The Colorado Supreme Court this week overturned a lower court’s decision that would have made it easier to file class-action suits against businesses.
The suit, Farmers Insurance Exchange v. Benzing, concerned a class action suit for “fraud on the market” under the Consumer Protection Act alleging that Farmers did not notify customers that purchasing uninsured motorist coverage for one vehicle covered all additional vehicles on the policy.
Fraud on the market is a defendant’s accusation that material misrepresentation in the open market affects price.
The court said the fraud on the market theory cannot be applied to maintain an insurance class action brought under the Consumer Protection Act.
The court also said that the plaintiff did not offer enough proof to maintain the suit.
The Colorado Trial Lawyers Association and the Colorado Civil Justice League both filed amicus briefs in the case – as did the Colorado Association of Commerce and Industry, the Colorado Competitive Council and the Denver Metro Chamber of Commerce.