                                                                   FILED
                                                        United States Court of Appeals
                                                                Tenth Circuit

                                                            December 18, 2015
                                   PUBLISH                 Elisabeth A. Shumaker
                                                               Clerk of Court
                  UNITED STATES COURT OF APPEALS

                               TENTH CIRCUIT



 DELBERT SOSEEAH, for himself and
 others similarly situated; MAXINE
 SOSEEAH, for herself and others
 similarly situated; JOHN BORREGO,
 for himself and other similarly
 situated,

       Plaintiffs-Appellees,
 v.                                                  No. 14-2199
 SENTRY INSURANCE, a Mutual
 Company, and any other related
 business entities including parent
 companies, consolidated tax filers and
 subsidiaries including, DAIRYLAND
 INSURANCE COMPANY; PEAK
 PROPERTY AND CASUALTY
 INSURANCE CORPORATION; and
 VIKING INSURANCE COMPANY
 OF WISCONSIN,

        Defendants-Appellants.



        APPEAL FROM THE UNITED STATES DISTRICT COURT
               FOR THE DISTRICT OF NEW MEXICO
                 (D.C. No. 1:12-CV-01091-RB-KK)


John R. Gerstein, of Troutman Sanders LLP, Washington, D.C. (Gabriela
Richeimer of Troutman Sanders LLP, Washington, D.C.; Jennifer A. Noya and
Alex C. Walker of Modrall, Sperling, Roehl, Harris & Sisk, P.A., Albuquerque,
New Mexico, with him on the briefs), for Defendants-Appellants.
John C. Bienvenu, of Rothstein, Donatelli, Hughes, Dahlstrom, Schoenburg &
Bienvenu LLP, Santa Fe, New Mexico (Kristina Martinez of Rothstein, Donatelli,
Hughes, Dahlstrom, Schoenburg & Bienvenu LLP, Santa Fe, New Mexico; Linda
G. Hemphill of The Hemphill Firm P.C., Santa Fe, New Mexico; and John
Howard, Attorney at Law, Santa Fe, New Mexico, with him on the brief), for
Plaintiffs-Appellees.



Before BRISCOE, McKAY and McHUGH, Circuit Judges.


BRISCOE, Circuit Judge.



      Plaintiffs Delbert Soseeah, Maxine Soseeah and John Borrego filed this

action against defendants Sentry Insurance, Dairyland Insurance Company, Peak

Property and Casualty Insurance Company, and Viking Insurance Company of

Wisconsin (collectively Sentry) claiming, in part, that Sentry failed to timely and

properly notify them and other Sentry automobile insurance policyholders of the

impact of two New Mexico Supreme Court decisions regarding the availability of

uninsured and underinsured motorist coverage under their respective policies.

The district court granted plaintiffs’ motion for class certification. Sentry

subsequently sought and was granted permission to appeal the district court’s

class certification ruling. Exercising jurisdiction pursuant to 28 U.S.C. § 1292(e)

and Fed. R. Civ. P. 23(f), we reverse and remand for further consideration of

plaintiffs’ motion for class certification.



                                              2
                                           I

                      The Weed Warrior and Jordan decisions

      On October 18, 2010, the Supreme Court of New Mexico issued two related

decisions addressing the provision of uninsured/underinsured motorist (UM/UIM)

coverage by insurers to New Mexico residents. In the first decision, Progressive

Northwestern Insurance Co. v. Weed Warrior Services, 245 P.3d 1209 (N.M.

2010), the New Mexico Supreme Court “consider[ed] the duty imposed on

insurers to offer uninsured/underinsured motorist (UM/UIM) coverage under

NMSA 1978, Section 66-5-301 (1983).” 245 P.3d at 1210. More specifically, the

New Mexico Supreme Court addressed the question, certified to it by this court,

“of whether the election by an insured to purchase UM/UIM coverage in an

amount less than the policy liability limits constitutes a rejection of the maximum

amount of UM/UIM coverage permitted under Section 66-5-301.” Id. After

reviewing the language of the statute and surveying its own case law interpreting

that statute, the New Mexico Supreme Court

      conclude[d] that Section 66-5-301 requires an insurer to offer
      UM/UIM coverage in an amount equal to the liability limits of the
      policy and that the choice of the insured to purchase any lower
      amount functions as a rejection of that maximum amount of coverage
      statutorily possible.

Id. at 1214. Consequently, the New Mexico Supreme Court held that “the insurer

may not exclude the maximum possible level of UM/UIM coverage in an auto

liability policy unless it has offered it to the insured and the insured has exercised

                                           3
the right to reject the coverage through some positive act.” Id. at 1213 (internal

quotation marks omitted).

      The second case, Jordan v. Allstate Insurance Co., 245 P.3d 1214 (N.M.

2010), was intended by the New Mexico Supreme Court as a companion to Weed

Warrior in order “to provide guidance on the technical requirements for valid

offers and rejections of UM/UIM coverage.” 245 P.3d at 1219. The court held

      that a rejection of UM/UIM coverage equal to the liability limits in
      an automobile insurance policy must be made in writing and must be
      made a part of the insurance policy that is delivered to the insured.
      In order to honor these requirements effectively, insurers must
      provide the insured with the premium charges corresponding to each
      available option for UM/UIM coverage so that the insured can make
      a knowing and intelligent decision to receive or reject the full
      amount of coverage to which the insured is statutorily entitled. If an
      insurer fails to obtain a valid rejection [for any reason], the policy
      will be reformed to provide UM/UIM coverage equal to the limits of
      liability.

Id. at 1217. The court also held that its decision applied retroactively and was not

limited to prospective application. Id. at 1222-23. And the court emphasized that

the cost of reforming existing policies would be borne solely by insurers. Id. at

1223 (“On balance, we deem it more equitable to let the financial detriments be

borne by insurers, who were in a better position to ensure meaningful compliance

with the law, than to let the burdens fall on non-expert insureds, who are the

Legislature’s intended beneficiaries.”).

                              The filing of this action

      On September 18, 2012, plaintiffs Delbert and Maxine Soseeah filed a

                                           4
purported class action complaint against Sentry in New Mexico state district

court. The complaint alleged that Delbert Soseeah, after being injured in a motor

vehicle accident, made a claim for UM/UIM benefits under two policies of

automobile insurance issued by Sentry to Mrs. Soseeah. According to the

complaint, Mrs. Soseeah “never executed a valid waiver of UM/UIM coverage

under the” two policies and, consequently, Mr. Soseeah “demanded that . . .

Sentry reform” the two policies “to provide stacked uninsured/underinsured

motorist coverage limits equal to the limits of the liability coverage on each of the

vehicles covered by the” policies “in accordance with the decisions in Jordan and

Weed Warrior.” Dist. Ct. Docket No. 1, Exh. A at 4. Sentry purportedly refused

to reform the policies and rejected Mr. Soseeah’s claim for UM/UIM benefits. Id.

The complaint alleged that Sentry, by doing so, violated New Mexico’s Unfair

Practices Act (UPA), N.M. Stat. Ann. § 57-12-1 et seq., violated a portion of New

Mexico’s Insurance Code known as the Trade Practices and Frauds Act (TPFA),

N.M. Stat. Ann. § 59A-16-1 et seq., breached the implied covenant of good faith

and fair dealing, and breached the terms of the two policies.

      Notably, the complaint alleged that the Soseeahs’ claims were

representative of “all Sentry-insured New Mexico residents entitled to the benefits

of UM/UIM coverage who failed to receive notification from . . . Sentry that

UM/UIM coverage limits were, as a matter of law, reformed [by Weed Warrior

and Jordan] to provide coverage equal to liability limits.” Id. at 6-7. The

                                          5
complaint in turn alleged that the “action should proceed as a class action” under

New Mexico state law. Id. at 8. Lastly, the complaint alleged that the named

plaintiffs and the class should “recover treble damages” and “attorney’s fees and

costs” in connection with their UPA claim, id. at 11, damages in connection with

their TPFA claim, id. at 13, reformation of their policies to provide “UM/UIM

coverage with limits in an amount equal to the limits of the liability coverage of

the policies at issue,” id. at 13, actual and punitive damages in connection with

their claim for breach of the implied covenant of good faith and fair dealing, id. at

14, actual damages in connection with their breach of contract claim, id.,

injunctive relief “requiring that . . . Sentry be enjoined from continuing practices

that violate the statutory duties as well as the contractual and legal obligations

owed to the [named] Plaintiffs and the Class,” id., a “declaratory judgment

establishing the respective rights and obligations of the parties with respect to the

claims set forth” in the complaint, id. at 15, and punitive damages, id.

             Removal to federal court and amendment of the complaint

      On October 22, 2012, Sentry removed the action to the United States

District Court for the District of New Mexico pursuant to 28 U.S.C. §§ 1441,

1446, and 1453. Soon thereafter, plaintiffs filed a first amended class action

complaint. That was later followed by a second, a third, and, ultimately, a fourth

amended class action complaint.




                                           6
                           The Fourth Amended Complaint

      The fourth amended complaint continued to list Delbert and Maxine

Soseeah as the lead plaintiffs and included many of the same factual allegations

that were included in the original complaint. The fourth amended complaint,

however, expanded substantially upon the original complaint by discussing the

impact Weed Warrior and Jordan had upon the Soseeahs’ policies and Sentry’s

response or lack thereof to Weed Warrior and Jordan. To begin with, the

complaint alleged that the Soseeahs’ purported rejection of UM/UIM coverage on

their Sentry policies was, for several reasons, “legally insufficient” under Weed

Warrior and Jordan. Dist. Ct. Docket No. 131 at 5. The complaint further alleged

that in early 2011, Sentry “sent to every policyholder with a policy then in force

that had rejected UM/UIM coverage, including Plaintiff Maxine Soseeah, a form

letter [(referred to in this litigation as the “IMPORTANT NOTICE”)] and follow-

up form letter [(referred to in this litigation as the “FINAL NOTICE”)].” Id. at 6.

Both letters stated that “[i]n . . . 2010, the New Mexico Supreme Court issued a

ruling requiring new information to be provided with Uninsured Motorist . . .

coverage selection forms,” id., Att. 1, Exh. A at 1, and in turn advised

policyholders “that they had to sign a new waiver or ‘Your Premium Will Go

Up,’” id. at 6. The complaint also alleged that “[i]n January 2012, Defendants

sent another form letter to certain policyholders [(referred to in this litigation as

the “IMPORTANT NOTICE OF POTENTIAL COVERAGE”)], including [Mrs.]

                                           7
Soseeah, advising them that they may have UM/UIM coverage.” Id. All of these

letters, the complaint alleged, were “misleading and inaccurate” in light of Weed

Warrior and Jordan. Id. at 6-7. The complaint further alleged that Sentry’s

“obligation of good faith and fair dealing to its insureds required it to reform

coverage and provide a clear simple notice of reformed coverage and a right to

make a claim in a timely fashion after the [two] decision[s].” Id. at 7. With

respect to the Soseeahs individually, the fourth amended complaint alleged that

“Sentry never notified the[m] . . . that their initial signed purported waiver of

UM/UIM coverage was invalid” or that they “in fact under New Mexico law had

UM/UIM coverage from the policies’ inception through and including the date of

their demand.” Id. at 8.

      The fourth amended complaint included a third plaintiff named John

Borrego and added factual allegations relating to Borrego. According to the

fourth amended complaint, Borrego purchased a policy of insurance from Sentry

that provided coverage for two personal vehicles. The complaint alleged that

after Weed Warrior and Jordan were issued, “Sentry had an affirmative obligation

to notify . . . Borrego and all other similarly situated New Mexico policyholders

that their policies were reformed and that they had UM/UIM coverage in an

amount equal to the level of the bodily injury liability limits under their policies.”

Id. at 11-12. The complaint further alleged that in April 2006, Borrego was

seriously injured in a motor vehicle accident. “By letter of November 20, 2012,

                                           8
after the class action complaint in this matter had been filed, . . . Borrego

requested that Sentry provide stacked UM/UIM coverage equal to the bodily

injury liability coverage on each vehicle.” Id. at 12. According to the complaint,

“Sentry subsequently agreed to provide stacked UM/UIM coverage to . . .

Borrego.” Id.

      The “Class Action Allegations” section of the fourth amended complaint

alleged that “all insurance policies issued by Defendant Sentry to New Mexico

policyholders [we]re uniform in all respects material to [the] claims” asserted by

the named plaintiffs, id., and that “all forms used by Defendant Sentry for

putative rejection of UM/UIM insurance coverage [we]re [also] uniform in all

respects material to [the] claims brought” by plaintiffs, id. at 13. The section in

turn defined the proposed class as “[a]ll insureds under policies issued in New

Mexico by Sentry and its related entities . . . from January 1, 1995 to April 1,

2011 in which UM/UIM coverage was purportedly rejected.” Id. The section

alleged that “[b]ecause no such rejections were in conformance with New Mexico

law as set forth in Jordan and Weed Warrior, all such insureds [we]re entitled to

reformation and proper and adequate notice.” Id. The section further alleged that

certification of the proposed class was “desirable and proper because there [we]re

questions of law and fact . . . common to all members of the Class,” including

whether Sentry’s “acts and practices” amounted to “a breach of its contractual

obligations with respect to its New Mexico policyholders,” “breached the implied

                                           9
covenant of good faith and fair dealing with respect to the policies issued to New

Mexicans,” and “constitute[d] unfair or deceptive trade practices or

unconscionable trade practices.” Id. at 14-15.

      The specific claims alleged in the fourth amended complaint, and the forms

of relief sought in connection with those claims, were essentially identical to

those alleged in the original complaint.

                            Dismissal of the TPFA claim

      On July 10, 2014, the district court, acting pursuant to Sentry’s motion,

dismissed without prejudice plaintiffs’ TPFA claim. In doing so, the district court

concluded that “[t]he plain language of the statute clearly limits recovery to

actual damages and only gives the [New Mexico] Superintendent of Insurance the

power to seek injunctions.” Dist. Ct. Docket No. 134 at 12-13. The district court

emphasized that “[p]laintiffs [we]re free to pursue their claims for injunctive and

declaratory relief under another cause of action.” Id. at 13.

      Although Sentry also moved to dismiss the remainder of plaintiffs’ claims

on the grounds that there was no allegation of irreparable harm, the district court

disagreed and denied Sentry’s motion.

                                 Class certification

      Plaintiffs moved for certification of the class identified in the fourth

amended complaint. On September 26, 2014, the district court issued a

memorandum opinion and order granting plaintiffs’ motion as to the following

                                           10
class:

         All insureds under policies issued in New Mexico by Sentry and its
         related entities . . . from May 20, 2004 to April 1, 2011 in which
         UM/UIM coverage was purportedly rejected. . . . Included as
         subclasses are: (1) insured[s] who received the “IMPORTANT
         NOTICE” and “FINAL NOTICE” . . . ; and (2) insured[s] who
         received the “IMPORTANT NOTICE OF POTENTIAL
         COVERAGE.”

Dist. Ct. Docket No. 136 at 3. 1

         In doing so, the district court determined that all four of the prerequisites

outlined in Fed. R. Civ. P. 23(a) were satisfied. More specifically, the district

court concluded:

         1) that “the numerosity requirement [wa]s satisfied” because
         “Defendant Sentry conceded in discovery that at least 36,000
         potential claimants signed rejections and may be entitled to
         reformation of their policies,” and “Sentry d[id] not contest that
         joinder of so many individuals would be impracticable,” id. at 5;

         2) that plaintiffs “met the commonality requirement” because “the
         potential class members . . . experienced the same injury,” i.e., “the
         lack of proper notice of the coverage available to the policy holders
         after Jordan and Weed Warrior,” “in spite of the factual differences
         between them,” id. at 7;

         3) that plaintiffs “satisfied the typicality requirement,” id. at 9,
         because “the proposed class consist[ed] of policyholders who
         received inadequate notice from Defendant Sentry,” id. at 8, and thus
         “the claims . . . ar[o]se from the same course of events and all
         proposed class members were subjected to the same harmful
         practices,” id. at 8-9; and

         1
        The record suggests that there are two general categories of insureds who
rejected UM/UIM coverage during this time period: (1) those who rejected it
without signing any type of rejection form; and (2) those who rejected it by
signing a pre-Jordan rejection form.

                                            11
      4) that the named plaintiffs were “adequate representatives of the
      class,” id. at 11, and that “[p]laintiffs’ attorneys [we]re adequate to
      represent the class,” id. at 13.

      The district court in turn concluded that plaintiffs “met the requirements of

Rule 23(b)(2) for certification of the proposed class.” Id. at 15. In reaching this

conclusion, the district court noted that

      [p]laintiffs requested the following remedies: (1) an injunction that
      prohibits Defendant Sentry from continuing to engage in practices
      that violate its duties and contractual and legal obligations owed to
      Plaintiffs and the proposed class; and (2) an injunction requiring
      Defendant Sentry to give notice to all class members that the Jordan
      and Weed Warrior decisions mandate that they are entitled to
      UM/UIM coverage equal to liability coverage, and of their right to
      make a UM/UIM claims notwithstanding the fact that they had
      previously rejected UM/UIM coverage, because the rejection was
      invalid.

Id. at 14-15. In other words, the district court concluded that this requested

injunction was “sufficiently specific . . . to meet the requirements of Rule

23(b)(2).” Id. at 15.

      In sum, the district court concluded that plaintiffs “established the

requirements for certification of the proposed class pursuant to Federal Rule of

Civil Procedure 23(b)(2)” and that “[a] class action [wa]s the fairest and most

efficient manner of litigating the injunctive claims at issue in the . . . case.” Id.

                                    Sentry’s appeal

      Sentry sought and was granted permission by this court pursuant to Fed. R.

Civ. P. 23(f) to appeal the district court’s interlocutory order granting plaintiffs’


                                            12
motion for certification of the class identified in the fourth amended complaint.

                                           II

                                 Standards of review

      “We review the district court’s decision to certify the class for an abuse of

discretion.” Tennille v. W. Union Co., 785 F.3d 422, 430 (10th Cir. 2015). “The

district court abuses its discretion when it misapplies the Rule 23 factors—either

through a clearly erroneous finding of fact or an erroneous conclusion of law—in

deciding whether class certification is appropriate.” CGC Holding Co. v. Broad

& Cassel, 773 F.3d 1076, 1085-86 (10th Cir. 2014). “Our review is only de novo

to the extent we must determine whether the district court applied the correct

standard.” Id. at 1086. “In the end, as long as the district court applies the

proper Rule 23 standard, we will defer to its class certification ruling provided

that decision falls within the bounds of rationally available choices given the facts

and law involved in the matter at hand.” Id. (internal quotation marks and

brackets omitted).

                            Class certification standards

      “Class certification is governed by Federal Rule of Civil Procedure 23.”

Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2548 (2011). Rule 23(a)

requires the party seeking class certification to satisfy four prerequisites:

      One or more members of a class may sue or be sued as
      representatives on behalf of all members only if:
      (1)   the class is so numerous that joinder of all members is

                                          13
             impracticable;
      (2)    there are questions of law or fact common to the class;
      (3)    the claims or defenses of the representative parties are typical
             of the claims or defenses of the class; and
      (4)    the representative parties will fairly and adequately protect the
             interests of the class.

Fed. R. Civ. P. 23(a). In addition, “the proposed class must satisfy at least one of

the three requirements listed in Rule 23(b).” Wal-Mart, 131 S. Ct. at 2548. In

this case, the plaintiffs and the district court relied on Rule 23(b)(2), which states:

      the party opposing the class has acted or refused to act on grounds
      that apply generally to the class, so that final injunctive relief or
      corresponding declaratory relief is appropriate respecting the class as
      a whole.

Fed. R. Civ. P. 23(b)(2).

                   The district court’s commonality determination

      Sentry’s arguments on appeal focus on the district court’s commonality

determination. As discussed in greater detail below, we agree with Sentry that the

district court abused its discretion in concluding that the general class it certified

satisfied Rule 23(a)(2)’s commonality requirement.

      a) The meaning of Rule 23(a)(2)’s commonality requirement

      In Wal-Mart, the Supreme Court expounded on the meaning of Rule

23(a)(2)’s commonality requirement:

      Commonality requires the plaintiff to demonstrate that the class
      members “have suffered the same injury.” [Gen. Tel. Co. of Sw. v.
      Falcon, 457 U.S. 147, 157 (1982)]. This does not mean merely that
      they have all suffered a violation of the same provision of law. Title
      VII, for example, can be violated in many ways—by intentional

                                           14
      discrimination, or by hiring and promotion criteria that result in
      disparate impact, and by the use of these practices on the part of
      many different superiors in a single company. Quite obviously, the
      mere claim by employees of the same company that they have
      suffered a Title VII injury, or even a disparate-impact Title VII
      injury, gives no cause to believe that all their claims can productively
      be litigated at once. Their claims must depend upon a common
      contention—for example, the assertion of discriminatory bias on the
      part of the same supervisor. That common contention, moreover,
      must be of such a nature that it is capable of classwide
      resolution—which means that determination of its truth or falsity will
      resolve an issue that is central to the validity of each one of the
      claims in one stroke. * * *

          Rule 23 does not set forth a mere pleading standard. A party
      seeking class certification must affirmatively demonstrate his
      compliance with the Rule—that is, he must be prepared to prove that
      there are in fact sufficiently numerous parties, common questions of
      law or fact, etc. We recognized in Falcon that “sometimes it may be
      necessary for the court to probe behind the pleadings before coming
      to rest on the certification question,” 457 U.S., at 160, 102 S. Ct.
      2364, and that certification is proper only if “the trial court is
      satisfied, after a rigorous analysis, that the prerequisites of Rule
      23(a) have been satisfied,” id., at 161, 102 S. Ct. 2364; see id., at
      160, 102 S. Ct. 2364 (“[A]ctual, not presumed, conformance with
      Rule 23(a) remains . . . indispensable”). Frequently that “rigorous
      analysis” will entail some overlap with the merits of the plaintiff’s
      underlying claim. That cannot be helped. “‘[T]he class
      determination generally involves considerations that are enmeshed in
      the factual and legal issues comprising the plaintiff's cause of
      action.’” Falcon, supra, at 160, 102 S. Ct. 2364 (quoting Coopers &
      Lybrand v. Livesay, 437 U.S. 463, 469, 98 S. Ct. 2454, 57 L.Ed.2d
      351 (1978); some internal quotation marks omitted). Nor is there
      anything unusual about that consequence: The necessity of touching
      aspects of the merits in order to resolve preliminary matters, e.g.,
      jurisdiction and venue, is a familiar feature of litigation. See Szabo
      v. Bridgeport Machines, Inc., 249 F.3d 672, 676–677 (C.A.7 2001)
      (Easterbrook, J.).

131 S. Ct. at 2551-52 (footnote omitted).


                                         15
      b) Did the district court err in finding any class-wide injury?

      Sentry argues that the district court’s “most glaring error was finding a

common injury where the vast majority of class members suffered no legally

cognizable injury at all.” Aplt. Br. at 37 (emphasis in original). More

specifically, Sentry asserts that “Plaintiffs have no right in contract, tort or any

other law to a purely inchoate ‘notice’ from the insurance company—without ever

tendering a claim for benefits—that their automobile insurance policies were

being reformed retroactively to provide UM coverage where it had been rejected

without the required Jordan disclosures.” Id. at 39. “And,” Sentry argues,

“Plaintiffs neither claim, nor is it so, that the New Mexico Department of

Insurance has required any such notice.” Id. In short, Sentry argues that

“[p]urported lack of notice of the change in UM law after Jordan and Weed

Warrior . . . is not a common injury or, indeed, any injury at all.” Id. at 42

(emphasis in original).

      To determine whether the certified class of plaintiffs suffered a common

and legally cognizable injury, we focus our attention on whether the plaintiffs

have alleged the violation of any recognized legal duty on the part of Sentry. As

the Seventh Circuit recognized in a somewhat similar proposed class action case,

“a claim of injury is not cognizable unless it results from the breach of a

recognized legal duty owed to the plaintiff.” Kartman v. State Farm Mut. Auto.

Ins. Co., 634 F.3d 883, 889 (7th Cir. 2011). Any such recognized legal duty on

                                           16
the part of Sentry in this case would have to arise under one of three sources

identified in the claims that remain pending before the district court: (1) the UPA,

(2) New Mexico contract law, which provides the basis for plaintiffs’ breach of

contract claim against Sentry, or (3) New Mexico tort law, which provides the

basis for plaintiffs’ bad faith claim against Sentry.

      The UPA prohibits certain types of acts that occur “in connection with the

sale, lease, rental or loan of goods or services or in the extension of credit or in

the collection of debts by a person in the regular course of the person’s trade or

commerce.” N.M. Stat. Ann. § 57-12-2(D) (defining the phrase “unfair or

deceptive trade practice”). The bulk of plaintiffs’ UPA allegations, and the ones

that the district court specifically focused upon in granting plaintiffs’ motion for

class certification, concern the steps that Sentry took, or allegedly failed to take,

in notifying existing policyholders of the impact of Weed Warrior and Jordan.

Because that alleged conduct occurred after, rather than in connection with, the

sale of the policies at issue, we conclude it falls outside of the scope of the plain

language of the UPA. Consequently, we conclude that the UPA did not impose

any duty on Sentry with respect to notifying existing policyholders of the impact

of Weed Warrior and Jordan. 2

      2
        To be sure, the fourth amended complaint alleges that Sentry violated the
UPA, in part, by “using rejection forms for UM/UIM coverage that failed to
inform consumers of their choices adequately.” Dist. Ct. Docket No. 131 at 17.
Presumably, this language was intended to focus on Sentry’s acts at the time it
                                                                     (continued...)

                                           17
      Plaintiffs also allege in the fourth amended complaint that Sentry breached

the terms of the various policies of insurance that are encompassed by the

certified class. But plaintiffs have not identified a single contractual provision in

any of the policies at issue, let alone one that is contained in all of the policies at

issue, that would have imposed a duty on Sentry to inform the certified class of

the impact of Weed Warrior and Jordan. 3 Consequently, we conclude that the

plaintiffs’ breach of contract claim cannot give rise to the common injury

required by Fed. R. Civ. P. 23(a)(2) for class certification.



      2
        (...continued)
issued the respective policies of insurance to the members of the certified class.
Further, in their motion for class certification, plaintiffs suggested that Sentry
continued using improper rejection forms for UM/UIM coverage after the
issuance of Weed Warrior and Jordan. Because the UPA’s definition of the
phrase “unfair or deceptive trade practice” appears to us to encompass the sale or
issuance by an insurer of a policy of insurance to an insured, we conclude that
this portion of plaintiffs’ UPA claim identified a legally cognizable duty that
Sentry allegedly violated.
       It does not appear to us, however, that the district court took these
particular allegations into consideration in concluding that the general certified
class satisfied Rule 23(a)(2)’s commonality requirement. And, in any event, we
conclude that this alleged violation does not give rise to an injury common to
either the general certified class or either of the two subclasses identified by the
district court.
       Of course, the district court is free on remand to take these particular
allegations into consideration in deciding whether to certify a new and separate
class (i.e., a class distinct from the general class and subclasses that it previously
certified).
      3
        Under Wal-Mart, it is not enough for plaintiffs to merely allege that some
policy provision imposes this duty. Instead, plaintiffs must identify with
specificity a common policy provision that imposes this duty. See 131 S. Ct. at
2551. Notably, plaintiffs have failed to do so.

                                           18
      That leaves only plaintiffs’ bad faith tort claim. Under New Mexico law,

each insurance contract includes “an implied covenant of good faith and fair

dealing that the insurer will not injure its policyholder’s right to receive the full

benefits of the contract.” 4 Dairyland Ins. Co. v. Herman, 954 P.2d 56, 60 (N.M.

1997). “[T]his means that an insurer cannot be partial to its own interests, but

must give its interests and the interests of its insured equal consideration.” Id. at

61 (internal quotation marks omitted). “[T]he implied covenant of good faith and

fair dealing protects against only bad faith or wrongful and intentional conduct

that injures the other party’s rights under the contract . . .” Azar v. Prudential

Ins. Co. of Am., 68 P.3d 909, 927 (N.M. Ct. App. 2003).

      Even if we were to assume that Sentry acted in bad faith with respect to all

of the policyholders identified in the general certified class by failing to inform

them of the impact of Weed Warrior and Jordan on their respective policies, we

are not persuaded that plaintiffs have alleged, let alone made any attempt to

establish, that such conduct injured every policyholder’s rights under their

respective policies. Indeed, we fail to see how the purported lack of notice and

information could have injured a policyholder in the absence of a viable claim

against Sentry for UM/UIM benefits. And there appears to be little dispute that

      4
        The class certified by the district court is not limited to Sentry
policyholders, and instead includes anyone that could be insured under any Sentry
policy issued during the relevant time period. As Sentry aptly notes, however, it
“has no duty to send any notice to unknown insureds with unknown—let alone
no—UM claims.” Aplt. Br. at 42 (emphasis in original).

                                           19
many, if not most, of the certified class members do not have any such claim at

all. As a result, there is simply no common injury among the general certified

class that would satisfy the requirements of Fed. R. Civ. P. 23(a)(2) for purposes

of the plaintiffs’ bad faith claim. 5

       To be sure, plaintiffs suggest that the New Mexico Supreme Court’s

decision in Salas v. Mountain States Mut. Cas. Co., 202 P.3d 801 (N.M. 2009),

supports their bad faith claim and indicates that an insurer’s failure to disclose

necessarily gives rise to a valid bad faith claim under New Mexico state law. In

other words, plaintiffs suggest that, under Salas, an insurer injures an insured

merely by failing to disclose to the insured relevant information about the policy

at issue. We disagree.

       Salas dealt primarily with a breach of contract claim brought by an injured


       5
         Relatedly, the injunction sought by plaintiffs in connection with their bad
faith claim would not “be a final remedy.” Kartman, 634 F.3d at 886. To the
contrary, the requested injunctive relief, i.e., “compel[ling] . . . Sentry to give
notice to all class members of the effect of the Jordan and Weed Warrior
decisions on their UM/UIM coverage,” Dist. Ct. Docket No. 131 at 26 (Fourth
Amended Complaint), would, at best, “only lay an evidentiary foundation for
subsequent individual determinations of [UM/UIM] liability and damages,”
Kartman, 634 F.3d at 886. And “the class-action device is not appropriate for
resolving such highly individualized questions of fact” (not to mention that such
questions are not alleged at all in the Fourth Amended Complaint). Id. at 891; see
also Jamie S. v. Milwaukee Pub. Sch., 668 F.3d 481, 499 (7th Cir. 2012) (“[A]
claim for class-wide injunctive and declaratory relief does not satisfy Rule
23(b)(2) if as a substantive matter the relief sought would merely initiate a
process through which highly individualized determinations of liability and
remedy are made; this kind of relief would be class-wide in name only, and it
would certainly not be final.”).

                                         20
class-two insured who had been denied UIM benefits by the defendant insurer,

and the key question before the New Mexico Supreme Court was whether the

insurer could defend against that claim on the basis of an exclusionary provision

that it failed to disclose to the insured. The New Mexico Supreme Court, after

outlining the circumstances under which an insurer must disclose policy

information to a class-two insured, concluded that the defendant insurer had

violated this duty of disclosure to the plaintiff insured and was therefore estopped

from enforcing against the insured an undisclosed exclusionary provision to limit

or deny the insured’s entitlement to UIM benefits under the policy. 202 P.3d at

807-09.

      In our view, there are at least two reasons why Salas fails to support the

bad faith theory urged by the plaintiffs in this case. First, nothing in Salas states

that an insurer’s failure to disclose, standing alone, gives rise to a bad faith claim.

Indeed, although the plaintiff in Salas asserted a bad faith claim in addition to her

breach of contract claim, the New Mexico Supreme Court did not address the bad

faith claim at all (because the New Mexico Court of Appeals failed to address that

claim in the first instance). Thus, the holding in Salas must necessarily be read as

limited to breach of contract claims brought by an insured against an insurer.

      Second, to the extent that the New Mexico Supreme Court in Salas touched

upon an insurer’s duty of good faith to its insured (and, again, it did so only in the

context of addressing the plaintiff’s breach of contract claim), it simply repeated

                                           21
the principles that we have already recognized, i.e., that the implied covenant of

good faith and fair dealing requires “that the insurer will not injure its [insured]’s

right to receive the full benefits of the contract.” 202 P.3d. at 805 (quoting

Dairyland Ins. Co. v. Herman, 954 P.2d 56, 60 (N.M. 1997)). Nothing in this

language supports the plaintiffs’ theory that an insurer’s failure to give notice,

without any resulting infringement upon an insured’s rights under the contract,

can give rise to a valid bad faith claim.

      Because plaintiffs have failed to establish that all members of the general

certified class suffered the common injury required by Rule 23(a)(2), we conclude

that the district court abused its discretion in certifying the general class. 6

                    The subclasses identified by the district court

      The district court, in addition to certifying the general class, identified the

following two subclasses: “(1) insured[s] who received the ‘IMPORTANT

NOTICE’ and ‘FINAL NOTICE’ . . . ; and (2) insured[s] who received the

‘IMPORTANT NOTICE OF POTENTIAL COVERAGE.’” Dist. Ct. Docket No.

136 at 3.

      The members of the first subclass were Sentry policyholders who, in early

2011, received from Sentry the form letters entitled “IMPORTANT NOTICE” and

“FINAL NOTICE.” Neither of these letters informed the recipient policyholders

      6
        Having reached this conclusion, we find it unnecessary to address
Sentry’s other challenges to the district court’s commonality determination
regarding the general class.

                                            22
that their policies had been automatically reformed, without any additional

premium, to include UM/UIM coverage equal to the liability limits of the

policies. Instead, the letters stated that (a) the policyholders had to return the

enclosed UM Coverage Selection Form, (b) Sentry could keep the UM/UIM limits

below the liability limits of the policies if the policyholders so chose, and (c)

Sentry could charge the policyholders an additional premium for UM/UIM

coverage in an amount equal to liability coverage.

      The members of the second subclass were Sentry policyholders who, in

2012, received from Sentry a form letter entitled “IMPORTANT NOTICE OF

POTENTIAL COVERAGE.” Each member of this subclass was purportedly

involved in some type of accident that potentially implicated UM/UIM coverage

under their respective Sentry policies. The letter mentioned Weed Warrior and

Jordan by name and purported to outline the potential effects of these decisions.

      Notably, Federal Rule of Civil Procedure 23(c)(5) states that “[w]hen

appropriate, a class action may be divided into subclasses that are each treated as

a class under this rule.” Fed. R. Civ. P. 23(c)(5). Thus, notwithstanding our

conclusion that the general class certified by the district court fails to meet the

commonality requirements of Rule 23(a)(2), the question remains whether either

or both of the subclasses identified by the district court can independently satisfy

the requirements of Rule 23 and be allowed to proceed.

      Because the district court’s certification ruling did not expressly address

                                          23
the Rule 23 factors as they applied to each of the identified subclasses, we do not

have enough information to determine whether the district court abused its

discretion in certifying the two subclasses. Consequently, we direct the district

court on remand to address these issues.

                                           III

      The district court’s order is REVERSED and the case is REMANDED to

the district court for further consideration of plaintiffs’ motion for class

certification. Sentry’s unopposed motion for leave to file exhibit under seal is

GRANTED.




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