The issue of whether the “standing approach” or “class certification approach” is applicable continues to remain an open issue in the Fifth Circuit.  In Angell v. Geico Advantage Ins. Co., the Fifth Circuit declined to decide the issue because it ruled that Plaintiffs had satisfied both approaches. 

The “class certification approach” merely asks whether the named Plaintiff(s) have standing—if so, the analysis shifts to Rule 23.  The “standing approach” delves deeper, analyzing harms of the named Plaintiff(s) to determine whether they are “sufficiently analogous” to all class members.  Only if sufficiently analogous will the analysis shift to Rule 23.

Plaintiffs had auto insurance policies with Defendant insurers.  If there was a “loss” under the policy, the insurers were liable for the lesser of: (1) the “Actual Cash Value” of the damaged car or (2) repair costs.  Plaintiffs claimed that “Actual Cash Value” included sales tax, title fees, and registration fees (“Purchase Fees”).

Plaintiffs alleged that the insurers underpaid them for covered losses under their respective auto insurance policies.  Specifically, the insurers were alleged to not have paid the entirety of Plaintiffs’ Purchasing Fees.  And, in turn, the insurer violated the Texas Prompt Payment of Claims Act (“TPPCA”) as the statutory deadline for complete payment had expired.

The insurers appealed the district court’s holding that (1) Plaintiffs had standing to bring the class claims and (2) Plaintiffs satisfied Rule 23’s class certification requirements.

The Court rejected the insurers’ arguments against class certification.  The insurers argued that typicality and predominance were not met because the three different Purchasing Fees created three separate claims.  Because each named Plaintiff alleged underpayment for different Purchasing Fees, and no Plaintiff alleged a loss of all three Purchasing Fees, the claims were not typical of the class and highly individualized issues would predominate.  The insurers also argued that Plaintiffs were not adequate representatives because claim preclusion would prevent class members from bringing certain claims.  The Court disagreed and noted that its concerns were further relieved by the ability of class members to opt out.

In ruling on standing, the Court acknowledged that “[t]here has yet to be a bright line drawn between the issues of standing and class certification.”  In fact, there is a circuit split on the issue.  Some courts use the “class certification approach” and others use the “standing approach”. 

Because Plaintiffs had satisfied both approaches, however, the Court did not provide direction as to which approach district courts should follow.  This creates flexibility among the district courts, but also uncertainty.  In any case, it is clear that named Plaintiff(s) in class actions must satisfy at least one of the two approaches to have standing as class representatives.