On March 26, 2019, the U.S. District Court for the Northern District of Illinois Eastern Division granted class certification and appointed Labaton Sucharow as class counsel in a securities class action against Allstate and certain of its former and current executives. Plaintiffs previously prevailed over the defendants’ motion to dismiss on February 27, 2018.
The action alleges that during the third quarter of 2014, Allstate experienced a pronounced uptick in the number of claims filed against its Allstate brand auto insurance – the company’s most popular and profitable line of insurance – which was the result of Allstate loosening its underwriting standards in an effort to grow the size of its insurance business. Allstate misled investors by first failing to disclose the uptick in claims frequency. Then, later in the class period, after Allstate acknowledged the increase in claims frequency, it misled investors by attributing the increase not to its loosened underwriting standards, but to external factors, such as severe weather and the number of miles driven. After Allstate finally admitted on August 3, 2015 that its push for new business was a factor in the increase in claims frequency, its stock price fell more than 10 percent, wiping out billions of dollars in the stock’s value.
The Labaton Sucharow team includes partners Tom Dubbs, Louis Gottlieb, and Tom Hoffman, and associate Wendy Tsang. The Firm represents lead plaintiffs Carpenters Pension Trust Fund for Northern California and Carpenters Annuity Trust Fund for Northern California, and additional class representative the City of Providence. The case is In re The Allstate Corporation Securities Litigation, No. 16-cv-10510 (N.D. Ill.).