DA 16-0013

IN THE SUPREME COURT OF THE STATE OF MONTANA

2016 MT 302

PETER BYORTH and ANN McKEAN,

on behalf of themselves and all 

those similarly situated,

 Plaintiffs and Appellees,

 v.

USAA CASUALTY INSURANCE

COMPANY, and JOHN DOES I-X,

 Defendants and Appellants.

APPEAL FROM: District Court of the Thirteenth Judicial District,

In and For the County of Yellowstone, Cause No. DV-15-0511

Honorable Gregory R. Todd, Presiding Judge

COUNSEL OF RECORD:

For Appellants:

Ian McIntosh, Kelsey E. Bunkers, Crowley Fleck, PLLP, Bozeman, 

Montana

Jessica G. Scott, Wheeler Trigg O’Donnell LLP, Denver, Colorado

For Appellees:

John Heenan, Colette B. Davies, Bishop & Heenan, Billings, Montana 

Submitted on Briefs: August 24, 2016

 Decided: November 22, 2016

Filed:

__________________________________________

Clerk

11/22/2016

Case Number: DA 16-0013
2

Justice Patricia Cotter delivered the Opinion of the Court. 

¶1 USAA Casualty Insurance Company (USAA) appeals from an order of the 

Thirteenth Judicial District Court in Yellowstone County certifying a class action 

pursuant to M. R. Civ. P. 23. We reverse the order of the District Court and remand for 

further proceedings.

ISSUES

¶2 The question on appeal is whether the District Court abused its discretion in 

certifying the class pursuant to M. R. Civ. P. 23. Following the structure of Rule 23, we 

divide this question into two issues:

1. Did the District Court abuse its discretion in certifying the class under 

M. R. Civ. P. 23(a)?

2. Did the District Court abuse its discretion in certifying the class under 

M. R. Civ. P. 23(b)(3)?

BACKGROUND

¶3 In September 2011, Peter Byorth was struck by a motor vehicle while riding his 

bicycle. He was insured at the time by USAA under an auto insurance policy that 

provided $10,000 in medical payment coverage. Byorth submitted medical payment 

claims totaling $85,000, which USAA then sent to Auto Injury Solutions (AIS) for 

review. Due to an alleged coding error in the paperwork AIS required Byorth’s physician 

to complete, USAA initially denied Byorth’s claims as medically unnecessary. However, 

USAA eventually paid policy limits to Byorth.

¶4 Ann McKean was also insured under a USAA auto insurance policy that provided 

medical payments coverage. In February 2014, McKean was injured in a motor vehicle 
3

accident and incurred damages far greater than her policy limits. McKean submitted her 

medical bills to USAA, and USAA forwarded them to AIS for review. AIS allegedly 

determined several procedures McKean underwent were not medically necessary, and 

USAA subsequently denied coverage. 

¶5 On April 24, 2015, Byorth and McKean filed a complaint against USAA alleging 

breach of fiduciary duties, breach of contract, and violations of the Unfair Trade Practices 

Act, § 33-18-201, MCA (UTPA). Plaintiffs argued USAA’s practice of sending medical 

claims to AIS was “an improper cost containment scheme designed to wrongfully deprive 

Montana consumers of their first-party medical pay benefits.” Plaintiffs sought to 

recover actual and punitive damages and to enjoin USAA from submitting future claims 

to AIS for review.

¶6 On June 11, 2015, USAA removed the matter to federal court. While the case was 

before the federal court, USAA filed its answer, wherein USAA denied all allegations 

relating to AIS’s role in adjusting medical claims. The federal court ultimately 

determined that it lacked subject matter jurisdiction, and the case returned to the District 

Court. On November 19, 2015, Plaintiffs filed a motion to certify the proposed class. 

Six days later, USAA filed a motion to strike the class allegations from Plaintiff’s 

complaint. On December 15, 2015, USAA filed its response in opposition to 

certification. The District Court issued its order certifying the class two weeks later, on 

December 29.

¶7 Plaintiffs’ motion and brief in support of class certification recited many of the 

allegations of their complaint. In its motion to strike the class allegations from the 
4

complaint, USAA argued that the class was unascertainable, that individual issues 

predominated over common issues, and that a class action was not the superior method of 

litigation. USAA reasoned that no amount of discovery would ever show that Plaintiffs’ 

class could overcome these deficiencies and satisfy the requirements of Rule 23.

¶8 In response to USAA’s motion to strike, Plaintiffs repeated their allegations 

regarding AIS’s role in reviewing medical claims. To support these allegations, Plaintiffs 

appended two exhibits to their brief. First, Plaintiffs provided an August 6, 2009, 

National Association of Insurance Commissioners (NAIC) memorandum (hereinafter the 

NAIC memo) discussing the status of Horton v. USAA Casualty Ins. Co., No. 

CV-06-02810-PHX-DGC (D. Ariz.), a class action alleging USAA relied on AIS 

payment recommendations to pay less than the full amount owed on medical claims. 

Plaintiffs also provided an excerpt from a proposed settlement agreement dated May 27, 

2008, wherein USAA denied the Horton class allegations but stipulated to a class for 

settlement purposes. The NAIC memo indicates the parties were scheduled to file an 

amended settlement agreement by November 6, 2009. Plaintiffs did not provide evidence 

of a final settlement in Horton.

¶9 Second, Plaintiffs provided the District Court with an undated excerpt from a 

Washington Superior Court’s order approving a class settlement in MySpine, PS v. USAA 

Casualty Ins. Co., No. 12-2-32635-5 SEA (Wash. Super. Ct.). The settlement class in 

MySpine included USAA insureds who had medical claim payments reduced due to 

certain “Reason Codes.” The excerpt does not mention AIS, nor does it explain what a 

“Reason Code” is or if the codes were used erroneously.
5

¶10 In its December 15 brief in opposition to class certification, USAA provided 

medical payment logs for Byorth and McKean and the results of an AIS review of one of 

McKean’s claims. The payment logs list the dates USAA received claims from Byorth 

and McKean, as well as the dates USAA issued payments under the respective insurance 

policies. The logs indicate USAA did not pay many of the claims submitted, but they do 

not include any reason for the denials. The AIS review relates to coverage of an MRI 

McKean received. The review is signed by a physician who reviewed documentation 

submitted with the claim and concluded the MRI was “medically reasonable or 

necessary.” The physician therefore recommended payment of the claim.

¶11 The District Court’s certification order concluded that “all members of the 

proposed class, including Byorth and McKean, were subject to the same claims 

processing procedure of outsourcing claims to AIS.” Thus, the common question for the 

class was “[w]hether or not USAA violated Montana law with respect to its med-pay 

claims handling practices.” The District Court reasoned that although additional 

litigation may be needed to determine each class member’s damages, the threshold 

question of unfair trade practices could be resolved in a single stroke. The District Court 

therefore certified the class as follows:

Under Mont. R. Civ. P. 23(b)(3) the Court certifies the following 

class: (a) all Montana consumers who (b) were insured by USAA for med 

pay benefits and (c) who submitted a claim for med pay benefits from April 

2007 to April 2015, and (d) had their claim denied in whole or in part 

following a “file review” by AIS or because of an asserted “coding error.”
6

¶12 The District Court analyzed each of the four elements of Rule 23(a), but did not 

explicitly address the requirements of Rule 23(b)(3). USAA promptly appealed from the 

certification order in accordance with Rule 23(f).

STANDARD OF REVIEW

¶13 We review a district court’s decision on a motion for class certification for an 

abuse of discretion. Sangwin v. State, 2013 MT 373, ¶ 10, 373 Mont. 131, 315 P.3d 279 

(citing Chipman v. N.W. Healthcare Corp., 2012 MT 242, ¶ 17, 366 Mont. 450, 288 P.3d 

193). The question is not whether this Court would have reached the same decision, but 

whether the District Court acted arbitrarily without conscientious judgment or exceeded 

the bounds of reason. Sangwin, ¶ 10 (citing Chipman, ¶ 17). We afford trial courts the 

broadest discretion because they are “‘in the best position to consider the most fair and 

efficient procedure for conducting any given litigation.’” Sangwin, ¶ 10 (quoting 

Jacobsen v. Allstate Ins. Co., 2013 MT 244, ¶ 25, 371 Mont. 393, 310 P.3d 452). 

Certification orders are usually made in the early stages of litigation, when discovery is 

still underway and facts are disputed. Because of this timing, and the trial court’s power 

to modify a class after certification pursuant to Rule 23(c)(1)(C), we are generally 

reluctant to supplant the trial court’s certification decision. Diaz v. State, 2013 MT 219, 

¶ 20, 371 Mont. 214, 308 P.3d 38 (Diaz II). A district court’s interpretation of procedural 

rules, like Rule 23, is a matter of law that we review de novo for correctness. See In re 

Estate of Strange, 2008 MT 158, ¶ 6, 343 Mont. 296, 184 P.3d 1029.
7

DISCUSSION

¶14 1. Did the District Court abuse its discretion in certifying the class under 

M. R. Civ. P. 23(a)?

¶15 Rule 23(a) establishes four prerequisites to class certification:

One or more members of a class may sue or be sued as representative 

parties on behalf of all members only if:

(1) the class is so numerous that joinder of all members is 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.

M. R. Civ. P. 23(a). These four prerequisites are respectively known as numerosity, 

commonality, typicality, and adequacy of representation. The absence of any one 

prerequisite is fatal to certification. Jacobsen, ¶ 28 (citing Chipman, ¶ 43). These 

prerequisites “‘ensure[ ] that the named plaintiffs are appropriate representatives of the 

class whose claims they wish to litigate’ and ‘effectively limit the class claims to those 

fairly encompassed by the named plaintiff's claims.’” Mattson v. Mont. Power Co., 2012 

MT 318, ¶ 18, 368 Mont. 1, 291 P.3d 1209 (Mattson III) (quoting Wal-Mart Stores, Inc. 

v. Dukes, 564 U.S. 338, 349, 131 S. Ct. 2541, 2550 (2011)) (alteration in original).

¶16 The party seeking certification bears the burden of showing the proposed class 

satisfies all four prerequisites of Rule 23(a). Roose v. Lincoln Cnty. Emple. Group 

Health Plan, 2015 MT 324, ¶ 16, 381 Mont. 409, 362 P.3d 40. When evaluating a 

proposed class, a trial court may need to probe beyond the pleadings to determine 

whether the class is suitable for certification. Sangwin, ¶ 15. In this way, certification 

entails a “rigorous analysis,” which may touch the merits of the class claim. Worledge v. 
8

Riverstone Residential Grp., LLC, 2015 MT 142, ¶ 23, 379 Mont. 265, 350 P.3d 39; 

Sangwin, ¶ 15. At the same time, we have cautioned district courts against assessing 

“any aspect of the merits unrelated to a Rule 23 requirement.” Sangwin, ¶ 15 (citing 

Chipman, ¶ 44). We have explained this analysis with the following framework:

(1) a district judge may certify a class only after making determinations that 

each of the Rule 23 requirements has been met; (2) such determinations can 

be made only if the judge resolves factual disputes relevant to each Rule 23 

requirement and finds that whatever underlying facts are relevant to a 

particular Rule 23 requirement have been established and is persuaded to 

rule, based on the relevant facts and the applicable legal standard, that the 

requirement is met; (3) the obligation to make such determinations is not 

lessened by overlap between a Rule 23 requirement and a merits issue, even 

a merits issue that is identical with a Rule 23 requirement; (4) in making 

such determinations, a district judge should not assess any aspect of the 

merits unrelated to a Rule 23 requirement; and (5) a district judge has 

ample discretion to circumscribe both the extent of discovery concerning 

Rule 23 requirements and the extent of a hearing to determine whether such 

requirements are met in order to assure that a class certification motion 

does not become a pretext for a partial trial of the merits.

Jacobsen, ¶ 29 (quoting Mattson v. Mont. Power Co., 2009 MT 286, ¶ 67, 352 Mont. 

212, 215 P.3d 675 (Mattson II)). Admittedly, the precise burden at the certification stage 

has been muddled. In Morrow v. Monfric, Inc., 2015 MT 194, 380 Mont. 58, 354 P.3d 

558, this Court stated that “[p]laintiffs must actually prove that they have satisfied the 

prerequisites for class certification.” Morrow, ¶ 10. Four months later, we stated in 

Roose that “the class action proponent need not prove each element with absolute 

certainty.” Roose, ¶ 14.

¶17 Relevant precedent establishes two fundamental standards for the “rigorous 

analysis” of class certification. First, the trial court must have some evidentiary basis for 

determining each Rule 23 requirement is satisfied. Comcast Corp. v. Behrend, ___ U.S. 
9

___, 133 S. Ct. 1426, 1432 (2013) (proposed class must “satisfy through evidentiary 

proof at least one of the provisions of Rule 23(b)”); Diaz v. Blue Cross & Blue Shield, 

2011 MT 322, ¶ 31, 363 Mont. 151, 159, 267 P.3d 756 (Diaz I) (proposed class must 

present evidence or reasonable estimate of numerosity). “‘Rule 23 does not set forth a 

mere pleading standard.’” Chipman, ¶ 44 (quoting Wal-Mart, 564 U.S. at 350, 131 S. Ct. 

at 2551). Thus, a district court may not simply rely on the allegations of the parties’ 

pleadings. Morrow, ¶ 10 (“speculation or conclusory allegations are not sufficient”); 

Sangwin, ¶ 15 (“Actual, not presumed, conformance with Rule 23(a) is indispensable.”). 

We anticipate this rigorous analysis will involve some assessment of the parties’ factual 

contentions. Mattson II, ¶ 67 (trial judge must “resolve[ ] factual disputes relevant to 

each Rule 23 requirement”). Those facts may even touch on the merits of the plaintiff’s 

cause of action. Worledge, ¶ 23; Sangwin, ¶ 15 (citing Comcast, ___ U.S. at ___, 133 

S. Ct. at 1432); Chipman, ¶ 44 (citing Wal-Mart, 564 U.S. at 351, 131 S. Ct. at 2551). 

¶18 Second, beyond this essential evidentiary basis, the trial court has broad discretion 

at the certification stage. Worledge, ¶ 14; Sangwin, ¶ 15 (trial court must be “‘satisfied, 

after a rigorous analysis, the prerequisites of Rule 23(a) are met’”) (quoting Comcast, 

___ U.S. at ___, 133 S. Ct. at 1432); Jacobsen, ¶ 29 (trial court has discretion to establish 

scope of discovery and hold evidentiary hearing before certification). While we are 

deferential to a trial court’s determinations regarding satisfaction of the Rule 23 

requirements, we cannot affirm certification of a class when the record lacks evidence 

supporting a determination on a Rule 23 requirement. To hold otherwise would reduce 

the concept of “rigorous analysis” to a nullity. See Comcast, ___ U.S. at ___, 133 S. Ct. 
10

at 1433. It would also mean the proposed class’s “burden” to satisfy the requirements of 

Rule 23 is no burden at all.

¶19 “We have a ‘long history of relying on federal jurisprudence when interpreting the 

class certification requirements of Rule 23.’” Jacobsen, ¶ 32 (quoting Chipman, ¶ 52). 

The U.S. Supreme Court has never clearly defined the burden of proof at certification, 

and federal courts are divided on the question. 3 William B. Rubenstein et al., Newberg 

on Class Actions § 7:21 (5th ed. 2013) [hereinafter 3 Rubenstein]. In recent years, the 

burden has trended toward more proof, with several circuits adopting the familiar 

preponderance of the evidence standard. See Teamsters Local 445 Freight Div. Pension 

Fund v. Bombardier, Inc., 546 F.3d 196, 202 (2d Cir. 2008); In re Hydrogen Peroxide 

Antitrust Litig., 552 F.3d 305, 307 (3d Cir. 2008); Messner v. Northshore Univ. 

HealthSystem, 669 F.3d 802, 811 (7th Cir. 2012); see also 3 Rubenstein, § 7:21. In light 

of the discussion that follows, we need not adopt a specific standard today, but we do 

recognize that certification requires at least some evidence to satisfy each of Rule 23’s 

requirements. With this burden in mind, we turn to the four prerequisites of Rule 23(a). 

A. Numerosity

¶20 A proposed class must be “so numerous that joinder of all members is 

impracticable.” M. R. Civ. P. 23(a)(1). There is no “bright-line number” that satisfies 

numerosity—impracticability must be determined on a case-by-case basis. Morrow, ¶ 9. 

It is well established that the proposed class “‘must present some evidence of, or 

reasonably estimate, the number of class members.’” Sangwin, ¶ 17 (quoting Diaz I, 

¶ 31).
11

¶21 Here, USAA admitted in a discovery response that 154 claims from Montana 

insureds were submitted to AIS from January 2012 through September 2015. The 

District Court concluded that this volume of claims, which represented only a fraction of 

the eight-year timeframe at issue, satisfied numerosity. USAA argues that this number 

does not actually represent the size of the proposed class, because the class is defined to 

include only those claimants who were denied coverage in whole or in part. 

¶22 USAA has resisted Plaintiffs’ efforts to discover the number of denied claims, 

maintaining that a burdensome “line-by-line review in every file” would be necessary to 

determine which claimants were denied benefits. When the District Court certified the 

class, Plaintiffs had not yet filed a motion to compel discovery pursuant to M. R. Civ. P. 

37. Although Plaintiffs subsequently filed a motion to compel, the District Court has not 

yet ruled upon the motion.1 Because the District Court had not yet considered the merits 

of the parties’ arguments for and against discovery, we will not wade into the parties’ 

apparent discovery dispute. 

¶23 The District Court has broad discretion to establish the scope of 

certification-related discovery. 3 Rubenstein, § 7:4. Here, the District Court has not yet 

established that scope, and very little certification-related discovery is present in the 

record. As a consequence, we have no evidence of the number of claimants who had 

their claims denied in whole or in part. Any attempt to distill the 154 claims down to 

only those that were denied would be pure speculation. Moreover, we have no evidence 

regarding the claims filed or denied in the 2007 to 2012 timeframe. Because the record 

 

1

Instead, the District Court granted a USAA motion to stay discovery during this appeal. 
12

lacks evidence or a reasonable means of estimating the size of the class, Plaintiffs have 

not at this juncture satisfied their burden of proving numerosity. We therefore conclude 

that the District Court abused its discretion in finding numerosity was satisfied.

¶24 Plaintiffs cite Roose for the proposition that a class of one is certifiable if a district 

court reasonably concludes that other, unidentified, class members exist. In Roose, the 

defendants admitted the insurance policies they had issued contained an exclusion that 

violated Montana’s made whole doctrine. Roose, ¶ 23. Although the full extent of the 

class had not been determined before certification, all policyholders were entitled to 

equitable and injunctive relief. Roose, ¶ 21. Plaintiffs analogize the present case to 

Roose as follows: “in this case, it is known that systematically, USAA refers adjustment 

of its med pay claims to AIS. AIS, in turn, systematically applies computer algorithms to 

review the files for any possible means to deny the claims in whole or in part.”

¶25 The record before us lacks any mention of an algorithm. In fact, Plaintiffs have 

provided virtually no evidence of how AIS actually reviews claims. USAA has admitted 

that all medical payment claims are sent to AIS, but USAA has not conceded that any of 

its practices are illegal. Unlike the contracts at issue in Roose, the systematic conduct 

that the Plaintiffs allege caused them harm—the AIS computer algorithms—has not been 

substantiated at this point. Roose is therefore inapposite.

B. Commonality

¶26 Rule 23(a)(2) requires common questions of law or fact. The U.S. Supreme Court 

has observed that “any competently crafted class complaint literally raises common 

questions.” Wal-Mart, 564 U.S. at 349, 131 S. Ct. at 2551 (internal quotation omitted). 
13

In Wal-Mart, a class of 1.5 million former and current employees of the nation’s largest 

private employer alleged gender discrimination in pay and promotions. Wal-Mart, 564 

U.S. at 342–43, 131 S. Ct. at 2547. The Court observed that the class unsurprisingly 

raised certain superficial, common questions, such as: “Do all of us plaintiffs indeed 

work for Wal-Mart? Do our managers have discretion over pay?” Wal-Mart, 564 U.S. at 

349, 131 S. Ct. at 2551. These questions were an insufficient basis for class certification 

because they did not “demonstrate that the class members ‘have suffered the same 

injury,’” as commonality requires. Wal-Mart, 564 U.S. at 349–50, 131 S. Ct. at 2551 

(quoting Gen. Tel. Co. of the Sw. v. Falcon, 457 U.S. 147, 157–58, 102 S. Ct. 2364, 

2370–71 (1982)). Before Wal-Mart, we construed commonality as a “relatively low 

burden for plaintiffs.” Jacobsen, ¶ 31 (citing Diaz I, ¶ 32). We have since recognized 

that Wal-Mart “significantly tightened the commonality requirement,” Chipman, ¶ 47, 

but we have not yet adopted Wal-Mart as the standard for commonality in Montana. 

Mattson III, ¶ 37. 

¶27 Here, the District Court determined the proposed class satisfied the Wal-Mart

standard. The District Court quoted Jacoben’s observation that Wal-Mart is satisfied 

when the proposed class alleges “that a defendant’s programmatic conduct violates the 

law.” Jacobsen, ¶ 44. The District Court then certified the class with the following 

common question: “[w]hether or not USAA violated Montana law with respect to its 

med-pay claims handling practices.” Because the class as defined included only those 

claimants who “had their claim denied in whole or in part following a ‘file review’ by 

AIS or because of an asserted ‘coding error,’” we can infer that the District Court 
14

determined the AIS review process was the “programmatic conduct” that satisfied 

commonality.

¶28 In Jacobsen, the plaintiff class submitted evidence of a specific, programmatic, 

claims handling practice, the existence of which was undisputed. A consulting firm had 

advised Allstate that insureds represented by an attorney typically settled claims for 

double or triple the cost of an unrepresented insured’s claims. Jacobsen, ¶ 19. To reduce 

costs, Allstate implemented a new claims handling process whereby adjusters intimated 

to unrepresented claimants that they would recover more from their claim if they 

proceeded without an attorney. Jacobsen, ¶ 24. The uniform application of this process 

allegedly caused each class member damages in the form of reduced settlement values. 

¶29 Here, the mere act of sending claims to an outside contractor like AIS—without 

more—is not the type of programmatic conduct that satisfies Jacobsen and Wal-Mart. 

The question of whether all class members had claims reviewed by AIS is precisely the 

type of superficial question that fails to demonstrate a common injury. To satisfy 

commonality, the question would have to address the common injury allegedly shared 

across the class. In other words, the question would have to identify the allegedly 

unlawful, systematic program in place at AIS that causes the denials, just as the plaintiffs 

in Jacobsen identified the specific claims handling process that led to diminished 

settlement values for each class member.

¶30 On appeal, Plaintiffs argue that AIS applies an algorithm to process and ultimately 

deny medical claims in whole or in part. Nothing in the record supports this claim, and 

the District Court did not mention an algorithm in its certification order. Plaintiffs 
15

contend that the present action alleges essentially the same programmatic conduct as 

Horton and MySpine. We find Plaintiffs’ analogy to these cases unpersuasive. Because 

Plaintiffs have submitted only excerpts from these cases, the record lacks sufficient 

context to determine whether the claims are actually similar. The excerpt from Horton

and the NAIC memo explaining it make clear the excerpt was not from a final settlement 

agreement. Indeed, nothing in the record indicates Horton was ever settled. Further, the 

MySpine excerpt does not mention AIS file reviews. While MySpine addresses claims 

denied for certain “reason codes,” the record does not indicate whether these reason 

codes are related to the coding errors alleged by Plaintiffs. In short, Plaintiffs’ reference 

to these two seemingly unrelated cases does nothing to advance their claims of 

programmatic conduct connecting Byorth, McKean, and the absent class members.

¶31 Plaintiffs also encourage us to take judicial notice of an article from the San 

Antonio Express-News that claims USAA has been “dogged by lawsuits” that take issue 

with the company’s handling of medical payments. This article was never submitted to 

the District Court and did not serve as a basis for certification. Moreover, judicial notice 

of the article is wholly inappropriate here: the facts explained in the article were not 

generally known in the District Court’s jurisdiction, nor were the facts “capable of 

accurate and ready determination by resort to sources whose accuracy cannot be 

reasonably questioned,” as judicial notice requires. M. R. Evid. 201(b). We also note 

that the article focused on the present case and quoted Plaintiffs’ counsel extensively. 

We will not take judicial notice of facts alleged by Plaintiffs’ counsel simply because 

they were printed in a newspaper.
16

¶32 Upon a full review of the record presently before us, we cannot locate any 

evidence of the alleged algorithm employed by AIS to systematically deny claims. In 

fact, the AIS reviews of McKean’s claims that USAA attached to its brief in opposition to 

certification include a physician’s analysis of documents submitted with the claim. If 

anything, this evidence tends to show an individualized review, rather than a 

systematically-applied algorithm. Throughout their brief, Plaintiffs cite their complaint 

and the District Court’s certification order as evidence of systematic claims handling 

processes. As previously explained, the Plaintiffs’ complaint is not a sufficient basis for 

class certification. See Chipman, ¶ 44 (“Rule 23 does not set forth a mere pleading 

standard.” (internal quotation marks omitted)). Similarly, the District Court’s order does 

not direct us to evidence in the record supporting certification. Because the record lacks 

an evidentiary basis for finding commonality, we conclude that the District Court abused 

its discretion by granting certification before the proposed class had met its burden of 

showing commonality. Because this case comes before us with minimal discovery, we 

leave it to the District Court to determine whether Plaintiffs can demonstrate, after 

additional discovery, a common injury through an algorithm or some other programmatic 

conduct.

C. Typicality

¶33 The typicality requirement of Rule 23(a)(3) ensures the named class members’ 

interests align with the interests of absent class members. Jacobsen, ¶ 51 (citing Mattson 

III, ¶ 21). This alignment occurs when “the claims or defenses of the representative 

parties are typical of the claims or defenses of the class.” M. R. Civ. P. 23(a)(3). 
17

“Typicality is not a demanding standard.” Worledge, ¶ 34 (citing Sangwin, ¶ 21). If the 

class claims are based on the “same event, practice, or course of conduct” and “the same 

legal or remedial theory,” typicality is satisfied. Worledge, ¶ 34 (internal quotation marks 

omitted). Moreover, the event, practice, or course of conduct need not be identical for all 

members of the class. Worledge, ¶ 34.

¶34 Typicality and commonality tend to overlap, as both measure the relationship of 

the members’ class claims. Worledge, ¶ 34. The difference between typicality and 

commonality is a matter of perspective: commonality looks to the questions of law or fact 

common to the class as a whole, while typicality focuses more closely on the named 

representatives’ relationship to the rest of the class. 1 William B. Rubenstein et al., 

Newberg on Class Actions § 3:31 (5th ed. 2011) [hereinafter 1 Rubenstein].

¶35 In its certification order, the District Court stated that USAA did not dispute 

typicality. On appeal, USAA directs us to three pages of its brief opposing certification 

wherein the company argues that Byorth is not a member of the class and McKean’s 

claims are not “co-extensive” with the class. USAA reasons that, because Byorth 

eventually received the maximum benefit provided under his policy, he is not a member 

of the class of claimants who had claims denied in whole or in part. As for McKean, 

USAA notes that McKean does not allege that a coding error was the cause of her benefit 

denial. Therefore, USAA argues that McKean’s claims are not co-extensive with those 

of the larger class of claimants who were denied coverage due to an AIS file review or an 

asserted coding error. 
18

¶36 Plaintiffs’ complaint alleges several counts, including violations of the UTPA for 

misrepresenting pertinent facts or insurance policy provisions, refusing to pay claims 

without conducting a reasonable investigation, and failing to promptly settle claims once 

liability became reasonably clear. Assuming Plaintiffs can satisfy commonality with a 

showing of the alleged algorithm, the class UTPA claim will be shared across all 

members of the class, including the named representatives, Byorth and McKean. The 

fact that Byorth eventually received what he was owed under the contract does not 

absolve USAA of the alleged UTPA violations. See McVey v. USAA Cas. Ins. Co., 2013 

MT 346, ¶¶ 24–25, 372 Mont. 511, 313 P.3d 191 (eventual payment does not shield 

insurer from UTPA liability); Lorang v. Fortis Ins. Co., 2008 MT 252, ¶ 149, 345 Mont. 

12, 192 P.3d 186. Because Byorth is a member of the class, and he has alleged that a 

coding error resulted in denial of benefits, the two representative class members’ claims 

are reasonably co-extensive with the class as a whole. 

¶37 We reiterate that the record before us lacks evidence of the alleged programmatic 

conduct used by AIS to injure the class as a whole, which must be shown to establish 

commonality. Because typicality and commonality overlap to the extent both are 

measured by the reach of common questions of law or fact, we cannot overlook the fact 

that the record does not contain evidence of the alleged common question that unites not 

only the class as a whole, but also the named representatives with the absent class 

members. We therefore conclude that the District Court abused its discretion in finding 

typicality satisfied, though not for the reasons claimed by USAA. We leave it to the 
19

District Court to determine, with the benefit of additional discovery, whether Plaintiffs 

can satisfy typicality.

D. Adequacy

¶38 Rule 23(a)(4) ensures “the representative parties will fairly and adequately protect 

the interests of the class.” M. R. Civ. P. 23(a)(4). This portion of Rule 23 looks to the 

attorney representing the class, who must “be qualified, experienced, and generally 

capable” of conducting the class action. Jacobsen, ¶ 58 (internal quotation marks 

omitted). Adequacy also prevents certification of a class if the representative parties’ 

interests are “antagonistic to the class interests.” Worledge, ¶ 39; accord 1 Rubenstein, 

§ 3:54.

¶39 USAA does not dispute adequacy on appeal. In a footnote to its opening brief, 

USAA reserves a potential challenge to the adequacy of the named representatives until it 

has taken discovery from Plaintiffs. Because we remand for additional discovery, we 

decline to address adequacy further at this juncture. 

¶40 2. Did the District Court abuse its discretion in certifying the class under 

M. R. Civ. P. 23(b)(3)?

¶41 After a proposed class has shown it satisfies the four elements of Rule 23(a), a 

district court may certify the class if it fits within one of the class categories provided in 

Rule 23(b). The Rule 23(b)(3) class is appropriate only if “the questions of law or fact 

common to the class members predominate over any questions affecting only individual 

members” and “a class action is superior to other available methods for fairly and 

efficiently adjudicating the controversy.” M. R. Civ. P. 23(b)(3). These dual 
20

requirements of Rule 23(b)(3) are commonly referred to as predominance and superiority. 

Regardless of the category of class action a district court chooses, the court must conduct 

a rigorous analysis of all Rule 23 requirements, including Rule 23(b). Comcast, ___ U.S. 

at ___, 133 S. Ct. at 1432 (noting that the analytical principles that govern Rule 23(a) 

also govern Rule 23(b)).

¶42 Here, the District Court did not mention Rule 23(b) until the penultimate page of 

its certification order. Even then, the District Court did so in passing: “Under Mont. R. 

Civ. P. 23(b)(3) the Court certifies the following class . . . .” It is unclear whether the 

District Court undertook any analysis in determining that the class satisfied Rule 

23(b)(3). We therefore conclude the District Court abused its discretion by certifying the 

class under Rule 23(b)(3) without assessing predominance and superiority.

¶43 USAA urges us to conclude that the record shows the proposed class could never 

satisfy the predominance and superiority requirements of Rule 23(b)(3). USAA reasons 

that each class member’s claims involve individualized determinations of medical 

reasonableness and necessity, and that these individual questions would predominate over 

common questions. USAA also maintains that the claims Plaintiffs have raised here are 

frequently litigated on an individual basis, making the class action an unnecessary and 

inferior method of resolution. Because the District Court has not analyzed these 

arguments, we will not entertain them on appeal. We therefore remand to the District 

Court to consider the parties’ evidence and arguments regarding Rule 23(b)(3).
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CONCLUSION

¶44 For the reasons stated above, we reverse the order of the District Court granting 

class certification. We remand for further certification-related discovery and an analysis 

of the Rule 23(b) requirements. To be clear, we do not conclude that the class could 

never be certified. Rather, the District Court may certify the class provided Plaintiffs 

satisfy their burden of showing each Rule 23 requirement is met. 

¶45 Reversed and remanded.

/S/ PATRICIA COTTER

We Concur: 

/S/ BETH BAKER

/S/ JAMES JEREMIAH SHEA

/S/ LAURIE McKINNON

/S/ JIM RICE

Justice Michael E Wheat, dissenting.

¶46 I dissent from the majority’s decision to reverse the District Court’s class

certification in this case. The foundation of all class action suits is consumer protection 

and judicial economy. For this reason we have provided the district courts with broad 

discretion in certifying classes and managing the litigation related thereto. As we stated 

in Roose, certification orders “‘are not frozen once made’; instead, the District Court 

maintains discretion to alter the class definition as the case proceeds.” Roose, ¶ 14

(internal citation omitted).
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¶47 Here the District Court exercised its broad discretion by certifying a class of 

Montana consumers who are alleged victims of USAA’s acknowledged and 

long-standing practice of outsourcing claims handling to be conducted by a computer 

algorithm which is programmed to evaluate medical payment claims. The District Court 

invoked its discretion to certify the class based on the facts and arguments presented to it 

by the parties. The District Court’s order certifying the class demonstrates its clear grasp 

of the parameters of the case and the obvious need for the court to manage and control 

the course of litigation. Therefore, I would affirm the District Court.

¶48 Because the matter is being remanded for further discovery, the District Court will 

be able to employ its broad discretion in managing the course and scope of discovery. 

And, because the discovery will be focused on USAA’s claims handling practices and 

Byroth and McKean’s efforts to re-establish class certification, I would encourage the 

court to schedule a discovery conference as provided by M. R. Civ. P. 16 and 26 so the 

parties will fully understand the court’s procedural expectations.

/S/ MICHAEL E WHEAT

Chief Justice Mike McGrath joins the Dissent of Justice Michael E Wheat.

/S/ MIKE McGRATH