Ward v. Dixie National Life

ON REHEARING

UNPUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 06-2022

MARTHA WARD, on behalf of herself and all
others similarly situated,

Plaintiff - Appellant,

versus

DIXIE NATIONAL LIFE INSURANCE COMPANY;
NATIONAL FOUNDATION LIFE INSURANCE COMPANY,

Defendants - Appellees,

and

PALMETTO MARKETING ASSOCIATES, INCORPORATED;
PATTI JENKINS,

Defendants.

----------------------------

SOUTH CAROLINA DEPARTMENT OF INSURANCE;
AMERICA’S HEALTH INSURANCE PLANS,
INCORPORATED,

Amici Supporting Appellees.
 No. 06-2054

MARTHA WARD, on behalf of herself and all
others similarly situated,

Plaintiff - Appellee,

versus

NATIONAL FOUNDATION LIFE INSURANCE COMPANY,

Defendant - Appellant,

DIXIE NATIONAL LIFE INSURANCE COMPANY,

Defendant - Appellee,

and

PALMETTO MARKETING ASSOCIATES, INCORPORATED;
PATTI JENKINS,

Defendants.

----------------------------

SOUTH CAROLINA DEPARTMENT OF INSURANCE;
AMERICA’S HEALTH INSURANCE PLANS,
INCORPORATED,

Amici Supporting Appellant.

Appeals from the United States District Court for the District of
South Carolina, at Columbia. Joseph F. Anderson, Jr., Chief
District Judge. (3:03-cv-03239-JFA)

Argued: May 23, 2007 Decided: October 5, 2007

Decided on Rehearing: November 29, 2007

2
Before MICHAEL and TRAXLER, Circuit Judges, and WIDENER,1 Senior
Circuit Judge.

Vacated in part, affirmed in part, dismissed in part, and remanded
by unpublished per curiam opinion.

ARGUED: Richard Ara Harpootlian, Columbia, South Carolina, for
Martha Ward, on behalf of herself and all others similarly
situated. Elliot H. Scherker, GREENBERG & TRAURIG, L.L.P., Miami,
Florida, for Dixie National Life Insurance Company and National
Foundation Life Insurance Company. ON BRIEF: Tobias G. Ward, Jr.,
TODD & WARD, P.C., Columbia, South Carolina, for Martha Ward, on
behalf of herself and all others similarly situated. C. Allen
Foster, Kevin E. Stern, GREENBERG & TRAURIG, L.L.P., Washington,
D.C.; J. Calhoun Watson, SOWELL, GRAY, STEPP & LAFFITTE, L.L.C.,
Columbia, South Carolina, for Dixie National Life Insurance Company
and National Foundation Life Insurance Company. Jeffrey A. Jacobs,
SOUTH CAROLINA DEPARTMENT OF INSURANCE, Columbia, South Carolina,
for the South Carolina Department of Insurance, Amicus Curiae
Supporting Dixie National Life Insurance Company and National
Foundation Life Insurance Company. Joni Hong, AMERICA’S HEALTH
INSURANCE PLANS, INC., Washington, D.C.; Markham R. Leventhal,
Mitchell D. Sprengelmeyer, JORDEN BURT, L.L.P., Miami, Florida, for
America’s Health Insurance Plans, Inc., Amicus Curiae Supporting
Dixie National Life Insurance Company and National Foundation Life
Insurance Company.

Unpublished opinions are not binding precedent in this circuit.

1
Judge Widener heard oral argument in this case but died prior
to the time the decision was filed. The decision is filed by a
quorum of the panel. 28 U.S.C. § 46(d).

3
PER CURIAM:

Plaintiff Martha Ward sued National Foundation Life

Insurance Company (National) and Dixie National Life Insurance

Company (Dixie), asserting that National refused to pay the full

amount of benefits owed under supplemental cancer insurance

policies that were issued by Dixie and later assigned to National.

The district court certified a statewide (South Carolina) plaintiff

class rather than the multistate class Ward sought to represent,

and the court later granted summary judgment in favor of National

on the breach of contract claims. Ward appealed and National

cross-appealed. In a prior opinion, we concluded that although the

district court properly limited the plaintiff class to South

Carolina residents, the court improperly granted summary judgment

on the breach of contract claims, and we remanded for further

proceedings on those claims. We dismissed National’s cross-appeal

without prejudice. See Ward v. Dixie Nat’l Life Ins. Co., 2007 WL

2914954 (4th Cir. Oct. 5, 2007).

Ward filed a petition for rehearing, and National,

supported by various amici, filed a petition for rehearing and

rehearing en banc. We granted Ward’s petition for panel rehearing

and denied National’s petition for rehearing, thus vacating our

prior opinion.2 See Fourth Circuit I.O.P. 40.2. Dispensing with

2
Because no member of the court called for a vote on
National’s petition for rehearing en banc, the petition was denied.
See Fourth Circuit Local Rule 35(b).

4
further briefing and argument, we now vacate the district court’s

decision granting summary judgment in favor of National, and we

remand with instructions for the district court to instead enter

judgment in favor of Ward on the breach of contract claims. In

light of our remand, we conclude that it would be premature for us

to consider the class certification issue. We therefore dismiss

without prejudice National’s cross-appeal.

I.

In August 1990 Ward purchased a cancer treatment benefit

policy from Dixie covering both herself and her husband. Ward’s

policy is a type of supplemental insurance under which direct

payments are made to the policyholder when an insured patient

undergoes covered cancer treatments. Benefits under this kind of

policy are paid regardless of whether the patient has other

insurance sufficient to cover all medical expenses. When the

patient has other insurance covering cancer treatments, the

policyholder is able to retain the money received as a result of

the supplemental coverage.

Benefits under Ward’s policy vary as to the procedure

performed. In some sections the policy provides clear caps as to

the maximum benefit to be paid. For example, the policy provides

a “Schedule of Operations” listing the maximum amount to be paid

-- ranging from $150 for skin excisions to $3000 for removal of an

5
intracardiac tumor -- for a variety of operations. In many other

sections of the policy no dollar amounts are provided, and benefits

are calculated in relation to the “actual charges” for the covered

procedures. Section (F) of the policy, titled “X-ray Therapy,

Radium Therapy, Radiation Therapy, and Chemotherapy Benefit,”

provides an example of this language:

We will pay the actual charges for teleradiotherapy,
using either natural or artificially propagated
radiation, when used for the purpose of modification or
destruction of tissue invaded by cancer. We will also
pay the actual charges made for plaques or molds or the
administration internally, interstitially, or
intracavitarially of radium or radioisotopes in sealed
sources for the purpose of modification or destruction of
tissue invaded by cancer. We will also pay the actual
charges for cancericidal chemical substances and the
administration thereof for the purpose of the
modification or destruction of tissue invaded by cancer.

J.A. 221. Although the phrase is used repeatedly throughout the

policy, no definition for “actual charges” is provided.

Dixie assigned Ward’s policy to National in 1994. In

2001 Ward began filing claims under the policy after her husband,

James Ward (James), was diagnosed with prostate cancer and started

receiving treatment. Shortly thereafter, a dispute between Ward

and National arose over how benefits paid in the amount of the

“actual charges” are calculated.

For a number of years after the assignment, National

appears to have calculated benefits in the same manner that Dixie

had previously done. Specifically, when the benefit owed was based

on the “actual charges,” Dixie paid the benefit based on the

6
amounts billed to patients by their medical providers. Dixie paid

such amounts even though providers often have agreements with

certain insurers to accept as payment-in-full an amount less than

that reflected on the patient’s bill. In this case, for example,

James’s primary health insurance is provided through a plan

administered by Blue Cross and Blue Shield of South Carolina

(BCBS). Regardless of the amounts billed to James, his medical

providers have an agreement with BCBS that requires them to accept

a discounted amount as payment-in-full for services rendered to

BCBS insureds. This agreement prohibits providers from attempting

to collect an amount in excess of the pre-negotiated, discounted

fee from BCBS insureds such as James.

Toward the end of the year in 2001, National changed its

benefit payment practice. When Ward submitted claims for James’s

treatments in 2002, she was told that she would have to submit an

explanation of benefits (EOB) statement. By viewing the EOB,

National would be able to determine what the pre-negotiated

discount rate was for James’s treatments and calculate benefits in

light of this reduced amount. Ward refused to provide National

with the EOB statements because she contended that under the terms

of her policy, the “actual charge” was reflected in the non-

discounted bill that she received rather than in the EOB.

On March 7, 2003, after Ward was unable to resolve the

dispute, she filed an action in the Court of Common Pleas for

7
Richland County, South Carolina, against both Dixie and National.

The defendants removed the action to federal court on October 10,

2003. On September 15, 2004, Ward moved to certify a plaintiff

class consisting of

all persons insured under cancer policies from Defendant
Dixie National Life Insurance Company where Dixie
promised to pay to the insured the “actual charges”
incurred for certain medical services, but instead paid
not the actual charges but rather the (lesser) amount
that the insured’s primary health insurer negotiated with
the healthcare provider to pay for the medical
procedure[.]

S.A. 7. On May 5, 2005, the district court certified a class of

South Carolina residents. The court limited the class to South

Carolina residents based on its understanding of South Carolina’s

door-closing statute, S.C. Code Ann. § 15-5-150. Ward, with

permission of the court, filed a third amended complaint on

September 27, 2005, asserting claims for (1) breach of contract

against both Dixie and National; (2) bad faith refusal to pay

against National; and (3) breach of contract accompanied by a

fraudulent Act against National. Ward later abandoned the bad

faith claim. Cross-motions for summary judgment followed. In

addition, National filed a motion, joined by Dixie, to decertify

the statewide class.

On May 10, 2006, the district court granted National’s

motion for summary judgment while denying Ward’s. The court

concluded that under South Carolina contract law, the phrase

“actual charges” is not ambiguous and must be read to mean “the

8
charges for which the patient is liable when medical services are

rendered, not the fictional amounts indicated on the invoice that

the provider does not expect the patient to pay.” J.A. 1074.

Because Ward did not prevail on her breach of contract claims, the

joint motion to decertify the class and Dixie’s motion for summary

judgment were denied as moot.

Ward appeals both the grant of summary judgment to

National as well as the district court’s decision to limit class

membership to South Carolina residents. National has filed a

cross-appeal contesting the district court’s decision to certify

even a statewide class.

II.

We begin with Ward’s argument that the district court

erred in concluding that, as used in her policy, the unambiguous

meaning of the phrase “actual charges” is the discounted amount

that medical providers have agreed to accept as full payment

pursuant to a third-party agreement with another insurer. Under

South Carolina law when a term has a “plain, ordinary, and popular

meaning,” courts must interpret the term to give effect to that

ordinary usage. Century Indem. Co. v. Golden Hills Builders, Inc.,

561 S.E.2d 355, 358 (S.C. 2002). When a term has a plain meaning

and that meaning is “clear and unambiguous, the language [of the

contract] alone determines the contract’s force and effect.”

9
Schulmeyer v. State Farm Fire & Cas. Co., 579 S.E.2d 132, 134 (S.C.

2003). Of course not all terms are susceptible to plain and

ordinary definition because of the simple fact that they are not

popularly used. As a result, a contract term is ambiguous when it

lacks a plain definition and is “capable of more than one meaning

when viewed objectively by a reasonably intelligent person who has

examined the context of the entire integrated agreement and who is

cognizant of the customs, practices, usages and terminology as

generally understood in the particular trade or business.” Hansen

v. United Servs. Auto. Ass’n, 565 S.E.2d 114, 117-18 (S.C. 2002).

In the district court’s endeavor to discern the plain

meaning of “actual charges” as used in Ward’s policy, it reasoned

that the word “actual” should be given a separate meaning from the

word “charges.” Because the district court understood the word

“actual” to mean something that is real or true, it concluded that

“actual charges” means the amounts for which the patient is truly

liable as opposed to “the fictional amounts indicated on the

invoice that the provider does not expect the patient to pay.”

J.A. 1074. We disagree both with the district court’s interpretive

approach as well as the conclusion that it reached. The definition

settled on by the district court is not the only one possible when

the language of the policy is considered in light of its context.

As we explain below, the meaning of the phrase “actual charges” as

used in Ward’s policy is ambiguous.

10
 First, even under the district court’s approach --

defining each word separately and then putting those definitions

together -- another meaning can reasonably be found. The words

“actual charges” could also be understood to mean the amount shown

on the bill sent to the patient regardless of whether this amount

is the same as the amount actually owed. Viewed from within the

four corners of the policy, the phrase is ambiguous as there is

nothing to indicate whether “actual charges” is best understood to

mean the amount actually billed or the amount actually owed. See

Conner v. Am. Pub. Life Ins. Co., 448 F. Supp.2d 762, 766 (N.D.

Miss. 2006) (finding “inherent ambiguity in the undefined term

‘actual charges’”); Metzger v. Am. Fid. Assur. Co., No. CIV-05-

1387-M, 2006 U.S. Dist. LEXIS 70061, at *13 (W.D. Okla. Sept. 26,

2006) (same).

Second, we disagree with the assertion that the district

court was correct “in considering ordinary dictionary definitions”

of both “actual” and “charges.” Appellees’ Br. at 21. We conclude

that a person “who is cognizant of the customs, practices, usages

and terminology as generally understood” in the health insurance

industry would regard “actual charges” as a term of art rather than

two words to be separately defined. Hansen, 565 S.E.2d at 117.

The words are used throughout the insurance policy together as a

phrase -- a phrase that neither appears in a standard dictionary

nor has an ordinary, popular usage. Contrary to the defendants’

11
contention, South Carolina’s principles of contract interpretation

in no way prohibit courts from reading a phrase as a term of art if

that is how it would be regarded by an objective observer well-

versed in medical insurance terminology. See Frazier v. Badger,

603 S.E.2d 587, 591 (S.C. 2004).

Third, even when viewed as a term of art, the phrase

remains ambiguous. Prior to filing this lawsuit, Ward wrote to the

South Carolina Department of Insurance and asked to be provided

with a legal definition of “actual charge.” A representative of

the Department wrote back explaining that “[t]he term ‘actual

charge’ in industry-wide standards is the amount that you are

legally obligated to pay for a specific service.” J.A. 611

(emphasis in original). In contrast to the view taken by the

Department of Insurance, numerous health care dictionaries define

“actual charge” as the amount billed. See, e.g., Mosby’s Medical,

Nursing, and Allied Health Dictionary 26 (4th ed. 1994) (“actual

charge, the amount actually charged or billed by a medical

practitioner for a service. The actual charge may not be the same

as that paid for the service by an insurance plan.”); Lee Hyde, The

McGraw-Hill Essential Dictionary of Health Care 133 (1988) (“actual

charge. the amount a physician or other practitioner actually bills

a patient or his insurance for a medical service or procedure.”)

(emphasis in original). Because the policy itself does not

12
indicate which definition was intended by the parties, we conclude

that its meaning is ambiguous.3

We must now determine what remedy flows from our

conclusion that the insurance policy is ambiguous. In a typical

contract dispute, the meaning of an ambiguous contract is a

question of fact to be resolved by the jury. See, e.g., Café

Assocs., Ltd. v. Gerngross, 406 S.E.2d 162, 164 (S.C. 1991) (“As a

general rule, written contracts are to be construed by the Court;

but where a contract is ambiguous or capable of more than one

construction, the question of what the parties intended becomes one

of fact, and the question should be submitted to the jury.”).

Although statements of that general rule appear in cases involving

insurance disputes, see Waters v. S. Farm Bureau Life Ins. Co., 617

S.E.2d 385, 388 (S.C. Ct. App. 2005), only latent ambiguities in an

insurance policy are resolved by a jury; patent ambiguities must be

resolved in favor of the insured. See Cogdill v. Equity Life &

Annuity Co., 203 S.E.2d 674, 677 (S.C. 1974); Hann v. Carolina Cas.

Ins. Co., 167 S.E.2d 420, 423 (S.C. 1969). Accordingly, if the

3
National and its supporting amici contend that, absent
compelling reasons, we must defer to the Department of Insurance’s
interpretation of “actual charges.” We disagree. Although an
agency’s interpretation of a statute it is charged with enforcing
is entitled to deference, see Dunton v. S.C. Bd. of Examiners in
Optometry, 353 S.E.2d 132, 133 (S.C. 1987), the Department of
Insurance has no statutory mandate to pronounce the meaning of a
term in an individual insurance policy. We are of course
interested in the Department’s position, but South Carolina law
does not in this case require us to defer to the Department’s view
of the matter.

13
ambiguity in this case is patent, the district court should have

granted summary judgment in favor of Ward on the breach of contract

claims. If the ambiguity is latent, the meaning of the policy must

be determined by a jury on remand.

A patent ambiguity is one where the uncertainty as to

meaning “arises upon the words of the will, deed, or other

instrument as looked at in themselves, and before any attempt is

made to apply them to the object which they describe.” Hann, 167

S.E.2d at 422 (quoting Jennings v. Talbert, 58 S.E. 420, 421 (S.C.

1907)); cf. Stone Container Corp. v. Hartford Steam Boiler

Inspection & Ins. Co., 165 F.3d 1157, 1162 (7th Cir. 1999) (“A

patent ambiguity in a contract is one that is apparent from just

reading the contract.”). With a latent ambiguity, “the uncertainty

arises, not upon the words of the will, deed, or other instrument

as looked at in themselves, but upon those words when applied to

the object or subject which they describe.” Hann, 167 S.E.2d at

422. A latent ambiguity thus “does not appear on the face of the

words used, nor is its existence known until those words are

brought into contact with collateral facts.” Hastings v. Union

Fire Ins. Co., 125 S.E. 923, 924 (S.C. 1924) (internal quotation

marks omitted); cf. Stone Container Corp., 165 F.3d at 1162 (“A

latent ambiguity arises when, although the contract is clear ‘on

its face,’ anyone knowing the background would know that it didn’t

mean what it seems to mean.”).

14
 We believe that the phrase “actual charges” is patently

ambiguous. The phrase is susceptible of more than one reasonable

interpretation, and the uncertainty of meaning arises thus from the

phrase itself, not from the application of the phrase to collateral

facts. See Cogdill, 203 S.E.2d at 677 (concluding that “lame back”

as used in a policy provision limiting disability benefits could

plausibly be construed in more than one way and that the phrase was

patently ambiguous); Hastings, 125 S.E. at 924 (finding latent

ambiguity in fire insurance policy that covered two barns because

the insured’s property included two traditional barns and an

abandoned tenant house used by the insured as a barn).

Because the ambiguity is patent, construction of the

policy is for the court rather than a jury. See Cogdill, 203

S.E.2d at 677; Hann, 167 S.E.2d at 423. South Carolina law very

clearly requires us to resolve the ambiguity in favor of the

insured. See Helena Chem. Co. v. Allianz Underwriters Ins. Co.,

594 S.E.2d 455, 459 (S.C. 2004) (“Where the words of an insurance

policy are capable of two reasonable interpretations, the

construction most favorable to the insured should be adopted.”);

Hann, 167 S.E.2d at 423 (“It is settled beyond cavil in this

jurisdiction that the terms of an insurance policy should be

construed most liberally in favor of the insured, and that in case

of conflict or ambiguity, a construction will not be adopted that

defeats recovery if the policy is reasonably susceptible of a

15
meaning that will permit recovery. We uniformly give the insured

the benefit of any doubt in the construction of the terms used in

an insurance policy.”). Accordingly, we vacate the district

court’s grant of summary judgment to National and remand with

instructions that the district court enter summary judgment in

favor of Ward on her breach of contract claims.

III.

A.

We now turn to the question of whether the district court

properly limited the class of plaintiffs to those who, like Ward,

are residents of South Carolina. In her motion for class

certification, Ward made clear that she sought to represent persons

residing throughout the southern United States who had bought

policies from Dixie that were later assigned to National. Because

the proposed class included non-residents of South Carolina, the

district court requested briefing from the parties on the effect of

South Carolina’s door closing statute, S.C. Code Ann. § 15-5-150,

on the potential out-of-state class members. That statute

provides:

An action against a corporation created by or under the
laws of any other state government or country may be
brought in the circuit court:

16
 (1) By any resident of this State for any cause of
action; or

(2) By a plaintiff not a resident of this State when the
cause of action shall have arisen or the subject of the
action shall be situated within this state.

S.C. Code Ann. § 15-5-150. As recently reinterpreted by the

Supreme Court of South Carolina in Farmer v. Monsanto Corp., 579

S.E.2d 325 (S.C. 2003), § 15-5-150 determines the capacity of a

party to sue. Furthermore, Farmer held that Ҥ 15-5-150 controls

the eligibility of class members in a class action where the

defendant is a foreign corporation.” 579 S.E.2d at 559. For

suits in South Carolina state court, the effect of Farmer is to

limit class membership to those persons who would have had

capacity to sue for themselves.

In ruling on Ward’s motion for class certification, the

district court concluded that § 15-5-150 prevented Ward from

representing out-of-state plaintiffs. The district court reached

this conclusion by relying on our prior decisions stating that “a

South Carolina federal court exercising diversity jurisdiction

must apply § 15-5-150 ‘unless there are affirmative countervailing

federal considerations.’” Proctor & Schwartz, Inc. v. Rollins,

634 F.2d 738, 739-40 (4th Cir. 1980) (quoting Szantay v. Beech

Aircraft Corporation, 349 F.2d 60, 64 (4th Cir. 1965)). Our

decisions in Proctor & Schwartz and Szantay, however, interpreted

the door-closing statute in light of the then-prevailing

17
understanding that § 15-5-150 restricted not capacity to sue but

the subject matter jurisdiction of state courts. In Farmer the

Supreme Court of South Carolina overruled its prior cases stating

that § 15-5-150 dealt with jurisdiction.

In this case, we do not find it necessary to decide what

effect the reinterpreted door-closing statute has on class

membership in suits being heard in South Carolina federal courts

sitting in diversity. This is so because, as we discuss next,

Ward has failed to establish that the proposed multistate class

meets Rule 23(b)(3)’s requirement that common legal issues

predominate.

B.

Fed. R. Civ. P. 23 sets the requirements for class

certification. First, Rule 23(a) provides that certification is

proper only if

(1) the class is so numerous that joinder of all members
is impracticable, (2) there are questions of law or fact
common to the class, (3) the claims or defenses of the
representative parties are typical of the claims or
defenses of the class, and (4) the representative
parties will fairly and adequately protect the interests
of the class.

Fed. R. Civ. P. 23(a). Once Rule 23(a)’s requirements of

numerosity, commonality, typicality, and representational adequacy

are met, the proposed class must still satisfy one of three

additional requirements for certification under Rule 23(b).

18
Because Ward sought class certification under Rule 23(b)(3), she

was required to show that

questions of law or fact common to the members of the
class predominate over any questions affecting only
individual members, and that a class action is superior
to other available methods for the fair and efficient
adjudication of the controversy.

Fed. R. Civ. P. 23(b)(3). The predominance requirement under Rule

23(b)(3) “is similar to but ‘more stringent’ than the commonality

requirement of Rule 23(a).” Thorn v. Jefferson-Pilot Life Ins.

Co., 445 F.3d 311, 319 (4th Cir. 2006) (quoting Lienhart v. Dryvit

Sys., 255 F.3d 138, 146 n. 4 (4th Cir. 2001)). The party seeking

class certification bears the burden of establishing all Rule 23

requirements. In re A.H. Robins Co., 880 F.2d 709, 728 (4th Cir.

1989).

In her class certification memorandum, Ward stated that

“members of the Class are dispersed throughout the southern United

States.” S.A. 12. She further noted that “Dixie marketed and

sold cancer policies in at least seven states other than South

Carolina, including Alabama, Florida, Georgia, Louisiana,

Mississippi, Tennessee, and Texas.” Id. Although Ward’s

multistate class purported to include “at a minimum, thousands of

persons” across the southern United States, Ward never identified

what state law would apply to the claims of absent class members

who are not residents of South Carolina and whose claims have no

19
connection to that state. Id. In a class action potentially

governed by the laws of multiple states, identifying the

applicable body or bodies of state law is critical because

“variations in state law may swamp any common issues and defeat

predominance.” Castano v. American Tobacco Co., 84 F.3d 734, 741

(5th Cir. 1996). Ward has the burden of showing “that common

questions of law predominate, and [she] cannot meet this burden

when the various laws have not been identified and compared.”

Gariety v. Grant Thornton, LLP, 368 F.3d 356, 370 (4th Cir. 2004);

see also Cole v. GMC, 484 F.3d 717, 730 (5th Cir. 2007)

(decertifying a class because “[p]laintiffs have failed to

adequately address, much less extensively analyze, [] variations

in state law”) (internal quotation marks and citation omitted).

Because the district court ruled on the effect of the

door-closing statute before addressing the merits of Ward’s motion

for class certification, it did not decide whether the proposed

multistate class meets the requirements of both Rule 23(a) and

Rule 23(b)(3). Even assuming that this proposed class could

satisfy the requirements of Rule 23(a), Ward has not established

that the multistate class satisfies Rule 23(b)(3)’s requirement

that common questions of law predominate. Specifically, Ward

failed to identify and compare the applicable state laws. When a

plaintiff seeking certification fails to provide this analysis, it

is not possible for the district court to determine whether any

20
variations in state law “pose ‘insuperable obstacles’ to

certification” of a multistate class. Spence v. Glock,

GES.m.b.H., 227 F.3d 308, 313 (D.C. Cir. 2000) (quoting Walsh v.

Ford Motor Co., 807 F.2d 1000, 1017 (D.C. Cir. 1986)). The need

in this case to identify all governing state laws and compare any

variations is underscored by the decisions in two recent cases

where plaintiffs in states within the proposed geographic class

made claims materially similar to Ward’s. In contrast to our

decision today under South Carolina law, two district courts

applying contract law principles of Alabama and Louisiana

concluded that the meaning of “actual charges” is unambiguous as

a matter of law. See Claybrook v. Cent. United Life Ins. Co., 387

F. Supp.2d 1199, 1203 (M.D. Ala. 2005); Jarreau v. Cent. United

Life Ins. Co., No. 05-83-FJP-SCR, 2006 U.S. Dist. LEXIS 51196 at

*2 (M.D. La. May 16, 2006). In light of Ward’s failure to show

that common issues of law would be predominant in a multistate

class, we affirm the decision of the district court to limit class

membership to South Carolina residents regardless of the effect of

the door-closing statute. See United States v. Smith, 395 F.3d

516, 519 (4th Cir. 2005) (“We are not limited to evaluation of the

grounds offered by the district court to support its decision, but

may affirm on any grounds apparent from the record.”).

21
 IV.

We now turn to the cross-appeal filed by National, one

of the defendants. National claims that the district court abused

its discretion in certifying even a statewide class because: (1)

the class is not sufficiently numerous; (2) Ward is neither a

typical nor adequate class representative; and (3) individual

issues will predominate the determination of class members’

claims. On May 19, 2005, after the statewide class had been

certified but before any party had filed a motion for summary

judgment, National and Dixie petitioned this court to review the

district court’s certification order pursuant to Fed. R. Civ. P.

23(f). This rule grants us the discretion to entertain appeals

from class certification orders prior to the entry of a final

judgment. See Lienhart, 255 F.3d at 145. Our court applies a

five-factor test to guide our discretion in deciding whether to

hear such interlocutory appeals:

(1) whether the certification ruling is likely
dispositive of the litigation; (2) whether the district
court’s certification decision contains a substantial
weakness; (3) whether the appeal will permit the
resolution of an unsettled legal question of general
importance; (4) the nature and status of the litigation
before the district court (such as the presence of
outstanding dispositive motions and the status of
discovery); and (5) the likelihood that future events
will make appellate review more or less appropriate.

Id. In their Rule 23(f) petition, the defendants raised the same

objections to the class certification order that National now

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asserts in this appeal. We denied the interlocutory petition for

review on June 23, 2005.

National’s cross-appeal of the class certification is

before us as a result of the appeal taken by the plaintiff, Ward,

from a final judgment, namely, the summary judgment awarded to

defendant National. Because we have decided to vacate that

judgment and remand the case for further proceedings, National’s

current challenge to class certification is procedurally akin to

the earlier interlocutory appeal. This circumstance leads us to

conclude that it would be premature for us to address the class

certification issue. Earlier, when the district court certified

the statewide class, it explicitly reserved its authority to

decertify or modify the class at a future date. See McNamara v.

Felderhof, 410 F.3d 277, 281 (5th Cir. 2005) (noting that under

Rule 23(c)(1)(C) the district court on remand “is free to

reconsider its class certification order as often as necessary

before judgment.”). The defendants went on to file motions for

summary judgment and for decertification of the statewide class.

After the district court granted summary judgment to National, the

pending motion to decertify was denied as moot. Now, in light of

the remand, the district court will be able to consider the motion

to decertify. Accordingly, we dismiss without prejudice the

cross-appeal filed by National. Cf. Baskin v. Hawley, 810 F.2d

370, 371 (2d Cir. 1987) (“Prudential considerations lead to our

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conclusion that these appeals should be dismissed as premature

notwithstanding the fact that they are taken from what was, at

that time, a ‘final decision[]’ within the meaning of 28 U.S.C.

§ 1291.”) (alteration in original).

V.

In sum, we conclude that the meaning of the phrase

“actual charges” as used in Ward’s policy is patently ambiguous.

We therefore vacate the district court’s grant of summary judgment

to National and remand with instructions for the district court to

grant summary judgment to Ward on the breach of contract claims.

We affirm, albeit on alternate grounds, the district court’s

decision to limit class membership to South Carolina residents.

Finally, we dismiss without prejudice the cross-appeal filed by

National challenging the district court’s certification of a

statewide class.

VACATED IN PART,
AFFIRMED IN PART,
DISMISSED IN PART,
AND REMANDED

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