Williams v. Progressive County Mutual Insurance Company

• Court: District Court, S.D. California
• Decided: December 3, 2020
• Docket: 3:17-cv-02282
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 Blaise Williams, individually, and on Case No.: 17-cv-02282-AJB-BGS behalf of all others similarly situated, 12 ORDER: Plaintiff, 13 (1) DENYING PLAINTIFF’S MOTION v. 14 FOR CLASS CERTIFICATION (Doc. Progressive County Mutual No. 89); AND 15 Insurance Company, Progressive 16 Corporation, Progressive Casualty (2) DENYING DEFENDANT Insurance Company, and Mitchell MITCHELL INTERNATIONAL, 17 International, Inc., INC.’S MOTION FOR LEAVE TO 18 Defendants. AMEND, (Doc. No. 118) 19 20 Presently before the Court are: (1) Plaintiff Blaise Williams’s (“Plaintiff”) motion for 21 class certification, (Doc. No. 89); and (2) Defendant Mitchell International, Inc.’s 22 (“Mitchell”) motion for leave to amend its answer to Plaintiff’s First Amended Complaint, 23 (Doc. No. 118.) Both motions are fully briefed. The Court held a hearing on Plaintiff’s 24 motion for certification on May 7, 2020, (Doc. No. 113), and submitted on Mitchell’s 25 motion for leave to amend, concluding that the motion was suitable for determination on 26 the papers, (Doc. No. 123). For the reasons set forth below, the Court DENIES Plaintiff’s 27 motion for class certification, and DENIES Mitchell’s motion for leave to amend. 28 // 1 I. BACKGROUND 2 This action is a business tort and insurance action. Plaintiff, a Texas resident, brings 3 this lawsuit against Defendant Mitchell International, Inc. (“Mitchell”), arguing Mitchell 4 is an unlicensed insurance agent/adjuster. Plaintiff also challenges Mitchell’s use of its 5 Work Center Total Loss (“WCTL”) software to adjust the “actual cash value” (“ACV”) of 6 “total loss” vehicles, arguing this system results in insureds obtaining an ACV less than 7 the actual value of their cars. 8 On September 6, 2016, Plaintiff purchased a 2016 GMC Yukon for $48,050.00. 9 (First Amended Complaint, (“FAC”), Doc. No. 38 ¶ 48.) Plaintiff obtained insurance on 10 the Yukon through Progressive County Mutual (“Progressive”). (Id. ¶ 49.) The insurance 11 policy was a Progressive Texas Auto Policy. (Id.) Around August 26, 2017, Plaintiff’s 12 2016 GMC Yukon was significantly damaged as a result of Hurricane Harvey. (Id. ¶ 53.) 13 Plaintiff filed an insurance claim with Progressive, and Progressive deemed the car a “total 14 loss.” (Id. ¶¶ 54–56.) 15 Progressive used the WCTL software system licensed from Mitchell to determine 16 the ACV of “total loss” vehicles, including Plaintiff’s Yukon. Initially, Progressive told 17 Plaintiff that based on Mitchell’s WCTL valuation system, the ACV of the Yukon at the 18 time of the loss was $38,109.27. Progressive subsequently made an offer to settle the claim 19 for $40,341.34. (Id. ¶ 59.) Plaintiff disputed and negotiated the ACV of the Yukon but was 20 told Progressive could not change the valuation provided by Mitchell. (Id. ¶ 61.) Using 21 Mitchell’s WCTL system again, Progressive made a final offer to settle Plaintiff’s claim in 22 the amount of $42,112.17, based on Mitchell’s valuation of $39,775.92. (Id. ¶ 62.) 23 According to Plaintiff’s own research on the market value, age, and condition of the Yukon, 24 Plaintiff alleges the ACV of the car at the time of the flood was actually $44,025. (Id. ¶ 63.) 25 At bottom, Plaintiff alleges the WTCL system used to determine the ACV of his 26 vehicle was “fundamentally flawed,” and Mitchell and Progressive were manipulating the 27 system to decrease the ACV of the vehicles. Specifically, Plaintiff alleges the WCTL 28 system intentionally undervalues a total loss vehicle’s worth and “thereby cheats Plaintiff 1 and Class Members out of the full amount owed under the Texas Policy.” (Doc. No. 89-1 2 at 6.) Plaintiff argues the WCTL system uses an impermissible “projected sold 3 adjustment,” which reflects a consumer’s purchasing behavior (i.e., negotiating a lower 4 price), and fails to consider the condition of comparable vehicles. (Id.) 5 Based on these facts, Plaintiff alleges Mitchell violated the Texas Insurance Code 6 by serving as an unlicensed agent. To the extent Mitchell is held to not be an agent of 7 Progressive’s, Plaintiff alternatively alleges Mitchell conspired with Progressive to 8 artificially reduce the ACV of vehicles declared total losses, and tortiously interfere with 9 Progressive’s contract with its insureds. (Doc. No. 72 at 8.) 10 II. PROCEDURAL HISTORY 11 On November 8, 2017, Plaintiff filed suit against Mitchell and Progressive (Doc. 12 No. 1.) Plaintiff amended his Complaint (“FAC”) on February 16, 2018. (Doc. No. 38.) 13 The FAC asserted the following claims: breach of contract, tortious interference with 14 contract, violations of the Texas Insurance Code, breach of the implied covenant of good 15 faith and fair dealing, and civil conspiracy. Both Mitchell and Progressive filed motions to 16 dismiss. After full briefing of the motions to dismiss, the Court dismissed the claims against 17 Progressive for lack of personal jurisdiction. (Doc. No. 71.) Those claims have been refiled 18 in Texas state court. (Doc. No. 94 at 6.) As to Mitchell, the Court found that Plaintiff had 19 stated a claim against Mitchell for tortious contractual interference, violations of the Texas 20 Insurance Code, and civil conspiracy. (Doc. No. 72.) On January 13, 2020, Plaintiff filed a 21 motion for class certification, (Doc. No. 89), and on May 26, 2020, Mitchell filed its motion 22 for leave to amend, (Doc. No. 118). Both motions are fully briefed, and this order follows. 23 III. LEGAL STANDARD 24 A plaintiff seeking to represent a class must satisfy the threshold requirements of 25 Rule 23(a) as well as the requirements for certification under one of the subsections of Rule 26 23(b). Rule 23(a) provides that a case is appropriate for certification as a class action if: 27 “(1) the class is so numerous that joinder of all members is impracticable; (2) there are 28 questions of law or fact common to the class; (3) the claims or defenses of the 1 representative parties are typical of the claims or defenses of the class; and (4) the 2 representative parties will fairly and adequately protect the interests of the class.” Fed. R. 3 Civ. P. 23(a). 4 A plaintiff must also establish that one of the subsections of Rule 23(b) is met. In 5 the instant case, Plaintiff seeks certification under subsection (b)(2) for an injunctive relief 6 class. Rule 23(b)(2) permits certification where “the party opposing the class has acted or 7 refused to act on grounds that apply generally to the class, so that final injunctive relief or 8 corresponding declaratory relief is appropriate respecting the class as a whole.” Fed. R. 9 Civ. P. 23(b)(2). 10 A plaintiff bears the burden of demonstrating that each element of Rule 23 is 11 satisfied, and a district court may certify a class only if it determines that the plaintiffs have 12 borne their burden. See Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 158–61 (1982); 13 Doninger v. Pac. Nw. Bell, Inc., 564 F.2d 1304, 1308 (9th Cir. 1977). The court must 14 conduct a “rigorous analysis,” which may require it “to probe behind the pleadings before 15 coming to rest on the certification question.” Wal–Mart Stores, Inc. v. Dukes, 131 S.Ct. 16 2541, 2551 (2011) (internal citations omitted). “Frequently that ‘rigorous analysis’ will 17 entail some overlap with the merits of the plaintiff’s underlying claim. That cannot be 18 helped.” Id. 19 IV. PLAINTIFF’S MOTION FOR CLASS CERTIFICATION 20 A. Standing to Seek Injunctive Relief 21 Plaintiff seeks an injunction requiring Mitchell to disclose in WCTL reports that 22 there are alternative methods to the WCTL system, such as other guidebooks, for valuing 23 total loss vehicles. (Doc. No. 89-1 at 21.) As an initial matter, Mitchell challenges 24 Plaintiff’s Article III standing to bring an injunctive relief class. (Doc. No. 94 at 18.) To 25 establish Article III standing, Plaintiff must establish that he: “(1) suffered an injury in fact, 26 (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely 27 to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 28 1547 (2016). In addition to these three requirements, for injunctive relief—which is a 1 prospective remedy—the threat of injury must be “actual and imminent, not conjectural or 2 hypothetical.” Summers v. Earth Island Inst., 555 U.S. 488, 493 (2009). In other words, 3 the “threatened injury must be certainly impending to constitute injury in fact” and 4 “allegations of possible future injury are not sufficient.” Clapper v. Amnesty Int’l USA, 568 5 U.S. 398, 409 (2013) (internal quotation marks and alteration omitted). Past wrongs, 6 though insufficient by themselves to grant standing, are “evidence bearing on whether there 7 is a real and immediate threat of repeated injury.” City of Los Angeles v. Lyons, 461 U.S. 8 95, 102 (1983) (internal quotation marks omitted). 9 Mitchell does not dispute the second or third prongs required for standing. Instead, 10 Mitchell disputes the injury-in-fact prong, and the requirement of a threat of future injury 11 necessary for injunctive relief. Mitchell’s challenge to Plaintiff’s standing is two-fold. 12 First, Mitchell argues standing for an injunction does not exist because Plaintiff was never 13 injured by Mitchell’s alleged lack of disclosures in the first instance.1 (Doc. No. 94 at 19.) 14 Particularly, Mitchell states there is a disconnect between the injunctive relief sought 15 (mandating disclosures of alternative valuation methods), and Plaintiff’s injury (decreased 16 ACV) because Plaintiff knew from the start that there were other resources to guide the 17 valuation of his Yukon. (Id.) Plaintiff himself looked to the National Automobile Dealers 18 Association (“NADA”) Guidebook and the Kelley Blue Book as alternatives to challenge 19 the values calculated by the WCTL system. (Id., Ex. G, Blaise Williams Deposition at 20 38:24-40:1.) Second, Mitchell further argues there is no standing to seek injunctive relief 21 22 1 Mitchell also argues Plaintiff only seeks injunctive relief against Progressive, and not Mitchell in the 23 FAC. (Doc. No. 94 at 23.) Although Federal Rule of Civil Procedure 8(a) requires that a “pleading that states a claim for relief must contain . . . a demand for the relief sought, which may include relief in the 24 alternative or different types of relief,” a court is not limited to the relief sought in this demand when entering a final judgment. See Fed. R. Civ. P. 54(c) (final judgments other than default judgments “should 25 grant the relief to which each party is entitled, even if the party has not demanded that relief in its 26 pleadings”). For example, the Ninth Circuit has applied this rule to uphold a court’s power to award declaratory relief when that relief was not requested in the complaint. See Arley v. United Pacific Ins. Co., 27 379 F.2d 183, 186–187 (9th Cir. 1967). Mitchell makes no showing that it would be prejudiced by a request for injunctive relief. Additionally, as explained below, Plaintiff’s Texas Insurance Code claim 28 against Mitchell specifically allows for injunctive relief. 1 because there is no threat of future harm. Mitchell draws a comparison to false advertising 2 cases and points out that even if Mitchell were to suffer another total loss to a vehicle, “[i]t 3 is impossible for Williams to not know what he already knows” about the existence of other 4 alternatives to the WCTL system. (Id. at 20.) 5 In reply, Plaintiff contends he was injured because he received less than the ACV 6 under the insurance policy. (Doc. No. 104 at 7.) Furthermore, to counter Mitchell’s 7 statement that there is no threat of future harm, Plaintiff relies on Davidson v. Kimberly- 8 Clark Corp., 889 F.3d 956 (9th Cir. 2018). In Davidson, the Ninth Circuit held “that a 9 previously deceived consumer may have standing to seek an injunction against false 10 advertising or labeling, even though the consumer now knows or suspects that the 11 advertising was false at the time of the original purchase, because the consumer may suffer 12 an ‘actual and imminent, not conjectural or hypothetical’ threat of future harm.” Id. at 969 13 (citing Summers v. Earth Island Inst., 555 U.S. 488, 493 (2009)). 14 First, Plaintiff has alleged an injury-in-fact. Plaintiff’s theory of the case is Mitchell 15 “misrepresented the actual cash value of total loss vehicles and failed to state the material 16 fact that its WCTL system was structured to artificially reduce the model value, age, and 17 condition of the vehicles at the time of the loss.” (FAC ¶ 111.) As stated by Plaintiff, the 18 WCTL system allegedly incorporates mechanisms that artificially suppress the ACV of 19 vehicles, causing Plaintiff to receive an ACV lower than he should have received. Thus, 20 there is an injury Plaintiff can point to. 21 Secondly, Plaintiff has additionally demonstrated a threat of future harm sufficient 22 to confer standing for injunctive relief. Specifically, under Ninth Circuit authority, Plaintiff 23 “properly alleged that [he] faces a threat of imminent or actual harm by not being able to 24 rely on [the WCTL report] in the future, and that this harm is sufficient to confer standing 25 to seek injunctive relief.” Davidson, 889 F.3d at 967. Because Plaintiff is still a Progressive 26 policyholder, he faces the inability to trust the WCTL reports in the event he faces another 27 total loss of a vehicle. As stated in Davidson, “[k]nowledge that the advertisement or label 28 was false in the past does not equate to knowledge that it will remain false in the future.” 1 See id. at 969. Therefore, Plaintiff faces the uncertainty of whether Mitchell’s WCTL 2 system will include alternative methods for ACV calculation, or not, in the future. 3 Accordingly, Plaintiff has sufficient standing to bring an injunctive relief class. 4 B. Injunctive Relief Under the Texas Insurance Code 5 Next, Mitchell argues that the Texas Insurance Code (“TIC” or “the Code”) does not 6 provide for the relief Plaintiff seeks because the TIC does not allow Williams to act as a 7 “private attorney general,” seeking remedies for wrongs that he himself did not suffer. 8 (Doc. No. 94 at 21.) The two TIC provisions allowing for a private plaintiff to bring claims 9 under the statute have an express requirement of a showing of actual “damages.” Mitchell 10 argues Plaintiff has no actual damages because “Williams wants a disclosure informing 11 him of something he already knew.” (Id. at 22.) 12 Here, Plaintiff’s request for injunctive relief is specifically enumerated in the TIC. 13 The Code provides that “[a] person who sustains actual damages may bring a claim against 14 another person for those damages caused by the other person engaging in an [unfair method 15 of competition or an unfair or deceptive act or practice in the business of insurance.]” Tex. 16 Ins. Code § 541.151(1). If a plaintiff prevails in such an action, the plaintiff may seek actual 17 damages, attorneys’ fees, injunctive relief, and “any other relief the court determines is 18 proper.” Id. at § 541.152(a). Section 541.251 also allows a “member of the insurance 19 buying public [that] has been damaged by an unlawful method” to bring an action “on the 20 individual’s own behalf and on behalf of others similarly situated to recover damages and 21 obtain relief as provided by this subchapter.” Here, at least for standing purposes, Plaintiff 22 has alleged damages in receiving a lower ACV than he was entitled to. Thus, there is no 23 barrier prohibiting injunctive relief. 24 C. Federal Rule of Civil Procedure 23(a) 25 Having determined that Plaintiff has standing, the Court will next turn to whether 26 Plaintiff has met the Rule 23(a) elements necessary to certify a class. Plaintiff seeks to 27 certify the following class pursuant to Federal Rules of Civil Procedure 23(a) and (b)(2): 28 “All insureds under Progressive’s Texas Auto Policy (i) whose vehicles were declared total 1 losses by Progressive and (ii) whose claims were valued utilizing Mitchell’s WCTL 2 system.” (Doc. No. 89-1 at 7.) The Court will address the Rule 23(a) elements of 3 numerosity, commonality, typicality, and adequacy below. 4 1. Numerosity 5 Under Rule 23(a)(1), a lawsuit may only proceed via a class if the “class is so 6 numerous that joinder of all members is impracticable.” Here, there is no dispute that there 7 are potentially thousands of putative class members under the proposed class definition. 8 Mitchell has used the WCTL valuation system in assessing the ACV for claims submitted 9 to Progressive by its insureds since at least 2010. (FAC ¶ 4.) Additionally, Mitchell assesses 10 thousands of total loss claims per year for Progressive using the WCTL valuation system. 11 (See Steckler Declaration, Exhibit 3.) And, after Hurricane Harvey, approximately a 12 million automobiles were destroyed in the Houston area. Mitchell does not dispute these 13 facts, and so, this element is satisfied. See Charlebois v. Angels Baseball, LP, 2011 WL 14 2610122, at *4 (C.D. Cal. June 30, 2011) (“Where the exact size of the class is unknown 15 but general knowledge and common sense indicate that it is large, the numerosity 16 requirement is satisfied.”). 17 2. Commonality 18 The commonality factor “requires the plaintiff to demonstrate that the class members 19 have suffered the same injury, which does not mean merely that they have all suffered a 20 violation of the same provision of law.” Dukes, 131 S. Ct. at 2551. The “claims must 21 depend on a common contention” and “that common contention . . . must be of such a 22 nature that it is capable of class-wide resolution.” Id. The commonality requirement of Rule 23 23(a)(2) is construed less rigorously, for example, than the “predominance” requirement 24 of Rule 23(b)(3). Id. Indeed, for purposes of Rule 23(a)(2), even a single common question 25 will suffice. Id. at 2556. 26 Plaintiff argues commonality is satisfied because each putative class members’ 27 vehicle was declared a total loss by Progressive and valued utilizing Mitchell’s WCTL 28 system. (Doc. No. 89-1 at 15.) Plaintiff asserts proof that Mitchell’s WCTL system 1 systematically undervalues total loss vehicles insured under Progressive’s Texas Policy 2 would be common to all class members. (Id.) Furthermore, Plaintiff has identified several 3 questions of law and fact he contends are common to the entire class. These issues include, 4 for example: (1) whether Progressive’s Texas Policy required it to pay ACV to its Texas 5 insureds; (2) whether Progressive failed to pay ACV to its Texas insureds; (3) whether 6 Mitchell’s WCTL system’s valuation represents the ACV of vehicles at the time of the 7 loss; (4) whether Mitchell is an “adjuster” under the Texas Insurance Code; and (5) whether 8 Progressive and Mitchell had an agreement or understanding on how to calculate the ACV 9 of vehicles declared a total loss. (Doc. No. 89-1 at 16–17.) 10 In opposition, Mitchell argues, “[t]here is a disconnect between the ‘common issues’ 11 Williams identifies and the relief he seeks,” because the common issues “have nothing to 12 do with the injunctive relief Williams seeks.” (Doc. No. 94 at 24.) Mitchell contends that 13 a finding that the WCTL system’s valuation does not represent the ACV of vehicles at the 14 time of the loss will not be remedied by compelling Mitchell to “make disclosures on its 15 total loss reports . . . that there are other ways to calculate ACV that may result in higher 16 values than the WCTL system.” (Doc. No. 94 at 24.) 17 While the disconnect Mitchell points out is indeed concerning, the relevant inquiry 18 for this element is whether “common questions contain[] the glue necessary to say that 19 examination of all the class members claims for relief will produce a common answer to 20 the crucial question[s] raised by the plaintiffs’ complaint.” Jimenez v. Allstate Ins. Co., 765 21 F.3d 1161, 1166 (9th Cir. 2014) (internal quotations omitted). Mitchell’s corporate 22 representative, Philip Kroell, testified that the same methodology employed by the WCTL 23 system “is common to every claim that is evaluated by the [WCTL] system.” (Steckler 24 Declaration, Exhibit 4, 41:25-42:3.) Because the methodology of calculating the ACV is 25 the same for all total loss claims, the common questions of whether the WCTL system 26 misrepresented the ACV of vehicles, whether class members were entitled to ACV, and 27 whether Mitchell was an “adjuster” under the Texas Insurance Code will “drive the 28 resolution of the litigation.” Jimenez, 765 F.3d at 1165. Accordingly, commonality is 1 satisfied. 2 3. Typicality 3 While Plaintiff has satisfied numerosity and commonality, Plaintiff cannot 4 demonstrate typicality. Rule 23(a)(3)’s typicality requirement provides that a “class 5 representative must be part of the class and possess the same interest and suffer the same 6 injury as the class members.” Falcon, 457 U.S. at 156 (quoting E. Tex. Motor Freight Sys., 7 Inc. v. Rodriguez, 431 U.S. 395, 403 (1977)) (internal quotation marks omitted). The 8 purpose of the requirement is “to assure that the interest of the named representative aligns 9 with the interests of the class.” Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 10 1992). “[T]he typicality requirement is ‘permissive’ and requires only that the 11 representative’s claims are ‘reasonably co-extensive with those of absent class members; 12 they need not be substantially identical.’” Rodriguez v. Hayes, 591 F.3d 1105, 1124 (9th 13 Cir. 2010) (internal citations omitted). However, a court should not certify a class if “there 14 is a danger that absent class members will suffer if their representative is preoccupied with 15 defenses unique to it.” Hanon, 976 F.2d at 508 (internal quotation marks omitted). 16 In proving typicality, Plaintiff argues his total loss vehicle was insured under the 17 same Progressive Texas Policy and undervalued by the same Mitchell WCTL system as 18 every member of the putative class. Therefore, typicality is “necessarily satisfied where, as 19 here, ‘the plaintiff endured a course of conduct directed against the class.’” (Doc. No. 89- 20 1 at 17 (quoting Just Film v. Buono, 847 F.3d 1108, 1118 (9th Cir. 2017).) Additionally, 21 Plaintiff states the elements needed to prove violations of Texas Insurance Code 22 §§ 541.060(a) and 541.061, tortious interference, and civil conspiracy are the same for all 23 putative class members. (Id. at 18–19.) 24 Mitchell pushes back, arguing Plaintiff’s claims are not typical because the “course 25 of conduct involved differs from a vast majority of the proposed class’s claim.” (Doc. No. 26 94 at 25.) Mitchell points out that 94% of Progressive’s total loss claims settle after the 27 first phone call from Progressive with the proposed settlement value from the first WCTL 28 valuation report. (Doc. No. 89-1 at 9.) By contrast, Plaintiff’s total loss claim took at least 1 sixteen calls with Progressive representatives and three reports run to negotiate a higher 2 settlement value. (Doc. No. 94 at 25.) 3 Here, the element of typicality is not met. “Measures of typicality include ‘whether 4 other members have the same or similar injury, whether the action is based on conduct 5 which is not unique to the named plaintiffs, and whether other class members have been 6 injured by the same course of conduct.’” Torres v. Mercer Canyons Inc., 835 F.3d 1125, 7 1141 (9th Cir. 2016) (quoting Hanon, 976 F.2d at 508). The gravamen of Plaintiff’s claims 8 is that Mitchell misrepresented the ACV of total loss vehicles and failed to state that its 9 WCTL system was structured to artificially reduce the model value, age, and condition of 10 the vehicles at the time of the loss. (FAC ¶ 111.) Plaintiff states that because of the 11 misrepresentation, he received a lower ACV than he should have received. But as noted by 12 Mitchell, Plaintiff is not a typical plaintiff. According to Progressive’s statistics, 94% of 13 the total loss claims are settled by the first call. (Doc. No. 89-1 at 9.) By contrast, Plaintiff’s 14 claim did not settle until after sixteen calls. During the negotiations, Progressive also 15 requested Mitchell run a specialty report, an individualized report created by Mitchell. 16 (Doc. No. 94 at 25.) For specialty reports, rather than having the software automatically 17 pull car comparables from data available, a human sifts through vehicle listings and recent 18 sales to find comparables to calculate a settlement value. (Id.) Additionally, Plaintiff fails 19 to meet typicality because he did not rely on the WCTL valuation report but instead on 20 NADA and Kelley Blue Book comparables. (Id. at 26.) The facts do not establish that 21 Plaintiff was even deceived by the WCTL value. Indeed, he did not take the WCTL report 22 for face value, and instead did his own research into the ACV of his Yukon. Plaintiff then 23 negotiated the settlement with Progressive, and settled his claim using a specialty report. 24 (Id. at 24–26.) Mitchell also points out “Williams repeatedly told Progressive that his 25 ultimate goal was to have Progressive pay an amount sufficient to have the balance on his 26 vehicle loan paid and the lien released.” (Id. at 5.) Williams ultimately accepted a payment 27 of $42,112.17 from Progressive on October 19, 2017 to resolve his insurance claim—an 28 amount that his lender agreed was sufficient to satisfy his outstanding loan. (Id.) 1 Plaintiff argues it is immaterial that Plaintiff did not rely on the WCTL report 2 because reliance is not an element to any of the asserted claims. To the contrary, Texas 3 district courts have held that reliance is an element of claims brought under Texas 4 Insurance Code chapter 541, the chapter which Plaintiff relies. See Partain v. Mid- 5 Continent Specialty Ins. Servs., Inc., 838 F. Supp. 2d 547, 558 (S.D. Tex. 2012), aff’d sub 6 nom. Graper v. Mid-Continent Cas. Co., 756 F.3d 388 (5th Cir. 2014); Nunn v. State Farm 7 Mut. Auto. Ins. Co., 729 F. Supp. 2d 801, 813 (N.D. Tex. 2010) (claims under Section 8 541.051 of the Texas Insurance Code for alleged misrepresentation require a plaintiff to 9 prove that the misrepresentation caused the plaintiff’s damages); Carper v. State Farm 10 Lloyds, 2002 WL 31086074, at *8 (N.D. Tex. Sept. 13, 2002) (granting summary judgment 11 for defendant on plaintiff’s Insurance Code claims based on absence of evidence of reliance 12 and causation). 13 Based on the foregoing, “there is a danger that absent class members will suffer” 14 because Plaintiff might be “preoccupied with defenses unique to it.” Hanon, 976 F.2d at 15 508 (internal quotation marks omitted). There is a great risk that Plaintiff’s lack of reliance 16 would consume the litigation. As such, Plaintiff has not shown typicality. 17 4. Adequacy 18 Rule 23(a)(4) requires the class representative to “fairly and adequately protect the 19 interests of the class.” Fed. R. Civ. P. 23(a)(4). In assessing this requirement, courts within 20 the Ninth Circuit apply a two-part test, asking the following questions: (1) do the named 21 plaintiffs and their counsel have any conflicts of interest with other class members? and (2) 22 will the named plaintiffs and their counsel prosecute the action vigorously on behalf of the 23 class? See Staton v. Boeing Co., 327 F.3d 938, 957 (9th Cir. 2003). 24 Plaintiff argues he and his counsel do not have any conflicts with the class. (Doc. 25 No. 89-1 at 19–20.) Furthermore, Plaintiff adds he has been an active participant in this 26 litigation and his counsel has prosecuted this action vigorously on behalf of himself and 27 the class. (Id.) Mitchell does not challenge Plaintiff on his assertion that there are no 28 conflicts between Plaintiff, counsel, and the proposed class. Mitchell does however attack 1 counsel’s competency, pointing out counsel has only taken one deposition of Mitchell’s 2 corporate representative. (Doc. No. 94 at 27.) That deposition, Mitchell explains, only 3 probed “the Texas Insurance Code claim, and elicited almost no testimony on the WCTL 4 methodology and whether WCTL reaches accurate valuations.” (Id.) Mitchell also states 5 Plaintiff only has one expert witness, who will only opine on whether Mitchell is an 6 adjuster under the Texas Insurance Code and will offer no opinion on a damage’s 7 methodology or about the validity of the WCTL valuation software. (Id.) Finally, Mitchell 8 also calls into question Plaintiff’s counsel’s legal research abilities, in addition to failing to 9 file the motion for class certification under seal. 10 First, Mitchell’s arguments regarding counsel’s adequacy are unpersuasive. Based 11 on counsel’s work on this litigation thus far, the counsel would not be inadequate. Counsel 12 has successfully briefed and argued Mitchell’s motion to dismiss and has shown a 13 willingness to “prosecute the action vigorously.” In re Mego Fin’l Corp. Secur. Litig., 213 14 F.3d 454, 462 (9th Cir. 2000). While the Court does not doubt that Plaintiff has prosecuted 15 the action vigorously, as discussed above, there are concerns as to whether Plaintiff may 16 be an adequate representative due to his atypical situation. See Kandel v. Brother Int’l 17 Corp., 264 F.R.D. 630, 634 (C.D. Cal. 2010) (“Issues of typicality and adequacy of the 18 class representatives’ representation often blur, and the Court will not restate its prior 19 points with regard to the proposed class representatives.”). As such, the Court finds that 20 Plaintiff is an inadequate class representative. 21 * * * 22 In sum, Plaintiff fails on the Rule 23(a) typicality and adequacy elements necessary 23 for class certification. 24 D. Federal Rule of Civil Procedure 23(a) 25 A plaintiff seeking to represent a class must satisfy the threshold requirements of 26 Rule 23(a) as well as the requirements for certification under one of the subsections of Rule 27 23(b). Here, Plaintiff seeks only to certify a class under Rule 23(b)(2). Rule 23(b)(2) 28 provides for class certification when “the party opposing the class has acted or refused to 1 act on grounds that apply generally to the class, so that final injunctive relief or 2 corresponding declaratory relief is appropriate respecting the class as a whole. . . .” Rule 3 23(b)(2) applies only when a single injunction or declaratory judgment would provide 4 relief to each member of the class. See Dukes, 564 U.S. at 360–61. It does not authorize 5 class certification when each individual class member would be entitled to a different 6 injunction or declaratory judgment against the defendant. Id. Similarly, it does not 7 authorize class certification when each class member would be entitled to an individualized 8 award of monetary damages. Id. 9 Briefly, even if Rule 23(a) was met, it is questionable whether Plaintiff may certify 10 the class under Rule 23(b). Plaintiff’s requested injunctive relief—requiring Mitchell to 11 make disclosures on its WTCL total loss reports—would apply to the class as a whole, 12 because Mitchell would be required to make disclosures on every WCTL report to 13 Progressive insureds. However, based on Plaintiff’s allegations, the putative class members 14 are also entitled to “individualized award of monetary damages.” Dukes, 564 U.S. at 360– 15 61. Namely, this would be the difference between the ACV calculated by the WCTL 16 system, and the actual value of the car at total loss. Because each class member would be 17 entitled to an individualized award of monetary damages, Plaintiff has not satisfied Rule 18 23(b)(2). 19 * * * 20 In summation, Plaintiff has not shown typicality or adequacy necessary for class 21 certification under Rule 23(a). Neither has he shown that class certification is appropriate 22 under Rule 23(b)(2). As such, the Court DENIES Plaintiff’s motion for class certification. 23 (Doc. No. 89.) 24 V. MITCHELL’S MOTION FOR LEAVE TO AMEND 25 Mitchell seeks leave to amend its answer to add a counterclaim under Texas 26 Insurance Code §§541.153 and 541.253, both of which award attorneys’ fees and costs for 27 the filing of actions under the TIC which are groundless and brought in bad faith or brought 28 for the purpose of harassment. (Doc. No. 118.) Section 541.253 of the TIC states, “[t]he 1 court may award to the defendant court costs and reasonable attorney’s fees in relation to 2 the work expended on a finding by the court that a class action under this subchapter was 3 brought by an individual plaintiff in bad faith or for the purpose of harassment.” Section 4 541.153 similarly states, “[a] court shall award to the defendant court costs and reasonable 5 and necessary attorney’s fees if the court finds that an action under this subchapter is 6 groundless and brought in bad faith or brought for the purpose of harassment.” “A claim 7 for attorney fees under Section 541.153 is an independent claim for affirmative relief” and 8 must be brought as a counterclaim. See Knoderer v. State Farm Lloyds, 515 S.W.3d 21, 47 9 (Tex. App. 2017). 10 Rule 15(a) governs leave to amend prior to trial. A party may amend its pleading 11 once as a matter of course within 21 days after serving it; or, if the pleading is one requiring 12 a response, within 21 days after service of the responsive pleading or motion. See Fed. R. 13 Civ. P. 15(a)(1). “In all other cases, a party may amend its pleading only with the opposing 14 party’s written consent or the court’s leave. The court should freely give leave when justice 15 so requires.” Fed. R. Civ. P. 15(a)(2). The grant or denial of leave to amend is in the Court’s 16 discretion. See Swanson v. U.S. Forest Serv., 87 F.3d 339, 343 (9th Cir. 1996). “In 17 determining whether to grant leave to amend, the court considers five factors: (1) bad faith; 18 (2) undue delay; (3) prejudice to the opposing party; (4) futility of amendment; and (5) 19 whether the [party] has previously amended [its pleading].” Nunes v. Ashcroft, 375 F.3d 20 805, 808 (9th Cir. 2004)). 21 In opposition, Plaintiff argues “Mitchell has known that Plaintiff asserts TIC claims 22 against it for more than two and a half years, but Mitchell’s motion fails to explain why it 23 just now seeks to amend its pleadings to include its counterclaim.” (Doc. No. 121 at 9.) 24 Plaintiff maintains that despite Mitchell’s contention that additional discovery is not 25 needed, the deadline for fact discovery has passed, and Plaintiff has not had an opportunity 26 to defend against the proposed claim. (Id. at 10.) Lastly, Plaintiff argues in opposition that 27 the addition of Mitchell’s proposed claims is futile because Mitchell has not pled facts 28 tending to show Plaintiff’s TIC claims are groundless, asserted in bad faith, or harassing. 1 (Id. at 13.) 2 The Court agrees with Plaintiff and will deny Mitchell’s request for leave to add a 3 counterclaim. “[L]ate amendments to assert new theories are not reviewed favorably when 4 the facts and the theory have been known to the party seeking amendment since the 5 inception of the cause of action.” Manipoun v. DiBella, No. 17-CV-02325-AJB-BGS, 2019 6 WL 1937574, at *2 (S.D. Cal. May 1, 2019 (citing Acri v. Int’l Ass’n of Machinists & 7 Aerospace Workers, 781 F.2d 1393, 1398 (9th Cir. 1986)). Mitchell does not adequately 8 explain why it only now discovered this claim, and why it could not have asserted this 9 claim two years ago. Indeed, Mitchell knew about Plaintiff’s TIC claim from the inception 10 of this suit because it was included in Plaintiff’s Complaint in November 2017. (Doc. No. 11 1.) Furthermore, fact discovery closed on December 30, 2019, and expert discovery closed 12 on May 29, 2019. (See Doc. Nos. 80, 108.) Therefore, to either reopen discovery, or allow 13 the addition of the claim without discovery as Mitchell advocates, would prejudice Plaintiff 14 as his claims have been pending for two years without allegations of bad faith. 15 Furthermore, there are some questions as to whether amendment would be futile. To 16 bring a claim under TIC § 541.153, a defendant “must establish that the plaintiff’s claims 17 were (1) groundless and brought in bad faith, or (2) groundless and brought for the purpose 18 of harassment.” Arizpe v. Principal Life Ins. Co., No. 3:18-CV-1010-G, 2019 WL 4246598, 19 at *2 (N.D. Tex. Sept. 6, 2019). Mitchell argues Plaintiff’s contention that Mitchell is an 20 adjuster under the TIC lacks support under law and fact. (Doc. No. 118-1 at 47.) However, 21 the Court notes that Plaintiff’s TIC claim has at least survived Mitchell’s motion to dismiss. 22 Whether Plaintiff may ultimately prevail is not at issue today, but Plaintiff’s ability to 23 survive a motion to dismiss calls into question Mitchell’s argument that the TIC claim was 24 brought frivolously. Thus, upon review of the factors relevant to a Rule 15 analysis, the 25 Court DENIES Mitchell’s motion considering Mitchell’s delay in proposing the 26 counterclaim, coupled with the potential prejudice to Plaintiff and futility of amendment. 27 VI. CONCLUSION 28 Based on the foregoing, the Court DENIES Plaintiff’s motion for class certification, 1 ||(Doc. No. 89), and DENIES Mitchell’s motion for leave to amend, (Doc. No. 118). 2 3 IT IS SO ORDERED. 4 Dated: December 3, 2020 ,

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