When a district court certified a class of Ohio homeowners alleging failure by title insurers to provide a merited discount, post-certification discovery revealed the individualized nature of the inquiries necessary for the homeowners to prove their case and thus demonstrated that certification had been improvidently granted.  The district court subsequently decertified the class, which, expressing some reluctance, the Sixth Circuit upheld in Randleman v. Fidelity National Title Insurance Co. (6th Cir. Case Nos. 09-4533 7 10-4242) (PDF).  Although the court felt that a class action presented “the only meaningful way to afford relief,” it agreed that the requirement of commonality was not met and that, therefore, the homeowners class had to be decertified.

Randleman involved two related matters, both involving different sets of Ohio plaintiffs.  In the first, the Randlemans purchased a home in 2001, along with lender’s title insurance and an owner’s policy.  In 2004, the Randlemans refinanced their home and were required by their new mortgagee to purchase new title insurance, which policy was issued by Fidelity.  According to the Randlemans, Fidelity failed to issue the new policy under a discounted “refinance” rate applicable when another insurer had issued title insurance on the same property within the previous 10 years — thereby allegedly overcharging the Randlemans $213.57.  Although the Randlemans had never requested the discount from Fidelity or submitted the necessary documentation to establish that they had recently purchased title insurance, they later filed suit against Fidelity and sought to certify a class of homeowners similarly situated.  In deciding to certify the class, the district court concluded that Fidelity must have received information sufficient to determine if an homeowner was eligible for the discount.  But when post-certification discovery revealed that, in fact, in Ohio a prior mortgage in the chain of title would not necessarily have given Fidelity notice of a prior purchase of title insurance, the court concluded that commonality was not met, ordering decertification.

The second case in Randleman involved a different class of homeowers.  The Hickmans purchased a home in 1999 in Ohio, also purchasing a lender’s title insurance policy and an owner’s policy.  Subsequently, the Hickmans refinanced their house in 2001 and again in 2004, purchasing title insurance from First American Title Insurance Co. in the 2004 transaction.  As with the Randlemans, the Hickmans were unaware that they qualified for a discount and did not submit to First American any documentation to demonstrate as much.  In their complaint, the Hickmans alleged that First American overcharged them $134.40, and they also sought to certify a class of similarly suited homeowners — albeit a class that differed somewhat from the Randlemans’ proposed class in its definition and scope.  In the Hickmans’ case, the district court concluded that commonality and typicality were not met, refusing to certify the class.

Writing for a panel that included Judges Siler and Rogers, Judge Martin agreed with the district court that, due to the peculiarities of Ohio practice and procedure for insurance, neither class could be certified.  In doing so, the court addressed an issue of first impression for the Sixth Circuit and formally confirmed that the standard of review applicable to orders decertifying a class is identical to the standard for reviewing class certification: abuse of discretion.

The panel was plainly sympathetic to the plaintiffs, opining that “[i]n light of the relatively small sums of money involved in each individual transaction, a class action appears to be the only way in which homeowners who were improperly denied the discount on title insurance may be able to recover.”  But the panel concluded that Ohio’s rate rule requirements “necessitate substantial individual inquiries to determine liability under [the plaintiffs’] theory of the case and class definition that are incompatible with the predominance requirement of Rule 23(b)(3).”  Concluding that “a class action is the only real meaningful way to afford relief in this case” and pointedly noting that “our holding does not extend to a class that might be differently defined to satisfy the requirements in Rule 23,” the court found that commonality was not met by the Randlemans or Hickmans and affirmed the district court.