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Sitton v. State Farm Mutual Automobile Insurance Co.2/18/2003
fs define as 'the difference between PIP claims made and those paid by State Farm.' Plaintiffs contend such aggregate damages should be automatically awarded if the jury finds in Phase I that State Farm acted in bad faith. As Commissioner Verellen stated in granting discretionary review: 'The plaintiffs' faulty syllogism is that, because a bad faith program was intended to limit claims and resulted in the limitation of claims, the full amount of every claim made is valid.'
The present trial plan allows the jury to make a damages award without requiring individual claimants to establish causation and damages or providing State Farm the opportunity to show it had a reasonable justification for denying individual claims. The effect of the plan is to eliminate causation as an element of plaintiffs' bad faith and CPA claims. This is plainly error, and we vacate the order establishing the trial plan.
This is not to say that bifurcation is not a possibility here. A trial plan involving bifurcated phases, such as a bad faith phase and a separate, causation/damages phase, may be appropriate, so long as it requires individual claimants to demonstrate causation and damages, and provides a mechanism for State Farm to show justification for denying individual claims.
State Farm also contends, however, that such bifurcation would violate its right to a jury trial under the Washington Constitution. Federal Seventh Amendment jurisprudence guides us as to the right to jury trial under our state constitution. Bifurcation does not violate the Seventh Amendment unless the questions sought to be bifurcated are so interwoven that one cannot be submitted independently of the other without confusion and uncertainty. Here, whether State Farm created and implemented a program for the purpose of wrongfully denying, limiting, or terminating PIP benefits is an issue separate and distinct from individual determinations of whether such a program caused harm, and if so, how much. These issues are not so interwoven as to create confusion or uncertainty.
State Farm also argues that individual determinations of causation and damages in the second phase of a bifurcated proceeding would be unmanageable because 'there would be thousands of juries spread throughout the state, entirely outside the control of the Phase I judge.' This argument is essentially the same as State Farm's superiority argument. It is true that management of any complex class action with significant individual issues is likely to be a challenge. As described above, however, the trial court has a variety of tools available to deal with these challenges. As illustrative examples, the court can make use of special masters to preside over individual causation and damages proceedings. So long as State Farm retained the right to dispute the master's findings and request a jury determination, State Farm's right to a jury trial is not compromised. Or the court could certify subclasses in each county where class members reside, or even decertify the class altogether after the bad faith phase, and give notice to class members concerning how to proceed on individual damage claims.
In short, although we vacate the order establishing the current trial plan, State Farm has not shown that a litigation plan bifurcating the trial is inherently unmanageable.
III. Presumption of Harm
The parties have devoted extensive briefing to the question of whether a finding of bad faith entitles plaintiffs to a rebuttable presumption of harm. The presumption of harm doctrine in bad faith insurance cases arose from the Supreme Court's decision in Safeco Insurance Co. v. Butler, and was described further in Coventry Associat
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