Strawn v. Farmers: Affirming Presumption of Reliance in Consumer Fraud Class Actions

The U.S. Supreme Court has denied a petition for review brought by defendant Farmers Insurance, in the process strengthening the argument advocated by the plaintiffs’ bar that individual reliance need not be established in consumer class actions.  See Strawn v. Farmers Ins. Co., 256 P.3d 100 (Or. 2011), cert. denied, No. 11-445 (U.S. Jan. 23, 2012) (available here). 

The underlying ruling by the Oregon Supreme Court affirmed a jury verdict for the plaintiffs finding that Farmers Insurance had defrauded and breached its contractual obligations to class members.  Id. at 102.  The Oregon high court specifically rejected the defendant’s contention that the plaintiffs were required to show reliance by every class member on the allegedly fraudulent misrepresentations.  Id.  In a prior ruling in this case, the court explained that reliance among class members could be inferred if the defendant made the same misrepresentation to all, and if class members would have reasonably understood the misrepresentation in the same way.  Strawn v. Farmers Ins. Co., 258 P.3d 1199, 1213 (Or. 2011).

The Oregon Supreme Court thus endorsed a presumption of classwide reliance in consumer fraud class actions, further reinforcing the trend among trial and appellate courts to infer the reliance of absent class members.  See also Wolph v. Acer, 272 F.R.D. 477 (N.D. Cal. Mar. 25, 2011) (classwide reliance is presumed upon a showing that the misrepresentation is material); Fitzpartick v. General Mills, No. 10-11064, 2011 U.S. App. LEXIS 6047 (11th Cir. Mar. 25, 2011) (same); Cole v. Asurion Corp., 267 F.R.D. 322 (C.D. Cal. 2010) (same).

In denying Farmers Insurance’s certiorari petition, the U.S. Supreme Court has implicitly endorsed the Oregon court’s reasoning, and signaled that it is not willing to expand the reach of Dukes to the degree that some had predicted.