay.” (Doc. 85 at 5). Of course, “Article III standing must be
determined as of the time at which the plaintiff’s complaint is filed.” Focus on the Family v. Pinellas
Suncoast Transit Auth., 344 F.3d 1263, 1275 (11th Cir. 2003).
do not say denial of some future claim is “certainly impending” or “likely to occur
immediately.” Browning, 522 F.3d at 1161 (quoting 31 Foster Children v. Bush, 329
F.3d 1255, 1265 (11th Cir. 2003)); Susan B. Anthony List v. Driehaus, 134 S. Ct. 2334,
2341 (2014). They only argue there is a “substantial likelihood of future harm” because
there is a 10 percent chance their townhouse will suffer such a loss. (Doc. 81 at 4).
These are apparently the same odds that every insured in the United States faces of
filing an insurance claim. Although the Plaintiffs are not required “to demonstrate that it
is literally certain that the harms they identify will come about,” Clapper v. Amnesty Int’l
USA, 133 S. Ct. 1138, 1150 n.5 (2013), “a ‘perhaps’ or ‘maybe’ chance is not enough.”
Malowney, 193 F.3d at 1347; see also Whitmore v. Arkansas, 495 U.S. 149, 158
(1990). It is a matter of degree, and the degrees of separation here are simply too great
to confer Article III standing.
Accordingly, the Plaintiffs’ motion for reconsideration is DENIED.
2. State Farm’s Motion for Reconsideration
State Farm primarily raises two arguments in its motion for reconsideration.
First, State Farm argues an insured can bring a failure to assess claim only if it turns out
that the insured in fact suffered diminished value, which, of course, would require the
same individualized assessment that makes the Plaintiffs’ failure to pay claim unsuitable
for class certification. (Doc. 80 at 2-5). “Relatedly,” State Farm argues that the failure
to pay and failure to assess claims are “the same claim, under settled res judicata
principles,” and “must be tried together.” (Doc. 80 at 2).
State Farm raised this first argument before. (Doc. 56 at 19-20, 23-24).
According to State Farm, it can fail to perform its contractual duty to assess for
diminished value but only breach its contract if some later assessment eventually
reveals that diminished value in fact exists. (Doc. 80 at 3-4). Again, as far as the failure
to assess class is concerned, the existence of diminished value is not an issue. Rather,
the issue is whether State Farm breached its alleged duty to assess for diminished
value. This is established by State Farm’s failure to assess, not by diminished value.
(Doc. 78 at 21).
State Farm’s second argument is not entirely clear. State Farm argues the
Plaintiffs’ failure to pay and failure to assess claims are, as a matter of res judicata,
“aspects of a single, indivisible claim for breach of contract.” (Doc. 80 at 5). State Farm
previously argued, without mentioning res judicata, that the Plaintiffs could not “splinter”
or “split” their “breach-of-contract-by-insurance-underpayment claim” and so there is no
separate failure to assess claim. (Doc. 56 at 18-19, 23). Now, State Farm argues that
the claims are the “same claim” and “cannot be separately adjudicated.” (Doc. 80 at 5).
It thus appears State Farm may be arguing that the doctrine of res judicata supports its
prior position that the Plaintiffs cannot bring a failure to assess claim because there is
only a single breach of contract claim. (Doc. 80 at 5). As previously discussed, this
position is untenable in light of Mabry.7 (Doc. 78 at 19-21).
On the other hand, State Farm could be conceding that the Plaintiffs can bring a
separate failure to assess claim and could be arguing, for the first time, that the
potential for res judicata should factor into the Court’s class certification decision. State
Farm, however, does not discuss res judicata in the context of the Rule 23 prerequisites
or the Court’s class certification decision. For instance, State Farm does not argue that
the potential preclusive effect of this action on any future failure to pay claim creates an
State Farm Mut. Auto. Ins. Co. v. Mabry, 274 Ga. 498, 556 S.E.2d 114 (2001).
adequacy of representation problem that should defeat class certification. See, e.g., In
re Vitamin C Antitrust Litig., 279 F.R.D. 90, 114-16 (E.D.N.Y. 2012); In re Methyl
Tertiary Butyl Ether (“MTBE”) Prods. Liab. Litig., 209 F.R.D. 323, 338-40 (S.D.N.Y.
2002). Nor does State Farm argue that the Court cannot limit the scope of this action’s
preclusive effect.8 Instead, State Farm simply argues that if the failure to assess class
remains certified, a decision on the merits “will dispose of any breach of contract claim
any class member had with respect to the water loss at issue,” including any potential
failure to pay claim. (Doc. 80 at 6). The Plaintiffs respond that res judicata would not
bar a future failure to pay claim because, here, there is no full and fair opportunity to
litigate that claim, no identity of cause of action, and no adjudication on the merits—all
requirements under Georgia law.9 (Doc. 84 at 5).
The Plaintiffs are likely correct. Because the Court refused to certify the
Plaintiffs’ failure to pay claim, class members will not have an opportunity to litigate the
merits of that claim in this action. See V.I.P. Homes, Inc. v. Weader, 216 Ga. App. 412,
412, 454 S.E.2d 548, 550 (1995) (upholding refusal to apply res judicata where claims
were previously dismissed “on a procedural basis before appellees had the full
opportunity to litigate their claim on the merits”). Again, as far as the members of the
certified class are concerned, there is no claim that State Farm failed to pay diminished
value. Of course, it is likely the case that “a court adjudicating a class action cannot
predetermine the res judicata effect of its own judgment; that can only be determined in
See, e.g., Elizabeth Chamblee Burch, Adequately Representing Groups, 81 Fordham L. Rev. 3043,
3066-67, 3066 n.123 (2013) (“This is a matter of much confusion in lower court cases based primarily on
the Supreme Court’s ruling in Cooper v. Federal Reserve Bank of Richmond, 467 U.S. 867 (1984).”);
Tobias Barrington Wolff, Preclusion in Class Action Litigation, 105 Colum. L. Rev. 717 (2005).
The parties agree that Georgia law would apply. See Semtek Int’l Inc. v. Lockheed Martin Corp., 531
U.S. 497 (2001).
a subsequent suit.” Pelt v. Utah, 539 F.3d 1271, 1285 (10th Cir. 2008). Perhaps
mindful of this, the Plaintiffs say they can inform class members about the potential
preclusive effect of this action on other claims, and those who wish to avoid that effect
can opt out of the class. (Doc. 84 at 6). That and other issues arguably raised by the
certification of only the failure to assess class should be addressed in the parties’ joint
proposal for providing notice to class members. But, at this stage, the potential
preclusive effect of this action on other claims does not render the Plaintiffs inadequate
representatives or otherwise defeat certification of the failure to assess class.
Therefore, State Farm’s motion for reconsideration is DENIED.
SO ORDERED, this 19th day of May, 2016.
S/ Marc T. Treadwell
MARC T. TREADWELL, JUDGE
UNITED STATES DISTRICT COURT
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