In Beaver, the question presented was whether an insurer has a duty to defend a putative class action where the claim of the named plaintiff would not be covered but the class was defined in a fashion so as to include covered claims by other class members – if the class were certified.

The Hartford argued that the complaint could not be deemed to include covered claims at least until the class in fact was certified. The Eleventh Circuit rejected this argument, based on both class-action law principles and insurance-law rules. As a matter of civil procedure, the court relied on the Florida rule that putative class members’ claims can be aggregated to satisfy various jurisdictional requirements. Id. at 11, citing Johnson v. Plantation Gen’l Hosp., Ltd., 641 So.2d 58, 60 (Fla. 1994).

As a matter of insurance law, the court relied on the allegations setting forth claims that were potentially covered, even though the claimants were yet to be formally joined, finding analogous authority in LensCrafters, Inc. v. Liberty Mut. Fire Ins. Co., 2005 WL 146896 (N.D. Cal. 2005). As the court analogized, if “the duty to defend arises in spite of the uncertainty and impracticality of defending wholly meritless individual claims, we think it equally clear that the duty to defend is not defeated by some uncertainty as to the merits of a class certification.” Slip op. at 15.

The Beaver court observed that “Hartford would have ignore this basic truth about class action litigation: the fight over class certification is often the whole ball game.” Id. at 12. Given the purpose of the litigation insurance provided pursuant to the promise to defend, “[t]he overwhelming importance of class certification to the ultimate resolution of the case militates strongly against leaving the insured without a defense until after a decision on class certification.” Id. at 14.

The Eleventh Circuit furthermore sought to apply a principle of enlightened self-interest to protect the insurer from the tactical arguments of its lawyers. “Thus, the rule Hartford advocates would not only deny an insured the defense it contracted for, but also would lock insurers out of the litigation until after the critically important issue of class certification had been decided.” Id. While an insurer’s right to defend is not unfettered, the absolutist position of The Hartford of denying a defense until covered claimants are added to the case via certification “would poorly serve insurers and insureds alike.” Id. at 15.

Note: A version of this entry can be found also at 6 Insurance Coverage Litigation Bulletin 9 (March 2007).