In Randleman v Fidelity Nat'l Title Ins Co, No. 09-4533, 2011 U.S. App. LEXIS 9915 (6th Cir., May 16, 2011), the United States Court of Appeals for the Sixth Circuit addressed an issue of first impression – the standard of review applicable to orders decertifying classes – and held that the district courts did not abuse their discretion in concluding that the claims presented by two similar "putative classes [were] not amenable to class-wide resolution" and affirmed the district courts' respective judgments.
These two similar actions involved disputes regarding the premium rates charged on title insurance policies issued to homeowners who had previously purchased title insurance for the same property from another insurer within ten years. Id. at *1-2. The defendant title insurer in each action – Fidelity National Title Insurance Company and First American Title Insurance Company (collectively, the "Insurers") – issued new title insurance policies to the homeowner plaintiffs but failed to offer or provide a discounted "refinance" rate as required under certain circumstances by the Ohio Title Insurance Rating Bureau's "Rate Manual."
Under this "Rate Manual," title insurers transacting business in Ohio are required to charge a discounted premium rate for policies issued in connection with refinancing transactions where a different insurer has issued a policy on the same property within the previous ten years. Id. at *3-4. The plaintiff homeowners were allegedly unaware of this premium rate discount and, consequently, they never requested the discount or submitted the necessary documentation to establish that they had recently purchased title insurance. Id. at *4-7.
The plaintiff homeowners in both actions alleged that by not providing the rate discount, the Insurers overcharged them in violation of their filed rates.
In the first action, membership in the proposed class turned upon each individual homeowner's "entitlement" to receive the rate discount. The district court initially certified the proposed class based upon its preliminary presumption that the existence of a prior mortgage invariably notified the Insurer of a prior policy and thus "eligibility" could be determined according to each individual homeowner's insurance application.Id. at *5. However, the district court in this action subsequently learned that mortgagees often rely on opinion letters or title guarantees in lieu of purchasing title insurance. Id. Thus, the district court found that liability could only be determined on an individual basis and thus the putative class failed to meet the commonality or typicality requirements of Federal Rule of Civil Procedure 23, and that common questions did not predominate. Thus, the district court decertified the class.
In the second action, the proposed class included all homeowners who had refinanced a mortgage within the ten-year look-back period. Id. at *7-8. In this action, the district court likewise concluded that the proposed putative class failed to meet the commonality or typicality requirements of FRCP 23, and that common questions did not predominate. Thus, the district court denied the plaintiff homeowners' motion for class certification.
On appeal, the Sixth Circuit stated preliminarily that it had not previously addressed the standard of review applicable to orders decertifying classes, and adopted the highly deferential, "abuse-of-discretion" standard, which other circuits have applied to certification orders. Id. at *9-10.
The Sixth Circuit concluded that the allegations of the respective putative classes implicated substantial individual inquiries and, therefore, the actions were not amenable to class-wide resolution. Thus, the Sixth Circuit held that the district courts did not abuse their discretion and affirmed the district courts' respective class certification decisions.