Most class actions end in settlements, but an increasing number are heading to trials, despite the substantially higher costs, given the dollars at stake and experts required to determine potential damages. (Credit: Natallia/Adobe Stock)
Defense attorney Joel Siegel had reasons not to go to trial: A judge had certified a class of more than 300,000 policyholders in California against his client, First American Title Insurance Co., and the case was in Los Angeles Superior Court, where no defendant wanted to be.
On March 25, one day before jurors began deliberating, Siegel got a handwritten note from plaintiffs’ lawyer Steven Jay “Bernie” Bernheim offering to settle the case for $400 million. But he didn’t. And, on March 26, after 90 minutes of deliberations, jurors handed his client a defense verdict.
“Juries do the right thing,” Siegel, managing partner of the Los Angeles office of Dentons, told Law.com. “And how juries react to class actions doesn’t have to be what companies think is going to be. Jurors are smart people, and they want to get to the truth of the matter, too."
Siegel tried the case with Ronald Kent, managing partner of Dentons’ office in Newport Beach, California.
Richard Friedman of Seattle’s Friedman Rubin, who tried the class action for the plaintiff with Michael Bidart of Claremont, California-based Shernoff Bidart Echeverria and Steven Jay “Bernie” Bernheim of The Bernheim Law Firm in Los Angeles said his team planned to appeal.
“This was a really complicated case in terms of what the jury was asked to do,” Friedman said. “In this case, the issues were so complicated the defense thought they had a chance of confusing the jury of what was going on and were willing to take the risk.”
The case, originally brought in 2005, represents a rare class-action trial. Most class actions end in settlements, but an increasing number are heading to trials, despite the substantially higher costs, given the dollars at stake and experts required to determine potential damages.
“The reason why companies settle is they’re terrified,” Siegel said. “You get this hydraulic pressure on companies. It sounds like too much of a financial risk, so they end up settling.”
But Siegel's client wanted to fight. The case alleged the California insurer had overcharged title insurance rates to policyholders. At stake, Siegel said, were $500 million in potential damages.
The jury never even got that far. On an 18-question verdict form, they answered “no” to the first: Did First American make a false representation of fact to the class members?
‘Kickbacks and rebates’
The case had a long road to trial, starting nearly two decades ago, when Bernheim filed the first of about a half-dozen class actions alleging First American Title was charging beyond the fees agreed to by the California Department of Insurance.
“He found illegal kickbacks and rebates,” Friedman said of Bernheim. “They were charging for things not on their schedule of fees."
One case ended in a $5 million bench verdict about a decade ago, Friedman said.
In this month’s case, plaintiff Jeffrey Albert Sjobring alleged he paid $563 to First American Title after closing on a home in 2004. In 2017, Los Angeles Superior Court Judge Marion Nelson certified two classes but, one year later, granted First American Title’s motion for judgment.
The California Court of Appeal in 2022 reversed that decision and, after a reassignment, Los Angeles Superior Court Judge Kenneth Freeman set a trial for a class of policyholders from 2003 to 2006 who alleged First American Title charged them premiums of more than $125 on loan policies. Then he transferred the case to Los Angeles Superior Court Supervising Judge Samantha Jessner.
The trial lasted about a month, with experts on both sides.
For Friedman, it was his first class-action trial. However, Friedman did not walk away believing jurors were critical of class actions; in fact, he said, most relayed positive experiences during voir dire.
“The sad truth is class actions are the only way much corporate cheating is ever policed because the government doesn’t do a very good job of that, nobody else does a good job of that,” Friedman said. “But there is room for improvement in the class action world.”
This piece was originally published on Law.com and may not be reprinted.
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