We have been tracking certain class actions filed against Applied Underwriters, Inc. and Applied Risk Services, Inc. alleging that the companies fraudulently marketed and sold workers’ compensation insurance programs to California employers in violation of state and federal law. The case involves a disputed Reinsurance Participation Agreement used to control worker’s compensation rates. As we previously reported, on January 29, 2019, the court denied class certification, holding that plaintiffs failed to demonstrate that a class action would be “superior” to individual actions, as required by Federal Rule 23(b)(3).

Subsequent to that ruling, plaintiffs requested a status conference, which the court granted. The conference addressed a number of issues, including whether one of the plaintiffs could file a renewed motion for class certification based on a more limited proposed class, whether plaintiffs could communicate with putative class members, and whether the court would set a settlement conference. The new proposed class “would consist of all California participants in defendants’ insurance programs that paid more under defendants’ Reinsurance Participation Agreement than they would have under guaranteed cost workers’ compensation insurance policies issued by California Insurance Company.” Class certification would be sought only on the plaintiff’s claim “under the unlawful prong of California’s Unfair Competition Law.”

The court denied the requests for a renewed motion for class certification and for leave to communicate with putative class members. The court noted that the relevant plaintiff failed to provide “the court with any explanation for why it could not have pursued this narrowed class definition in the initial motion for class certification.” The court observed that the plaintiffs were seeking certification of essentially the same class in a separate New York proceeding. The court also held that the proposed narrower class still would “not resolve the court’s concerns identified in the prior order denying class certification.” The court did decide to consolidate for trial the related cases before the court, and further ordered the cases to the court’s Voluntary Dispute Resolution Program.

Shasta Linen Supply, Inc. v. Applied Underwriters, Inc., Case No. 2:16-cv-01211-WBS-AC (USDC E.D. Cal. Apr. 17, 2019).