Golden v. State Farm Mutual Automobile Insurance Company

Filing 18

OPINION AND ORDER re 11 MOTION to Dismiss for Failure to State a Claim by Defendant State Farm Mutual Automobile Insurance Company. The Motion will brief out in accordance with Local Rule 7-1. Regarding discovery, the self-operating discovery that the parties have identified in their Report of the Parties' Planning Meeting (DE 13 ), including initial disclosures, will go forward as laid out in that Report. The parties may conduct agreed upon informal discovery to address class issues, and either party may seek to be relieved of this Order to the extent they wish to do formal discovery that cannot be agreed upon. Signed by Magistrate Judge Roger B Cosbey on 1/5/12. (cer)

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
FORT WAYNE DIVISION
CINDY GOLDEN, individually and on
behalf of others similarly situated,

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Plaintiff,
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v.
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STATE FARM MUTUAL AUTOMOBILE )
INSURANCE COMPANY,
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Defendant.
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CAUSE NO. 1:11-CV-399

SCHEDULING ORDER CONCERNING THE MOTION TO DISMISS AND
DISCOVERY
I. INTRODUCTION
Plaintiff Cindy Golden brought this putative class action against Defendant, State Farm
Mutual Automobile Insurance Company (“State Farm”), challenging State Farm’s use of its own
staff counsel, rather than independent counsel, to defend its policyholders against lawsuits.1
While the Complaint makes class action allegations (Compl. ¶¶ 30-32), Golden has not yet filed
for class certification. State Farm, however, moved to dismiss the case for failure to state a
claim under Federal Rule of Civil Procedure 12(b)(6) on December 19, 2011. (Docket # 11.)
Now before the Court is the question of whether the Motion to Dismiss should be permitted to go
forward before a class certification determination is made. For the following reasons, the Court
will allow the precertification Motion to Dismiss to proceed.

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The Complaint was filed in Allen Superior Court on October 17, 2011 (Docket # 1), and State Farm
subsequently removed the case to this Court (Docket # 2). Jurisdiction of the undersigned Magistrate Judge is based
on 28 U.S.C. § 636(b)(1)(A).

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II. DISCUSSION
Although Federal Rule of Civil Procedure 23(c)(1) requires class certification as soon as
practicable, this does not mean that the class certification decision must be made before the court
addresses the merits of the claim on a dispositive motion, such as a motion to dismiss for failure
to state a claim or for summary judgment. See Cowen v. Bank United of Texas, 70 F.3d 937,
941-42 (7th Cir. 1995); Gauder v. Leckrone, 366 F. Supp. 2d 780, 783 (W.D. Wis. 2005) (noting
that “nothing in Rule 23 prevents a court from considering a dispositive motion before inquiring
into the propriety of class certification”); Haehl v. Washington Mut. Bank, F.A., 277 F. Supp. 2d
933, 934 n.1 (S.D. Ind. 2003) (stating that “it is not improper for a defendant in a putative class
action to seek dismissal or summary judgment—and for the court to grant such a motion—on the
ground that plaintiffs’ claims lack merit”). Accordingly, “[t]he Seventh Circuit [Court of
Appeals] has recognized that, in some circumstances, decisions on dispositive motions may be
made prior to the certification issue to determine whether ‘the claim of the named plaintiffs lacks
merit.’” Smith v. Short Term Loans, No. 99 C 1288, 2001 WL 127303, at *4 (N.D. Ill. Feb. 14,
2001) (quoting Cowen, 70 F.3d at 941); see also Wiesmueller v. Kosobucki, 513 F.3d 784, 786
(7th Cir. 2008) (“Which is not to say that the district judge may never dismiss a case on
summary judgment without first ruling on the plaintiff’s motion to certify a class.”); Haehl, 277
F. Supp. 2d at 934 n.1 (dismissing a putative class action under 12(b)(6) before addressing class
certification); Allen v. Aronson Furniture Co., 971 F. Supp. 1259, 1261 (N.D. Ill. 1997) (ruling
on a summary judgment motion before addressing class certification where the plaintiff’s claims
were without merit).
Ordinarily, a decision that a named plaintiff’s claim lacks merit disqualifies that plaintiff

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as a proper class representative, which has the effect of mooting the question of class
certification unless the lawyers for the class manage to find another representative. Cowen, 70
F.3d at 941. At the same time, if a case is dismissed before the class certification question is
ruled on, dismissal against the named plaintiff will not have a preclusive effect against other
members of the class. See Roberts v. Am. Airlines, Inc., 526 F.2d 757, 762-63 (7th Cir. 1975).
In deciding to rule on a dispositive motion before class certification is determined, courts
have considered the expense involved in class actions, see Cowen, 70 F.3d at 941, and judicial
economy, Smith, 2001 WL 127303, at *4. Furthermore, “as the Sixth Circuit observed, ‘to
require notice to be sent to all potential plaintiffs in a class action when the underlying claim is
without merit is to promote inefficiency for its own sake.’” Allen, 971 F. Supp. at 1261 (quoting
Marx v. Centran Corp., 747 F.2d 1536, 1552 (6th Cir. 1984)). The Seventh Circuit has found
that this strategy of filing dispositive motions before a suit is certified as a class action is not
improper, stating that this “recognized tactic” was “[o]ne way to try to knock [a potential class
action] off at low cost.” Cowen, 70 F.3d at 941.
Here, Golden has not yet filed a motion for class certification. On the other hand, State
Farm has filed a motion to dismiss, a dispositive motion which, if permitted to go forward, could
dispose of Golden’s claim, thereby saving the expense involved in a class action and promoting
the interests of judicial economy by preventing the expenditure of judicial resources into a claim
that may lack merit. These concerns of expense, judicial economy, and inefficiency are properly
considered when deciding to address a dispositive motion before certification. See Cowen, 70
F.3d at 941; Smith, 2001 WL 127303, at *4; Allen, 971 F. Supp. at 1261. Moreover, courts have
ruled on motions for summary judgment before class certification determinations, Cowen, 70

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F.3d at 941; Smith, 2001 WL 127303, at *4; Allen, 971 F. Supp. at 1261, which is a motion that
occurs significantly later in the life of the case than a motion to dismiss filed only two months
after the Complaint was brought, as State Farm’s motion here was. Directly on point with the
instant case, in Haehl, the defendants moved for dismissal under 12(b)(6), and, after specifically
noting that it was not improper for the defendant to bring, and the court to grant, such a motion
to dismiss, the court dismissed the complaint before, and without, addressing class certification.
277 F. Supp. 2d at 934 n.1, 943. Therefore, in this case, where State Farm is challenging the
sufficiency of the Complaint and the merits of Golden’s claims, it is proper to permit the Motion
to Dismiss to go forward and to rule on it, before addressing the issue of class certification,
especially when a motion for class certification has not even been filed.
Of course, there are trade-offs to this outcome; for instance, if the Court grants the
Motion to Dismiss, plaintiff’s counsel could feasibly find another class representative because,
by moving for precertification dismissal, State Farm loses the preclusive effect that a dismissal
after class certification could have brought. Regardless, moving for an early disposition, before
certification, was not an improper tactic, see Cowen, 70 F.3d at 941, and the Court, in its
discretion, will allow the Motion to Dismiss to go forward.
III. CONCLUSION
For the foregoing reasons, it is hereby ORDERED that State Farm’s Motion to Dismiss
(Docket # 11) will brief out in accordance with Local Rule 7-1. As regards discovery, the selfoperating discovery that the parties have identified in their Report of the Parties’ Planning
Meeting (Docket # 13), including initial disclosures, will go forward as laid out in that Report.
The parties may conduct agreed upon informal discovery to address class issues, and either party

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may seek to be relieved of this Order to the extent they wish to do formal discovery that cannot
be agreed upon.
SO ORDERED.
Entered this 5th day of January, 2012.
/s/ Roger B. Cosbey
Roger B. Cosbey
United States Magistrate Judge

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