In re Farmers Ins. Co. Wind/Hail Storm Litig.

Decision Date07 April 2015
Docket NumberNO. 14–0882,14–0882
Citation481 S.W.3d 422
Parties In re Farmers Insurance Company Wind/Hail Storm Litigation
CourtJudicial Panel on Multidistrict Litigation


Presiding Judge Peeples delivered the opinion of the MDL Panel:

Rule 13 authorizes the MDL Panel to transfer "related" cases (i.e. cases involving common questions of fact) from different trial courts to a single pretrial judge if transfer will (1) serve the convenience of the parties and witnesses and (2) promote the just and efficient conduct of the litigation. See In re State Farm Lloyds Hurricane Ike Litig., 392 S.W.3d 353, 354 (Tex. M.D.L. Panel 2012). For a transfer to be ordered, "there must be two distinct findings: that the cases are related and that placing them into one pretrial court will serve the interests of convenience and efficiency."

See In re Wellington Ins. Co. Hailstorm Litig., 427 S.W.3d 581, 584 (Tex. M.D.L. Panel 2014) (emphasis in original). A pretrial court decides the pretrial issues and then remands cases for trial in the original counties of venue.

Farmers Insurance Company (for itself and related entities) seeks creation of an MDL pretrial court for 1565 wind-and hail-damage cases pending in 166 courts in forty-four counties.1 The cases involve claims arising from storms that occurred between February 29, 2012 and June 11, 2014. Seventy-three percent of the claims arose from eight major storms. Lesser storms also produced multiple claims in the same twenty-seven month period.2 In nearly every case the insurance policies state the coverage in substantially the same language. In addition to actual damages, statutory penalties, and attorneys' fees, the plaintiffs seek extra-contractual relief. They allege that Farmers and its adjusters do not assess each claim individually. Instead, they say, the adjusters implement standard business practices that are designed to minimize payments to insureds and maximize profits to the insurer. For these extra-contractual claims the plaintiffs seek punitive damages and other relief, including discovery far beyond the individual facts in each case.3

Farmers asks that we create one pretrial court to handle all the cases. In the alternative it asks for pretrial courts in five different areas around the state.

All plaintiffs oppose the motion. (1) They argue first that the cases are not "related," and therefore should not be transferred, because they arose from many different storms that occurred at different times in different counties. (2) Second, they argue that to grant this motion would give Farmers a "perpetual MDL" because Farmers could use the tag-along procedure to bring newly-filed cases into the pretrial court, potentially forever. (3) They also argue that any convenience for Farmers would be outweighed by the inconvenience to the plaintiffs, who would have to travel to a court far away from the counties of venue, where the property is located.

For the reasons stated below, we grant Farmers' alternative request in part and create three MDL courts for these cases.4


"Rule 13 aims to further the goals of convenience, efficiency, and justice by (1) eliminating duplicative and repetitive discovery, (2) minimizing conflicting demands on witnesses, (3) preventing inconsistent decisions on common issues, (4) reducing unnecessary travel, and (5) creating judicial efficiency through the use of a single judge." See In re State Farm Lloyds Hidalgo County Hail Storm Litig., 434 S.W.3d 350, 355 (Tex. M.D.L. Panel 2014).

Whether it would serve the interests of convenience, efficiency, and justice to transfer the pretrial phase of 1565 cases (pending in 166 courts in forty-four counties) is not a difficult question. In the matter before us, transfer would further each of these goals. We have not been given any reason why it would be sensible judicial policy for dozens of trial judges to adjudicate the same issues again and again;5 or for the same witnesses to be deposed (or the same documents produced) repeatedly; or for the same lawyers to face conflicting trial settings. And the fifth goal—allocating finite judicial resources intelligently—seems especially compelling, for reasons that we have explained before.6


A more difficult question is whether these cases are related within the meaning of prior MDL decisions. "Relatedness is a threshold question. If cases are not related we lack authority to assign them to an MDL pretrial judge, even if such an assignment would serve the interests of convenience and efficiency." See In re Deepwater Horizon Incident Litig ., 387 S.W.3d 127, 128 (Tex. M.D.L. Panel 2011).

The issue of MDL relatedness in weather-damage insurance lawsuits has been fought repeatedly in MDL filings. This history of continuous and strenuous disagreement suggests that we should take a fresh look at our weather-damage cases and clarify the rules for better guidance in future cases.7

Our first weather-damage MDL motion arose from Hurricane Rita. It involved twenty-two cases against several insurers. In In re Delta Lloyds Ins. Co., 339 S.W.3d 384 (Tex. M.D.L. Panel 2008), a majority of the panel held that even though all twenty-two cases arose from one violent storm, they were not related to each other by that common event because Rule 13 defines "related" as involving "one or more common questions of fact"—and Hurricane Rita was a common "undisputed fact," not a common "question of fact." Id. at 387. Nevertheless, the panel held that sixteen of the cases were related because two insurers (Delta and Southeast) faced multiple extra-contractual claims. The "business practices" allegations against Delta in its four cases made those cases related to each other. And the "business practices" allegations against Southeast in its twelve cases made those cases related to each other.8 But as to the remaining six cases against five other insurers a majority of the panel denied the MDL motion, reasoning that the cases were not related because each insurer was defending only one claim, and therefore the claims against those five insurers were not related to any other case.9 Later, in In re Standard Guaranty Ins. Co., 339 S.W.3d 398 (Tex. M.D.L. Panel 2009), the panel granted an MDL motion for roughly a dozen Hurricane Rita cases against one insurer that faced the common extra-contractual claims.

The next weather-damage MDL motion involved forty-two cases arising from two different hurricanes, Rita and Humberto. In In re Texas Windstorm Ins. Ass'n Hurricanes Rita and Humberto Litig ., 339 S.W.3d 401, 403 (Tex. M.D.L. Panel 2009), we followed Delta and held the cases were related "because each case arises from hurricane damage, involves the same insurance coverage, and involves the same or similar extra-contractual claims and discovery."

In a Hurricane Ike proceeding three years later, we followed Delta and Texas Windstorm and disposed of the relatedness issue in this short passage:

These [sixty-six] cases are related because they arise from one event and the plaintiffs seek common discovery on the ground that State Farm has a "general business practice" of adjusting claims in a way that is unfairly designed to tilt the process in its favor and against the policyholder. Plaintiffs seek discovery tailored to each specific case and also discovery delving into State Farm's broader practices in property insurance cases generally. For the reasons stated in [ Texas Windstorm and Delta ], which need not be repeated here, the cases are related for purposes of Rule 13.

See In re State Farm Lloyds Hurricane Ike Litig., supra, 392 S.W.3d at 354–55. We established an MDL court for the sixty-six hurricane cases. A few months later, State Farm sought to add an ordinary windstorm case to the Hurricane Ike pretrial court. In In re State Farm Lloyds Hurricane Litig., 387 S.W.3d 130 (Tex. M.D.L. Panel 2012), we allowed a 2010 windstorm case The same allegations have been made against the insurer in every weather-damage case cited in this opinion. to be added by the tag-along procedure10 to the MDL court involving the 2008 hurricane, essentially because the same generic "business practices" discovery was sought in both.

We next applied this evolving series of decisions in In re National Lloyds Ins. Co. Hurricane Litig., 422 S.W.3d 926 (Tex. M.D.L. Panel 2012). There we held that hailstorm cases were not related to hurricane cases against the same insurer, even though the same business practices were alleged to be used in both kinds of claims. In National Lloyds there were already two existing pretrial courts—one involving National Lloyds' hurricane cases and the other involving hailstorm cases against several other insurers. We sent the cases to the hailstorm MDL court and denied National Lloyds' request to put the hailstorm cases in its hurricane MDL court.

By this time, it was becoming clear that business practices allegations were the main point of contention in these cases. All requests for MDL treatment in weather-damage cases before and since have involved assertions by the plaintiffs that the insurers follow standard business practices designed to minimize payouts instead of concentrating on the individual claims.

When litigants broaden their claims to make business practices allegations and to seek discovery beyond the facts surrounding the individual policyholder's loss—when they allege that a uniform set of practices is occurring in all their cases, for which they seek uniform extra-contractual discovery and relief—these generic claims transcend the individual claims and make the cases related to each other. The allegation itself is an implicit concession that the cases are related.

These allegations have been the primary reason why we have set up pretrial courts. Yet we second lawsuit. have been reluctant to hold that a "business practices" allegation, without some other kind of linkage, justifies...

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