An Ashley County Circuit Judge’s ruling denying class action status in a lawsuit against an insurance company was wrong, the Arkansas Supreme Court said Thursday.
The high court reversed the decision of Judge Robert Bynum Gibson Jr., who denied the class action status, and sent the case back to Gibson for further proceedings.
Brandi Kersten filed suit against State Farm Mutual Automobile Insurance Company in 2011 after the company filed a complaint against her for negligence in an automobile accident in Crossett in 2010. A few days later, Kersten countersued, alleging that the company was engaging in deceptive and unlawful business practices by sending out collection-style letters in an attempt to collect claims that had not been settled in court.
In her countersuit, Kersten said that State Farm had the McHughes Law Firm send her a letter listing the company as a creditor and saying she owed them a debt of $2,969.59. She also said the lawsuit should include other persons who had received similar communications, one group in Arkansas, the other residents of 17 other states who have consumer protection statutes similar to Arkansas’.
State Farm asked that the lawsuit be dismissed, arguing in a legal brief that the Arkansas Detective Trade Practices Act does not apply to insurance activities or the practice of law, and that Kersten’s lawsuit did not fit with a court rule regarding what groups can be considered as a class.
Specifically, in order to be considered a class, members must share certain characteristics.
After a hearing in January 2012, Gibson filed an order dismissing Kersten’s claim against the McHughes Law Firm, as well as denying class action status “for the reasons stated in State Farm’s motion.”
He did allow Kersten’s personal claim to continue, and a hearing on that complaint is set in July at Hamburg.
Noting that order, Supreme Court Associate Justice Donald Corbin said that allowing Kersten’s personal claim against State Farm to proceed is tantamount to denying State Farm’s motion to dismiss.
Although Kersten presented five separate arguments on why Gibson’s ruling was wrong, Corbin said the one that resolves the appeal and requires reversing Gibson’s’ decision deals with the court rule on what groups can constitute a class for the basis of a lawsuit.
Corbin said in the ruling that Kersten received a collection-type letter at State Farm’s request, and “upon information and belief that State Farm engaged in similar deceptive and unlawful conduct with respect to the proposed class.
“We conclude that these allegations, at this early stage of the pleading phase sufficiently plead a course of State Farm’s conduct that is typical of both Kersten and the class,” Corbin said in the ruling. “And we conclude that the circuit court therefore abused its discretion in adopting the flawed reasoning State Farm asserted.”
Because Gibson did not consider all the factors in the rule on class certification, Corbin said the Supreme Court cannot consider whether all those factors were met in Kersten’s counterclaim.