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Johnson v. Allstate Insurance Co.

September 30, 2009


The opinion of the court was delivered by: Reagan, District Judge


A. Introduction/Background

On November 5, 2007, Plaintiffs Robert L. Johnson, Sr., Anthony L. Richardson, Sheila M. Sydnor and Deborah A. Sparks sued Defendant Allstate Insurance Company on behalf of a putative class. (Doc. 2.) Plaintiffs bring this suit under the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA), 815 Ill. Comp. Stat. 505/1--12 (2008), alleging that Allstate violated the act by using multiple and differing insurance scoring schemes in order to charge higher premiums to insureds with similar insurance risk.

Currently before the Court is Allstate's motion to dismiss the two-counts against it. (Doc. 14.) Specifically, Allstate argues Plaintiffs lack standing to bring this suit under the ICFA and should be dismissed. (Doc. 15.) Allstate further argues that Plaintiffs have failed to plead adequate facts to allow for recovery under the ICFA and requests the Court to dismiss both Counts I and II.

(Id.) Finally, Allstate requests the Court strike Plaintiffs' nationwide class allegations. (Id.) Because the Court lacks subject-matter jurisdiction over two of the parties due to their lack of standing, the Court will grant Allstate's motion in part with respect to Snydor and Sparks. The Court will defer ruling on the determination of the class until the class certification hearing. The Court will deny Allstate's motion in all other respects.

B. Standing

Because Allstate is challenging Plaintiffs's standing, Allstate is essentially challenging the Court's subject-matter jurisdiction to hear Plaintiffs' claims. The proper standard for a motion to dismiss based on standing is Federal Rule of Civil Procedure 12(b)(1), which provides for dismissal of an action based on lack of subject-matter jurisdiction. See Retired Chi. Police Ass'n v. City of Chi., 76 F.3d 856, 862 (7th Cir. 1996). Because standing is a jurisdictional requirement, "[t]he Plaintiff bears the burden of establishing standing." Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443 (7th Cir. 2009) (citing Perry v. Vill. of Arlington Heights, 186 F.3d 826, 828 (7th Cir. 1999)). "[W]hen a party moves for dismissal under Rule 12(b)(1), the nonmoving party must provide competent proof of jurisdictional facts to support its allegations."

Vill.of Riverdale v. 138th St. Joint Venture, 527 F. Supp. 2d 760, 763 (N.D. Ill. 2007) (citing Thomson v. Gaskill, 315 U.S. 442, 446 (1942)). "[T]he degree of proof grows concomitantly with the stage of the litigation, with general allegations of injury usually sufficient to demonstrate standing at the pleading stage." Id. (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)).

The elements of standing are "(1) an injury in fact, which is an invasion of a legally protected interest that is concrete and particularized and, thus actual or imminent, not conjectural or hypothetical; (2) a causal relationship between the injury and the challenged conduct, such that the injury can be fairly traced to the challenged action of the defendant; and (3) a likelihood that the injury will be redressed by a favorable decision." Id. "In ruling on a motion to dismiss for want of standing, the district court must accept as true all material allegations of the complaint, drawing all reasonable inferences therefrom in the plaintiff's favor." Lee v. City of Chi., 330 F.3d 456, 468 (7th Cir. 2003) (citing Retired Chi. Police Ass'n, 76 F.3d at 862).

If a defendant is making a factual challenge to a plaintiff's standing the standard changes. As the Seventh Circuit explained, the situation is, essentially, that "'the complaint is formally sufficient but the contention is that there is in fact no subject matter jurisdiction.'" Apex, 572 F.3d at 444 (quoting United Phosphorus, Ltd. v. Angus Chem. Co., 332 F.3d 942, 946 (7th Cir. 2003)).When considering a factual challenge, "'[t]he district court may properly look beyond the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists.'" Id. (quoting Evers v. Astrue, 536 F.3d 651, 656--57 (7th Cir. 2003)). "Once [Defendant's] evidence is proffered, '[t]he presumption of correctness that we accord a complaint's allegations falls away,' and the plaintiff bears the burden of coming forward with competent proof that standing exists." Id. (second alteration in original) (citations omitted) (quoting Commodity Trend Serv., Inc. v. Commodity Futures Trading Comm'n, 149 F.3d 679, 685 (7th Cir. 1998)). As a result, plaintiff must bear a heavier burden by supporting his allegations with "competent proof." Zamecnik v. Indian Prairie Sch. Dist. # 204 Bd. of Educ., No. 07 C 1586, 2009 WL 805654, at *1 (N.D. Ill. March 24, 2009) (citing McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936)). Courts have previously stated that "competent proof" requires "[a] showing by a preponderance of the evidence, or proof to a reasonable probability, that standing exists." Id. (citing NLFC, Inc. v. Devcom Mid--Am., Inc., 45 F.3d 231, 237 (7th Cir. 1995)).

a. Plaintiffs Sparks and Sydnor

Allstate argues that Sparks and Sydnor lack injury in fact. Sparks and Sydnor allege in their complaint that they "purchased Allstate insurance without knowledge of Allstate's simultaneous use of multiple and differing insurance scoring schemes," (Doc. 2, ¶¶ 31--32) but Allstate asserts that it has never issued them "a policy of automobile, homeowners', motorcycle or renters' insurance" (Doc. 15). In response, Sparks and Sydnor admit that they did not purchase their insurance directly through Allstate but instead allege that they purchased insurance through one of Allstate's subsidiaries.*fn1 (Doc. 19.)

The Court now must weigh the evidence before it concerning this issue. Allstate provides the Court with the affidavit of Lynn Gehant, who is the acting State Manager for the Midwest Region at Allstate Insurance Company, and she reiterates Allstate's assertion: "Allstate Insurance Company has never issued a policy of insurance to Plaintiffs Deborah Sparks or Sheila Sydnor." (Exh. A.) This rebuts the allegation in the complaint that Sparks and Sydnor purchased Allstate insurance. In response, Sparks and Sydnor provide nothing but their allegations. They have not provided the Court affidavits that they have insurance through Allstate subsidiaries. They have not provided the Court their insurance policies with those supposed Allstate subsidiaries. They do not even mention the supposed subsidiaries of Allstate through which they supposedly have insurance. Sparks and Sydnor have not even demonstrated to the Court that they have an insurance policy with anyone at all. The best proof that Plaintiffs can offer is Richardson's insurance policy with Allstate, but that is not an insurance policy of Sydnor or Sparks. As mentioned before, Sparks and Sydnor have the burden of proof in a factual challenge to the Court's jurisdiction, and as they have come forward with no proof at all, the Court cannot say that they have satisfied their burden of "competent proof" to their standing.

Sparks and Sydnor also argue that their lack of insurance from Allstate does not affect their standing because privity of contract is not required under the ICFA. Even if this argument is correct, the problem of proof of any insurance still remains. The Court does not know if Plaintiffs Sparks and Sydnor have insurance policies at all, let alone with Allstate or Allstate subsidiaries, ...

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