Day v. GEICO Casualty Company

Background

GEICO Casualty Company, GEICO Indemnity Company, and GEICO General Insurance Company moved for summary judgment, which asks a court to decide a claim without a trial when no genuine dispute about an important fact exists. Jessica Day opposed the motion.

During the COVID-19 pandemic, GEICO announced the “GEICO Giveback,” a 15% discount on new and renewed automobile and motorcycle insurance policies. Day alleged that the discount was insufficient because fewer miles were driven and fewer accidents occurred during the pandemic. She brought the case as a putative class action asserting several claims. After earlier rulings, the remaining claims were breach of contract and a claim under the “unfair” prong of California’s Unfair Competition Law. The court later dismissed the breach-of-contract claim and certified a class. The court subsequently narrowed the class period to March 19, 2020, through July 11, 2021.

Evidentiary Rulings

The court granted GEICO’s requests for judicial notice of California Department of Insurance bulletins, press releases, government announcements, a transportation report, and court filings from similar cases. Judicial notice allows a court to recognize certain facts or documents without requiring ordinary proof, but the court stated that it would not treat alleged facts in related court filings as true.

The court overruled Day’s objection to a January 26, 2023, email from a California Department of Insurance official stating that GEICO was not required to return additional premiums to California policyholders. The court found the email relevant and concluded that any risk of unfair prejudice, confusion, or wasted time did not substantially outweigh its relevance.

The court struck a supplemental declaration from Day’s expert, Allan Schwartz, because it was disclosed after expert discovery had closed and Day had not shown that the late disclosure was substantially justified or harmless.

Rulings on GEICO’s Motion

California Department of Insurance determination

GEICO argued that the California Department of Insurance’s determination that GEICO did not need to return additional premiums prevented Day from pursuing her Unfair Competition Law claim. The court rejected that argument. It found that GEICO had not shown that the department acted in a judicial capacity, resolved disputed facts after the parties had an adequate opportunity to litigate, or actually and necessarily decided whether the GEICO Giveback was unfair under the statute.

The court also rejected GEICO’s argument that Day was barred from taking a position inconsistent with her earlier use of California Department of Insurance evidence. The court found no clearly inconsistent position and stated that it had never previously ruled on the preclusive effect of such a department determination under California law. The court therefore denied GEICO’s motion on this ground, while noting that the determination could be powerful evidence at trial.

GEICO’s alleged net loss

GEICO argued that its pandemic-related net underwriting losses eliminated any harm to the class. The court found genuine disputes about whether GEICO’s losses negated the class’s alleged harm. The parties disputed whether GEICO’s calculations omitted investment results and other income, whether GEICO’s data was consistent with its California Department of Insurance filings, and what period should be used to measure the effects of the pandemic.

The court also found that a reasonable factfinder could conclude that the pandemic’s effects on GEICO’s vehicle-insurance losses had dissipated by June 2021. If so, a factfinder could conclude that GEICO still received a pandemic-related windfall that it did not adequately refund, even if GEICO later experienced underwriting losses. The court denied GEICO’s motion on this argument.

Whether the GEICO Giveback was unfair

GEICO argued that the Giveback was not an unfair practice under California’s Unfair Competition Law and appeared to argue that the claim required intentional deception or a scheme to defraud. The court explained that an unfair-practice claim generally does not require intent. It also stated that GEICO had not analyzed the claim under either of the legal frameworks courts use to evaluate unfairness: balancing the usefulness of the conduct against the seriousness of the harm, or asking whether the conduct is connected to a declared legal policy or affects competition.

Because GEICO had not addressed the governing legal standard, the court found that GEICO had not met its initial burden for summary judgment and denied the motion on this issue. The court stated that it would allow a further summary-judgment motion addressing the statute’s safe-harbor provision and the claim under the correct legal standards.

Restitution

GEICO argued that Day could not seek restitution because GEICO charged rates approved by the California Department of Insurance and therefore had not received anything wrongfully. Restitution under the Unfair Competition Law can require returning money acquired through an unfair business practice, but it is not an award of damages for injury.

The court concluded that whether GEICO wrongfully received premiums appeared to depend on whether the premiums were obtained through an unfair business practice. Because GEICO had not addressed unfairness under the correct legal standard, it had not met its initial summary-judgment burden. The court denied GEICO’s motion on restitution.

Constitutional arguments

GEICO argued that imposing liability under the Unfair Competition Law would violate the Takings and Due Process Clauses of the United States Constitution because GEICO had experienced net losses. The court found that the disputed evidence about whether GEICO had suffered a net loss prevented summary judgment and denied the motion on this argument.

Disposition

The court denied the defendants’ motion for summary judgment. The court expressly stated that this denial did not resolve any issues in the case.