Ferrara v. 21st Century N. Am. Ins. Co. – 9/10/2018

October 3, 2018

Ferrara v. 21st Century N. Am. Ins. Co. (9/10/2018): Arizona Court of Appeals Division Two holds that class certification of putative nationwide class action is precluded on grounds of numerosity, commonality, and typicality where evidence establishes no more than 40 class members, and there are substantial differences in the substantive law of the states where putative class members reside.

After an on-the-job auto accident, an injured employee received workers’ compensation that covered her medical bills. She then received a settlement from the party responsible for her injury, and the workers’ compensation carrier was repaid from her settlement. The employee then sought recovery from an auto insurance policy for her medical bills. The insurer denied her claim pursuant to an exclusion for medical payments if workers’ compensation benefits were available. The employee sued for breach of contract and declaratory relief, and sought certification of a nationwide class action. The superior court denied certification, and the employee appealed.

The Court of Appeals affirmed. While there is no bright-line rule barring certification of a class that puts the laws of multiple states at issue, a party seeking certification must provide an extensive analysis of whether variations in state law are an insurmountable barrier to class certification. In this case, discovery revealed at most 40 potential class members from 33 states, and the laws of 27 of those states substantively differed on relevant issues. Under these circumstances, denial of class certification was not an abuse of discretion because the proponent of certification failed to prove there were in fact sufficiently numerous parties with common questions of law and fact and that state law variances did not pose significant obstacles.

Judge Eppich delivered the unanimous opinion of the court; Presiding Judge Vasquez and Judge Espinosa joined.