A California court hears plaintiff’s experts’ testimony in a bellwether baby food toxic metals case, Washington’s insurance commissioner temporarily bans credit-based insurance scoring, and, in New Jersey, a bill passes that could allow plaintiff’s attorneys to leverage earlier settlements at elevated rates.
Washington
Kreidler Temporarily Bans Insurers’ Use of Credit Information
Insurance Commissioner Mike Kreidler adopted a rule temporarily banning insurers from using credit information to set auto, homeowner, and renter insurance, effective March 4. The rule will be in effect for three years after federal or state COVID-19 emergency declarations end, whichever is later. Kreidler notes that the federal CARES Act allows lenders to grant relief to people struggling financially, but he says when the act ends, delinquencies may show up as a blackout period on credit reports, which could impact insurance rates. As noted in our November 2021 “National” column, Kreidler had previously issued an emergency rule temporarily banning the practice, but it was struck down after Thurston County Superior Court Judge Mary Sue Wilson determined Kreidler did not have “good cause” to file the rule as an emergency. This new rule is in response to that decision. While temporary, Kreidler intends to work with the legislature and others to “see how we can permanently end the use of credit scoring in setting insurance premiums.”—From Senior Managing Editor Phil Gusman
California
Court Hears Expert Testimony in Baby Food Toxic Metals Case
A Los Angeles County judge concluded an early evidentiary hearing centered on the opinions from four of the plaintiff’s experts in one of the nation’s first lawsuits over baby food allegedly contaminated with toxic metals. The case involves a seven-year-old minor plaintiff represented by his mother, who alleges he was diagnosed with ASD and later ADHD caused by eating baby food containing heavy metals. The catalyst for the suit? The widely reported and heavily publicized February 2021 U.S. House of Representatives report finding that several “commercial baby foods are tainted with significant levels of toxic heavy metals, including arsenic, lead, cadmium, and mercury.” The court heard testimony from plaintiff’s experts over four days, via Zoom, with defendants having the opportunity to cross-examine each. If the court rules the science is valid, baby food manufacturers and retailers could face lawsuits as ASD prevalence continues to increase.—From CLM Member Erin Miter Scanlon, Goldberg Segalla
Louisiana
GEICO Customers Denied Class Certification
The United States Court of Appeals for the Fifth Circuit affirmed a district court’s denial of class certification for a group of GEICO customers who received payouts for total-loss auto claims. The customers allege GEICO’s use of a proprietary valuation system violates state law and that GEICO systematically undervalues total-loss auto claims. The court noted that the Federal Rules of Civil Procedure require that the “representative parties [in a class-action] will fairly and adequately protect the interests of the class.” The court added, “This compels attention to ‘the risk of conflicts of interest between the named plaintiffs and the class they seek to represent.’” The district court, therefore, questioned whether appellants’ theory of liability was beneficial to the proposed class, and the Fifth Circuit determined, “It was not. Indeed, a portion of the proposed class members received payments above (that is, benefitted from) the allegedly unlawful valuation. This undermined appellants’ class-wide theory of liability and thereby doomed adequacy.”—From Senior Managing Editor Phil Gusman
Florida
Rule Amendment Allows Interlocutory Appeal of Nonfinal Orders
In a divided decision, the Florida Supreme Court agreed to adopt an amendment to Rule 9.130, which allows parties to request immediate nonfinal appellate review of orders relating to punitive damages. Set to go into effect April 1, the rule provides for the interlocutory appeal of nonfinal orders granting or denying leave to amend a complaint to assert a claim for punitive damages. Proponents of the new rule change say that it is necessary because, under the prior framework, the parties had limited access to interlocutory appeals and were automatically subjected to detailed financial worth discovery and required to post a bond pending the resolution of the post judgment appeal. The new rule allows interlocutory review of evidentiary and procedural issues. Opponents of the rule, including dissenting Judge Labarga, feared that the new option for parties will stall cases at the trial court level and cause added stress on an already overloaded and backlogged court system.—From CLM Member Kimberly M. Jones, Wood Smith Henning & Berman
New Jersey
New IFCA Could Force Insurers Into Quicker Settlements
The “New Jersey Insurance Fair Conduct Act,” which would establish a private cause of action for first-party claimants regarding certain unfair or unreasonable practices by their insurer, was signed by Gov. Phil Murphy. According to the bill, SB 1559, a claimant may file a civil action in a court of competent jurisdiction against its automobile insurer for an unreasonable delay or unreasonable denial of a claim for payment of benefits under an insurance policy. Moreover, upon establishing that a violation of the provisions of the bill has occurred, the claimant shall be entitled to actual damages caused by the violation, including, but not limited to, actual trial verdicts and prejudgment interest, reasonable attorney’s fees, and all reasonable litigation expenses. The bill could greatly impact policies that have already been written by insurers as it provides yet another tool for plaintiff’s attorneys to leverage earlier settlement, and at higher-than-usual rates, because of the threat of a pending trial.—From CLM Member Samuel Rodrigues, Callahan & Fusco
Massachusetts
Termination for Personnel File Rebuttal Violates Public Policy
The Massachusetts Supreme Judicial Court held in Meehan v. Medical Information Technology, Inc. that the termination of an employee for submitting a rebuttal for inclusion in the employee’s personnel file violated public policy and amounted to wrongful discharge. Pursuant to M.G.L. ch. 149, § 52C, Massachusetts employees have a statutory right to submit a rebuttal to any record contained within the personnel file with which she disagrees. The statute provides for fines for a violation and enforcement by the attorney general. It does not expressly authorize a private cause of action. Massachusetts, however, has long recognized a cause of action for an employee whose termination occurs under circumstances that violate public policy. The court concluded that the statutory right to submit a rebuttal was sufficiently important to bring it within the protection of the public policy doctrine. In other words, an employer who terminates an employee because the employee submits a rebuttal-risks suit for wrongful discharge.—From CLM Members Jennifer Markowski and R. Victoria Fuller, Freeman Mathis & Gary