The Connecticut Supreme Court has reversed the most recent trial court order In the Macomber v. Travelers case (certifying the case as a class action and certifying the plaintiff as representative of the class) and remanded the case to the trial court with a direction to deny the plaintiffs’ motion for class certification and for further proceedings according to law.
For additional background about the Macomber case, see this December 3, 2004 weblog post .
For additional commentary about the Connecticut Supreme Court decision:
Audio podcast interview of plaintiff attorney Ralph Stone by Mark Wahlstrom - this interview also appears on The Settlement Channel;
S2KM April 1, 2006 weblog post summarizing the audio interview.
The Macomber case was argued December 1, 2005. Although the Connecticut Supreme Court decision will not be officially released until April 4, 2006, a copy of the decision is posted on the State of Connecticut website.
The Macomber complaint alleges that the defendants routinely
engaged in two types of wrongdoing (rebating and shortchanging) while utilizing
structured settlements to resolve personal injury cases. The defendants include: Travelers Group,
Inc.; Travelers Property and Casualty Corporation; Travelers Equity Sales, Inc;
Travelers Life and Annuity Company; and Soloman Smith Barney Holdings, Inc.
This most recent decision represents the second time the
Connecticut Supreme Court has considered the Macomber case. In an earlier appeal, the court held that
plaintiffs’ complaint alleged legally cognizable damages and remanded the case
for further proceedings. Following the
remand, one of two plaintiffs withdrew her claim leaving Lisa Macomber as the
sole plaintiff.
In the subsequent trial court action, plaintiff Macomber
moved for class certification and requested that she be certified as
representative of the class. The
proposed class included: “all persons
who [since 1982] settled claims with [Travelers Casualty] insureds through
structured settlements that involved rebated commissions on the annuities used
to fund the settlements, and/or …as to which [Travelers Casualty] spent amounts
less than the sums it represented as the costs or then-present values of the
annuities used to fund the structured settlements.”
After limited discovery and an evidentiary hearing, the
trial court granted the plaintiff’s motion for class certification as to four
counts:
- Breach of contract
- Violations of Connecticut’s Trade Practices and Insurance Practices Acts
- Civil conspiracy
- Unjust enrichment
The defendants appealed the trial court’s decision claiming
the trial court abused its discretion by:
- Certifying the plaintiff’s claims as typical of absent class members and certifying her as an adequate class representative;
- Ruling that a class action is superior to other methods of
adjudication.
In reversing the trial court’s certification ruling, the
Connecticut Supreme Court criticized the discovery process used for class
certification. The trial court had
randomly selected 28 cases from among thousands. The Connecticut Supreme Court refused to
endorse the discovery procedure because the trial court record did not
establish the selected cases were materially representative of the proposed
class.
Although the Connecticut Court acknowledged that doubts
regarding the propriety of class certification should be resolved in favor of
certification, it determined the trial court had abused its discretion because
the trial court:
- Did not undertake the requisite analysis to determine whether individual issues predominated;
- Ruled preliminarily that Connecticut law would govern the case.
Significantly, the Connecticut Supreme Court declined to
rule that the Macomber case is inappropriate for class certification at this
stage of the proceedings. To the extent the
files do not disclose representations concerning class certification, the court
held plaintiffs responsible for establising the necessary representations by
virtue of oral testimony from the absent class members and the appropriate
claim adjustors or other agents.
Attorneys arguing the case included:
- For the plaintiff: Ralph M. Stone, John C. Matulis, Jr., and Thomas G. Ciarlone, Jr.;
- For the defendants: Thomas J. Groark, Jr., John A. Neuwirth, Michael
Shea, James K. Robertson, Jr., Jonathan Margolis, and Adam Schloss;
- As amici curiae, on behalf of the Connecticut Business and Industry Association, Inc.: Katherine A. Scanlon and Peter J. Vodola.
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