Class Action Status Preserved By Ninth Circuit in Allstate Lawsuit

insurechance.com

On April 12, 2016, the U.S. Court of Appeals for the Ninth Circuit ruled that a putative class action could proceed despite a defendant offering judgment on a named plaintiff’s individual claims under Federal Rule of Civil Procedure 68.

In the case, Chen, et al. v. Allstate Ins. Co., named plaintiffs Richard Chen and Florencio Pacleb filed a class-action complaint against Allstate Insurance Company alleging violations of the Telephone Consumer protection Act (“TCPA”) after receiving unsolicited automated calls and texts from the company. Plaintiffs, on behalf of themselves and those similarly situated, sought $500 in statutory damages for each violation by Allstate, as well as injunctive relief.

Allstate attempted to have the class action dismissed by offering settlement to the named plaintiffs and depositing $20,000 in an escrow fund in furtherance of the settlement. The insurance company’s actions were seen by many as an attempt to take advantage of the decision in Campbell-Ewald v. Gomez, a case decided early this year by the U.S. Supreme Court. In Campbell-Ewald, the Supreme Court held that defendants could not end a class action by offering to settle in full with the named plaintiffs; however, declined to rule as to whether a defendant’s deposit of the named plaintiffs’ settlement funds into an escrow account, plus an entry of judgment, would be enough to preclude a class action from moving forward.

Justice Ruth Bader Ginsberg, who authored the January 2016 Campbell-Ewald opinion, stated that it would be better to decide this issue in a case where the issue is actually present and not a mere hypothetical, which lead to this Ninth Circuit decision. Plaintiffs’ attorneys have commented that they fully expect Allstate to appeal the issue all the way to the Supreme Court.

The case is: Chen, et al. v. Allstate Ins. Co., No. 13-16816 (9th Cir.)

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