Keeling v. ESurance Ins. Co., No. 10-0835-DRH, 2011 WL 3030942 (S.D. Ill. July 25, 2011).

You know, the ostrich has taken a lot of abuse. It is kind of funny looking. It can’t fly despite being a bird. They are the material of which boots are made (in Texas anyway). But being compared to lazy defense attorneys, well a giant flightless bird can only take so much.

Plaintiff Keeling, on his own behalf and on behalf of all others similarly situated, filed a four count class action complaint against defendant ESurance in Illinois county court alleging various causes of action related to ESurance’s alleged practice of charging its customers for Underinsured Motorist Coverage that Keeling claimed was wholly illusory, rendered void by the language of the policy itself, and which, Keeling claimed, under which ESurance had no intention of ever paying a claim. Keeling sought certification of a class consisting of “all persons in the State of Illinois who purchased $20,000/$40,000 Underinsured Motorist Coverage offered by the defendant, its subsidiaries, agents, and affiliates, which use policies containing the language, or substantially similar language set forth herein.” 

ESurance removed the case to the federal court under CAFA based on the following amount in controversy: (a) Recovery of the premiums collected for the coverage at issue for the 52,469 policies totaling $613,894; (b) Disgorgement of funds not paid on claims made against the policies ($40,000 per claim denied in Illinois); and (c) Punitive damages, attorney fees’ and an order enjoining defendant from continuing to offer the underinsured motorist coverage.

Keeling filed a motion to remand arguing that it was clear from the defendant’s discovery responses that the amount in controversy did not exceed $5 million. Keeling asserted that after six months of discovery, ESurance was still unclear about the number of class members who had actually had claims denied on account of the policy language and, thus, the defendant removed this case based on speculation and not facts. Keeling contended that the calculation of damages ESurance used to establish jurisdiction was based on “ostrich -like speculation.”

So, here is what came to mind when I read this. Are ostriches really given to speculation? I mean, no one really knows what goes on in the head of that giant bird while they are hanging out in Africa. But ostriches are known for running away and hiding, not speculation (so says Wikipedia).

Good thing for Keeling the judge got the point, despite the not quite correct use of the ostrich

analogy. What ESurance apparently ran away from was answering discovery. Granting Keeling’s motion to remand, the District Court observed that ESurance had not provided evidence regarding either the number of claimants or the amount in controversy to establish that removal was proper under CAFA. In particular, after lodging a string of objections, ESurance’s amended discovery response revealed that there were only 5 claims made against the $20,000/$40,000 underinsured motorist Illinois policies from January 1, 2000 to December 18, 2010. This, despite an ESurance representative’s testimony that it would only take a few minutes to run a search in its database for such information. The Court remarked that the defendant easily could have run this search through its database before it filed its Notice of Removal. 

Even with the possibility of punitive damages, attorneys’ fees and injunctive relief factored in the amount in controversy, the Court found that it would be legally impossible for plaintiff to recover in excess of $5 million. 

So back to state court you go ESurance. The moral of this tale is do not insult large birds, check your metaphors before you use them, and investigate your basis for removal before doing so.