Day v. GEICO Casualty Company

Background

The lawsuit concerns the “GEICO Giveback,” a program announced in April 2020 that gave new and renewing customers a 15% credit on certain personal automobile, motorcycle, and recreational-vehicle insurance policies. Jessica Day alleged that pandemic-related reductions in driving and accidents lowered GEICO’s claims costs and increased its profits. She claimed that GEICO engaged in unfair business practices by failing to provide an adequate premium refund, limiting the refund to customers who renewed their policies, falsely stating that the Giveback provided “substantial and full relief,” and failing to disclose excessive profits.

After earlier rulings on GEICO’s motions to dismiss, Day had one remaining claim under California’s Unfair Competition Law. She sought to represent all California residents who purchased GEICO personal automobile, motorcycle, or recreational-vehicle insurance covering any part of the period from March 1, 2020, to the present. GEICO opposed class certification.

Evidentiary Rulings

The court overruled GEICO’s objections under Evidence Rule 702 and the reliability standard associated with Daubert to the report of Day’s actuarial expert, Allan Schwartz. Schwartz proposed calculating each class member’s alleged harm by comparing a reasonable credit with the credit GEICO actually gave. Although his report did not yet calculate the reasonable percentage or provide a sample calculation, the court found that he identified relevant data sources and a method that was sufficiently reliable and complete for the class-certification stage. GEICO could challenge the accuracy of the damages calculation later.

The court sustained Day’s objections under Federal Rule of Civil Procedure 37 to a declaration from GEICO assistant vice president Russell Ward. GEICO had not identified Ward or the summarized data in its required disclosures, and GEICO did not show that the failure was substantially justified or harmless.

Class-Certification Analysis

Under Federal Rule of Civil Procedure 23, the court considered whether the proposed class met four requirements: numerosity, commonality, typicality, and adequacy. It also considered whether common questions predominated, whether a class action was superior to other methods of resolving the dispute, and whether the class could be identified using objective criteria.

The court found numerosity satisfied because Day alleged that the class included more than two million people, and GEICO did not dispute the class’s size. Commonality was satisfied because the legality of GEICO’s conduct under the Unfair Competition Law, the adequacy of the Giveback, the resulting losses, and the method of calculating relief presented common questions and could be addressed with common evidence.

The court rejected GEICO’s argument that Day was not typical because she was not claiming that GEICO misapplied a rate to her personal characteristics. The court stated that Day’s theory challenged GEICO’s use of its rates as unfair during the pandemic, and Day held a GEICO policy during that period. The court also found Day adequate to represent the class because the record showed no conflict of interest and she demonstrated the ability and intention to prosecute the case vigorously.

The court found the proposed class counsel adequate under Rule 23(g). It approved Nichols Kaster, PLLP; Stephan Zouras, LLP; and Poulin | Willey | Anastopoulo, LLC as class counsel based on their work, experience, legal knowledge, and available resources.

The court found the class ascertainable because membership could be determined using objective criteria: California residency and purchase of GEICO insurance during the relevant period. It also found that common questions predominated. Schwartz’s proposed damages model would apply a percentage refund to each policyholder’s actual premium, and the court held that Day needed to present only a likely classwide method at this stage, not prove that the method would work with certainty.

Finally, the court found a class action superior to individual lawsuits. It concluded that differences among policyholders could be addressed through the proposed damages model and that GEICO’s objections largely concerned the model’s substantive complexity rather than the manageability of a class action. The court noted that GEICO could later seek decertification if the class became unmanageable.

Order

The court granted Day’s motion for class certification. It certified the proposed class of California residents who purchased GEICO personal automobile, motorcycle, or recreational-vehicle insurance covering any portion of the period from March 1, 2020, to the present, subject to the exclusions stated in the order. The court appointed Jessica Day as class representative and Nichols Kaster, PLLP; Stephan Zouras, LLP; and Poulin | Willey | Anastopoulo, LLC as class counsel. It required notice to the class and ordered Day to submit a proposed notice plan within 30 days.

This order addressed whether the case could proceed as a class action. It did not decide whether GEICO violated California law or determine damages.