Illinois Farmers Insurance Company and Farmers Insurance Exchange recently filed in the Illinois Circuit Court for Cook County a putative class action against various municipalities and the Metropolitan Water Reclamation District of Greater Chicago (see the Illinois Farmers v Metropolitan Water complaint). This case appears to be the first of its kind and has gotten significant media attention (see this Washington Post article and Claims Journal article for example). Farmers filed this as a subrogation case, on behalf of a proposed class of similarly situated insurance companies and property owners who suffered water damage on April 17 and 18, 2013, when heavy rainfall allegedly caused stormwater and sewer system overflows. The complaint alleges generally that the defendants failed to take appropriate steps to mitigate problems of stormwater and sewer system overflows following climate change that has occurred over the last 40 years. Climate change is alleged to have caused increased rainfall, necessitating higher capacity stormwater and sewer systems that the defendants failed to implement. This will be an interesting case to follow. A key challenge that Farmers is likely to face is to maintain consistency between its position in this case as a class action plaintiff that will be seeking to certify a class and its position in other cases as a class action defendant. It seems clear that one of the key issues will be whether causation can be established on a classwide basis, where the allegations focus on two specific rainfall events but encompass large geographic areas. The complaint suggests the possibility of subclasses. Whether damages can and need to be proved on a classwide basis also could be a key battleground on class certification. I wonder whether any insurers that are members of the proposed class will try to join this case in its early stages. They might well wait to see whether a class is certified before deciding whether or not to participate in the lawsuit. If Farmers is successful, this case might lead other insurers to file subrogation class actions. But Farmers faces significant challenges, and insurers will need to be cautious about maintaining consistency of position as subrogation plaintiffs and as class action defendants.
