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U.S. District Judge Karen Spencer Marston approved a class action settlement agreement regarding the reimbursement of sales taxes that were charged to customers with leased vehicles that were completely totaled. Judge Marston said, “The settlement is fair, reasonable, and adequate.”

This is the case of Erby v. Allstate Fire and Casualty Insurance Co., in the U.S. District Court for the Eastern District of Pennsylvania. According to the complaint, the plaintiff, Michael Erby, and the other class members filed a lawsuit against Allstate Fire and Casualty Insurance alleging that Allstate failed to reimburse customers for the full sales tax on leased vehicles that were totaled in collisions.

According to the settlement agreement, Allstate will payout the unpaid sales tax to each member of the class who submits a valid claim. Under the agreement, class members include individuals who from January 2021 to April 2022 “submitted a private-passenger auto physical damage claim for a leased vehicle under an Allstate Pennsylvania policy” where the total loss claim payment failed to include the full sales tax.

Pursuant to court documents, the amount due to each class member will be calculated by determining the full sales tax for the total-loss vehicle and subtracting the amount of the sales tax that was included in any previous payment that was made by Allstate on the claim, per court documents.

Michael Erby and the class members are represented by Daniel Levin of Levin Sedran & Berman, Aaron Rihn of Robert Peirce & Associates PC, and Derrek Cummings of Weisberg Cummings PC, and in this case, they were awarded more than $730,000 in attorney fees and costs.

The court also awarded $4,500 to Michael Erby, the class representative, as a service award, even though he requested $6,500. Judge Marston said that Erby’s proposed $6,500 service award was “slightly high” in considering his level of involvement in the class action lawsuit.

The court pointed out that he refused to sit for a deposition and did not help review any discovery. Judge Marston said, “At bottom, there is no indication that he was particularly involved in this litigation, other than at its initiation.”

In 2018, Erby filed a lawsuit against Allstate, alleging a breach of contract and accusing Allstate of violating Pennsylvania’s Unfair Trade Practices and Consumer Protection Law.

Court documents reveal that in August 2016 Erby’s Honda Accord was hit by a Cadillac insured by Allstate, however, the cost to repair the vehicle was too high. Allstate eventually agreed to settle his claim for more than $19,000 dollars, but that did not include sales tax for his totaled vehicle.