Strembitskyy v. American Family Mutual Insurance Company, No. C16-0691RSL, 2016 WL 3640315 (W.D. Wash. July 8, 2016).
The plaintiff brought a putative class action in the state court asserting claims for breach of contract, violation of the Washington Consumer Protection Act, bad faith, and conversion. The plaintiff alleged that the defendant AmFam failed to fully compensate him for the property damage he suffered in an accident.
The plaintiff was involved in a car accident, wherein the plaintiff’s vehicle sustained damage. The plaintiff’s vehicle had Collision coverage provided by AmFam, with a deductible of $400 (for purposes of this accident). The damage exceeded the $400 deductible. So, when the plaintiff had the vehicle repaired, he paid $400 out of pocket, and AmFam paid the rest. AmFam sought to recover these repair costs from the liability coverage of the other vehicle involved. AmFam decided that liability would be split on a 90/10 basis, attributing 90% fault to the other vehicle. As a result, AmFam secured reimbursement for 90% of the total cost to repair the plaintiff’s vehicle. After securing this 90% reimbursement, AmFam sent the plaintiff a check for $360, representing 90% of the plaintiff’s collision deductible. This left the other $40 of plaintiff’s deductible as uncompensated property damage.
AmFam removed the action the District Court under CAFA and 28 U.S.C. § 1332(a)(1). Although the complaint did not specify the amount of damages sought, AmFam argued that the jurisdictional minimum of $5 million was satisfied under various theories based predominantly on the affidavit of a Claims Data and Reporting Manager for AmFam. The plaintiff moved to remand (Strembitskyy Motion to remand), which the District Court granted.
The only evidence regarding the amount in controversy was an affidavit from one of AmFam’s employees — Mr. Wheeler. The Court, however, remarked that it was impossible for it to determine what information and statements contained in the affidavit were based on Mr. Wheeler’s personal knowledge and what constituted inadmissible hearsay. The Court pointed out that the affidavit and attached exhibit were not created or kept in the course of AmFam’s regularly conducted business and did not appear to fall within any exception to the hearsay rule. While the form of the evidence might be subject to remedy, the documents themselves gave reason to doubt the completeness, accuracy, and/or relevance of the information gathered by Mr. Wheeler and presented in Exhibit A.
The Court identified the following defects in the affidavit that made Mr. Wheeler’s conclusions and analysis unreliable:
First, Mr. Wheeler gathered data regarding policyholders in the State of Washington who submitted a claim for collision coverage, rather than focusing on collision claims that were actually paid, as specified in the class definition.
Second, Mr. Wheeler included in his calculations deductibles paid by policyholders who then recovered some portion of their losses from a third party. The class definition, however, encompassed only those situations in which AmFam obtained the third-party recovery.
Third, Mr. Wheeler provided no information regarding the nature of the records contained in AmFam’s electronic databases or the specific search terms and parameters used to generate the list of policyholders who fall within the class. His initial records search suggested that 6,725 policyholders fell within the class, but the plaintiff’s claim was not identified as one of them.
Fourth, Mr. Wheeler opted to base his calculations regarding the amount in controversy on a random sample of 100 files (out of the 6,725 identified in the records search). Despite the relatively small number of files, he chose not to review them to determine the amount of the deductible actually paid by each policyholder. Rather, he assumed that each of the 6,725 policyholders paid the standard policy deductible amounts of $400 or $500, arriving at a payment range of $2,659,200-$3,324,000.
The data attached to his affidavit showed, however, that of the 100 files that were randomly selected for review, 40% of the policies did not involve deductibles within the presumed range: 24 files had no indication that a deductible was paid, 3 policies required a deductible of $100, 1 required $200, 5 required $250, and 7 policies had deductibles of $1000.
Finally, within the 100-file sample, almost a quarter of the files identified in the records search (23%) did not involve payment made by AmFam under the collision coverage and a third-party recovery.
Accordingly, the Court concluded that AmFam failed to come forward with admissible evidence to support its assertion of federal jurisdiction under CAFA. Thus, the Court granted the plaintiff’s motion to remand and remanded the action to the King County superior court.
-Melissa M. Grand