Hilario v. Allstate Insurance Company

Background

The case concerns Allstate’s calculation of home square footage for homeowners’ insurance policies. Allstate used a third-party tool called Residential Component Technology to estimate the cost of rebuilding a home. Before June 13, 2016, the system used one square-footage field for furnished living area, which did not include built-in garage space. Allstate then switched to a system with separate fields for furnished living area and total living area, with total living area including built-in garage space.

The opinion states that, during the transition, prior square-footage information was transferred into the total-living-area field, while the system deducted 288 square feet for each built-in garage from the furnished-living-area field. Allstate later implemented Project UIN, which added back 288 square feet, or a related multiplier, to policies with built-in garages. Hilario alleged that Project UIN was applied to policies that had already been manually corrected, causing the garage space to be counted twice and increasing premiums. She alleged that the change increased her premium by $141.

Hilario’s amended complaint asserted negligence and breach of California’s Unfair Competition Law. She moved to certify a class consisting of Allstate California policyholders from 2019 onward who had at least one built-in garage and paid premiums for homeowners’ or renters’ insurance.

Class Definition

The court found that proposed definition too broad. It excluded renters’ insurance policyholders because Hilario had not shown that Project UIN affected renters’ policies. It also excluded homeowners’ policyholders whose policies had not already been adjusted before Project UIN, because the opinion found they could not show the alleged double-counting injury. Finally, it excluded people who purchased policies after Project UIN was implemented in March 2019 because they were not subjected to the same alleged conduct.

The court narrowed the class to: “All Allstate California homeowners’ insurance policyholders as of March 2019, who paid premiums and had at least one built-in garage, and whose garage square footage was counted twice in calculating insured square footage and premiums.”

Rule 23(a) Requirements

The court found that the narrowed class satisfied Rule 23(a)’s requirements of numerosity, commonality, typicality, and adequacy.

For numerosity, the court relied on Allstate’s estimate that the software conversion produced incorrect furnished-living-area numbers for at least 20,000 properties. The court reasoned that Allstate later applied Project UIN to properties with built-in garages, including properties whose square footage had already been corrected, making each such policyholder a potential class member.

For commonality, the court identified common questions concerning whether Allstate had a system-wide method for calculating garage space; whether it created and applied Project UIN across affected policies; whether it knew Project UIN could double-count garage space; whether it could identify policies that had already been adjusted; and whether its conduct was negligent or constituted unlawful, unfair, or fraudulent business practices under the Unfair Competition Law. The court concluded that these questions could be answered with class-wide evidence and were central to the claims.

The court found Hilario’s claims typical because they arose from the same alleged conduct as the claims of other class members: the application of Project UIN, alleged double counting, communications about the change, and increased premiums. The court also found Hilario and her lawyers adequate representatives, finding no conflict with other class members and concluding that counsel were competent and qualified.

Rule 23(b)(3)

The court certified the class under Rule 23(b)(3). It found that common questions predominated because the alleged injuries arose from Allstate’s generalized application of the 288-square-foot multiplier to policies that may already have been adjusted. The court rejected Allstate’s arguments that individual questions about each home’s actual size, coverage, or damages would defeat certification. It reasoned that the alleged injury was being charged twice for the same garage space under Allstate’s calculations, not the difference between the premiums paid and an economically ideal premium.

The court also found that a class action was superior to separate lawsuits because the claims involved similar questions, the alleged conduct was consistent across the proposed class, and the relevant injuries occurred in California. The court noted that Allstate’s records could help identify policies affected by Project UIN and policies for which the correction was redundant.

Rules 23(b)(2) and 23(c)(4)

The court declined to certify the class separately under Rule 23(b)(2). Hilario sought restitution and money damages and apparently also sought an injunction against continued overcharging. The court stated that Rule 23(b)(2) certification is appropriate when the primary relief is declaratory or injunctive, and concluded that Hilario could pursue the requested injunctive relief through certification under Rule 23(b)(3). The court therefore declined separate certification under Rule 23(b)(2), while noting that questions about whether Allstate continued to charge for double-counted garages would likely be addressed as the case progressed.

The court also declined to certify particular issues under Rule 23(c)(4), reasoning that certification under Rule 23(b)(3) meant Hilario did not need separate issue certification.

Disposition

Judge William H. Orrick ordered that Hilario’s motion for class certification was GRANTED. The class was certified under Rule 23(b)(3) with the narrowed definition above. The court declined separate certification under Rules 23(b)(2) and 23(c)(4). The opinion did not decide the ultimate merits of Hilario’s negligence or Unfair Competition Law claims.