Bullivant FCRA victories for insurance companies confirmed in the Ninth Circuit
January, 2008
By
Stuart D. Jones,
John A. Bennett
On January 9, 2008, the Ninth Circuit Court of Appeals handed down decisions affirming and reinstating judgments originally entered in 2003 by the Federal District Court in Oregon in favor of Bullivant Houser Bailey clients: Safeco Insurance Companies (represented by John Bennett) and State Farm Insurance Companies (represented by Stuart Jones). These rulings follow a 9-0 victory for the insurance companies in Safeco v. Burr, a June 2007 ruling in the United States Supreme Court overturning an earlier decision by the Ninth Circuit reinstating the plaintiffs' lawsuits against the insurance companies.
In separate lawsuits filed in the Federal court in Oregon, several groups of plaintiffs sought to certify nationwide class actions against eight personal lines insurers (auto, homeowners, renters) based upon alleged willful violations of a Federal statute, the Fair Credit Reporting Act ("FCRA"). The FCRA requires insurance companies to send a notice to a consumer when the consumer's credit information is used to take "adverse action" in underwriting placement decisions or in establishing the premium to be charged for homeowners, renters and auto insurance. The lawsuits raised a number of legal issues about the interpretation and application of the FCRA that had not been addressed by Federal administrative agencies or in the courts.
The statute provided for imposition of damages of $100 to $1,000 for each instance of a proven willful violation--and for punitive damages. The plaintiffs alleged in these lawsuits that the insurance companies willfully violated the statute because they did not send "adverse action" notices when plaintiffs claimed such notices were required by the FCRA or that the insurance companies sent notices that did not provide information required by the statute. Where these insurers write literally hundreds of thousands of these insurance policies each year, these lawsuits made potential claims in each of the cases for substantial damages if the insurance companies were held to have willfully violated the statute, and if nationwide classes were certified.
Rather than remanding the cases back to the trial court where the litigation would be renewed, the Ninth Circuit affirmed the original judgments -- dismissing these lawsuits in favor of each of these insurance companies as a matter of law based upon the undisputed facts of these cases and the Supreme Court's rulings.