(Reuters) — A federal judge said on Monday that a lawsuit accusing Geico Corp. for overcharging more than 2 million California policyholders on auto insurance early in the COVID-19 pandemic may proceed as a class action.
U.S. District Judge Beth Labson Freeman in San Jose, Calif., rejected Geico’s claim that a class-action lawsuit over the alleged inadequacies of its “Geico Giveback” program would create “insurmountable manageability problems.”
Geico, part of Warren Buffett’s Berkshire Hathaway Inc., said a class action would not sufficiently take into account differences among policyholders, including the length of time they had insurance.
The Chevy Chase, Maryland-based insurer also said it would be difficult to assess damages, isolate pandemic costs and adjust rates retroactively.
But the judge said a class action was preferable to individual lawsuits, and the plaintiffs̵7; damages model “may provide an appropriate percentage recovery over a sufficiently long period of time” to address manageability issues.
Attorneys for Geico did not immediately respond to requests for comment. Attorneys for the plaintiffs did not immediately respond to similar requests.
Policyholders objected to Geico’s decision to provide $2.5 billion in credits, including 15% on renewals, starting in April 2020, reflecting how people at the time drove and had fewer accidents.
They said Geico reaped a “windfall” because the credit was “well short” or adequate given the reduced risks and accused the insurer of falsely claiming its credits provided “substantial and full relief.”
Some insurers, including State Farm and Allstate Corp., offered pandemic-related refunds to policyholders.
The class covers California residents who purchased Geico auto, motorcycle or RV insurance between March 1, 2020 and now.
Geico is defending itself against a similar federal lawsuit in Chicago and in May persuaded a Manhattan appeals court to uphold a judge’s dismissal of a similar lawsuit there.
Berkshire, based in Omaha, Nebraska, has owned all of Geico since 1996.
The case is Day v. Geico Casualty Co. et al, US District Court, Northern District of California, No. 21-02103.