[00:00:00] Speaker 00:
Good morning, Your Honors.

[00:00:02] Speaker 00:
Mark Hanover on behalf of defendant appellant Allstate.

[00:00:06] Speaker 00:
The crux of plaintiff's liability theory is that Allstate policyholders were allegedly overinsured because they paid homeowners premium on square footage that allegedly did not exist.

[00:00:21] Speaker 00:
but Ms.

[00:00:21] Speaker 00:
Hilario does not fit the plaintiff's liability theory because the square footage of her home recorded in Allstate's records was in fact lower than the actual square footage.

[00:00:35] Speaker 04:
Counsel, I remember reading that in your brief, but I also take it from the brief that Allstate, this was all an estimate.

[00:00:44] Speaker 04:
Nobody ever used exact square footage.

[00:00:46] Speaker 00:
That's right.

[00:00:47] Speaker 04:
So if the basis for the complaint was an improper use of an estimate, what does the actual square footage in Ms.

[00:00:58] Speaker 04:
Eladio's home have to do with it?

[00:01:02] Speaker 00:
Allstate doesn't write partial homeowners insurance.

[00:01:05] Speaker 00:
Allstate writes

[00:01:07] Speaker 00:
will only write homeowners insurance that it believes is sufficient to replace the home in the event that it's completely destroyed.

[00:01:16] Speaker 00:
So Allstate uses tools to try to figure out how much insurance might be necessary.

[00:01:24] Speaker 00:
Allstate discloses to the policyholder, here's our estimate, our estimated replacement cost of what we believe.

[00:01:31] Speaker 04:
And I respect that.

[00:01:32] Speaker 04:
My question, though, is since

[00:01:35] Speaker 04:
Allstate sets its premium based upon what it believes to be a good faith estimate.

[00:01:41] Speaker 04:
But in this case, you're saying, well, we're going to put the estimate aside, the actual square footage based upon, what was it, some kind of aerial surveillance or something you did at her home.

[00:01:50] Speaker 00:
Yes.

[00:01:51] Speaker 04:
It's less, and she actually came out better.

[00:01:53] Speaker 00:
Yes.

[00:01:53] Speaker 04:
But the complaint talks about the estimate.

[00:01:57] Speaker 04:
And she claims in the complaint that her bill was based upon the estimate, not based upon the actual square footage.

[00:02:08] Speaker 04:
So I'm still puzzled as to why your measurement of the actual square footage has anything to do with this class action and her standing as the representative.

[00:02:20] Speaker 00:
the relief that the plaintiff is not complaining about an improper estimated replacement cost.

[00:02:26] Speaker 00:
She doesn't care what the estimated replacement cost is.

[00:02:29] Speaker 00:
The relief that the plaintiff is seeking under the UCL is return of premium.

[00:02:35] Speaker 04:
That's $141 or something like that, but that's based upon, if I understand it, it's based upon her belief that she was kind of double counted based upon the use of the new

[00:02:47] Speaker 04:
I forget the acronym for TTC something or other.

[00:02:51] Speaker 04:
Isn't that correct?

[00:02:53] Speaker 00:
The reason why she wants to return a premium is because she believes that the premium, because she was over, she believes she was over and short.

[00:03:01] Speaker 03:
Well, she's not complaining about being overinsured.

[00:03:04] Speaker 03:
She's complaining about paying more money than she would have otherwise.

[00:03:07] Speaker 03:
Did she pay more money than she would have otherwise?

[00:03:09] Speaker 03:
I think the answer is conceded to be yes.

[00:03:12] Speaker 03:
Am I wrong about that?

[00:03:14] Speaker 03:
Did she pay more than she would have paid otherwise?

[00:03:19] Speaker 03:
Allstate didn't do this examination of her house out of the blue.

[00:03:23] Speaker 03:
It did it because they were trying to figure out how to deal with this lawsuit.

[00:03:27] Speaker 03:
If the lawsuit had never been there, she would never have paid the higher amount of, and the air hadn't taken place, she wouldn't have paid the higher amount of premium, would she?

[00:03:36] Speaker 03:
I mean, I don't think there's a dispute about that.

[00:03:39] Speaker 00:
Right.

[00:03:39] Speaker 00:
There's no dispute about the premium she paid.

[00:03:41] Speaker 03:
Was any claim ever paid on this policy?

[00:03:44] Speaker 00:
I don't believe so.

[00:03:46] Speaker 03:
OK, so she paid more than she would have otherwise.

[00:03:49] Speaker 03:
Why isn't that an injury?

[00:03:52] Speaker 03:
You're talking about she got extra value somehow because she was overinsured for some period of time and so forth, but no claims were ever paid.

[00:04:01] Speaker 03:
So from a dollars and cents perspective, she paid more money than she would have otherwise.

[00:04:05] Speaker 03:
And it doesn't sound like that's factually disputed.

[00:04:08] Speaker 00:
She paid more money because she didn't disclose the actual square footage of her home.

[00:04:13] Speaker 03:
Are you going to sue her for that?

[00:04:15] Speaker 00:
No.

[00:04:16] Speaker 03:
OK, then what's the problem?

[00:04:18] Speaker 03:
I mean, I'm having real trouble understanding how this action by Allstate, which it appears to concede happened, not just to this plaintiff, but to the other members of the class for whom this back and forth counting resulted in a double counting, is being resisted so hard

[00:04:40] Speaker 03:
If factually it's not disputed that, in fact, all state made a mistake at a certain point in time, tried to correct the mistake, but overlooked the fact that for many of the homeowners and the insureds, the mistake had been manually corrected by agents or other people.

[00:04:58] Speaker 03:
Those are the people we're talking about here.

[00:05:01] Speaker 03:
Now, isn't it the case that those people paid more than they would have otherwise?

[00:05:08] Speaker 00:
Well, there's what happened to Ms.

[00:05:10] Speaker 00:
Hilario, and then there's what happened to everyone else.

[00:05:12] Speaker 03:
And that's why, generally, because I'm going to leave her out of it for the moment, is there any dispute that the insureds generally, leaving aside the aberration for her addition that never got picked up, that they paid more money than they would have otherwise?

[00:05:31] Speaker 00:
Well, I mean, it depends.

[00:05:38] Speaker 00:
It's not on the class that the plaintiff sought to certify.

[00:05:41] Speaker 00:
The plaintiff sought to certify the class of everyone who had the project.

[00:05:45] Speaker 03:
And the district court caught that and changed the definition.

[00:05:49] Speaker 03:
That's the group I'm talking about.

[00:05:51] Speaker 00:
But OK, for that group, the judge said that it includes everyone where there was a garage that was allegedly double counted.

[00:06:03] Speaker 00:
But we cannot figure.

[00:06:05] Speaker 00:
we can't figure out what that actually means.

[00:06:08] Speaker 00:
For example, with respect to Hilario, Allstate reduced by 288 square feet, which is a standard garage, and then Allstate increased by 288 square feet, which is a standard garage.

[00:06:21] Speaker 00:
In the intervening time, Hilario, she noticed the decrease, she increased by 125 square feet, excuse me, 150 square feet.

[00:06:34] Speaker 00:
That's not the size of her garage, and that's not the size of a standard garage.

[00:06:39] Speaker 00:
We found out later than the litigation the size of her garage is 249 square feet.

[00:06:43] Speaker 00:
So was her garage double counted?

[00:06:46] Speaker 04:
You're not answering Judge Clifton's question.

[00:06:48] Speaker 04:
He's asking about the class as redefined by the judge.

[00:06:53] Speaker 03:
Please answer his question.

[00:06:56] Speaker 03:
I'm having trouble understanding why Allstate isn't trying to fix the problem.

[00:07:02] Speaker 03:
which it has the responsibility for having created and has the best source of information for who actually suffered from this.

[00:07:15] Speaker 03:
I mean, the lawsuit here seems like an expenditure of resources that could be better applied in solving the admitted problem for some number of all-state policyholders.

[00:07:32] Speaker 00:
We don't know that there's, and the record before the court does not prove that there's a problem for any Allstate policyholders, because the only one that's before the court is Ms.

[00:07:42] Speaker 00:
Hilario, whose limits weren't too high.

[00:07:44] Speaker 00:
She didn't have too much coverage.

[00:07:45] Speaker 03:
Okay, so you're not really interested in addressing the problem that Allstate has conceded, which is that it made a correction that turns out to have overcorrected for some number of people where there had been an interim correction.

[00:08:00] Speaker 03:
OK, let's go ahead and get to Ms.

[00:08:02] Speaker 03:
Hilario.

[00:08:03] Speaker 03:
I mean, I put it in front of you two or three times, and I don't hear anything that suggests that all states trying to address that problem.

[00:08:13] Speaker 00:
We did, Your Honor.

[00:08:14] Speaker 00:
We sent letters to people telling them to review and verify the information regarding your insured property, to notify us immediately if you believe that any information on your policy declarations is incorrect.

[00:08:26] Speaker 00:
But the problem is we can't tell that from our records.

[00:08:30] Speaker 00:
Our records will tell whether or not the square footage of a home increases at some point or another, but we don't know why that square footage was increased.

[00:08:39] Speaker 00:
We don't know why Ms.

[00:08:40] Speaker 00:
Hilario's agent increased by 150 square feet.

[00:08:43] Speaker 00:
That doesn't match up to anything.

[00:08:44] Speaker 00:
There's many reasons.

[00:08:45] Speaker 03:
You know it was increased.

[00:08:47] Speaker 03:
You know that you did one correct, you did one adjustment and

[00:08:53] Speaker 03:
a correction to that adjustment, and another adjustment was made.

[00:08:58] Speaker 00:
Right.

[00:08:58] Speaker 00:
And that adjustment could have been made because they put on an addition to their home.

[00:09:03] Speaker 00:
That adjustment could have been made because, in light of the wildfires, they did more research and they realized, oh, that number that I originally gave Allstate, that wasn't right.

[00:09:11] Speaker 00:
Now I take on a measuring tape, and I'm going to tell them the correct measures.

[00:09:16] Speaker 03:
You know the square footage of your house?

[00:09:18] Speaker 03:
Have you ever measured it yourself?

[00:09:20] Speaker 03:
Nobody's going to know that.

[00:09:21] Speaker 03:
So that's why people respond to that by saying.

[00:09:26] Speaker 00:
I don't know the square footage of my house.

[00:09:28] Speaker 00:
That's why we're not suing Halario, Your Honor.

[00:09:32] Speaker 00:
We're trying to figure out what the actual square footage is.

[00:09:35] Speaker 00:
And there's many sources for it, and no single one of them is determinative.

[00:09:38] Speaker 00:
But we can't figure out who, if anyone, was overinsured unless we know the actual square footage of their home.

[00:09:45] Speaker 03:
But they're not suing for being overinsured.

[00:09:48] Speaker 03:
They're suing for being overcharged, having to pay more than they would have otherwise.

[00:09:53] Speaker 03:
You keep putting the emphasis on overinsured, because that's what Allstate potentially suffered.

[00:10:00] Speaker 03:
But they suffered not from overinsurance.

[00:10:04] Speaker 03:
And if she didn't have any claims, didn't suffer from underinsurance, she suffered from paying more than she would have paid otherwise.

[00:10:13] Speaker 03:
Where am I wrong?

[00:10:16] Speaker 00:
Because we file our rates with the CDI, with the California Department of Insurance.

[00:10:21] Speaker 00:
and the amount that they were charged corresponds to the amount of coverage that they received.

[00:10:25] Speaker 00:
There was nothing wrong with the premiums compared to the coverage that they received.

[00:10:28] Speaker 03:
So for example, someone who- But she didn't have any claims, so the extra coverage wasn't of value to her.

[00:10:35] Speaker 00:
What if they did?

[00:10:35] Speaker 00:
What about someone who had a claim?

[00:10:38] Speaker 03:
What if?

[00:10:39] Speaker 03:
But is there anything wrong with my conclusion that she paid more

[00:10:45] Speaker 03:
than she would have otherwise.

[00:10:47] Speaker 03:
If this lawsuit had never come along, if nobody had noticed the fact that the House was apparently mismeasured in the first place, she wound up paying more, as at least some policyholders did.

[00:11:01] Speaker 03:
Is that wrong?

[00:11:03] Speaker 00:
She never paid more money than the coverage that was provided, and the coverage that provided was never too high.

[00:11:08] Speaker 00:
If someone who, Your Honor says, paid more,

[00:11:12] Speaker 00:
paid more, and then they had a complete loss of their home during a wildfire.

[00:11:17] Speaker 00:
And Allstate paid out the full coverage limits.

[00:11:20] Speaker 00:
Can she really come back here and say, I was injured because I paid too much?

[00:11:24] Speaker 00:
That person paid the correct premium, according to the rates filed with the CDI, for a certain amount of coverage and received the full amount of the coverage.

[00:11:35] Speaker 00:
So at all times, they had the full coverage stated on the policy, disclosed on the policy.

[00:11:42] Speaker 00:
At all times, they paid the premium for the coverage disclosed on the policy.

[00:11:47] Speaker 00:
And at all times, the dimensions of their home were disclosed on the policy.

[00:11:52] Speaker 00:
And at all times, they were advised to check them and to advise all state if there was any problems with them.

[00:11:59] Speaker 04:
With respect, Council, you seem to be evading the question from my perspective.

[00:12:06] Speaker 04:
you've got an according to the class as defined by the district judge you have a certain number of people whose agents recalculated how many square feet were involved without an earlier mistake had been made all state only recognize that increased it for everybody uh... and that group however many there were twenty thousand i think it's a rough estimate now

[00:12:36] Speaker 04:
paid more.

[00:12:37] Speaker 04:
And I don't think you question that.

[00:12:39] Speaker 04:
You're saying, well, they would have been a fire and they'd have benefited.

[00:12:42] Speaker 04:
Great.

[00:12:42] Speaker 04:
Well, that's fine.

[00:12:43] Speaker 04:
But that's not what's before us here.

[00:12:44] Speaker 04:
The question is, given the mistake, did they pay more?

[00:12:49] Speaker 04:
And I think the answer is pretty clearly yes, right?

[00:12:52] Speaker 04:
Those people.

[00:12:52] Speaker 04:
Put Hilario aside for a moment.

[00:12:56] Speaker 00:
Your Honor, people may have paid more money because of something completely unrelated to this.

[00:13:00] Speaker 00:
But they didn't do it.

[00:13:02] Speaker 04:
Allstate did, or one of its agents did, right?

[00:13:04] Speaker 00:
No, Your Honor, we increased and then decreased.

[00:13:07] Speaker 04:
And then you increased again.

[00:13:08] Speaker 00:
No, we didn't.

[00:13:10] Speaker 00:
We did the opposite.

[00:13:12] Speaker 00:
We decreased and then we increased back.

[00:13:14] Speaker 04:
Right, and then your agents, some of the local agents, also increased

[00:13:19] Speaker 04:
before you had the increase on a system-wide basis, right?

[00:13:23] Speaker 04:
And those are the people that are included in this purported class.

[00:13:27] Speaker 04:
Isn't that right?

[00:13:28] Speaker 00:
But if they called in to increase because they realized they added an addition to their home or the dimensions changed or something, then there was no injury to them because our decrease in increase did not result in an increase in premium.

[00:13:42] Speaker 00:
They never paid more premium to us.

[00:13:44] Speaker 04:
That's not the question here.

[00:13:46] Speaker 04:
The question is,

[00:13:48] Speaker 04:
Are there a certain number of people whose agents increased the amount of square footage?

[00:13:52] Speaker 04:
Because they recognized that the decrease was incorrect.

[00:13:57] Speaker 04:
Then Allstate, on a blanket basis, increased it.

[00:14:00] Speaker 04:
They paid more in premium than they otherwise would have.

[00:14:04] Speaker 04:
That's the claim.

[00:14:05] Speaker 04:
Now, it has to be proven, of course, but at least based upon the allegations, isn't that correct?

[00:14:11] Speaker 00:
They've suffered... No, Your Honor, it's not.

[00:14:14] Speaker 04:
Okay, and why is that?

[00:14:15] Speaker 00:
Because we do know

[00:14:18] Speaker 00:
Even if there is an agent who increased limits during this intervening period, we decreased, the agent increases, and then we increase back to where it was, that agent might have increased for reasons having nothing to do with this.

[00:14:35] Speaker 00:
And in other words, our process put them- Mike, what would that have been?

[00:14:40] Speaker 04:
The house blew up or what?

[00:14:43] Speaker 00:
They added a room.

[00:14:44] Speaker 00:
They added an addition.

[00:14:46] Speaker 00:
They added a bathroom.

[00:14:47] Speaker 00:
Or they went back and looked at their records and realized that the original amounts that they gave to Allstate were wrong.

[00:14:53] Speaker 00:
So yes, the agent made a change.

[00:14:55] Speaker 00:
But in that instance, the agent's change just was proper because it kept the status quo.

[00:15:01] Speaker 00:
We decreased and increased putting back there.

[00:15:04] Speaker 00:
And the agent made another change that was unrelated.

[00:15:06] Speaker 02:
What relief are you seeking here?

[00:15:10] Speaker 02:
to dismiss the whole case or to send it back to the district court?

[00:15:13] Speaker 00:
To vacate the certification, Your Honor.

[00:15:15] Speaker 00:
That's the only relief we're seeking.

[00:15:17] Speaker 00:
And then, I mean, if a class were certified and we proved that Ms.

[00:15:21] Speaker 00:
Hilario had no injury and she wasn't overinsured, I mean, that would be the end for the whole class.

[00:15:25] Speaker 00:
Because if she were typical, that would end the whole thing.

[00:15:28] Speaker 00:
We're asking for the class certification to be vacated so that we can figure out what did or did not happen with respect to Ms.

[00:15:36] Speaker 00:
Hilario's claim.

[00:15:37] Speaker 00:
OK.

[00:15:37] Speaker 04:
Other questions from my colleague?

[00:15:39] Speaker 04:
Very well, thank you.

[00:15:40] Speaker 04:
Thank you.

[00:15:41] Speaker 04:
All right, let's hear from Mr. Macmillan Sanchez, I believe, right?

[00:16:03] Speaker 01:
Thank you, Your Honours, and may it please the Court.

[00:16:05] Speaker 01:
My name is Richard MacMillan-Sanchez and I represent Plaintiff of Pelletie-Cehlara in this case and it's truly an honour to be here.

[00:16:11] Speaker 01:
I would like to touch on some of the concerns that the Court rightly touched on after hearing from Mr. Hanover.

[00:16:16] Speaker 01:
Centrally, as you've identified,

[00:16:18] Speaker 01:
The heart of this case is the damage suffered by Ms.

[00:16:20] Speaker 01:
Hilario when Allstate overcharged her and thousands of others for insurance premiums based on fictitious garage space.

[00:16:27] Speaker 04:
I hate to bother your initial presentation.

[00:16:30] Speaker 04:
We don't have a lot of time.

[00:16:31] Speaker 04:
So I want to get right to the jurisdictional issue, which of course is essential.

[00:16:35] Speaker 01:
Yes, Your Honor.

[00:16:36] Speaker 04:
You're here under CAFA, if at all, right?

[00:16:39] Speaker 04:
So you have to show that the amount of controversy exceeds $5 million, right?

[00:16:43] Speaker 04:
Yes, Your Honor.

[00:16:44] Speaker ?:
OK.

[00:16:45] Speaker 04:
So originally, there was an allegation about 40,000 people were in the class.

[00:16:50] Speaker 04:
When the district redefined the class, the estimate dropped to around 20,000.

[00:16:55] Speaker 04:
Is that right?

[00:16:56] Speaker 01:
That's my understanding, Your Honor.

[00:16:57] Speaker 01:
It was up to 20,000.

[00:16:58] Speaker 01:
Now, Ms.

[00:16:59] Speaker 04:
Hilario alleges that she overpaid by $141.

[00:17:02] Speaker 04:
I believe that's in so many cents.

[00:17:06] Speaker 04:
When you multiply 20,000 times 141, do you get $5 million?

[00:17:11] Speaker 01:
What do you get?

[00:17:13] Speaker 01:
Your honor, with all due respect to the math problem, I don't know if that adds up.

[00:17:16] Speaker 01:
The problem is here is there are persons who were overcharged in significantly greater amounts than that.

[00:17:22] Speaker 01:
While Ms.

[00:17:22] Speaker 01:
Hilario's double counting may only have resulted in $120 to $140 overcharge, there are others who suffered greater multiples of twice counted garage square footage, which did not exist.

[00:17:32] Speaker 04:
You agree.

[00:17:33] Speaker 04:
You have the burden to show that you meet the $5 million threshold, right?

[00:17:39] Speaker 04:
That is certainly a requirement.

[00:17:40] Speaker 04:
You have jurisdiction under CAFA, right?

[00:17:42] Speaker 04:
That's correct.

[00:17:43] Speaker 04:
Okay.

[00:17:43] Speaker 04:
And what is your best argument that the redefined class meets that threshold?

[00:17:51] Speaker 01:
Well, the argument, Your Honor, is that there were tens of thousands of potential overcharges in amounts that may be far greater than what Ms.

[00:17:59] Speaker 01:
Hilario suffered.

[00:18:00] Speaker 01:
Do you have any evidence that that's the case?

[00:18:02] Speaker 01:
Well, all state is actually in possession of the records, which show, at least in terms of reliable estimates, how much the overcharge is different.

[00:18:09] Speaker 04:
Tell us a little bit about those.

[00:18:12] Speaker 04:
In other words, tell us why you meet the $5 million threshold.

[00:18:16] Speaker 04:
I'm struggling with how you do, and I want you to convince me otherwise if you can.

[00:18:27] Speaker 04:
Did Allstate give you any records that you could cite, too, like if you got the average person in the 20,000 subclass suffered $10,000 worth of damages?

[00:18:40] Speaker 04:
Maybe we're talking about something, but are we talking peanuts, nickels, dimes?

[00:18:44] Speaker 04:
What are we talking about?

[00:18:47] Speaker 01:
Your Honor, to answer the first part of your question, Allstate has not produced a spreadsheet, for example, that has 20,000 cells which show estimated overcharges.

[00:18:55] Speaker 01:
What they have done, however, in terms of forecasting their potential financial losses as a result of the application of Project UIN, is they have gone through policies and estimated the extent to which garage square footage overcharges did produce, you know, financial losses for them.

[00:19:10] Speaker 01:
That's page 1975 in the record.

[00:19:11] Speaker 01:
And how much is involved from their perspective, according to what you think?

[00:19:15] Speaker 01:
I mean, certainly there's at least hundreds of, at least, at the very least, hundreds of dollars at issue per potential claimant.

[00:19:21] Speaker 01:
Now granted, of course, we will have to... Hundreds?

[00:19:24] Speaker 04:
We've got to make a $5 million minimum threshold.

[00:19:29] Speaker 04:
You have the burden to show that.

[00:19:32] Speaker 04:
What is your best site to the record?

[00:19:37] Speaker 04:
Where in the record do you show that you meet that standard?

[00:19:46] Speaker 01:
In terms of a specific page in the record, Your Honor, I'm not sure.

[00:19:49] Speaker 01:
What is important, though, is all the data that Allstate has looked at and observed.

[00:19:54] Speaker 04:
That doesn't help us.

[00:19:55] Speaker 04:
We're a court of appeal.

[00:19:56] Speaker 04:
We have to look at the record.

[00:19:58] Speaker 04:
If it's not in the record, it doesn't exist for purposes of this case.

[00:20:02] Speaker 01:
And where is it?

[00:20:03] Speaker 01:
I do understand that, Your Honor.

[00:20:04] Speaker 01:
Part of that is throughout discovery, we've requested data from Allstate not only supporting the application and the impact of Project UIN.

[00:20:13] Speaker 01:
They've only turned over so much because it's their entire contention.

[00:20:16] Speaker 01:
that this is not really calculable, you can't make any ascertainable determination as to what the damages are, which one is belied by the fact that they have the record showing who was affected by the project and they have the ability to determine and calculate the extent of those overcharges.

[00:20:30] Speaker 01:
Simply because they haven't produced, at this point, one single spreadsheet which shows, you know, this many thousands of dollars in premium increases or millions of dollars in premium increases are applicable, doesn't mean that that threshold isn't met, it's just that all state

[00:20:42] Speaker 04:
you know is trying to hide behind the fact that they can't calculate this can you decide as to any caffa case that would be analogous to what you're saying here that would where the court has said that that meets the threshold requirement at this moment in time your honor i cannot say to a specific caffa case so is it fair to say there's a high question whether you have met the minimum threshold standard

[00:21:11] Speaker 01:
Your Honor, I don't think that's necessarily true.

[00:21:13] Speaker 01:
I mean, yes, you are correct that, you know, Ms.

[00:21:17] Speaker 01:
Hilario's case involves $120 overcharge directly as a result of all states.

[00:21:22] Speaker 01:
That was $141, so.

[00:21:24] Speaker 01:
Well, right.

[00:21:24] Speaker 01:
And there's different spots in the record, right?

[00:21:26] Speaker 01:
And that's because, again, they're trying to hide behind their claimed inability to make these kinds of calculations.

[00:21:31] Speaker 01:
That's not important.

[00:21:32] Speaker 01:
But in the First Amendment class complaint, we do raise the issue that we're well above that $1 million threshold.

[00:21:37] Speaker 01:
And Ms.

[00:21:37] Speaker 01:
Hilario has not only the standing,

[00:21:41] Speaker 01:
We believe the ability to meet that threshold.

[00:21:44] Speaker 04:
It's just that because Allstate has tried to hide behind their claimed inability to- Again, with respect, I know you say that, but in your allegation, it's one thing to say, well, we're above the 5 million, but you've got to at least allege on a plausible basis how you get there.

[00:22:01] Speaker 04:
And that's what I'm struggling with.

[00:22:02] Speaker 04:
How do you get there?

[00:22:04] Speaker 01:
Sure.

[00:22:05] Speaker 01:
And we get there, Your Honor, by having up to 20,000 people who have, at this point, not necessarily specifically known amounts of their overcharges.

[00:22:14] Speaker 01:
It's certainly possible that those amounts could meet that threshold, but until we are able to proceed.

[00:22:20] Speaker 04:
But at best you're guessing, right?

[00:22:24] Speaker 01:
Your Honor, I don't know that it's fair to say that we're guessing.

[00:22:26] Speaker 01:
It's just that, again, all state has essentially obfuscated our ability to do the math problem with which the court's concerned.

[00:22:34] Speaker 02:
Did it be remanded and let the district court make this decision before we get into it?

[00:22:41] Speaker 01:
I mean, Judge Seiler, that is certainly one option for this court in terms of proceeding.

[00:22:47] Speaker 01:
That being said, I do think we've met the correct standard.

[00:22:51] Speaker 01:
And it's really at this point that all state has to acknowledge the fact that they've admitted wrongful conduct for which the class has been correctly certified.

[00:23:02] Speaker 01:
and has to face an accounting for that.

[00:23:03] Speaker 01:
If they believe there's no liability or insufficient damages or anything like that, the remedy for them is to move for summary judgment and make that argument or to move to decertify the class.

[00:23:11] Speaker 04:
But we have to have jurisdiction first.

[00:23:13] Speaker 01:
Sure.

[00:23:13] Speaker 04:
As you well know, as a capable lawyer, the first question we always ask is, do we have jurisdiction?

[00:23:21] Speaker 01:
Absolutely.

[00:23:21] Speaker 01:
And I think, Your Honor, the district court is certainly capable of, you know, suesponte analyzing the data before it, the information before it, the testimony before it, and determining that standing is not an issue in this case, which we don't believe it is.

[00:23:34] Speaker 01:
They've not raised it before this court, at least in terms of the CAFA jurisdictional monetary amount issue.

[00:23:40] Speaker 01:
They've not raised that issue.

[00:23:41] Speaker 01:
The district court has not ascertained that as an issue.

[00:23:43] Speaker 04:
As you know, we at Sue Espante are required to raise those issues.

[00:23:49] Speaker 04:
We don't need them raised by the parties.

[00:23:51] Speaker 01:
Sure.

[00:23:52] Speaker 01:
And the other fact that I would point your honors to is not only is it just a raw amount of numbers of people who were overcharged in certain amounts that, again, we do believe could meet that threshold.

[00:24:02] Speaker 01:
The fact this is also can be multiplied by three for the number of years that this went on.

[00:24:06] Speaker 01:
The overcharging period went on for a number of years across tens of thousands of people in amounts that can be determined and could, by virtue of that, meet the threshold for CAFA.

[00:24:18] Speaker 01:
All right, but I mean to interrupt you, but that's an important issue from our perspective.

[00:24:21] Speaker 01:
No, I appreciate it.

[00:24:22] Speaker 01:
And with the time that I have left, one other aspect of this case that I think really is important to clarify, for your honors, is when Allstate speaks to the actual square footage of Ms.

[00:24:31] Speaker 01:
Hilario's home, they also raise the fact that this is unpermitted construction.

[00:24:35] Speaker 01:
Now, they can't really have it both ways.

[00:24:36] Speaker 01:
They can't say, oh, this construction is unpermitted, and yet that should count against the amount of insurance coverage she should have had.

[00:24:44] Speaker 01:
Because what they don't tell you is that part of their estimated replacement costs

[00:24:48] Speaker 01:
includes permitting costs.

[00:24:49] Speaker 01:
If space is unpermitted, it cannot be permitted in a total loss and rebuilding scenario.

[00:24:54] Speaker 01:
So it doesn't really make sense for Allstate to say, oh, well, okay, the square footage number should have been higher and that they would then also rebuild this quote unquote unpermitted space.

[00:25:04] Speaker 01:
They wouldn't do that.

[00:25:05] Speaker 01:
Moreover, there's no reason to believe that they would just count the built-in garage space that was added on improperly by Project UIN towards the unpermitted construction.

[00:25:15] Speaker 01:
That add-on is not a garage

[00:25:17] Speaker 01:
And they keep track of that separately for a specific reason, and it defies logic to say that they would then go back after the fact post hoc and say, oh, this 288 square feet, that may not be for a garage, but we'll count that against your unpermitted construction.

[00:25:31] Speaker 01:
That doesn't make sense.

[00:25:32] Speaker 01:
And perhaps more importantly than that,

[00:25:34] Speaker 01:
even if Allstate had it their way and the square footage numbers had been actual or quote unquote correct in terms of their framing, Project UIN still would have double counted a built-in garage against that square footage which they claim because that's the way their system works.

[00:25:49] Speaker 01:
That's how RCT4 works in terms of calculating the total living area that goes towards premiums and that's also how Project UIN then tacked on an additional 288 square feet per built-in garage.

[00:26:00] Speaker 01:
The fact that this space may exist

[00:26:02] Speaker 01:
is wholly apart from what Ms.

[00:26:04] Speaker 01:
Hilaria was claiming, that there was an inflation of insurance premiums by virtue of tacked on garage space which did not exist and which Allstate would not count against any other aspect of an individual person's home.

[00:26:16] Speaker 01:
And it's also important to highlight for this court that nothing has really changed in terms of Allstate's practices.

[00:26:22] Speaker 01:
To the extent that there are overcharges, which we believe the record

[00:26:25] Speaker 01:
demonstrates certainly a possibility, and in all likelihood that there was, that overcharging is still going on to this day.

[00:26:31] Speaker 01:
Allstate has done nothing in terms of redressing the problem, issuing refunds, or even notifying its customers that there was a problem in the first place.

[00:26:38] Speaker 01:
Now, again, this is another important aspect of the case.

[00:26:40] Speaker 01:
Did you allege that in your complaint?

[00:26:42] Speaker 01:
Yes, Your Honor.

[00:26:43] Speaker 01:
One of the key facets of what's going on here is

[00:26:46] Speaker 01:
what even caused Ms.

[00:26:48] Speaker 01:
Hilario to be on alert is she got a pre-renewal letter after Project UIN did the improper addition of garage space.

[00:26:54] Speaker 01:
That letter just says, oh, you know, your information may have changed and it may have changed for these reasons.

[00:27:00] Speaker 01:
Allstate claims it's very difficult to write a letter that specifies what those changes are and the reasons for them, but it's really not.

[00:27:07] Speaker 01:
They just chose, and this is in the record, as a business decision not to send out a letter that explained the nature and basis for those changes.

[00:27:15] Speaker 01:
So again, the only way that this class of persons who have been harmed by Project UIN's addition of 288 or multiples thereof in garage space is through continuation of this lawsuit.

[00:27:26] Speaker 01:
Otherwise, Allstate will never notify its customers.

[00:27:29] Speaker 01:
They will never send out a more specific preform approval letter than they did.

[00:27:34] Speaker 01:
Because it's very clear in the testimony of each of their witnesses at the point where they discussed that letter.

[00:27:39] Speaker 01:
They believe the letter is clear.

[00:27:41] Speaker 01:
They believe it's sufficiently transparent to say your policy may have changed and it may have changed based on any one of these factors.

[00:27:47] Speaker 01:
Now, Your Honor, it would not be sufficient for me to present an argument to you and say our position is correct and it may be because of these cases and it may be because these cases might be applicable.

[00:27:56] Speaker 01:
That's not transparent.

[00:27:58] Speaker 01:
And for a consumer trying to understand why their insurance is going up and down and up and down,

[00:28:03] Speaker 01:
It certainly doesn't clarify why there's the issue, and it certainly does not alert them as to whether or not they should take out the tape measure and measure the walls of their home.

[00:28:12] Speaker 01:
It's not really a position that offers any sort of clarity and is, in fact, the basis for our UCL claim that is a dishonest business practice to mislead customers in this way.

[00:28:21] Speaker 01:
And really, all it is is an attempt to hide the fact that they did this to their consumers without regard to the negative possibility.

[00:28:27] Speaker 01:
Let me ask you this.

[00:28:28] Speaker 04:
If individual all-state agents

[00:28:32] Speaker 04:
had not adjusted the square footage involved, would Allstate be at fault in doing what it did and adding back the 280 square feet or something like that on the home based on their model?

[00:28:50] Speaker 01:
I mean, based on what occurred, I think that might be true.

[00:28:55] Speaker 01:
But that's also not the question before this court.

[00:28:57] Speaker 01:
I understand.

[00:28:58] Speaker 04:
I just want to understand.

[00:29:00] Speaker 04:
But I know that it's all the mode for plaintiff's lawyers to accuse insurance companies of horrendous things.

[00:29:09] Speaker 04:
But they're in business.

[00:29:10] Speaker 04:
They're trying to make a profit like anybody in business is.

[00:29:14] Speaker 04:
But it seems to me here that what happened is they thought they'd made a mistake.

[00:29:19] Speaker 04:
They thought they had corrected it.

[00:29:21] Speaker 04:
And but for the actions of individual all-state agents, which the main company may not have known at all,

[00:29:28] Speaker 04:
there wouldn't be a problem here.

[00:29:30] Speaker 01:
Is that correct?

[00:29:31] Speaker 01:
Sure.

[00:29:31] Speaker 01:
I mean, I think it's fair to say that because the square footage went down by one amount, if they had simply corrected it to that same amount, you know, that might be net zero.

[00:29:41] Speaker 01:
You know, that might be zero sum.

[00:29:43] Speaker 01:
But because that's not what happened here and because Allstate had the ability to know that that's not what happened here and implemented Project UIN anyway, that's really the heart of the case and why Ms.

[00:29:54] Speaker 01:
Hilario and thousands of others were damaged.

[00:29:55] Speaker 04:
It is Allstate, the insurance company,

[00:29:59] Speaker 04:
charged with the actions of its another called agents but are they literally all state agents i mean as a matter of law uh... do are they agent uh... you know principal agent kind of thing

[00:30:13] Speaker 01:
Does the principal bear the burden of what the agent does?

[00:30:17] Speaker 01:
I mean, I think just as an abstract principle, absolutely.

[00:30:19] Speaker 01:
But I think what's more important is at the time these adjustments were made, it's not as if, oh, me, Richard McMillan Sanchez, all-state adjuster or all-state agent can just go in

[00:30:29] Speaker 01:
and write whatever I want to on a customer square footage.

[00:30:32] Speaker 01:
At the time, it had to be submitted by agents or submitted by someone else within the company and then approved before that adjustment was actually applied.

[00:30:40] Speaker 01:
So insofar as that's true, these adjustments that were made, they would have had to have been submitted by all state agents and then approved on the back end by the company.

[00:30:48] Speaker 04:
Well, you know that they would have actually had to be reviewed as opposed to just the process.

[00:30:52] Speaker 01:
Yes, your honor and that is actually in the deposition testimony for their 30b6 witness they explain or and Jeff Thomas as well They explain how that process works that it wasn't just I could go in and write whatever I want because I think that's correct Let me ask my colleagues whether either has additional questions for all state Oh, I think not now we used up the other gentleman's time as well So unless either of my colleagues has additional questions

[00:31:16] Speaker 04:
We will thank both of you distinguished lawyers for your presentation.

[00:31:20] Speaker 04:
And I'm sorry.

[00:31:21] Speaker 04:
I do have one.

[00:31:22] Speaker 04:
Judge Clifton has a question.

[00:31:23] Speaker 03:
I'd like to ask Mr. Hanover to speak to the jurisdictional concerns that have been raised.

[00:31:32] Speaker 03:
They haven't been raised previously.

[00:31:33] Speaker 03:
The answer acknowledges that the court has jurisdiction under the Class Action Act.

[00:31:40] Speaker 03:
What should we do about that?

[00:31:45] Speaker 00:
jurisdiction turns on the allegations of the complaint.

[00:31:49] Speaker 00:
We don't think the allegations of the complaint are right.

[00:31:57] Speaker 00:
So we don't have an estimate of what the alleged injury is beyond what the complaint alleges, Your Honor.

[00:32:05] Speaker 04:
Are you bound by your concession of jurisdiction?

[00:32:11] Speaker 00:
We can't consent to federal jurisdiction exists or not.

[00:32:14] Speaker 00:
It's not a matter of consent.

[00:32:15] Speaker 00:
Are we bound by it?

[00:32:16] Speaker 00:
Excuse me?

[00:32:17] Speaker 04:
Are we, as a court of appeal, bound by it?

[00:32:21] Speaker 00:
You're not bound by any consent of the parties with respect to jurisdiction, Your Honor.

[00:32:25] Speaker 03:
Well, your answer says defendant admits the court has jurisdiction under the Class Action Fairness Act, period.

[00:32:35] Speaker 03:
That may not be the case from the perspective

[00:32:39] Speaker 03:
based on the questions that Judge Smith raised, so what do you suggest that we do about this?

[00:32:46] Speaker 03:
I understand you would like us to vacate the class, but if that's an issue we can't even reach until after we've ascertained whether we have jurisdiction.

[00:32:59] Speaker 03:
What do you suggest we do?

[00:33:01] Speaker 03:
Should we remand it to the district court so that the jurisdictional issue can be sufficiently defined or examined?

[00:33:11] Speaker 00:
At the time when a complaint is filed and a response is filed, jurisdiction turns on the allegations of the complaint.

[00:33:19] Speaker 00:
We admitted that based on the allegations of the complaint, there's federal jurisdiction.

[00:33:26] Speaker 03:
Based on what has been established in the litigation to date,

[00:33:29] Speaker 03:
The court has a duty to re-examine jurisdiction as the facts are developed.

[00:33:36] Speaker 03:
I'm not as familiar with the record, but it sounds like facts have developed to the point where there's at least some question as to whether there's jurisdiction under CAFA.

[00:33:46] Speaker 00:
Well, Your Honor, with respect to the facts that are developed, we don't think that there's damages or injury.

[00:33:51] Speaker 00:
We don't think there's five or eight hours.

[00:33:52] Speaker 03:
Well, that would suggest defendants always say, the complaint's incorrect.

[00:33:57] Speaker 03:
We're not liable.

[00:33:58] Speaker 03:
But that doesn't lead to a conclusion.

[00:34:00] Speaker 03:
The federal court doesn't have jurisdiction.

[00:34:02] Speaker 03:
Jurisdiction is examined separately.

[00:34:04] Speaker 03:
It is subject to adjustment as the litigation unfolds.

[00:34:09] Speaker 03:
And so I'm asking you, what's all states' position at this point in time as to whether there's jurisdiction?

[00:34:15] Speaker 03:
And if there's a question about that, how should we proceed?

[00:34:20] Speaker 04:
And can I add just this amendment to my colleague's question?

[00:34:23] Speaker 04:
When the answer was filed, I assume there was the allegation, the original allegation in the original class.

[00:34:31] Speaker 04:
The district court has now changed the definition of the class.

[00:34:34] Speaker 04:
If we assume, arguendo, that that is the new class, it basically cuts the class in half.

[00:34:40] Speaker 04:
What impact, if any, does that have on your answer to Judge Clifton's question?

[00:34:46] Speaker 00:
well that so your honor that that that's more difficult to answer than it sounds because as we we wrote in our appellate briefs

[00:34:55] Speaker 00:
The district court did talk about 20,000 class members.

[00:34:59] Speaker 00:
We've scoured the record.

[00:35:00] Speaker 00:
We don't think there's any evidence to support that.

[00:35:03] Speaker 00:
We think that that finding in and of itself is an abuse of discretion.

[00:35:06] Speaker 00:
We're not sure what he was looking at, where it came from.

[00:35:09] Speaker 00:
It wasn't in any of the underlying briefs.

[00:35:11] Speaker 00:
We don't think there's anything near 20,000 policies that are effective.

[00:35:14] Speaker 04:
Well, let's assume for a arguendo that there are 20,000 people that are affected.

[00:35:20] Speaker 04:
Your opposing counsel has suggested that all state has within its jurisdiction, within its paperwork, information that I believe he thinks would show that a number of people paid a whole lot more in excess premiums than $141.

[00:35:40] Speaker 04:
What's your response to that?

[00:35:44] Speaker 00:
Our records will show the number of policies for which Project UIN was run.

[00:35:50] Speaker 00:
That I know we can tell.

[00:35:51] Speaker 00:
There is a dispute.

[00:35:56] Speaker 04:
Do you, yourself, as an agent, do you have any indication of how much that was?

[00:36:03] Speaker 00:
I can't tell you standing here today, Your Honor.

[00:36:07] Speaker 04:
Other questions by my colleagues?

[00:36:09] Speaker 04:
All right, thanks to counsel.

[00:36:10] Speaker 04:
We appreciate the argument.

[00:36:12] Speaker 04:
The case disargued of Hilario versus Allstate Insurance is submitted.

[00:36:18] Speaker 04:
And the court is going to adjourn for the day.

[00:36:22] Speaker 04:
But I want to say to the students,

[00:36:25] Speaker 04:
that our law clerks are going to meet with you while we go into conference, which is where we decide the cases, and then the judges will come out and chat with you as well.

[00:36:35] Speaker 04:
Thanks to counsel for being here, and the court stands adjourned.