Artie's Auto Body v. Hartford Fire Ins.

• Decision Date: 03 June 2008
• Docket Number: No. 17797.,17797.
• Citation: 947 A.2d 320,287 Conn. 208
• Parties: ARTIE'S AUTO BODY, INC., et al. v. The HARTFORD FIRE INSURANCE COMPANY.
• Court: Connecticut Supreme Court

947 A.2d 320

287 Conn. 208

ARTIE'S AUTO BODY, INC., et al. v. The HARTFORD FIRE INSURANCE COMPANY.

No. 17797.

Supreme Court of Connecticut.

Argued November 29, 2007.

Decided June 3, 2008.

Linda L. Morkan, with whom, on the brief, were Craig A. Raabe, Edward J. Heath and Andrea Donovan Napp, Hartford, for the appellant (defendant).

David A. Slossberg, with whom were Allison Near, Milford, Alan Neigher, Westport, Robert J. Berg, pro hac vice, and Ronald J. Aranoff, pro hac vice, New York, NY, for the appellees (plaintiffs).

NORCOTT, PALMER, VERTEFEUILLE, ZARELLA and SULLIVAN, Js.

ZARELLA, J.

The defendant, The Hartford Fire Insurance Company (The Hartford), appeals from the ruling of the trial court granting the motion of the plaintiffs, three Connecticut auto body repair shops and a trade association of Connecticut auto body repair shops,¹ for class certification. The plaintiffs, who seek money damages and injunctive relief, allege that The Hartford engaged in a pattern of unfair and deceptive acts and practices in violation of the Connecticut Unfair Trade Practices Act (CUTPA),² General Statutes § 42-110a et seq. (counts one and two), and was unjustly enriched as a result thereof (count three). On appeal,³ The Hartford claims that the trial court abused its discretion in granting the plaintiffs' motion for class certification because common issues of law or fact do not predominate over questions affecting individual members with respect to proof of The Hartford's liability under CUTPA. We disagree and, accordingly, affirm the trial court's order granting class certification.

The following facts and procedural history are relevant to our resolution of this appeal. On July 16, 2003, the plaintiffs filed a complaint against The Hartford on behalf of themselves and all other persons and entities licensed to perform auto body repairs in Connecticut⁴ who had been substantially harmed by The Hartford's practices. The complaint alleged unfair and deceptive acts or practices on the following grounds. First, The Hartford improperly steered insureds⁵ to a closed network of preferred auto body repair shops that charged labor rates well below reasonable market value. The shops, which The Hartford describes as direct repair program shops (preferred shops), have a contractual relationship with The Hartford to repair damaged automobiles that The Hartford refers to them. Second, The Hartford improperly established an artificially low standard or prevailing hourly rate for reimbursement to shops that were not in the network of preferred shops (nonpreferred shops), including those of the plaintiffs and members of the plaintiffs' putative class. Third, The Hartford provided positive and negative incentives to purportedly independent insurance appraisers to encourage or pressure them into accepting monetary and other limits proposed by The Hartford.⁶ Moreover, the appraisers acceded to these incentives and regularly conformed to the proposed limits in their appraisals. The appraisers also advised and requested insureds to direct their business to the preferred shops and away from the plaintiffs and other members of the putative class. The plaintiffs thus claimed that they had lost business and were forced to charge below market labor rates that had been set by The Hartford's appraisers and charged by the preferred shops.

On August 15, 2005, the plaintiffs filed a motion for class certification. The parties briefed the issue, and the trial court heard oral argument in March, 2006. On August 30, 2006, the court determined that the requirements for class certification had been met and granted the motion. After noting that the plaintiffs had not provided a consistent definition of the proposed class during the proceedings, the court ordered certification of a class consisting of "Connecticut licensed auto body repair shops, or licensed individuals, that have performed physical auto body repairs paid for directly or indirectly, partially or in full, by [The] Hartford as a result of automobile insurance policies issued by [The] Hartford." Thereafter, the trial court denied The Hartford's motion for reconsideration or reargument. This appeal followed.

I

We begin by setting forth the standard of review and the legal principles that govern class certification orders. "A trial court must undertake a rigorous analysis to determine whether the plaintiffs have borne the burden of demonstrating that the class certification requirements of Practice Book §§ 9-7⁷ and 9-8⁸ have been met. ... A trial court nonetheless has broad discretion in determining whether a suit should proceed as a class action. ... As long as the trial court has applied the proper legal standards in deciding whether to certify a class, its decision may ... be overturned [only] if it constitutes an abuse of discretion. ...

"[I]n determining whether to certify the class, a [trial] court is bound to take the substantive allegations of the complaint as true. ... That does not mean, however, that a court is limited to the pleadings when determining whether the requirements for class certification have been met. On the contrary ... [t]he class determination generally involves considerations that are enmeshed in the factual and legal issues comprising the [plaintiffs'] cause of action ... and ... it [sometimes] may be necessary for the court to probe behind the pleadings before coming to rest on the certification question. ... In determining the propriety of a class action, [however] the question is not whether the plaintiff or plaintiffs have stated a cause of action or will prevail on the merits ... but rather whether the requirements of [the class action rules] are met. ... Although no party has a right to proceed via the class mechanism ... doubts regarding the propriety of class certification should be resolved in favor of certification. ...

"The rules of practice set forth a two step process for trial courts to follow in determining whether an action or claim qualifies for class action status. First a court must ascertain whether the four prerequisites to a class action, as specified in Practice Book § 9-7, are satisfied. These prerequisites are: (1) numerosity—that the class is too numerous to make joinder of all members feasible; (2) commonality— that the members have similar claims of law and fact; (3) typicality—that the [representative] plaintiffs' claims are typical of the claims of the class; and (4) adequacy of representation—that the interests of the class are protected adequately. ...

"Second, if the foregoing criteria are satisfied, the court then must evaluate whether the certification requirements of Practice Book § 9-8 are satisfied. These requirements are: (1) predominance—that questions of law or fact common to the members of the class predominate over any questions affecting only individual members; and (2) superiority—that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. ... Because our class certification requirements are similar to those embodied in rule 23 of the Federal Rules of Civil Procedure,⁹ and our jurisprudence governing class actions is relatively undeveloped, we look to federal case law for guidance in construing the provisions of Practice Book §§ 9-7 and 9-8." (Citations omitted; internal quotation marks omitted.) Collins v. Anthem Health Plans, Inc., 275 Conn. 309, 320-23, 880 A.2d 106 (2005).

In the present case, The Hartford concedes that the plaintiffs satisfied the first four prerequisites of numerosity, commonality, typicality and adequate representation but claims that the trial court incorrectly determined that they satisfied the requirement of predominance. We therefore turn to the legal principles that guide our analysis of this issue.

II

"[T]he fundamental purpose of the predominance inquiry is to determine whether the economies of class action certification can be achieved ... without sacrificing procedural fairness or bringing about other undesirable results. ... [C]lass-wide issues predominate if resolution of some of the legal or factual questions that qualify each class member's case as a genuine controversy can be achieved through generalized proof, and if these particular issues are more substantial than the issues subject only to individualized proof. ...

"In order to determine whether common questions predominate, [a court must] ... examine the [causes] of action asserted in the complaint on behalf of the putative class. ... Whether an issue predominates can only be determined after considering what value the resolution of the class-wide issue will have in each class member's underlying cause of action. ... Common issues of fact and law predominate if they ha[ve] a direct impact on every class member's effort to establish liability and on every class member's entitlement to injunctive and monetary relief. ... [When], after adjudication of the [class-wide] issues, [the] plaintiffs must still introduce a great deal of individualized proof or argue a number of individualized legal points to establish most or all of the elements of their individual[ized] claims, such claims are not suitable for class certification. ...

"[N]umerous [federal] courts have recognized [however] that the presence of individualized damages issues does not prevent a finding that the common issues in the case predominate. ... In assessing the predominance requirement in cases involving individualized damages, the [c]ourt's inquiry is limited to whether ... the proposed methods [for computing damages] are so insubstantial as to amount to no method at all. ... [The plaintiffs] need only come forward with plausible statistical or economic methodologies to demonstrate impact on a class-wide basis. ... Particularly [when] damages can be computed according to some formula, statistical analysis, or other easy or essentially mechanical methods, the fact that damages must be...