LaBrier v. State Farm Fire and Casualty Company

Filing 146

ORDER entered by Judge Nanette Laughrey. Plaintiff Amanda LaBrier's request that Defendant State Farm set aside certain retroactive payments to State Farm's insureds, see Docs. 88 and 91 , is granted. Plaintiffs request for Court supervision of certain communications between State Farm and its insureds, see id., is denied. (Barragan-Scott, Alana)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF MISSOURI
CENTRAL DIVISION
AMANDA M. LABRIER, individually,
and on behalf of all others similarly
situated,
Plaintiff,
vs.
STATE FARM FIRE AND CASUALTY
COMPANY,
Defendant.

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No. 2:15-cv-04093-NKL

ORDER
The primary issue in this case is whether Defendant State Farm Fire and Casualty
Company properly depreciated labor when it made actual cash value payments for property
damage. Subsequent to the Court’s Order denying State Farm’s motion to dismiss and holding
that labor could not be depreciated, [Doc. 67], State Farm decided to stop subtracting labor
depreciation for certain property damage claims that were paid after the Court’s order. State
Farm also started to retroactively pay previously withheld labor deprecation, and to communicate
with its insureds about the nature of those payments. To date, those retroactive payments have
been limited to actual cash value claims resolved after the Court’s interpretation of State Farm’s
policy. 1
In response, Plaintiff Amanda LaBrier has asked the Court to order State Farm to stop
making retroactive payments and to instead set aside the money for such payments until class
certification and the merits of the dispute are resolved. See [Doc. 88 and Doc. 91.] LaBrier

1

State Farm explained that it took time to set up a system to make payments consistent
with the Court’s interpretation of the disputed policy language. As a result, some payments after
the Court’s order still depreciated labor.

argues that it would be inequitable for putative class members to be paid for essentially the same
claims which LaBrier has asserted on their behalf, without sharing in the expense of pursuing
State Farm in court. LaBrier argues that her requested remedy is mandated by the common fund
doctrine or the equitable principles underlying the common fund doctrine. LaBrier also argues
that the Court should supervise State Farm’s communications with State Farm’s insureds.
I.

Common fund issues
Taking into account that Missouri law controls, the Court finds that the common fund

doctrine does not directly apply here because LaBrier has not shown that a common fund exists
at this time. The Court did not finally resolve the merits of the dispute and therefore there is no
specific fund that has been created by court order or otherwise. Lett v. City of St. Louis, 24
S.W.3d 157, 162 (Mo. Ct. App. 2000) (The doctrine applies “when each member of a certified
class has an undisputed and mathematically ascertainable claim to part of a lump-sum judgment
recovered on his behalf.”) However, the principles underpinning the common fund doctrine are
based on equity. “[T]he common benefit doctrine permits recovery of attorney's fees when a
successful litigant benefits a group of other individuals similarly situated.” Id.

Considering

these equitable principles as well as efficiency, the Court concludes that a temporary cessation of
State Farm’s retroactive payments is warranted, pending the resolution of the merits and any
issues related to class certification.
As to the equities, State Farm has acknowledged that it changed its labor depreciation
practices in response to the Court’s order interpreting LaBrier’s insurance contract with State
Farm. But for the work of the LaBrier, there is no evidence these changes would have occurred.
Further, while no class has been certified, the class was identified at the time the lawsuit was
filed and includes the putative class members who have been given retroactive labor depreciation
payments by State Farm. Thus, this case is distinguishable from the Missouri cases where
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indirect beneficiaries of litigation not specifically referenced in a lawsuit were not required to
contribute to the cost of a plaintiff’s work.
Furthermore, permitting a defendant to pay putative class members after the defendant
loses on a motion to dismiss has the effect of discouraging class actions. Class actions were
designed to permit aggregate actions to prevent small amounts of money from being taken
unlawfully without some consequence. Obviously, a plaintiff would be less likely to incur the
substantial costs of a class action if “voluntary” payments by a defendant would effectively
prevent a plaintiff from recovering a fair share of the cost of the litigation from putative class
members. Further, if that possibility existed, a judge might defer ruling on a motion to dismiss
to avoid any procedural posturing and the potential inequities outlined above. Such a decision
would not promote efficiency but would promote fairness.
The Court does recognize that State Farm has a legitimate concern as well. State Farm
fears being subject to vexatious refusal to pay claims if it does not change its labor depreciation
practices, now that the Court has interpreted the disputed language in State Farm’s insurance
policy. But the concerns of both LaBrier and State Farm can be addressed by putting the
disputed refunds in escrow with interest, pending final resolution of the merits and the resolution
of any class certification issue. This will protect both parties while the litigation process is
completed. 2
Therefore, the Court prohibits State Farm from making additional retroactive labor

2

The Court is aware that a federal court in Iowa came to a different conclusion. Bublitz
v. E.I. DuPont de Nemours and Co., 224 F. Supp. 1234 (S.D. Iowa 2002) (prior to class
certification in this ERISA proceeding, defendant offered stock options totaling $113 million in
value to putative class members in exchange for releases; the common fund doctrine did not
apply because the payments were voluntary and made outside the purview of judicial review,
approval, or compulsion). The Court respectfully disagrees with the decision. Further, the
dispute between LaBrier and State Farm is governed by Missouri law and therefore out-of-state
cases are less persuasive.
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depreciation payments to putative class members until otherwise ordered. The Court’s order
does not prohibit State Farm from placing the funds in escrow for the benefit of class members,
pending the final resolution of disputed issues.
II.

State Farm’s communications with its insureds
LaBrier also objected to State Farm’s contact with its insureds concerning the retroactive

payments, arguing that the communications should have been subject to the Court’s supervision.
LaBrier suggests that future notices be jointly prepared and approved in advance by the Special
Master. [Doc. 91-1, p. 4.]
Generally, in a class action, “a district court may not order restraints on speech under
[Rule] 23(d) except when justified by actual or threatened misconduct of a serious nature.”
Great Rivers Co-Op. of Se. Iowa v. Farmland Indus., Inc., 59 F.3d 764, 766 (8th Cir. 1995).
“Before entry of such an order, there must be a clear record and specific findings that reflect a
weighing of the need for a limitation and the potential interference with the rights of the parties.”
Id. (citing Gulf Oil v. Bernard, 452 U.S. 89, 101 (1981)). See also Manual for Complex
Litigation (Fourth) § 21.12 (“Defendants and their counsel generally may communicate with
potential class members in the ordinary course of business, including discussing settlement
before certification, but may not give false, misleading, or intimidating information, conceal
material information, or attempt to influence the decision about whether to request exclusion
from a class certified under Rule 23(b)(3). Ethics rules restricting communications with
individuals represented by counsel may apply to restrict a defendant's communications contract
with the named plaintiffs.”)
At this stage of the litigation, and in the absence of any evidence of misconduct such as
discouraging participation in a class action, the Court cannot conclude that supervision of or
restriction on State Farm’s communications is warranted.
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III.

Conclusion
Plaintiff Amanda LaBrier’s request that Defendant State Farm set aside retroactive

payments to State Farm’s insureds is granted, as discussed above. Plaintiff’s request for Court
supervision of communications between State Farm and its insureds is denied based on the
current record.
/s/ Nanette K. Laughrey
NANETTE K. LAUGHREY
United States District Judge
Dated: April 19, 2016
Jefferson City, Missouri

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