Jacobsen v. Allstate Ins. Co., DA 12-0130

Decision Date29 August 2013
Docket NumberDA 12-0130
PartiesROBERT JACOBSEN, and all others similarly situated, Plaintiff and Appellee, v. ALLSTATE INSURANCE COMPANY, Defendant and Appellant.
CourtMontana Supreme Court

APPEAL FROM: District Court of the Eighth Judicial District,

In and For the County of Cascade, Cause No. ADV 03-201(D)

Honorable Dirk M. Sandefur, Presiding Judge


For Appellant:

Dennis Tighe (argued); Paul R. Haffeman; Davis, Hatley, Haffeman & Tighe,

P.C., Great Falls, Montana

Robert H. King, Jr., SNR Denton US LLP, Chicago, Illinois

For Appellee:

Lawrence A. Anderson (argued), Attorney at Law, P.C., Great Falls,


Daniel P. Buckley, Buckley Law Office, P.C., Bozeman, Montana

David J. Berardinelli, Berardinelli Law Firm, Santa Fe, New Mexico

For Amici Curiae:

Bradley J. Luck, Garlington, Lohn & Robinson, PLLP, Missoula, Montana

Robin S. Conrad, National Chamber Litigation Center, Washington, D.C.

Gene C. Schaerr, Winston & Strawn, LLP, Washington, D.C. (Chamber of

Commerce of the United States of America)

Amy Poehling Eddy, Bottomly Eddy & Sandle, PLLP, Kalispell, Montana,

William F. Merlin, Jr., Merlin Law Group, P.A., Tampa, Florida

Leslie Anne Scalley, Attorney at Law, Tampa, Florida (United Policyholders)


ClerkJustice Michael E Wheat delivered the Opinion of the Court.

¶1 Defendant Allstate Insurance Company (Allstate) appeals the order of the Eighth Judicial District Court, Cascade County, granting Plaintiff Robert Jacobsen's (Jacobsen) motion for class certification. We affirm the class certification but modify the certified class relief on remand.


¶2 We restate the issues on appeal as follows:

¶3 1. Whether the District Court abused its discretion by finding that the proposed class met the requirements of M. R. Civ. P. 23(a)?

¶4 2. Whether the District Court abused its discretion by certifying a M. R. Civ. P. 23(b)(2) class action lawsuit?

¶5 3. Whether the District Court erred by holding that the Montana Rules of Evidence do not apply to class action proceedings?


¶6 This interlocutory appeal arises from the District Court's order certifying a class in Jacobsen's class action against Allstate. Jacobsen's class action claim in turn arose out of our remand of his initial non-class third-party claim against Allstate in Jacobsen v. Allstate Ins. Co., 2009 MT 248, 351 Mont. 464, 215 P.3d 649 (Jacobsen I). As we recounted in Jacobsen I, Jacobsen suffered bodily injuries and property damage in an automobile accident caused by Allstate's insured in 2001. Allstate admitted liability and negotiated a settlement with Jacobsen while he was unrepresented by counsel. Allstate's adjuster, Chuck Conners(Conners) used Allstate's Claim Core Process Redesign (CCPR) program to process Jacobsen's claim. The CCPR is a system of claims adjusting guidelines that Allstate implemented in 1995 to fast track settlements and reduce the amount paid out on claims. Conners utilized the general outlines of the CCPR in settling Jacobsen's claim. The program facilitated a quick, unrepresented settlement six days after the accident for $3,500 and 45 days of "open" medical payment. As part of the settlement, Jacobsen signed a release.

¶7 Roughly three weeks later, Jacobsen began experiencing significant pain. Jacobsen contacted Conners and asked him to reconsider the release and provide additional assistance. Conners refused because Jacobsen had signed a release. Jacobsen retained counsel, who successfully persuaded Allstate to rescind the release and re-open Jacobsen's claim. Due to the efforts of Jacobsen's newly-hired attorney, Allstate settled Jacobsen's claim for $200,000 on November 27, 2002, roughly 18 months after his initial, unrepresented settlement for $3,500.

¶8 Thereafter, Jacobsen retained new counsel and filed a complaint against Allstate seeking compensatory damages for various violations of the Montana Unfair Trade Practices Act (UTPA), common law bad faith, intentional and negligent infliction of emotional distress (IIED and NIED respectively), and also seeking punitive damages pursuant to § 27-1-221, MCA. Jacobsen ultimately sought compensatory damages based on the attorney fees he incurred in pursuing his underlying claim and punitive damages based on Allstate's alleged malicious conduct.

¶9 The jury returned a verdict in favor of Jacobsen on October 19, 2006, finding Allstate liable for common law and statutory bad faith and awarding Jacobsen $68,372.38 in compensatory damages. The jury specifically found that Allstate violated the UTPA by misrepresenting pertinent facts regarding the claim and neglecting to attempt in good faith to promptly, fairly, and equitably settle a claim in which liability was reasonably clear. The jury also awarded Jacobsen $350,000 in punitive damages based on its finding that Allstate acted with actual malice.

¶10 Following the verdict, both Jacobsen and Allstate appealed various rulings by the District Court. Our resolution of these appeals comprises Jacobsen I. One issue under consideration in Jacobsen I concerned the discovery of what were termed the "McKinsey documents." The McKinsey documents consist of around 12,500 PowerPoint slides produced by McKinsey & Company (McKinsey), a management consulting firm, for Allstate. The CCPR program is a distillation of the studies and recommendations contained in the McKinsey documents, and they consequently provide a more complete-understanding of the program. However, Jacobsen was unaware of the existence of the McKinsey documents at the time of his initial discovery request or motion to compel production of the CCPR. When he became aware of them, Jacobsen sought leave of the court to assert new individual and class action claims against Allstate and to pursue additional discovery. The District Court denied these requests, finding that they would "cause substantial prejudice and undue delay, burden, and expense[.]" Jacobsen I, ¶ 55.

¶11 In his pre-remand appeal, Jacobsen argued that the District Court erred by denying his request for further discovery. We found that because "the issue before the District Court was not whether to re-open discovery, but whether to compel Allstate to produce documents that were within Jacobsen's original discovery request," it was "unnecessary to determine whether Jacobsen demonstrated due diligence or excusable neglect[.]" Jacobsen I, ¶ 57. We concluded "[t]he McKinsey documents were indeed critical to Jacobsen's theory that Allstate's policies regarding unrepresented claimants constituted bad faith" and reversed the District Court's decision. Jacobsen I, ¶ 58.

¶12 We ultimately remanded the case for a new trial, finding that the jury's award of compensatory damages could not be based solely on Jacobsen's incurred attorney costs and fees and that there could be no punitive damages following this reversal of the compensatory damages award. We also ordered the court to allow the jury to consider Jacobsen's emotional distress damages and directed the District Court to compel the production of the McKinsey documents. Jacobsen I, ¶ 67.

¶13 On remand, bolstered by the production of the McKinsey documents, Jacobsen filed a motion for leave to file a Fourth Amended Complaint that added class action claims concerning Allstate's CCPR program. Count Four of Jacobsen's Fourth Amended Complaint, filed May 6, 2010, contained the newly-added class action claims. Jacobsen based the class claims on his prior individual theories asserting violations of the UTPA1 andcommon law bad faith. Specifically, Count Four alleged that Allstate's CCPR program violated the UTPA "and/or common law bad faith laws" by intentionally misrepresenting that unrepresented claimants generally received more compensation than represented claimants and by settling unrepresented claims via an inadequate "fast track" component of the CCPR that resulted in unfair settlements. Count Four asserted these claims on behalf of "all unrepresented individuals who had either third party claims or first party claims against Allstate whose claims were adjusted by Allstate in Montana using its CCPR program."

¶14 Count Five presented a claim for a common fund recovery of attorney fees incurred in pursuing the class action, and Count Six presented a claim for attorney fees as a "Private Attorney General" by asserting that the State of Montana had failed to enforce §§ 33-18-201(1) and (6), MCA. Regarding class relief, Jacobsen requested class certification, injunctive relief prohibiting Allstate from using the CCPR program in Montana, an injunction requiring Allstate to "re-open all claims in which liability was reasonable [sic] clear in which the Defendant applied the CCPR paradigm in settling such cases," an injunction requiring Allstate to disgorge unlawful profits, the award of punitive damages, and attorney fees.

¶15 Jacobsen filed a motion for class certification on May 7, 2010, proposing a class definition encompassing "all unrepresented individuals who had either third-party claims orfirst-party claims against Allstate whose claims were adjusted by Allstate in Montana using its CCPR program."

¶16 The District Court certified a Rule 23(b)(2) class in its methodical June 30, 2012 Order. In the course of its analysis, the Court noted the United States Supreme Court's admonition in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551-52 (2011), to conduct a "rigorous" Rule 23 analysis. The Court also construed the substantive essence of Plaintiff's asserted class claim to be, irrespective of individual outcomes, that the CCPR's settlement practices "constitute a common pattern and practice in violation of §§ 33-18-201(1) and (6), MCA, as generally applied to the class as a whole, thereby resulting in indivisible harm to the class as a whole . . . ." The court accordingly certified the following class claim:

(A) the Casualty CCPR's unrepresented

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