Day v. GEICO Casualty Company

Background

Jessica Day brought this putative class action against GEICO Casualty Company, GEICO Indemnity Company, and GEICO General Insurance Company, collectively referred to as GEICO. The remaining claim alleged that GEICO violated California’s Unfair Competition Law (UCL) by engaging in an unfair business practice.

During the COVID-19 pandemic, reduced traffic and fewer accidents reduced insurance claims. GEICO announced its “GEICO Giveback,” which provided a 15% credit on certain automobile, recreational vehicle, and motorcycle policies during specified periods. GEICO later extended the program at the request of the California Department of Insurance (CDI).

The CDI issued bulletins directing insurers to provide premium relief and report their actions. After reviewing data supplied by GEICO, the CDI stated in January 2023 that GEICO was not required to return additional premiums to its California personal automobile policyholders.

The court had previously dismissed Day’s breach-of-contract claim, leaving only the UCL unfair claim. It had also certified a class of California residents who purchased personal automobile, motorcycle, or recreational vehicle insurance from GEICO covering part of the period from March 19, 2020, through July 11, 2021. GEICO filed this renewed motion for summary judgment after the court invited it to address the safe-harbor issue and the legal tests for unfairness.

Evidentiary objections

Day objected to the email in which the CDI stated that GEICO did not need to provide additional premium relief, arguing that it was hearsay and improper expert testimony. The court overruled the objections. It concluded that hearsay alone did not prevent consideration of evidence at summary judgment when the document’s contents could be presented in an admissible form at trial. It also found that the email was not being offered as expert opinion.

UCL safe-harbor argument

GEICO argued that provisions of the California Insurance Code protected it from Day’s UCL claim. GEICO relied on the requirement that insurance rates be approved before use and on provisions concerning an insurer’s entitlement to premiums after an insured risk has attached.

The court rejected this argument and denied GEICO’s motion with respect to the safe-harbor issue. It reasoned that Day challenged GEICO’s application of approved rates during the pandemic, not the rates or rating factors themselves. The provisions GEICO cited did not expressly prohibit liability or bar an action based on an alleged misapplication of approved rates. The court therefore found that none of those provisions created a safe harbor for the claim.

UCL unfairness claim

The court then considered whether GEICO was entitled to summary judgment on the merits of Day’s UCL claim. In consumer cases, the court explained, California law permits use of either the “tethering” test or the “balancing” test to determine whether conduct is unfair.

Under the tethering test, the challenged conduct must be connected to a legislatively declared policy or actual or threatened harm to competition. The court found that Day’s theory implicated the policy expressed in California Proposition 103, including protecting consumers and ensuring that insurance is fair, available, and affordable.

The court nevertheless found that GEICO had produced strong evidence negating an essential element of the claim. The CDI had reviewed GEICO’s data using its methodology for determining whether insurers had returned sufficient premiums to account for reduced pandemic-related risk. The CDI determined that GEICO was not required to return additional premiums. The court found that this evidence showed GEICO’s conduct did not violate the policy or spirit of the Insurance Code.

The court rejected Day’s arguments that factual disputes required a trial. It found that evidence about GEICO’s motivation, profits, the timing and scope of the Giveback, GEICO’s alleged net losses, and when the pandemic’s effects diminished was not material under the tethering test. The court also found that Day’s other evidence, including an expert’s opinions about the amount of additional relief that should have been provided, was either insufficiently probative or did not address whether the Giveback adequately protected consumers and promoted fair, available, and affordable insurance rates.

Under the balancing test, the court weighs the usefulness of the defendant’s conduct against the seriousness of the harm to consumers. The court found that Day had not provided enough evidence for a reasonable factfinder to conclude that GEICO’s conduct was immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers. The court also relied on the CDI’s determination that GEICO was not required to return additional premiums. It concluded that GEICO’s failure to provide a greater refund was not unfair as a matter of law on the record before it.

Disposition

Judge Beth Labson Freeman granted GEICO’s renewed motion for summary judgment because Day’s UCL unfair claim failed as a matter of law. The court terminated GEICO’s pending motion to decertify the class as moot.