A few months ago, we shared in our blog about how Golomb Legalhad taken a case for Eric Suber, a driving enthusiast who loves track day, but was disappointed to learn how auto insurance companies wrongfully deny legitimate claims arising from accidents that occur at HPDE events. (Click here to view our previous blog entry.) We are excited to be able to share some important updates about this case, which we are confident will continue to progress in our client’s favor.
Case Continues Despite Defense’s Quick Motions to Dismiss
We recently filed Mr. Suber’s case against four-related Liberty Mutual insurance companies:
- LM General Insurance Company (“LM General”)
- Liberty Mutual Insurance Company (“LMIC”)
- Safeco Insurance Company (“Safeco”)
- Liberty Mutual Group (“LMG”)
LM General filed an Answer to the Complaint and the other three companies filed a Motion to Dismiss challenging subject matter jurisdiction and personal jurisdiction. It looked like a quick attempt to escape all responsibilities, and we are pleased to say that the court agreed and largely denied the motion.
In a thoughtful and well-reasoned Opinion, the Honorable Gerald Austin McHugh of the Eastern District of Pennsylvania rejected all of the Defendants’ subject matter jurisdiction and standing arguments. The Court partially granted the motion on personal jurisdiction grounds in favor of Safeco and LMG, but the Court ultimately found that LMIC was sufficiently involved in the claim investigation and denial that jurisdiction was warranted. (You can read a copy of the Decision by clicking here.
In rejecting the Defendants’ subject matter jurisdiction and standing arguments, the Court explained that the Defendants’ arguments suffered from “a conceptual flaw.” The Defendants argued that since they did not issue the policy, they were not proper defendants, and thus our client had sued the wrong parties. But the Court explained that this was a merits question, not a standing question, and to address it as a jurisdictional question would improperly raise the burden on plaintiffs at the pleadings stage. Relying on the 3rd Circuit’s decision in Davis v. Wells Fargo, [824 F.3d 333 (3d Cir. 2016)], the Court disregarded the Defendants’ factual submissions regarding corporate structure and found that the Defendants’ challenges to subject matter jurisdiction were meritless.
Court Inspects Each Defendant’s Involvement
Next, the Court addressed personal jurisdiction and examined the legal relevance of each insurance company’s role in the process of insurance. The Defendants argued for the adoption of a per se rule precluding lawsuits against ancillary insurance company entities that did not issue the policy, without regard to their possible involvement in investigating the claim and denying coverage.
The Court analyzed the status of the law and found no support for a per se rule and explained: “I am particularly reluctant to endorse a per se rule in the context of a parent-subsidiary relationship where a parent company may have financial incentives to orchestrate the actions of subsidiaries directly involved in administering the policy.” Thus, the Court found no reason to create an automatic liability shield in favor of an insurance company like LMIC when it is involved in investigating and denying claims, as it was in this case.
In addition, the Court held that it had jurisdiction to hear the Plaintiffs’ nationwide class claims. Once again, the Defendants wrongly presumed the existence of a per se rule. This time, though, the Defendants argued that a court must dismiss nationwide class claims at the Rule 12 stage for want of standing prior to class certification. Relying on the Third Circuit’s decision in Neale v. Volvo Cars of N. Am., LLC [794 F.3d 353 (3d Cir. 2015)], the Court found that precedent precluded the application of such a rule.
The Court stated: “Under Neale, the plaintiff can meet their jurisdictional threshold at the pleadings stage by establishing their own standing and a sufficient stake in litigating the interests of the absent class members to ground an actual controversy.” The Court cited with approval a recent decision by the Honorable Cynthia Rufe, as well as persuasive cases in the First, Second, Fourth, and Seventh Circuits that all rejected the same standing arguments presented by the Defendants.
What Happens Next?
Going forward, this nationwide class action case will move towards the discovery phase, where the Plaintiffs will substantiate the maxim that HPDE is not racing. We need your help to make this class as strong as it can be. If you got into an accident at an HPDE event and were denied coverage, we would like to hear from you. Our class action attorneys are capable of assisting clients nationwide, so do not hesitate to contact us online or by dialing us directly at (215) 278-4449 and getting a FREE consultation. We are also accepting case referrals from other law firms and legal professionals.
Press release:
Golomb Legal. HPDE Insurance Coverage Lawsuit Progresses Past Defense Attempts
A lawsuit and forming class action managed by Golomb Legal. for a client who was denied auto insurance coverage during an HPDE event has successfully moved past early dismissal attempts by the defense.
Golomb Legal. – a nationwide class action lawsuit firm – has accepted a case from lead plaintiff Eric Suber, who was injured while participating in a High-Performance Driving Education (HPDE) event. When Eric sought to use his auto insurance for coverage, Liberty Mutual denied the request and said that HPDE was “racing” and, therefore, ineligible under the policy’s terms. This wrongful denial prompted Eric to seek the assistance of the law firm. The case began months ago and was first reported in the law firm’s blog (https://www.golomblegal.com/blog/2022/january/does-your-street-insurance-cover-you-at-the-trac/) and has recently progressed, despite early attempts from the defense to have it dismissed.
The case was filed against four related Liberty Mutual insurance companies: LM General Insurance Company (“LM General”), Liberty Mutual Insurance Company (“LMIC”), Safeco, and Liberty Mutual Group (“LMG”). LM General filed an Answer to the Complaint and the other three companies filed a Motion to Dismiss challenging subject matter jurisdiction and personal jurisdiction. The Honorable Gerald Austin McHugh of the Eastern District of Pennsylvania rejected all of the Defendants’ subject matter jurisdiction and standing arguments. The Court partially granted the motion on personal jurisdiction grounds in favor of Safeco and LMG, but the Court ultimately found that LMIC was sufficiently involved in the claim investigation and denial that jurisdiction was warranted.
In rejecting all of the Defendants’ subject matter jurisdiction and standing arguments, the Court explained that the Defendants’ arguments suffered from “a conceptual flaw.” The Defendants argued that since they did not issue the policy, they were not proper defendants, and thus Plaintiffs had sued the wrong parties. But the Court explained that this was a merits question, not a standing question, and to address it as a jurisdictional question would improperly raise the burden on plaintiffs at the pleadings stage. Relying on the 3rd Circuit’s decision in Davis v. Wells Fargo, 824 F.3d 333 (3d Cir. 2016), the Court disregarded the Defendants’ factual submissions regarding corporate structure and found that all of the Defendants’ challenges to subject matter jurisdiction were meritless.
Next, the Court addressed personal jurisdiction and examined the legal relevance of each insurance company’s role in the process of insurance. Defendants argued for the adoption of a per se rule precluding lawsuits against ancillary insurance company entities that did not issue the policy, without regard to their possible involvement in investigating the claim and denying coverage. The Court analyzed the status of the law and found no support for a per se rule and explained: “I am particularly reluctant to endorse a per se rule in the context of a parent-subsidiary relationship where a parent company may have financial incentives to orchestrate the actions of subsidiaries directly involved in administering the policy.” Thus, the Court found no reason to create an automatic liability shield in favor of an insurance company like LMIC when it is involved in investigating and denying claims, as it was in this case.
In addition, the Court held that it had jurisdiction to hear Plaintiffs’ nationwide class claims. Once again, Defendants wrongly presumed the existence of a per se rule. This time Defendants argued that a court must dismiss nationwide class claims at the Rule 12 stage for want of standing prior to class certification. Relying on the Third Circuit’s decision in Neale v. Volvo Cars of N. Am., LLC, 794 F.3d 353 (3d Cir. 2015), the Court found that precedent precluded the application of such a rule. The Court stated: “Under Neale, the plaintiff can meet their jurisdictional threshold at the pleadings stage by establishing their own standing and a sufficient stake in litigating the interests of the absent class members to ground an actual controversy.” The Court cited with approval a recent decision by the Honorable Cynthia Rufe, as well as persuasive cases in the First, Second, Fourth, and Seventh Circuits that all rejected the same standing arguments presented by Defendants.
Going forward, this nationwide class action case will move towards the discovery phase, where Plaintiffs will substantiate the maxim that HPDE is not racing. Golomb Legal. is currently asking for assistance from other potential clients from all across the country. The more clients who can enter the plaintiff class, the stronger the class and the chances of its success become. Interested parties should visit www.golomblegal.com as soon as possible and reach out to the firm.