In re The Allstate Corporation Securities Litigation

Updated: January 5, 2021

Status: Ongoing Case

On January 20, 2017, Labaton Sucharow was appointed lead counsel in a securities class action against The Allstate Corporation (Allstate).

The Lead Plaintiffs allege that, in 2014, Allstate experienced a significant increase in the number of claims filed against its Allstate brand auto insurance (claims frequency), which resulted from Allstate loosening its underwriting standards to grow the size of its insurance business. Defendants misled investors by first failing to disclose the claims frequency increase. Then, after Allstate acknowledged the increase, Defendants misled investors by attributing the increase to external factors, such as severe weather and the number of miles driven by Allstate’s auto insurance customers, rather than Allstate’s growth strategy. In August 2015, Allstate finally admitted that its push for new business was a factor in the increase in claims frequency. On this news, Allstate’s stock price fell more than 10 percent, wiping out billions of dollars in its value.

On March 30, 2017, Lead Plaintiffs filed a Consolidated Class Action Complaint. On February 27, 2018, the Honorable Robert Gettleman dismissed Allstate’s motion to dismiss the Complaint. The Plaintiffs filed a Second Consolidated Class Action Complaint on September 12, 2018, that named the City of Providence as an additional class representative. On March 26, 2019, the Court granted Plaintiffs’ motion for class certification. 

On July 16, 2020, the Seventh Circuit Court of Appeals issued an opinion remanding the District Court’s class certification order. Specifically, the Seventh Circuit affirmed the District Court’s order granting leave to amend the Complaint to add the City of Providence as a class representative. The Seventh Circuit also affirmed the District Court’s application of the “price maintenance” theory of loss causation. However, the Seventh Circuit held that the District Court committed a legal error in “not engaging with the evidence that the alleged misrepresentations had no impact on the stock price.” 

On December 21, 2020, the District Court issued a second order certifying the class. On January 4, 2021, Defendants filed a petition to appeal the District Court’s second class certification order with the Seventh Circuit. Plaintiffs’ response is due on January 14, 2021. 

To date, Plaintiffs have completed extensive fact and expert discovery, which included numerous depositions and the review of voluminous documents.

The case is In re The Allstate Corporation Securities Litigation, No. 16-cv-10510 (N.D. Ill.). Labaton Sucharow represents Carpenters Pension Trust Fund for Northern California, Carpenters Annuity Trust Fund for Northern California, and the City of Providence Employee Retirement System. In addition to Allstate, the defendants include CEO Thomas J. Wilson and former President Matthew E. Winter.