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Erie Indemnity Co. v. Erie Insurance Exchange

This case was filed by respondent Erie Insurance Exchange (Exchange) against petitioner Erie Indemnity Company (Indemnity) in Pennsylvania state court. Exchange is a Pennsylvania unincorporated association that operates as a reciprocal insurer. It is owned by, and consists of, its policyholders, all of whom are members of it. Pursuant to a longstanding authorization in Pennsylvania law, the members purchase insurance policies and receive indemnification for any losses out of Exchange’s pool of funds. The pool is made up of fees, including insurance premiums and other charges, paid by the members. Indemnity is the managing agent and attorney-in-fact for Exchange. For these services, Indemnity is permitted to retain up to 25 percent of all premiums for policies written or assumed by Exchange. The balance of the premiums is to be used for insurance losses and other operational costs incurred by Exchange; any excess of premiums over such expenses may be distributed to Exchange’s members as dividends. Challenging the fee retained by Indemnity, Exchange sued Indemnity in state court using a Pennsylvania state law, known as Rule 2152, that addresses the procedure for suits by on or on behalf of an unincorporated association or, in the alternative, Rule 2177, which addresses suits by insurance exchanges. Indemnity, relying on the Class Action Fairness Act (CAFA), sought to remove the case to federal court, arguing that the lawsuit is a class action for purposes of CAFA and thus removable under CAFA.

After the district court and court of appeals rejected the argument, Indemnity petitioned for review in the Supreme Court. Public Citizen serves as co-counsel for Exchange in the Supreme Court. Our brief in opposition to the petition explains that Indemnity’s disagreement on the state-law question whether state-law Rule 2152 or 2177 apply does not convert the lawsuit into a class action, which involves allegations, procedures, and requirements not applicable here. The opposition also explains that the existence of an earlier case, pleaded as a class action, does not convert this case into one and that there is no conflict among the circuits as to any question presented in the case.