5th Circuit Clears Class-Action Suit in Texas Against GEICO

GEICO must defend itself against a class-action lawsuit that alleges it failed to include the cost of sales taxes and purchasing fees when it paid total loss auto collision claims in Texas, depriving policyholders of actual cash value.

A panel of the 5th Circuit Court of Appeals on Friday affirmed a District Court decision to certify a class of plaintiffs that GEICO said includes “tens of thousands” of policyholders.

The appellate panel rejected GEICO’s argument that the plaintiffs lacked standing and that the class certification was inadequate because the five named plaintiffs alleged they were underpaid for different types of purchasing fees, which consist of registration fees, title fees and sales taxes.

“GEICO’s failure to remit any of the three purchasing fees amounts to the same harm—a breach of the policies,” the panel’s opinion says. “Whether GEICO is liable to plaintiffs for any of the purchasing fees is dependent on an interpretation on the same language in the policies and how the policies calculate ACV.”

Philip Angell, Steven Brown, Tonnie Beck, Tammy Morris, and Dawn Burnham filed suit against five GEICO insurers in March 2020, alleging the insurers shortchanged them for the cost of purchasing fees. Their attorneys filed a motion for class certification in July 2021. The following November, the US District Court for the Southern District of Texas certified a class consisting of all policyholders who filed a total loss claim from March 5, 2016 until the state the class was certified. The court later clarified the certification to include only policyholders who filed total-loss claims for collision or comprehensive coverage.

GEICO appealed the class certification to the 5th Circuit. The insurer argued that the plaintiffs lacked standing to file a class-action lawsuit because their claims were dissimilar. Only one of the plaintiffs alleged they were not compensated for the cost of sales taxes. None alleged they were owed for title fees. The 5th Circuit panel, however, said the plaintiff’s complaints were “sufficiently aligned” to be representatives of the class.

GEICO also argued that the District Court’s ruling violated Federal Rule of Civil Procedure 23, which requires that to qualify as a class action the class members must make substantially the same claims. The panel said that argument is substantially the same as GEICO’s argument about standing and fails because the plaintiffs do allege substantially the same harm and would rely on the same legal theories.

The panel also rejected GEICO’s arguments that the six named plaintiffs were not adequate class representatives because of the dissimilar claims.