Judge Jennifer Sung, nominated by President Biden to the US Court of Appeals for the Ninth Circuit, cast the deciding vote in a 2-1 ruling that reversed a lower court and allowed part of a class action against an auto insurance company for significantly under paying the cost of badly damaged vehicles to go forward. She joined an opinion by Judge Jed Rakoff, a Clinton nominee, to which Clinton nominee Johnnie Rawlinson dissented. The August 2024 decision was in Jama v State Farm Mutual Automobile Insurance Co.
What happened in this case?
A group of Washington state consumers filed a class action against State Farm auto insurance company, contending that the insurer failed to pay the actual cash value of their cars after the vehicles were totaled in an auto accident. The drivers maintained that the insurance company applied two unlawful discounts in calculating the amount owed: a “negotiation” discount, meant to represent the amount that a consumer typically negotiates down the price of a new replacement car, and a “condition” discount, meant to represent the amount that the condition of a consumer’s car is worse than that of cars of similar make and model on sale at dealers.
The district court initially agreed with the consumers and certified both a “negotiation” and “condition” class of insureds so the case could proceed. After that, however, the Ninth Circuit issued a ruling in an unrelated case called Lara, in which the court upheld a lower court decision not to certify a “condition” class in a similar case against another insurer. Based on Lara, the district court in this case then decided to decertify both classes in this case and granted summary judgment against all the individual plaintiffs in the case. The consumers appealed the decision to the Ninth Circuit.
How did Judge Sung and the Ninth Circuit rule and why is it Important?
All three judges on the appellate panel agreed that the lower court properly decertified the “condition” class based on the Lara case. But Judge Rakoff wrote a 2-1 decision, joined by Judge Sung, that reversed the rulings decertifying the “negotiation” class and granting summary judgment against the individual plaintiffs, so that much of the case could go forward.
Judge Rakoff explained that the claims of the “negotiation’ class were “materially differen[t]” than those of the “condition” class. This was particularly because these consumers contended that “Washington law flatly prohibits any negotiation adjustment.” He wrote that for this class, moreover, ”injury could be calculated on a class-wide basis by adding back the putatively unlawful negotiation discount to determine the value each class member should have received.” The lower court must also, Rakoff continued, determine whether material facts remained in dispute to preclude summary judgment against the individual consumer plaintiffs.
The decision made possible by Judge Sung’s deciding vote is obviously important to the class of consumers harmed by State Farm’s “negotiation” underpayments, who can now go forward with their claims. The ruling is also significant in properly interpreting the Lara decision and other insurance cases, particularly in the Ninth Circuit, which includes Washington, California, Alaska, Arizona, Hawaii, Idaho, Montana, Nevada, and Oregon. The case also serves as a reminder of the importance of promptly confirming fair-minded judges to our federal courts