By Elizabeth Daley
Law360 (February 15, 2024, 4:18 PM EST) -- Allstate will have to face a class action accusing it of artificially inflating home insurance premiums for thousands of California properties by double-counting built-in garage space, a Ninth Circuit panel ruled, affirming a lower court's decision.
The Ninth Circuit said Allstate cannot avoid a class action alleging the insurer inflated home insurance premiums for California homeowners by double-counting garage space. (Photo by Justin Sullivan/Getty Images)
In an unpublished opinion Wednesday, the Ninth Circuit said Allstate's claims that lead plaintiff Tisha Hilario lacked standing were without merit, calling it "undisputed" that her premium was higher than it would have been if not for the insurer counting garage space twice in its square footage estimation.
The Ninth Circuit agreed with the trial court that certifying a class comprising California insureds like San Francisco homeowner Hilario was correct. The class was defined as policyholders who, as of March 2019, paid premiums and had built-in-garage square footage that was double-counted when calculating the property's insured square footage and premiums, according to court records
In a 2022 court hearing, David Shane, who represents the plaintiffs, said there were at least 43,000 Allstate policyholders impacted by the insurer's flawed calculations.
He told Law360 on Thursday that he was "pleased" with the Ninth Circuit's decision to affirm certification and will have to confer with his colleagues regarding the next steps in the case.
The panel said it reviewed the trial court's decision to certify "for abuse of discretion" but held "that the district court's conclusions were not illogical, implausible, or unsupported by the record."
Agreeing with the trial court, the panel said it didn't matter whether the square footage of Hilario's house was ultimately larger than the size that was insured.
"Any dispute between Allstate and Hilario over the true square footage of her home is inapposite and will not consume the focus of this litigation," the panel said.
The court also shot down the insurer's argument that "a unique contractual dispute" over whether Hilario should have corrected Allstate's square footage estimate would overwhelm litigation. The panel said the language in her policy was "boilerplate" and would be identical to that of other policyholders, making any argument over her requirement to correct the insurer far from unique.
Representatives of the insurer did not immediately respond to requests for comment Thursday.
U.S. Circuit Judges Eugene E. Siler and Milan D. Smith Jr. and Senior U.S. Circuit Judge Richard R. Clifton sat on the panel.
The plaintiffs are represented by David Shane of Shane Law and Brian Eldridge, Jack Prior and Steven Hart of Hart McLaughlin & Eldridge LLC.
Allstate Insurance Company is represented by Sonia R. Martin and Mark L. Hanover of Dentons US LLP.
The case is Hilario v. Allstate Insurance Co., case number 23-15264, in the U.S. Court of Appeals for the Ninth Circuit.
--Additional reporting by Bonnie Eslinger. Editing by Emma Brauer
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