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Michelman & Robinson Obtains Important Victory for California's Insurance Industry

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April 24, 2008

Michelman & Robinson, LLP (“M&R”) recently achieved a monumental victory for the Insurance industry, obtaining a dismissal with prejudice of a class action suit which threatened to gravely alter insurance practices, for the carriers as well as brokers and agents.

Exercising its legal strategy, M&R secured the dismissal in Newton v. Coast National Insurance Company, et al., during the class certification phase of the suit, thereby protecting one of the industry’s most profitable methods to distribute insurance and, simultaneously, protect one of the consumer and public’s most efficient ways to procure such insurance. This victory helped protect California consumers in many respects.

The plaintiff, in Newton, had alleged that Academy Automobile Insurance Services, Inc. “Academy,” acted as an agent of Coast National Insurance Co., “Coast National,” and not as a brokerage, improperly collecting brokerage fees from its customers. M&R, led by partner Sanford Michelman, championed the rights of the consumer and industry, the first victory of its kind in similar class action lawsuits.

Had Newton succeeded, the fallout from the judgment would have had a catastrophic impact for consumers, brokers, agents, and insurance companies statewide. Academy would have been ordered to return all fees to the plaintiffs, and injunctions may have been issued against all defendants.

“Since Krumme v. Mercury, plaintiff lawyers have been filing lawsuits trying to spin California law into something it is not, with no benefit to the public. In fact, the theories advanced by the plaintiff lawyers, if they prevailed, would have hurt the same population they allege they are trying to protect. Simply put, these cases generally serve no public benefit,” said Michelman.