S057520, Opinion — Strawn v. Farmers Ins. Co.

336
Argued and submitted March 2, 2010, at Lewis & Clark Law School, Portland,
Oregon, decision of Court of Appeals affirmed in part and reversed in part;
judgment of circuit court affirmed May 19, petition for reconsideration and motion
regarding ex parte contacts filed June 9 allowed by opinion July 8, 2011
See 351Or521, 256 P3d 100 (2011)
Mark STRAWN,
on his own behalf and as representative of
a class of similarly situated persons,
Petitioner on Review I Respondent on Review,
v.
FARMERS INSURANCE COMPANY OF OREGON,
an Oregon stock insurance company;
Mid-Century Insurance Company,
a foreign corporation;
and Truck Insurance Exchange,
a foreign corporation,
Respondents on Review I Petitioners on Review,
and
FARMERS INSURANCE GROUP INC.,
a foreign corporation,
Defendant.
(CC 9908-09080; CA A131605;
SC S057520 (Control), S057629)
258 P3d 1199
In a civil class action, plaintiffs, who had been insured by defendants, asserted
that defendants' claims handling process arbitrarily reduced payments for reason-
able medical benefits owed under its automobile insurance policies. A jury
returned a verdict for plaintiffs, and plaintiffs were awarded approximately
$900,000 in compensatory damages and $8 million in punitive damages. The Court
of Appeals affirmed the finding ofliability, but it concluded that the punitive dam-
age award exceeded federal constitutional limits. Both plaintiffs and defendants
petitioned for review. Held: (1) defendants' claims that the trial court erred in
excluding certain evidence had not been preserved, because defendants did not
present to the trial court the theories of admissibility that they advanced on
review; (2) plaintiffs were not required to offer individualized evidence of reliance
by each class member to support the fraud claim against defendants, because, on
the facts of this case, the jury was entitled to infer classwide reliance from evidence
common to the class; and (3) the Court of Appeals erred in considering whether the
punitive damages award exceeded federal constitutional limits, because defen-
dants had failed to preserve any challenge to the alternative and independent rea-
sons articulated by the trial court for denying defendants' motion.
The decision of the Court of Appeals is affirmed in part and reversed in part.
The judgment of the circuit court is affirmed.
On review from the Court of Appeals.*
* Appeal from Multnomah County Circuit Court, Jerome E. LaBarre, Judge.
228 Or App 454, 209 P3d 357 (2009).

Cite as 350 Or 336 	337
Kathryn H. Clarke, Portland, argued the cause for peti-
tioner on review/respondent on review Strawn. With her on
the briefs were Richard S. Yugler, David N. Goulder, and
Lisa T. Hunt, Landye Bennett Blumstein LLP, Portland.
Theodore J. Boutrous, Jr., Gibson, Dunn & Crutcher LLP,
Los Angeles, California, argued the cause for respondents on
review/petitioners on review Farmers Insurance Company of
Oregon et al. James N. Westwood, Stoel Rives LLP, Portland,
filed the brief for respondents on review/petitioners on review
Farmers Insurance Company of Oregon et al. With him on
the briefwereP.K. Runkles-Pearson, TheodoreJ. Boutrous,Jr.,
and Thomas H. Dupree, Jr., Gibson, Dunn & Crutcher LLP,
Los Angeles; and David L. Yohai and Gregory Silbert, Weil
Gotshal Manges LLP, New Yark.
Meagan A. Flynn, Portland, filed briefs in support of the
petition for review on behalf of amicus curiae Oregon Trial
Lawyers Association.
Brian S. Campf, Portland, filed a brief on behalf of amicus
curiae Oregon Trial Lawyers Association.
Andrew M. Schlesinger, West Linn, filed a brief on behalf
of amicus curiae United Policyholders.
Thomas 	M. 	Christ, 	Cosgrave 	Vergeer 	Kester 	LLP,
Portland, filed a brief on behalf of amicus curiae Oregon
Association of Defense Counsel.
Brian T. Hodges, Bellevue, Washington, filed a brief on
behalf of amicus curiae Pacific Legal Foundation. With him
on the brief were Deborah J. La Fetra and Timothy Sandefur,
Sacramento, California.
Before De Muniz, Chief Justice, and Durham, Kistler,
Balmer, Walters, and Linder, Justices.**
** Gillette, J., retired December 31, 2010, and did not participate in the deci-
sion of this case. Landau, J., did not participate in the consideration or decision of
this case.

338 	Strawn v. Farmers Ins. Co.
LINDER,J.
The decision of the Court of Appeals is affirmed in part
and reversed in part. The judgment of the circuit court is
affirmed.
Balmer, J., dissented and filed an opinion.

Cite as 350 Or 336 (2011) 	339
LINDER,J.
Plaintiff Mark Strawn filed a class action against
defendants 	Farmers 	Insurance 	Company 	of 	Oregon,
Mid-Century Insurance Company, 	and Truck Insurance
Exchange (collectively, Farmers). 1 The complaint alleged
that Farmers had breached its contractual obligations and
committed fraud by instituting a claims handling process
that arbitrarily reduced payments for reasonable medical
benefits owed under its automobile insurance policies. Ajury
returned a verdict for plaintiffs. Based on that verdict and a
post-verdict class claims administration process, the trial
court entered a judgment against Farmers for approximately
$900,000 in compensatory damages and $8 million in puni-
tive damages. Farmers appealed. On appeal, the Court of
Appeals 	concluded 	that 	the 	punitive 	damages 	award
exceeded 	federal 	constitutional 	limits, 	but 	otherwise
affirmed the judgment. Strawn v. Farmers Ins. Co., 228 Or
App 454, 209 P3d 357 (2009).
Both parties petitioned for review. In its petition,
Farmers presented three issues. The first two raise chal-
lenges to the liability verdict entered against Farmers. The
third issue challenges the punitive damages award, arguing
that the Court of Appeals should have reduced the punitive
damages award further. In plaintiffs' petition, they first con-
tend that the Court of Appeals should not have reached the
constitutionality of the punitive damages award for proce-
dural reasons. Alternatively, plaintiffs contend that the full
amount of punitive damages awarded by the jury was within
constitutional limits.
We allowed both petitions for review. As we will
explain, we reject Farmers's arguments that seek to set aside
the jury's liability determinations on plaintiffs' claims. On
the punitive damages issues, we conclude that the Court of
1 The trial court and the Court of Appeals were not always consistent in how
they referred to the parties in this case. The courts sometimes referred to "plain-
tiff' in the singular, and other times to "plaintiffs" collectively to indicate both
Strawn and the other class members. Similarly, the courts below sometimes
referred to defendants collectively as "Farmers" in the singular, and other times as
"defendants" in the plural. For purposes of this opinion, we use "plaintiff Strawn"
to indicate Strawn alone, "plaintiffs" to indicate Strawn and the class members,
and "Farmers" in the singular to refer to all defendants.

340 	Strawn v. Farmers Ins. Co.
Appeals should not have reached Farmers's constitutional
challenge to the amount of the punitive damages award. Con-
sequently, we affirm in part and reverse in part the decision
of the Court of Appeals, and we affirm the judgment of the
trial court.
I. 	FACTS AND PROCEDURAL BACKGROUND
This case involves personal injury protection (PIP)
benefits offered by insurance policies written by Farmers.
Both by statute and by contract, Farmers was obligated to
pay "[a]ll reasonable and necessary expenses of medical, hos-
pital, dental, surgical, ambulance and prosthetic services
incurred within one year after the date of the person's
injury," up to a certain limit. ORS 742.524(1)(a). 2 Because the
parties do not take issue with the summary of the facts pro-
vided by the Court of Appeals (which were set out in the light
most favorable to plaintiffs, as the prevailing party), we
quote that summary here:
"Before 1998, Farmers processed requests for PIP ben-
efits by having its claims adjusters review each medical bill
to determine whether the bill was reasonable-that is,
whether it was both 'usual and customary.' In 1997, how-
ever, Farmers decided to change that process. In an effort to
recover losses and regenerate its surplus after the 1994
Northridge, California earthquake, Farmers instituted its
'Bring Back a Billion' campaign. Farmers' corporate head-
quarters in Los Angeles alerted its regional offices of the
'increasing 	importance' 	of generating 	money 	without
raising premiums. In June 1997, Farmers instructed its
During the class period, ORS 742.524(1)(a) (1997) provided, in part:
"(l) Personal injury protection benefits as required by ORS 742.520 shall
consist of the following payments for the injury or death of each person:
"(a) All reasonable and necessary expenses of medical, hospital, dental,
surgical, ambulance and prosthetic services incurred within one year after the
date of the person's injury, but not more than $10,000 in the aggregate for all
such expenses of the person. Expenses of medical, hospital, dental, surgical,
ambulance and prosthetic services shall be presumed to be reasonable and nec-
essary unless the provider is given notice of denial of the charges not more than
60 calendar days after the insurer receives from the provider notice of the
claim for the services."
The statute has since been amended to increase the policy limit to $15,000, a
change that is inconsequential to this case. Or Laws 2003, ch 813, § 2. Other than
that change, the quoted portions of the statute remain the same. All references to
the statute in this opinion are to the 1997 version.

Cite as 350 Or 336 	341
Portland office to reduce payment of PIP benefits to realize
'PIP dollar savings * * *[,] an untouched area.'
"In an effort to reduce PIP payments, the Oregon PIP
claims manager, Heatherington, contracted with Medical
Management Online (MMO), a bill review vendor. MMO, in
turn, licensed a 'cost containment software program' from
Medata, a company that manages a database of roughly
100 million medical expenses. The software sorts those
medical expenses 	by Current Procedural Terminology
(CPT) codes, geographic region, and price. CPT codes,
which are created by the American Medical Association, are
used by medical providers to bill insurers. Geographic
regions in the database are defined according to 'PSRO'
areas, which are socio-demographic regions established by
the federal government in 1980 for workers' compensation
purposes. For Oregon, the federal government identified
two PSRO areas: (1) the Portland-metro area and (2) the
rest of the state.
"The software allowed MM O's clients (mostly insurance
companies and state agencies) to determine whether a bill
from a medical provider was more expensive than a given
percentage of the range of charges in other bills for the
same CPT code in the provider's designated geographic
area. Clients were able to select any percentile that they
wished, and MMO then evaluated the bills that it received
from the client to determine whether the bills exceeded that
percentile. If a bill exceeded the preselected percentile,
MMO generated an Explanation of Benefits (EOB) form
that reduced payment with reference to 'reason code'
'RC40.' The EOB explained the code as follows:
" 'RC40: This procedure was reduced because the
charges exceeded an amount that would appear reason-
able when the charges are compared to the chaw;es of
other providers within the same geographic area.' l
"The software was promoted as reducing medical provider
payments by 26 percent.
"Beginning in January 1998, Farmers implemented its
new PIP handling process through MMO-a process that,
in Heatherington's words, represented 'a significant change
Other EOB forms used the reason code "B2." For purposes of our review, that
code is essentially equivalent to an "RC40" reason code.

v. Farmers Ins. Co.
in the way we handle our bills.' Farmers selected the eight-
ieth percentile as the cutoff point for 'reasonable' expenses.
That is, Farmers determined that any bills that exceeded
the eightieth percentile in the MMO database would be
deemed to exceed the 'reasonable' charge and would be
'reduced' to that eightieth percentile. The program worked
as follows: After Farmers' insureds were treated for their
injuries, their medical providers sent their bills directly to
Farmers. Farmers then forwarded the bills to MMO, and
MMO entered the bills into its database. If the bill was
more than the charge that was at the eightieth percentile of
the charges for that same CPT code in the designated
region, MMO documented that fact on an EOB form with an
RC40 code.
"Although Farmers contended at trial (and still con-
tends) that the EOB form constituted only a 'recommenda-
tion' from MMO as to reasonableness, claims adjusters
were expected to follow the recommendation. The adjusters
were downgraded if they departed from MMO's recommen-
dations and were rewarded when they followed them. Thus,
the 'recommendation' was, as a practical matter, the final
determination of reasonableness.
"Between January 26, 1998 and July 21, 1999 (the class
period), Farmers reduced more than 60,000 individual bills
by a total of approximately $750,000. The majority of the
individual reductions were small: 90 percent were for $25
or less; more than one quarter were for $3 or less. Although
Farmers offered medical providers an opportunity to justify
the charges that exceeded the established percentile, it was
generally not cost-effective for medical providers to pursue
those avenues. The medical providers who took advantage
of the opportunity to justify their charges rarely secured
any additional payment from Farmers. When the providers
were unable to secure full payment from Farmers, the
insureds became responsible for the unpaid amounts.
"As previously noted, Farmers selected the eightieth
percentile as the cutoff point for payment of 'reasonable'
charges. That cutoff point, though profitable for Farmers,
also yielded an increase in customer complaints. The com-
plaints were particularly problematic for Heatherington
and Reinhardt, a regional claims manager, because cus-
tomer service satisfaction was one of the components for
measuring their performance and compensation. Together,
Heatherington and Reinhardt decided that the percentile

Cite as 350 Or 336 	343
should be raised to see whether customer relations would
improve, and, on May 21, 1999, Farmers raised the cutoff
point to the ninetieth percentile. Three weeks before this
class action case was filed, Farmers increased the cap to the
ninety-ninth percentile. Reinhart reported to corporate
headquarters that this was the right tack to take 'while the
litigation is pending.' "
Strawn, 228 Or App at 458-61 (footnotes omitted).
Plaintiff Strawn filed a class action against Farmers
in August 1999. The trial court certified the class action in
June 2000. Pursuant to the certification order, the class was
declared to consist of "all persons who were entitled to PIP
benefits from Farmers under Farmers's standard terms for
PIP coverage, whose benefit payments were reduced by
Farmers on the basis of codes RC40 or B2 during the period
January 26, 1998 to July 21, 1999, and whose claims are
not barred." Plaintiffs, alleging a total of approximately
8,000 class members, asserted four claims for relief against
Farmers: (1) breach of contract, (2) breach of the implied cov-
enant of good faith and fair dealing, (3) declaratory judg-
ment, and (4) fraud. 4 Plaintiffs sought punitive as well as
compensatory damages.
In a stipulated statement of the case that the trial
court read to the jury at the outset of the trial, the parties
summarized the underlying nature of the action:
"Plaintiffs contend that Farmers failed to comply with
the PIP law and Farmers' policy contract provisions by fail-
ing to pay all reasonable medical expenses it was required
to pay. * * *Plaintiffs contend that this practice of Farmers
of applying these percentile reductions, and without con-
ducting an adequate review or appeal process of these
reductions, was arbitrary and unreasonable and resulted in
Farmers failing to pay all reasonable medical expenses.
Plaintiffs['] First Claim contends this practice of Farmers
breached its insurance policy contract to its policyholders.
Plaintiffs' Second Claim contends that this practice of
Farmers breached its implied duty of good faith and fair
dealing with respect to performance of its insurance policy
4 The parties generally refer to plaintiffs' claim as one for "fraud," but some-
times refer to that same claim as one for "deceit." For the sake of consistency, we
refer to it throughout this opinion as plaintiffs' claim for fraud.

Strawn v. Farmers Ins. Co.
contract. Plaintiffs['] [Fourth] Claim contends that Farmers
engaged in fraud toward the class members with respect
to 	this 	practice 	and 	related 	non-disclosures 	to 	class
members."
The jury returned a verdict for plaintiffs on their claims for
breach of contract, breach of the implied duty of good faith
and fair dealing, and fraud, 5 awarding them $757,051.33 in
compensatory damages and $7 42,948.67 in prejudgment
interest. 6 The jury also awarded $8 million in punitive dam-
ages on plaintiffs' claim for fraud.
Ultimately, as noted, the trial court entered judg-
ment against Farmers for approximately $900,000 in com-
pensatory damages and $8 million in punitive damages.
Farmers appealed to the Court of Appeals, raising multiple
issues bearing on liability as well as challenging the amount
of the jury's punitive damages award. The Court of Appeals
rejected all but one ofFarmers's claims of error, agreeing only
that the punitive damages award exceeded constitutional
limits. 228 Or App at 457. The Court of Appeals granted relief
accordingly. Id. at 488. As already noted, both plaintiffs and
Farmers sought review of the Court of Appeals decision, and
this court allowed both petitions.
II. 	ISSUES ON REVIEW
On review, the issues before us divide into two cate-
gories. The first 	are challenges that Farmers raises in
connection with the merits of plaintiffs' various claims of
5 Plaintiffs also prevailed on their claim for declaratory judgment, which was
tried to the court.
6 The trial was essentially bifurcated, however, as to the award of compensa-
tory damages. The first step in assessing damages was to obtain the jury's verdict,
which effectively set the maximum amount that could be awarded to the plaintiffs.
Specifically, the jury was directed to calculate compensatory damages (if any) as
the difference between the face amount of all class medical bills and the reduced
amounts actually paid by Farmers on those bills (plus prejudgment interest).
The second step in assessing damages was a claims adjustment process to
refine downward any compensatory damages awarded by the jury. Because of the
class action posture of the case, before the trial court could enter final judgment, it
first had to offer class members the opportunity to file individual claims for dam-
ages. ORCP 32 F(2) (2002) (requiring class members entitled to individual recov-
eries to be given opportunity to submit a statement requesting affirmative relieO.
For any class member who failed to file a claim, Farmers would not be required to
pay, and the class member would not be entitled to recover, individual damages.
ORCP 32 F(2), (3) (2002).

Cite as 350 Or 336 	345
liability. The second are challenges that both parties raise to
the Court of Appeals' determination of the amount of puni-
tive damages that constitutionally could be awarded against
Farmers. We begin with the issues bearing on liability, which
would include plaintiffs' fraud claim on which the jury
awarded punitive damages. Ifwe were to reverse the verdict
on the fraud claim, that disposition would obviate the need to
reach the punitive damages issues that the parties present.
A. 	Whether Farmers 	was precluded from 	rebutting the
reasonableness 	of plaintiffs' 	medical 	expenses 	with
individualized evidence
On review to this court, the first issue that Farmers
raises is whether it was permitted to present a full defense to
plaintiffs' claims. Specifically, Farmers asserts that the trial
court did not permit Farmers to present evidence to the jury
that would have rebutted the reasonableness of the medical
charges submitted by individual class members for PIP reim-
bursement and, conversely, that would have established the
reasonableness of Farmers's investigation of those individual
PIP claims.
Before turning more directly to that issue, it is help-
ful to describe, as context for our discussion, the relevant core
theories on which the parties proceeded at trial. A key com-
ponent 	of all 	of plaintiffs' 	claims-including the 	fraud
claim-was the allegation that Farmers, by using their
percentile-reduction claims handling process, had failed to
pay the class members' "reasonable" medical charges. At
trial, the parties took different positions on plaintiffs' burden
to establish the "reasonableness" of the class members' med-
ical charges. Farmers's position was that plaintiffs were
required to present individualized proof as to the reasonable-
ness of each class member's medical charges. Plaintiffs' posi-
tion was that, under the statutory scheme governing PIP
benefits, the amounts charged by medical providers, as pre-
sented by their bills, were presumed "reasonable." Thus,
according to plaintiffs, once class members produced their
medical bills, the burden shifted to Farmers to disprove the
reasonableness of the billed medical charges.
The trial court resolved that central dispute through
summary judgment proceedings, concluding that plaintiffs

Strawn v. Farmers Ins. Co.
were legally entitled to a presumption of reasonableness,
based on the amounts that their medical providers charged.
Consequently, in the trial court's view, once plaintiffs pro-
duced evidence of the medical bills for the individual class
members, the burden shifted to Farmers to rebut the pre-
sumption that the amounts charged were reasonable.
After the trial court's summary judgment ruling,
Farmers continued to preserve its position on that question,
as reflected in certain procedural motions that Farmers
raised. For example, at the end of plaintiffs' case-in-chief,
Farmers renewed its position by moving to decertify the class
on that theory, among others, that plaintiffs' claims (includ-
ing the fraud claim) were not conducive to class treatment,
because plaintiffs were required to present individualized
proof of the reasonableness of their medical charges. Like-
wise, Farmers moved for a directed verdict at that point, urg-
ing, inter alia, that plaintiffs had the burden to prove the rea-
sonableness of the individual medical charges submitted for
PIP reimbursement and that they had failed to sustain that
burden. At each juncture, the trial court adhered to its ruling
that plaintiffs' evidence of their medical bills presumptively
established the reasonableness of the charges, and that the
burden then shifted to Farmers to rebut reasonableness.
On appeal to the Court of Appeals, Farmers assigned
error to the trial court's rulings on that issue, arguing, among
other points, that the reasonableness of the class members'
medical expenses required individualized proof and should
not be presumed based on their medical bills. Plaintiffs
argued the converse. By the time the Court of Appeals issued
its decision, this court had decided Ivanov v. Farmers Ins.
Co., 344 Or 421, 185 P3d 417 (2008). Relying on Ivanov, the
Court of Appeals rejected Farmers's position:
"In our view, Iuanou defeats Farmers' contention that
plaintiffs failed to offer sufficient proof of the reasonable-
ness of their medical expenses. In this case, as in luanou,
the 'gravamen of plaintiffs' complaint was that Farmers'
review methodology was an impermissible one.' Id. at 430.
Thus, plaintiffs were not required to offer any additional
evidence that, at the time the bills were submitted, they
were reasonable; the expenses were presumptively reason-
able at that point. Instead, Farmers had the burden of

Cite as 350 Or 336 (2011) 	347
establishing that 'the procedures it employed to deny plain-
tiffs' claims satisfied its statutory and common-law duties.'
Id.''
Strawn, 228 Or App at 465.
On review to this court, Farmers no longer main-
tains that plaintiffs had the burden to present individualized
proof of the 	reasonableness 	of their 	medical 	expenses.
Rather, given the holding in Ivanov, Farmers now accepts
that the amounts of plaintiffs' medical bills presumptively
established the reasonableness of their medical charges.
Farmers further accepts that, once that presumption was in
place, the burden shifted to Farmers to rebut that presump-
tion by showing that its investigation and processing of the
claims resulted in payment of plaintiffs' reasonable and nec-
essary medical expenses, thus satisfying Farmers's legal
obligation.
What Farmers does dispute, however, is whether the
trial court permitted Farmers to make that rebuttal showing.
According to Farmers, the trial court cut off Farmers's ability
to do so by excluding evidence relevant to whether Farmers
reasonably investigated the individual claims and whether
Farmers reimbursed plaintiffs in an amount that repre-
sented their reasonable medical expenses. Farmers urges
that, by excluding such evidence, the trial court effectively
made the presumption of the reasonableness of plaintiffs'
medical charges "irrebuttable," which "was not the plan envi-
sioned by Ivanov." Farmers also argues that the excluded evi-
dence had relevance beyond the narrow question of whether
Farmers reimbursed the individual plaintiff class members
for their reasonable medical charges. Withholding that evi-
dence from the jury, Farmers urges, also skewed the case in
favor of a classwide finding ofliability and a damages award
by not permitting the jury to consider evidence relevant to
the reprehensibility ofFarmers's conduct.
An essential problem with Farmers's arguments,
however, is that they are not arguments that Farmers made
to the trial court or to the Court of Appeals. To be sure,
Farmers points to some items of evidence that the trial court
ruled inadmissible before and during trial. 	But having
reviewed the rulings that Farmers challenges, we agree with

348 	Strawn v. Farmers Ins. Co.
plaintiffs that the trial court did not foreclose Farmers from
offering any evidence for the purpose that Farmers now
asserts the evidence would have been relevant-viz., 	to
establish the reasonableness of Farmers's investigation of
the individual claims or to show that the payments that
Farmers 	made 	to 	the 	individual 	class 	members 	met
Farmers's 	obligation 	to 	pay 	their 	reasonable 	medical
expenses. In other words, Farmers did not present to the trial
court the theories of admissibility that it advances now.
Some specific rulings are illustrative. 7 Before trial,
plaintiffs filed a motion in limine to exclude evidence that
medical providers had written off the balances of the bills
that Farmers had not paid under its percentile reduction pro-
cedure. Plaintiffs also filed a motion in limine to exclude evi-
dence that some class members either had a right to be paid,
or actually had been paid, by third-party tortfeasors for the
amounts that Farmers had refused to pay under the percen-
tile 	reduction 	program. 	Plaintiffs 	argued 	(among other
things) that those categories of evidence either were not rel-
evant, or that, if relevant, were inadmissible under OEC 403
because the evidence would unduly prejudice or confuse the
jury.
In response, Farmers argued a more narrow theory
of relevancy than it now advances. With regard to provider
write-offs, Farmers urged that the evidence showed that
class members often did not become liable for the unpaid por-
tions of the bills, which Farmers asserted was relevant both
to damages and punitive damages. Similarly, Farmers urged
that evidence of third-party tort liability was relevant to
damages. 8 The trial court granted the motions in limine, con-
cluding that the challenged evidence was inadmissible under
7 Farmers's arguments weave together several different and sometimes unre-
lated evidentiary rulings by the trial court, not all of which may have been the sub-
ject of a proper assignment of error in the Court of Appeals. We need not decide
whether all of the evidentiary issues that Farmers raises were adequately pre-
served at trial and presented to the Court of Appeals. We are satisfied that, even if
they were, the theory of admissibility that Farmers advances to this court is not
one Farmers preserved below.
At times, Farmers's arguments appear to potentially implicate that more
narrow basis for the trial court's ruling. l''armers's petition for review did not pres-
ent any challenge to the trial court's ruling on that ground, however. In the absence
of a more focused and developed argument by Farmers as to why the Court of

Cite as 350 Or 336 (2011) 	349
OEC 403 (although the trial court later permitted evidence of
third-party liability during the post-verdict claims adminis-
tration phase of the case). Farmers did not argue to the trial
court-as it now does to this court-that evidence of write-
offs and third-party liability should be admitted to rebut the
presumption 	that 	the 	class 	member 	plaintiffs' 	medical
charges were reasonable. Rather, throughout trial, after los-
ing the issue on summary judgment, Farmers held to its the-
ory that plaintiffs had the burden to produce individual evi-
dence of the reasonableness of their medical expenses and
that Farmers had no burden in that regard.
Farmers also asserts to this court that the trial court
denied it the ability to present "individualized evidence"
through what Farmers characterizes as a "blanket exclusion"
that effectively required Farmers to present only collective
evidence as to how Farmers treated PIP benefit claims. The
ruling that Farmers cites, however, was again more narrow.
Before plaintiff Strawn brought this class action against
Farmers, Farmers had reduced reimbursement for one of
Strawn's medical bills, because that bill exceeded Farmers's
percentile cutoff. At trial, Farmers sought to introduce evi-
dence that the bill was for medical services that had been
unnecessary, which, Farmers believed, would support a con-
clusion that Farmers lawfully could have refused to pay the
bill in its entirety. See ORS 742.524(1)(a) (PIP benefits cover
medical expenses that are both "reasonable and necessary"
(emphasis added)). The trial court sustained plaintiffs' objec-
tion 	to 	that 	evidence, 	reasoning 	that 	Farmers, 	having
reduced reimbursement for the charge based only on its per-
centile cutoff, could not, at that point, shift its reasoning and
claim that the entire charge was medically unnecessary.
That ruling does not support Farmers's claim that the trial
court made a broad or "blanket" ruling excluding evidence of
how Farmers had reviewed and handled individual claims;
the court merely refused to allow Farmers to present a new
and after-the-fact reason for denying a particular bill. Noth-
ing in that ruling prohibited Farmers from introducing indi-
vidualized evidence about how it handled PIP benefit claims,
Appeals' resolution of the issue merits this court's review and was wrong, we
decline to disturb that resolution,

Strawn v. Farmers Ins. Co.
and Farmers did not argue to the trial court that the evidence
was relevant on that theory.
As a final example, Farmers asserts that "the jury
never learned that Farmers actually overrode RC40/B2 rec-
ommended reductions, paying submitted medical charges in
full, in numerous individual cases." Farmers's argument in
that regard, however, is telling. Farmers acknowledges that
"[t]he focus of the trial here was not on the investigation but
on the reasonableness of the underlying charges." (Emphasis
in original.) In other words, the fight at trial was over
whether plaintiffs' medical bills established a rebuttable pre-
sumption of reasonableness, not over whether Farmers had
rebutted that presumption by showing the reasonableness of
its investigation. That was the focus because, as Farmers
concedes, the law on the point had not yet been settled by
Ivanov. 	Despite conceding that the trial was so focused,
Farmers 	urges 	that, 	"had individualized evidence 	been
admitted, Farmers could have shown-and did show during
the claims administration process-that it had a reasonable
investigation process." In particular, Farmers urges that it
"could have shown, for example," that it overrode the recom-
mended percentile reductions in many cases or had other rea-
sons why reimbursement was reduced.
What Farmers now recognizes it could have shown
with certain evidence is beside the point, however. The issue
is whether the trial court prevented Farmers from placing
evidence before the jury that was relevant to the reasonable-
ness of its claims handling process and its PIP payments to
plaintiffs. Farmers points to no place in the record where
Farmers offered, and the trial court excluded, evidence that
Farmers overrode the recommended reductions in individual
cases. Farmers may appreciate now what it could have
argued based on evidence that it either did not seek to place
before the jury, or that it placed before the jury for other rea-
sons. 9 But that hindsight appreciation establishes no error on
Farmers stated in its Court of Appeals' brief that, "in most instances,
Farmers followed the [recommended percentile reductions]." It also acknowledged
that it "presented its own uncontested evidence that (1) its adjustors had the
authority to override the recommended reductions, and (2) they sometimes did so."
Farmers relied on that evidence in connection with a different point-i.e., that

Cite as 350 Or 336 (2011) 	351
the trial court's part or a fundamental denial of Fanners's
right to defend against plaintiffs' fraud claim. 10
B. 	Whether plaintiffs failed to present evidence of classwide
reliance
The 	second question 	that Farmers 	presents 	on
review is whether it was entitled to a directed verdict on
plaintiffs' fraud claim. Farmers argues that plaintiffs failed
to present proof of reliance, as they were obligated to do, suf-
ficient to support a conclusion that all members of the class
detrimentally relied on Farmers's misrepresentation that
they would pay reasonable medical expenses.
To provide context for our discussion of Fanners's
arguments, we begin by describing plaintiffs' fraud claim and
the proof on which plaintiffs relied. 11 The essential elements
plaintiffs had failed to carry their burden of proof to demonstrate the reasonable-
ness of the medical charges that the class members submitted to Farmers, and that
the trial court had improperly shifted the burden of proof on reasonableness to
Farmers. Thus, Farmers's argument in that regard suggests that its pre-Ivanov
theory of the relevancy of that evidence differed from its post-Ivanov understand-
ing of how it could have used some of its own evidence to better advantage at trial.
10 Farmers also argues that the trial court erroneously excluded evidence of a
2003 legislative amendment (Oregon Laws 2003, chapter 813, section 4) to the PIP
statutes. According to Farmers, that legislation would have been relevant to show
that Farmers's percentile reduction process for reimbursement was reasonable. In
response to a pretrial motion to exclude that evidence, the trial court concluded
that it was inadmissible under OEC 403. Farmers did not assign error to that rul-
ing in the Court of Appeals. See Strawn, 228 Or App at 474-75 (declining to con-
sider certain arguments advanced by Farmers because ofFarmers's failure to com-
ply with ORAP 5.45 pertaining to the form and necessity of particularized
assignments of error). The Court of Appeals considered the effect of that legislation
only in connection with Farmers's contention that the trial court's declaratory rul-
ing was rendered moot by the 2003 legislative change. Id. at 475-76. For those rea-
sons, Farmers's challenge to the trial court's evidentiary ruling is not properly
before us. See ORAP 9.20(2) (questions on review ordinarily limited to those ques-
tions "properly before the Court of Appeals").
11 In its merits brief, Farmers begins its argument on this score by first urgu-
ing that plaintiffs never pleaded "a viable fraud claim in this case." Farmers points
out that the purported misrepresentation that Farmers made was the provision in
its PIP insurance policies stating that Farmers would pay reasonable and
necessary medical expenses of its insured. According to Farmers, "a failure to fulfill
such obligation, even if intentional, sounds only in contract, not tort." Farmers does
not dispute that fraud will lie for inducing a contract through a promise of future
performance if the promise is made with the intent not to perform (so-called "fraud
in the inducement"). See, e.g., Jones v. Northside Ford Truck Sales, 276 Or 685, 556
P2d 117 (1976) (for fraud based on nonperformance of contractual obligation,
intent not to perform future promise must exist when promise is made). But

of a common-law fraud claim are: the defendant made a
material misrepresentation that was false; the defendant did
so knowing that the representation was false; the defendant
intended the plaintiff to rely on the misrepresentation; the
plaintiff justifiably relied on the misrepresentation; and the
plaintiff was damaged as a result of that reliance. See Handy
v. Beck, 282 Or 653, 659, 581 P2d 68 (1978) (outlining ele-
ments); see generally Knepper v. Brown, 345 Or 320, 329, 329
n 5, 195 P3d 383 (2008) (noting older cases listing nine ele-
ments of common-law fraud, and more recent cases using a
more abbreviated list of elements). In this case, in allegations
common to all of plaintiffs' claims, plaintiffs set out the stan-
dard PIP terms of Farmers's no-fault automobile policy-i.e.,
that Farmers would cover medical expenses for bodily injury
to an insured arising out of the operation or use of an auto-
mobile, and defining medical expenses to mean "all reason-
able 	and 	necessary expenses" of medical, hospital, 	and
related health providers as required by Oregon law. Plain-
tiffs also alleged that Farmers was required by Oregon law to
provide PIP benefits no less favorable than required by ORS
742.524(1), which the complaint quoted. Then, for the fraud
claim specifically, plaintiffs alleged that Farmers intention-
ally represented to plaintiffs that it would pay all reasonable
medical and hospital expenses incurred by policyholders due
to an automobile accident; that plaintiffs relied on that rep-
resentation and incurred medical and hospital charges at
usual and customary rates; that Farmers's representation
was knowingly false, in that Farmers did not disclose to
plaintiffs its cost containment procedures for determining
benefits and by misrepresenting, when it paid reduced bene-
fits, how those benefits were calculated; that plaintiffs did
not know that Farmers's representations were false; and
that, as a direct result of Farmers's misrepresentations and
omissions, plaintiffs incurred medical and hospital costs for
which they were not reimbursed by Farmers.
Farmers contends that plaintiffs did not plead that theory or adequately prove that
Farmers had its cost containment procedures in place (and thus, intended not to
perform its future promise) when plaintiffs obtained or renewed their insurance
policies. We agree with the Court of Appeals that Farmers did not preserve a chal-
lenge to plaintiffs' pleadings on that theory. Strawn, 228 Or App at 468. Neither did
Farmers challenge plaintiffs' evidence as insufficient to support the fraud claim on
that basis. Thus, Farmers's arguments in that regard are not properly before us.

Cite as 350 Or 336 (2011) 	353
Farmers's motion for directed verdict raised several
challenges to the adequacy of plaintiffs' evidence on their var-
ious claims. As to plaintiffs' fraud claim, Farmers's argument
was not extensive, but it did directly take issue with whether
plaintiffs had adequately proved reliance on the part of the
class as a whole. Specifically, Farmers argued:
"Plaintiffs' deceit[, i.e., fraud] claims require proof that
plaintiffs relied on a material misrepresentation or omis-
sion of defendants. Several class members testified about
their expectations and understanding of the insurance pol-
icy and information received from Farmers about the
claims process. However, there is no evidence common to
the class which establishes that the absent class members
relied upon any material misrepresentation or omission of
the defendants."
The trial court denied the motion, concluding that, viewed in
the light most favorable to plaintiffs, 12 the evidence created a
jury question on classwide reliance. On appeal, the Court of
Appeals agreed, explaining that evidence of reliance by the
absent class members need not be direct, but could be
inferred:
"[P]laintiffs offered evidence that, viewed in the light most
favorable to plaintiffs, established that Farmers (1) prom-
ised to pay all reasonable and necessary medical expenses
as part of its PIP coverage; (2) selected an arbitrary percen-
tile cutoff that would increase its profits at the expense of
insureds; and (3) continued to collect premiums from its
insureds without informing them that it had decided not to
pay all reasonable and necessary expenses. From that evi-
dence, a reasonable trier of fact could conclude that the pay-
ment of reasonable and necessary PIP-related expenses
was a material part (and, in fact, a statutorily required
part) of the insurance policy and could therefore reasonably
infer that plaintiffs relied on Farmers' misrepresentation
that it would pay reasonable and necessary PIP-related
expenses when they continued to pay their premiums. That
is, on this record, a reasonable trier of fact could conclude
12 See Bolt v. lnfiuence, Inc., 333 Or 572, 578, 43 P3d 425 (2002) (in deciding
motion for directed verdict, a trial court must consider all the evidence, including
reasonable inferences, in the light most favorable to the party opposing the
motion).

354 	Strawn v. Farmers Ins. Co.
that plaintiffs acted to their detriment in paying premiums
for PIP coverage that Farmers never intended to provide."
Strawn, 228 Or App at 470-71(citations omitted).
On review, 	Farmers characterizes the Court of
Appeals as having indulged a "presumption" of reliance, one
that relieved plaintiffs of their burden to prove reliance on
the part of each of the class members. Farmers argues that,
as a matter oflaw, reliance in a fraud case "can never be pre-
sumed" and the obligation to prove reliance therefore poses a
particular evidentiary challenge to a class action plaintiff. At
a minimum, according to Farmers, a class action plaintiff
must present "competent evidence from which a jury can con-
clude that class members were generally aware of a claimed
misrepresentation and acted on the basis of that awareness."
Farmers thus asserts that, in the context of this case, plain-
tiffs had to come forward with proof that each class member
knew of the representation at issue, interpreted it to mean
that Farmers would pay full billed charges, and relied on that
representation. Here, Farmers maintains, plaintiffs pre-
sented absolutely "no evidence," either individualized by
class member or common to the class, from which the jury
could logically draw the necessary conclusion ofreliance as to
all class members.
Plaintiffs, for their part, agree that they had to prove
reliance for the class as a whole, rather than reliance only by
plaintiff Strawn or isolated members of the class. But class-
wide reliance, they urge, does not require direct evidence of
reliance by every individual class member. Instead, plaintiffs
urge, such reliance can be inferred in a proper case, and this
is such a case. Here, the evidence showed that the class mem-
bers received insurance policies in Farmers's standard form,
containing the same promise to pay PIP benefits in the form
of reimbursement for "reasonable medical expenses," as
defined by the policy and by statute. All class members, after
being involved in an accident, made a claim for the contrac-
tually promised PIP benefits. All sought and received medi-
cal services, and all (subject to some variation shown during
the individualized damages phase of the trial) received
reduced payments based on Farmers's percentile reduction

Cite as 350 Or 336
methodology. Plaintiffs argue that the evidence of the prom-
ise made and the actions that class members took is suffi-
ciently common to the class to permit a jury to infer classwide
reliance on Farmers's representation that it would pay their
reasonable medical expenses.
In making their respective arguments, the parties
debate at some length the significance of our decision in
Newman v. Tualatin Development Co. Inc., 287 Or 4 7, 54, 597
P2d 800 (1979). We agree that Newman provides guidance
for this case. We therefore turn to the issue presented in that
case and what this court held in resolving it.
The plaintiffs in Newman were purchasers of town-
houses built and sold by the defendant. They brought a class
action on behalf of all such purchasers, seeking damages
based on the defendant's use of galvanized, instead of copper,
water pipes in the townhouses. The trial court had certified
the class for purposes of the plaintiffs' negligence and implied
warranty claims, but declined to certify it for the express
warranty claim. Based on the particular evidence presented
at the class certification stage of the proceeding, this court
agreed that individual determinations of reliance would be
necessary, with the result that "common questions of fact
would not predominate over questions affecting individual
members of the class." Id. The court explained:
"Plaintiffs contend individual determinations will not
be required because direct evidence of reliance is not nec-
essary. All that is required is proof that the seller's state-
ments were of a kind which naturally would induce the
buyer to purchase the goods and that he did purchase the
goods.
"Plaintiffs contend that the warranty was made in a
sales brochure given to all purchasers. Even if plaintiffs can
prove the brochure was given to all members of the class in
this case, that would not establish that every member of the
class read, was aware of, and relied upon each of the repre-
sentations in the brochure. The brochure made statements
about many features of the townhouses,-various floor
plans, vaulted ceilings, color-matched kitchen appliances,
brick-enclosed courtyards, etc. The water pipes and their
composition is a relatively minor component."

356 	Strawn v. Farmers Ins. Co.
Id. (internal quotes and citations omitted).
Citing Newman, 	Farmers 	asserts 	that reliance,
whenever it is an element of a class action claim, must be
established through direct evidence of each class member's
individual reliance. But Newman, as the portion of the deci-
sion just quoted reveals, does not stand for that proposition.
Newman expressly tied its holding to the weaknesses of the
particular evidence submitted in support of class certification
on the express warranty claim. Immediately after discussing
those weaknesses, Newman expressly disavowed that indi-
vidual evidence of reliance was required as a matter oflaw in
all class actions:
"We do not hold that an express warranty is never an
appropriate subject for a class action adjudication or that
the issue ofreliance always requires individual determina-
tion. However, here, the alleged express warranty is such a
small part of the item purchased and the representation is
interspersed with many other descriptive statements."
Id. at 54. Newman thus turned on its particular facts, while
leaving other class actions requiring proof of reliance to do
the same. And although Newman did not declare when reli-
ance can be determined through common, rather than indi-
vidualized evidence, it at least suggested an answer-viz.,
when the same misrepresentation was made to all individual
class members and was sufficiently material or central to the
plaintiffs and the defendant's dealings that the individual
class 	members 	naturally 	would 	have 	relied 	on 	the
misrepresentation. 13
13 Newman arose in a different procedural posture-a dispute over class certi-
fication. The question of whether reliance must be shown by individualized evi-
dence, or whether it can be inferred from evidence common to the class. is one that
often arises in connection with the predicate determination of whether the case is
appropriate for class treatment. See generally Mary J. Cavins, Annotation.
Consumer Class Actions Based on Fraud or Misrepresentation, 53 ALR3d 534, 536-
57 (1977) (collecting case law arising out of consumer class actions for fraud and
misrepresentation). When individualized evidence is required, the individual
issues are more likely to predominate in a way that precludes class treatment. Id.
at 536.
Class certification does not foreclose issues over the adequacy of a class plain-
tiffs proof ofreliance, however. Here, in certifying the class, the trial court did not
list reliance as one of the issues oflaw and fact common to the class. On the other
hand, the trial court did not treat the list of common issues as exclusive either, and
did not declare in advance that reliance would be determined through individual

Cite as 350 Or 336 (2011) 	357
Such a standard for inferring classwide reliance
from evidence common to the class accords with what we con-
sider to be the better-considered authority in other jurisdic-
tions. As many courts have concluded, whether classwide
reliance can be inferred from evidence common to the class
depends on the misrepresentation. A key consideration is
whether the misrepresentation was uniformly made to all
class 	members, 	as 	through 	standardized documents, or
whether the evidence shows material variations in how the
misrepresentation may have been communicated, as with
oral representations made by different agents. 14 A second key
consideration is the nature of the misrepresentation itself:
how likely it is that class members would have uniformly
relied on it and, conversely, the likelihood that their reliance
would vary significantly from one class member to the next. 15
One particularly instructive case, with factual par-
allels to this one, is.Klay v. Humana, Inc., 382 F3d 1241 (11th
Cir 2004), cert den, 541 US 1081 (2005). Klay was a class
action case brought by a large number of physicians against
class member evidence. The issue was thus left to be determined based on plain-
tiffs' evidentiary showing at trial, which Farmers properly drew into question
through its directed verdict motion. Although the parties spar to some extent over
the significance of class certification in this case, whatever challenges Farmers
may have raised to class certification have dropped from the case; none has been
raised to this court on review. The only question is the adequacy of plaintiffs' proof,
a question that certification, in and of itself, does not resolve.
14 Compare, e.g., Rohlfing v. Manor Care, Inc., 172 FRD 330, 338-39 (ND Ill
1997) (common evidence permitted inference of classwide reliance where all class
members signed standardized contract and received specific written representa-
tions about pharmaceutical pricing) with Stout v. ,J.D. Byrider, 228 F3d 709, 718
(6th Cir 2000) (district court did not abuse discretion in determining that individ-
ualized reliance evidence was required, given variations in what documents cus-
tomers reviewed, what representations agents made to customers, and whether
customers selected extended service agreement).
15 See, e.g., Peterson v. H & R Block Tax Services, Inc., 174 FRD 78, 84-85 (ND
Ill 1997) (all class members paid significant fee for tax refund loan that they did not
qualify to receive; only logical explanation for doing so was reliance on misrepre-
sentation as to availability ofloan); Smith v. MCI Telecommunications Corp., 124
FRD 665, 678-79 (D Kan 1989} (implausible that, in accepting and continuing
employment, sales employees would not have relied on written commission plans
that they were required to sign). See generally FRCP 23(b)(3) Advisory Committee
Note (1966) ("[A] fraud perpetrated on numerous persons by the use of similar mis-
representations may be an appealing situation for a class action[.] * * * On the
other hand, although having some common core, a fraud case may be unsuited for
treatment as a class action if there was material variation in the representations
made or in the kinds or degrees of reliance by the persons to whom they were
addressed.").

358 	Strawn v. Farmers Ins. Co.
almost all major health maintenance organizations (HMOs)
alleging, among other claims, fraud. The alleged misrepre-
sentations that formed the basis for the fraud were that the
HMOs agreed to reimburse physicians for all medically nec-
essary services. The physicians alleged that the HMOs arti-
ficially and covertly underpaid them by using automated sta-
tistical and other criteria, rather than medical necessity, to
calculate reimbursement amounts. Id. at 124 7. In affirming
the class certification on the fraud claim, the Eleventh
Circuit agreed that the plaintiffs, to prove their case, had to
establish reliance on the part of each class member. But the
court concluded that, "based on the nature of the misrepre-
sentations at issue, the circumstantial evidence that can be
used to show reliance is common to the whole class." Id. at
1259. The court reasoned:
Id.
"The alleged misrepresentations in the instant case are
simply that the defendants repeatedly claimed that they
would reimburse the plaintiffs for medically necessary
services they provide to the defendants' insureds[.] * * * It
does not strain credulity to conclude that each plaintiff, in
entering into contracts with the defendants, relied upon the
defendants' representations and assumed they would be
paid the amounts they were due. A jury could quite reason-
ably infer that guarantees concerning physician pay-the
very consideration upon which those 	agreements 	are
based-go to the heart of these agreements, and that doc-
tors based their assent upon them. * * * Consequently,
while each plaintiff must prove reliance, he or she may do
so through common evidence (that is, through legitimate
inferences based on the nature of the alleged misrepresen-
tations at issue)."
The rule adopted by the authorities that we have
cited, and implicitly suggested in this court's decision in
Newman, is sound. To prevail in a class action for fraud, the
class plaintiff must prove reliance on the part of all class
members. Direct evidence of reliance by each of the individual
class members is not always necessary, however. Rather,
reliance can, in an appropriate case, be inferred from circum-
stantial evidence. For that inference to arise in this context,

Cite as 350 Or 336
the same misrepresentation must have been without mate-
rial variation to the members of the class. In addition, the
misrepresentation must be of a nature that the class mem-
bers logically would have had a common understanding of
the misrepresentation, and naturally would have relied on it
to the same degree and in the same way.
Not all fraud claims will lend themselves to common
evidence 	of reliance, 	rather 	than 	individualized 	proof.
Newman is a good example of a case that did not. As the deci-
sion in Newman emphasized, the representation at issue
there was one of myriad statements made in a sales brochure
for the townhouses, a brochure that the evidence did not
establish had been given to every putative class member.
Equally important, whether individual purchasers cared
about the kind of water pipes in the townhouses-which the
court 	characterized 	as 	a 	"relatively 	minor 	component"
(Newman, 287 Or at 54)-as opposed to other features, could
readily vary from one purchaser to the next and, on the evi-
dence before the court, simply was not established.
This case presents a more compelling basis for the
inference of classwide reliance. The misrepresentation at
issue here was in a uniform provision of a contract for motor
vehicle insurance, not a sales brochure that may not even
have ended up in the hands of all of the class members. 16 The
fact that the promise was in a written and binding contract of
insurance, 	rather than in a 	sales brochure, 	provides a
stronger basis than in Newman to infer classwide reliance.
Even so, contracts are often complex documents, ones that
can incorporate a wide array of terms, many of which contain
provisions that would not-at least for purposes of a fraud
claim-be uniformly understood or relied on by any person
who might enter into the contract.
16 As plaintiffs pleaded in their complaint, the class certification was premised,
in part, on the fact that plaintiff Strawn's claims were typical of those of the class
because "[t]he class members and plaintiff[Strawn] were all persons having auto-
mobile policies with [Farmers] containing the same PIP language and subject to
the same PIP statute[.]" Farmers does not dispute that the evidence established
that the class members' contracts of insurance contained standardized PIP provi-
sions that were, in all material ways, uniform for the class as a whole.

Strawn v. Farmers Ins. Co.
A motor vehicle liability policy, however, is distinc-
tive, both in many of its terms and in the reasons for its pur-
chase. As plaintiffs pleaded, and as was emphasized to the
jury throughout the trial, PIP benefits are a statutorily man-
dated provision of motor vehicle insurance in Oregon. ORS
742.520(1) (mandating PIP coverage for "[e]very motor vehi-
cle liability policy issued for delivery in this state" for private
passenger motor vehicles). The terms of required PIP cover-
age are extensively controlled by statute as well. See ORS
742.524 	(describing 	mandatory 	benefits); 	ORS 	742.530
(describing permissive exclusions from benefits). An insurer
may provide greater PIP coverage than the statutes require,
but not less. Utah Home Fire Ins. Co. u. Colonial Ins., 300 Or
564, 568, 715 P2d 1112 (1986) (insurance policy cannot pro-
vide fewer PIP benefits than the law requires it to provide);
ORS 742.532 (policy may provide more favorable personal
injury protection benefits than required by law). 	Thus,
although the policy is required to state the coverage that the
policy provides (ORS 742.450(1)), the policy provides PIP
benefits, regardless of whether it so declares.
Persons 	insuring 	and 	driving 	motor 	vehicles
licensed in Oregon have corresponding obligations. To regis-
ter or renew a motor vehicle license in Oregon, the applicant
must provide assurance of compliance with the financial
responsibility laws.17 ORS 803.370 (registration of motor
vehicle); ORS 803.460 (registration renewal). Most people
meet that obligation-as the class members in this case did-
by purchasing a motor vehicle liability policy that satisfies
the requirements of Oregon law. See ORS 806.060(2)(a)
(specifying when policy of insurance will satisfy financial
responsibility requirements); see generally OAR 735-050-
0050 (1997) (identifying information to be presented as part
of certificate of insurance). Finally, it is unlawful for a person
to drive a vehicle in Oregon without meeting the finan-
cial responsibility requirements of Oregon law; doing so is a
17 The financial responsibility laws basically require those who may be liable
for damages arising out of the use of a motor vehicle to be able to pay damages up
to certain specified amounts, either through insurance or by establishing their abil-
ity to pay through certain other means. See ORS 806.060 (specifying methods of
compliance for financial responsibility requirements).

Cite as 350 Or 336 (2011) 	361
Class B traffic offense. ORS 806.010 (defining offense of driv-
ing uninsured).
Against that extensive regulatory backdrop, a per-
son who purchases a motor vehicle policy to meet the finan-
cial responsibility requirements of Oregon law does not need
to read the policy to justifiably rely on its provisions. That
person has no choice to buy a policy without PIP coverage.
The insurer issuing the policy has no choice to issue it with-
out PIP coverage. The entire scheme is structured to permit
the purchasers of such insurance, as well as the state in its
regulatory role, to have confidence that the policy provides all
coverage, including PIP benefits, that is required to meet the
financial responsibility laws. Given the statutory require-
ments for the contents of motor vehicle policies, and the
responsibilities imposed on persons who are obligated to pur-
chase such policies, an insured's reliance on the PIP coverage
that the policy provides is inherent in the purchase of the
insurance, or at least, a factfinder is entitled to infer as
much. 18
The dissent characterizes our holding as raising a presumption of reliance.
E.g., 350 Or at 375 (Balmer, ,J., dissenting). We disagree. Our conclusion is only
that, in this distinctive context, actual reliance can be inferred from the nature of
the transaction involved. That context consists of a regulatory scheme that
involves mutually reinforcing obligations for purchasers of motor vehicle liability
policies and the insurers who issue those policies in Oregon. One of those obliga-
tions is that the purchaser must obtain, and the insurer must provide, the statu-
torily required minimum PIP coverage. Reliance is potentially "self-proving" from
the nature of the transaction itself, in which case the transaction is circumstan-
tial evidence of actual, not presumed, reliance. See, e.g., Chisolm v. TranSouth
Financial Corp., 194 FRD 538, 560-61, 560 n 24 (ED Va 2000)(noting that reliance
can be "self-proving" in certain kinds of transactions, and that what is involved is
not so much "presumed reliance" as it is a showing of demonstrated reliance via cir-
cumstantial prooO.
That permissible inference of reliance is not altered by the fact these policies,
as motor vehicle liability policies commonly do, contained several types of coverage
in addition to the PIP coverage at issue. See 350 Or at 375-76 (Balmer, J., dissent-
ing) (noting that policies at issue also provided liability coverage, uninsured and
underinsured motorist coverage, collision coverage, and comprehensive coverage).
Some of the other coverage is likewise mandatory. See ORS 742.502 (required unin-
sured and underinsured motorist coverage); ORS 742.504 (similar). Whether one
coverage provision is mandatory for purchasers to obtain and insurers to provide,
or three such provisions are, does not change the analysis. Our reliance analysis in
this case would not extend, however, to coverage (such as collision) that is not sta-
tutorily required.

Strawn v. Farmers Ins. Co.
For those reasons, a jury could infer from evidence
common to the class that the individual class members relied
on 	Farmers's 	misrepresentation 	that 	it 	would 	pay 	its
insureds' reasonable medical expenses arising out of their
automobile accidents; individualized evidence of the class
members' reliance was not necessary to create a jury ques-
tion on that element of plaintiffs' fraud claim. Consequently,
the trial court properly denied Farmers's motion for directed
verdict on that ground.
C. 	Whether 	the 	Court 	of 	Appeals 	correctly 	resolved
Farmers's 	challenge 	to 	the 	constitutionality 	of the
punitive damages award
The final issue before us is one that both parties
raise on review: whether the Court of Appeals correctly deter-
mined that the amount of punitive damages awarded by the
jury in this case was constitutionally excessive. Relying on its
understanding of the applicable federal due process stan-
dards, the Court of Appeals concluded that the jury's award
of $8 million in punitive damages was excessive, and that the
highest amount that the jury could constitutionally award
was four times the combined amount of plaintiff's compensa-
tory damages and prejudgment interest. Strawn, 228 Or App
at 485. The court therefore vacated the judgment with
instructions to grant Farmers a new trial on the issue of
punitive damages, unless plaintiffs on remand were to agree
to a remitittur of the punitive damages award. Id.
On review to this court, both parties assert that the
Court of Appeals' 4:1 ratio is legally in error. Farmers con-
tends that the ratio should be lower; plaintiffs contend that
the ratio should be higher. Preliminarily, however, plaintiffs
also contend that Farmers's challenge to the punitive dam-
ages award was not properly before the Court ofAppeals and,
therefore, the Court of Appeals should not have reached it at
all. We turn to plaintiffs' argument in that regard because, as
we will explain, it is dispositive.
As context for our discussion, we begin by describing
the parties' post-verdict positions on whether the trial court
should have reduced the jury's punitive damages award, as
advanced in the procedural motions and memoranda that the

Cite as 350 Or 336 	363
parties filed. After the jury returned its verdict, the parties
filed a series of motions through which plaintiffs effectively
asked the trial court to validate the amount of the jury's puni-
tive damages award, while Farmers effectively asked the
court to reduce that award. Plaintiffs filed the first of those
motions, requesting that the trial court "affirm" the jury's
punitive damages award under former ORS 18.537(2) (2001),
renumbered as ORS 31.730 (2003) (requiring trial court to
assess whether a punitive damages award is "within the
range of damages that a rational juror would be entitled to
award"). Farmers opposed that motion and also filed a
motion for remittitur, urging in support of both motions that
the punitive damages award exceeded federal due process
standards as described in State Farm Mut. Automobile Ins.
Co. v. Campbell, 538 US 408, 123 S Ct 1513, 155 L Ed 2d 585
(2003), and BMW of North America, Inc. v. Gore, 517 US 559,
116 S Ct 1589, 134 L Ed 2d 809 (1996). 19 Plaintiffs opposed
Farmers's motion for remittitur, asserting, among other rea-
sons, that the motion was "procedurally defective" because
Farmers had not conjoined it with a motion for new trial. The
parties' positions and objections were renewed and revised
through a series of further motions. For our purposes here, it
is not important to describe that entire series. It suffices to
observe that they culminated in: (1) Farmers's alternative
motions for remittitur and new trial, seeking to reduce the
punitive damages award; and (2) plaintiffs' opposition to
those motions.
What is important for our purposes is that Farmers's
motions and plaintiffs' opposition to them framed two broad
issues on which the parties disagreed. The parties not only
disagreed on the merits of Farmers's motion (viz., whether
the jury's punitive damages award comported with constitu-
tional standards), they also disagreed about what procedures
a defendant must follow to preserve a constitutional objection
to the excessiveness of a jury's punitive damages award.
19 Farmers's motion for remittitur also took issue with other aspects of the
jury's award, such as the amount of prejudgment interest that the jury awarded,
but the issues before us do not implicate those disputes between Farmers and
plaintiffs.

364 	Strawn v. Farmers Ins. Co.
In arguing that Farmers had failed to present its
constitutional objections in a procedurally proper way, plain-
tiffs advanced several theories. One was waiver. In particu-
lar, plaintiffs asserted that Farmers should have taken any
or all of a series of procedural steps during trial to ensure
that the jury returned a punitive damages award consistent
with due process standards. One such step, plaintiffs urged,
was that Farmers should have sought to have the jury
instructed that any punitive damages award it might make
could not exceed whatever upper limit Farmers believed was
constitutionally imposed. Plaintiffs also argued that, after
the jury returned its verdict, Farmers should have objected to
the discharge of the jury and requested that the jury be rein-
structed to "deliberate further" to make sure that the puni-
tive damages award did not exceed constitutional limits, cit-
ing Building Structures, Inc. v. Young, 328 Or 100, 968 P2d
1287 (1998) (party who fails to object to defective jury verdict
before jury is discharged waives objection to the defect). In
addition to those waiver arguments, plaintiffs urged that
Farmers's motions suffered from other procedural defects as
well. They included Farmers's failure, through a motion for
directed verdict or some other procedural means, to move to
strike plaintiffs' prayer for punitive damages on the ground
that it exceeded whatever amount that Farmers believed was
the 	constitutional maximum; Farmers's failure to 	move
against plaintiffs' complaint or challenge the sufficiency of
plaintiffs' evidence on that same theory; and Farmers's fail-
ure to condition its motions on a waiver of its right to appeal
as to all other alleged errors during the trial (which plaintiffs
urged was required at common law).
Farmers responded to plaintiffs' waiver and other
procedural objections by arguing that a defendant cannot
challenge a verdict for punitive damages as excessive until
after the jury renders its verdict. Farmers urged that alter-
native motions for remittitur or new trial were the appropri-
ate procedural means for raising its federal due process objec-
tion to the punitive damages award, citing Parrott v. Carr
Chevrolet, Inc., 331 Or 537, 558-59 n 14, 17 P3d 473 (2001)
(party cannot challenge verdict for punitive damages as con-
stitutionally 	excessive 	until 	after jury 	renders 	verdict;
motion for new trial is among appropriate procedures for

Cite as 350 Or 336 (2011) 	365
raising such challenge). In oral argument on the motions,
plaintiffs responded to Farmers's reliance on Parrott by
asserting the statements in that case were dicta and by con-
tending that there were many "big questions raised" by
Farmers's procedural choices.
Ultimately, the trial court agreed with plaintiffs,
both with their procedural position and with their position on
the merits. In its oral ruling, the trial court found "at the out-
set" that "there's been waiver" by Farmers and that, in the
court's view, "a finding of waiver is actually dispositive." The
trial court also considered the merits of Farmers's challenge,
stating expressly that it was doing so in the alternative,
because of the possibility that an appellate court would not
agree with the court's waiver determination. On the merits,
the trial court concluded that the jury's punitive damages
award was not constitutionally excessive. The written find-
ings of fact and conclusions of law that the trial court later
issued were consistent with its oral declaration, although
more 	detailed. 	In them, 	the 	trial court concluded that
Farmers had waived its constitutional objections, that its
motions were procedurally defective in other regards, and
that, on the merits, Farmers's challenge that the punitive
damages award was excessive failed.
On appeal to the Court of Appeals, Farmers's open-
ing brief assigned error to the award of punitive damages,
but did not specify the rulings being challenged. 20 The sole
argument that Farmers made in support of its claim of error
was that the trial court had erred in resolving the merits of
the motion against Farmers. That is, Farmers argued at
length that the jury's punitive damages award exceeded fed-
eral due process standards, and that the trial court had erred
in concluding otherwise. Farmers made no mention of the
trial court's procedural ruling that Farmers had waived its
20 The actual assignment of error was less than precise as to the rulings that
Farmers sought to challenge. Under the caption "Assignment of Error No. 7" the
assigned error was only that "Punitive Damages Are Not Allowable. Alternatively,
a Remittitur is Required." See ORAP 5.45(3) ("Each assignment of error shall
indentify precisely the legal, procedural, factual, or other ruling that is being
challenged.").

366 	Strawn v. Farmers Ins. Co.
challenge or had otherwise not followed the proper proce-
dural route to raise and preserve it. Instead, Farmers con-
tended that the motion had been deemed denied on the expi-
ration of the 55-day period prescribed by ORCP 64 F (which
we will discuss shortly).
In response to Farmers's argument, plaintiffs first
urged that the Court of Appeals could not reach the issue of
whether the award was excessive, because Farmers had not
challenged the waiver and other procedural grounds on
which the trial court ruling also rested. Plaintiffs then
argued, in the alternative, that the trial court's resolution of
Farmers's excessiveness challenge to the punitive damages
award was correct. In its decision, the Court of Appeals
resolved 	the 	Farmers's 	excessiveness 	challenge 	without
acknowledging or addressing the waiver and procedural
grounds on which the trial court had alternatively based its
ruling. Strawn, 228 Or App at 4 76-85.
On review, plaintiffs challenge the Court of Appeals'
failure to affirm the trial court on the alternative procedural
grounds that Farmers did not challenge. Farmers, for its
part, does not question the proposition that, when a court's
decision or ruling is premised on alternative grounds, a party
challenging that ruling generally must take issue with all
independent and alternative grounds on which it is based to
obtain relief. Cf State ex rel Juv. Dept. v. Charles, 299 Or 341,
343, 701 P2d 1052 (1985) (dismissing petition as improvi-
dently granted, because Court of Appeals decision rested on
an independent ground and state petitioned for review on one
ground only; thus, this court would be required to affirm the
Court of Appeals on the issue for which review was not
sought). Neither does Farmers disagree that the trial court in
fact did conclude that Farmers had waived and procedurally
defaulted in bringing its challenge to the punitive damages
award, as alternative grounds for resolving that award. And
finally, Farmers does not dispute that, to preserve an issue
on appeal, a party must make the issue the object of a proper
assignment of error and supporting argument in the party's
opening brief. See ORAP 5.45(1) ("No matter claimed as error
will be considered on appeal unless the claim of error * * * is
assigned as error in the opening brief * * *." (Emphasis
added.)).

Cite as 350 Or 336 	367
Farmers's principal response is that the trial court
had lost its jurisdiction to articulate any reasons for denying
the motion. Farmers contends that its motion for new trial
was denied by operation of law before the trial court ruled on
it, so the court's order was void. Under ORCP 64 F, 21 if a trial
court has not "heard and determined" a motion for new trial
within 55 days after entry of judgment, that motion is
deemed denied by operation of law, and the trial court lacks
jurisdiction to enter any order on the motion. McCollum v.
Kmart Corporation, 347 Or 707, 711, 226 P3d 703 (2010). In
this case, the trial court held the hearing on Farmers's
motions on the last day of the 55-day period, orally ruled on
the motion at that time, and signed a simple order denying
the motions in open court before the hearing ended. The trial
court did not, however, sign and enter its lengthier written
findings and conclusions in support of its order until after
that period had expired. Based on that, Farmers argues that
the trial court's oral waiver ruling was ineffective, since it
was 	not 	memorialized in writing 	until 	after Farmers's
motions were denied by operation of law, at which point the
trial court had no further jurisdiction over the motions.
That analysis, however, overlooks the legal effect of
the trial court's ruling at the time of the hearing. During the
hearing, the trial court stated that it was denying Farmers's
motions and briefly explained its reasons on the record,
including its waiver determination. The court then signed-
in open court-an order denying Farmers's motions, and
expressly declared that it was doing so: "At this time I'm sign-
ing the order denying Farmers's motions which I've already
identified. So that order is signed." Under ORS 3.070, the
order became immediately effective, and thus took effect
before Farmers's motion for new trial would have been
deemed 	denied by operation of law. 22 For that reason,
Farmers's jurisdictional argument is unavailing.
ORCP 64 F(l) provides, in part:
"The motion [for new trial] shall be heard and determined by the court within
55 days from the time of the entry of the judgment, and not thereafter, and if
not so heard and determined within said time, the motion shall conclusively be
deemed denied."
22 ORS 3.070 provides, in part:
"Any judge of a circuit court in any judicial district may, in chambers,
grant and sign defaults, judgments, interlocutory orders and provisional

Strawn v. Farmers Ins. Co.
Farmers makes a second, alternative argument, as
well. It contends that the trial court should be deemed to
have denied the motion for new trial without any explanation
of its reasoning. Farmers contends that the trial court's oral
statements of its reasoning were ineffective, because they
were not memorialized in writing. Farmers further reasons
that the written findings of fact and conclusions of law were
ineffective, because they were filed and entered after the trial
court had denied the motion for new trial. Based on those
alleged defects of form and timing, Farmers effectively urges
that a reviewing court is required to ignore the trial court's
stated reasons for its decision.
We find no merit to that contention. By its terms,
ORCP 64 F requires a motion for new trial to be heard and
determined within 55 days from entry of judgment, but it
requires no written statement of reasons or other explana-
tion in support of the ruling. Neither does it preclude a trial
court from memorializing its reasoning after ruling on the
motion in open court within the time allowed. Such written
explanations and findings are generally very helpful to the
appellate courts in meaningfully reviewing a trial court's rul-
ing, and we are not inclined to foreclose their consideration
unnecessarily. In this instance, the only mandate contained
in ORCP 64 F is that the motion for new trial be resolved
within the prescribed period. Here, it was. The trial court
remedies, make findings and decide motions, demurrers and other like matters
relating to any judicial business coming before the judge from any judicial dis-
trict in which the judge has presided in such matters. * * *The judge may exer-
cise these powers as fully and effectively as though the motions, demurrers,
matters or issues were granted, ordered, decided, heard and determined in
open court in the county where they may be pending. If signed other than in
open court, all such orders, findings and judgments issued, granted or ren-
dered, other than orders not required to be filed and entered with the clerk
before becoming effective, shall be transmitted by the judge to the clerk of the
court within the county where the matters are pending. They shall be filed and
entered upon receipt thereof and shall become effective from the date of entry
in the register."
Although ORS 3.070 does not explicitly address the effective date of orders
made in open court, it does do so implicitly. Our cases involving orders signed out-
side of open court likewise have implicitly recognized that same proposition in the
course of analyzing when those orders took effect. See, e.g., McCollum, 347 Or at
712 (since 1991, an order not signed in open court becomes effective only upon
entry in the register); Ryerse v. Haddock, 337 Or 273, 281, 95 P3d 1120 (2004)
(order denying motion for new trial did not become effective until entered in the
register, because it was signed "other than in open court").

Cite as 350 Or 336 	369
ruled in open court; it briefly stated its reasoning orally; the
written order denying the motion for new trial was signed in
open court and specifically stated that future findings would
be issued; and the findings themselves were signed, filed, and
entered within two weeks, and before the filing of any notice
of appeal. Farmers advances no persuasive reason why the
trial court's written explanation of its timely determination
of the motion should not be given full consideration by the
appellate courts. 23
We therefore conclude that the Court of Appeals
erred in reaching Farmers's challenge to the punitive dam-
ages award as excessive. The trial court articulated two alter-
native reasons for denying Farmers's motions (waiver and
other procedural defects, as well as a conclusion on the merits
that the award did not exceed constitutional limits). The trial
court further expressly concluded that both bases on which it
ruled were independently sufficient to support the trial
court's ruling. Logically, that was true. On appeal, Farmers
23 Farmers makes two other abbreviated arguments that we also reject. First,
Farmers asserts that it did challenge the "waiver" ruling in the Court of Appeals.
Nothing in Farmers's opening brief even acknowledged the existence of the trial
court's alternative reasons, however, much less notified the Court of Appeals that
Farmers challenged those reasons.
In its reply brief, Farmers did summarily contend that the trial court's waiver
and procedural rulings were erroneous after plaintiffs, in their responding argu-
ment, argued that the Court of Appeals could not reach the issue because Farmers
did not challenge the procedural grounds on which the trial court had ruled. But
advancing such a new and different argument for the first time in a reply brief is
not the proper way to preserve an argument in the Court of Appeals. See ORAP
5.45(6) (supporting argument must follow assignment of error in opening brief); see
generally Ailes v. Portland Meadows, Inc., 312 Or 376, 379-80, 826 P2d 956 (1991)
(Court of Appeals should not have reached alternative waiver argument when that
argument, in addition to not having been preserved in trial court, was not raised in
opening brief on appeal and was instead presented for the first time in reply brief).
Compare, e.g., Stanich v. Precision Body and Paint, Inc., 151 Or App 446, 456, 950
P2d 328 (1997) (new claim in reply would not be considered) with Estate of Michelle
Schwarz v. Philip Morris Inc., 348 Or 442, 456-57, 235 P3d 668 (2010)(challenge to
giving uniform instruction adequately preserved where opening brief, although it
did not discretely assign error to such, raised an issue that presented the same
legal question, identified the error in preservation section, and argued the point
sufficiently to prompt responsive argument by opposing party).
Second, Farmers asserts that the Court of Appeals necessarily considered and
rejected the waiver and other procedural defects found by the trial court. We fail to
see how that is so. Farmers had specifically argued to the Court of Appeals that the
motion for new trial had been denied by operation oflaw, and so the trial court's
reasoning was a nullity. The Court of Appeals may have simply accepted that
argument.

Strawn v. Farmers Ins. Co.
failed to preserve any challenge to the waiver and other pro-
cedural grounds on which the trial court's order was alter-
natively based. Any error by the trial court concerning the
constitutionality of the punitive damages award therefore
was necessarily harmless. The Court of Appeals should have
affirmed the trial court's order denying the motion for new
trial. See generally Jensen v. Medley, 336 Or 222, 239-40, 82
P3d 149 (2003) (affirming judgment, despite erroneous jury
instruction on one of plaintiffs theories of liability, where
defendant did not challenge another basis for liability).
In so concluding, we emphasize that we do not decide
whether the trial court's alternative grounds for its ruling
were sound. The correctness of the trial court's waiver and
other procedural analyses are not before us, just as those
issues were not before the Court of Appeals. Indeed, it is pre-
cisely because the trial court's alternative grounds for ruling
were not challenged by Farmers that the issue of the excess-
iveness of the punitive damages award was not before the
Court of Appeals for its determination. Likewise, whether
that award was constitutionally excessive is not before us.
For that reason, the punitive damages award must be
affirmed.
III. 	CONCLUSION
We reject Farmers's arguments on review that the
trial court either committed evidentiary error or erred in
denying Farmers's motion for directed verdict. We agree with
plaintiffs that the Court of Appeals should not have reached
the merits ofFarmers's assertion that the punitive damages
award exceeded constitutional limits. The decision of the
Court of Appeals is reversed in that respect only.
The decision of the Court of Appeals is affirmed in
part and reversed in part. The judgment of the circuit court is
affirmed.
BALMER, J., dissenting.
The majority labors long and faithfully to bring this
tortured case, filed in the last century, to a conclusion, and I

Cite as 	371
agree with important aspects of the majority's opinion. 1 How-
ever, because I believe the majority's discussion of the reli-
ance element of plaintiffs' fraud claim is flawed, I must
respectfully dissent.
This was never a simple case, but it evolved into an
unfortunately-and 	unnecessarily-complex 	proceeding.
That complexity was, in part, the result of choices made by
both parties (at trial and on appeal) and by the trial court, but
it also arose from the statutory context of the claims (includ-
ing the insurance code and the financial responsibility law),
the overlay of class allegations, the shifting legal landscape
created by appellate decisions issued during the decade that
the case was pending(such as Ivanov v. Farmers Ins. Co., 207
Or App 305, 140 P3d 1189 (2006), rev'd, 344 Or 421, 185 P3d
417 (2008)), and the ever-changing procedural and substan-
tive rules involving punitive damages. At the end of the day,
that complexity created a variety of traps for the unwary,
which, in large part, form the basis for the Court of Appeals'
rejection of many of Farmers's arguments and this court's
rejection of Farmers's argument regarding the amount of
punitive damages.
Some of those traps (to continue the metaphor) may
have been set by Farmers itself, either inadvertently or for
reasons of trial strategy, and I agree with the majority that
established rules of preservation prevent Farmers from rais-
ing a variety of otherwise potentially meritorious arguments
on appeal. However, for the reasons set out below, I disagree
with the majority's conclusion that evidence in the record
supported the jury's finding that plaintiffs and the class
1 In particular, I agree with the majority that Farmers failed to preserve objec-
tions to certain of the trial court's evidentiary rulings, although the issue is a close
one. See 350 Or at 346-51. I also agree with the majority's rejection ofFarmers's
argument that reliance, when it is an element of a class action claim, always must
be established through direct evidence of each class member's individual reliance.
See id. at 356. Rather, as the majority concludes, in an appropriate class action
case, classwide reliance may be inferred from evidence common to the class;
whether that evidence is sufficient in a particular case will depend on the nature of
the misrepresentation, among other factors, and I disagree with the majority on
whether the evidence was sufficient here. Finally, I agree with the majority's inter-
pretation of ORCP 64 F and the majority's conclusion that the trial court order giv-
ing its reasons for denying defendant's motion for a new trial was valid, even
though that order was not issued within 55 days after entry of judgment. See id. at
367-69.

members that they represented relied on Farmers's alleged
misrepresentations.
The gravamen of plaintiffs' case was that Farmers
had instituted a procedure for reviewing charges by medical
providers that provided care to Farmers's insureds under the
"personal injury protection" (PIP) coverage of their auto-
mobile insurance policies. Under the procedure, charges at or
less than the eightieth percentile of charges for comparable
procedures in the same geographic area would be considered
by Farmers to be "reasonable" and paid. 2 Charges in excess of
the eightieth percentile were considered excessive and were
paid only in exceptional circumstances. Plaintiffs alleged
that Farmers's procedure violated ORS 742.524(1)(a), which
requires an insurer to pay all "reasonable and necessary"
medical expenses for covered claims and that Farmers's con-
duct in implementing the procedure also constituted breach
of contract and fraud. Plaintiffs' central argument on their
fraud claim was that Farmers had falsely represented that
they would pay "reasonable" medical expenses when they did
not, in fact, intend to pay all reasonable charges. The jury
found in favor of plaintiffs on the fraud claim; on the basis of
that finding, the jury also was allowed to consider punitive
damages, and it awarded substantial punitive damages to
plaintiffs.
The majority rejects Farmers's argument that the
trial court erred in denying its motion for a directed verdict
on the fraud claim, holding that plaintiffs introduced suffi-
cient evidence for the jury to find that the class representa-
tives and the class as a whole relied on misrepresentations
that Farmers made to them. To put it bluntly, even if
Farmers's insurance policies (or the insurance code) could be
construed to constitute a representation to policyholders that
Farmers would pay all "reasonable" charges, which represen-
tation was false because Farmers in fact intended to base its
"reasonableness" determination on (and only to pay) all
charges at or below the eightieth percentile, there is scant
evidence that any plaintiff relied, to his or her detriment, on
that representation. And there is virtually no evidence from
2 Farmers later changed the eightieth percentile level to the ninetieth and then
the ninety-ninth.

Cite as 350 Or 336
which a jury could infer that the class of Farmers policy-
holders who made PIP claims relied on that representation.
I first discuss the majority's reliance holding and
then consider other ways in which reliance might be proved
here. "Reliance," of course, is an element of fraud, and must
be proved. See Gardner v. Meiling, 280 Or 665, 671, 572 P2d
1012 (1977) ("Implicit in the element ofreliance is a require-
ment [that] the plaintiff prove a causal relationship between
the representation and his entry into the bargain."). The
majority appears to accept plaintiffs' argument that reliance
need not be proved by "direct" evidence and that it can,
instead, be "inferred," 350 Or at 354, and in an appropriate
case that might be true. But the majority goes on to hold that,
because the class members were required by law to have
insurance, bought policies from Farmers, "received" those
policies (which included a statement that Farmers would pay
"reasonable" PIP charges), and then made PIP claims, a jury
could find that they "relied" on Farmers's misrepresenta-
tions. Id. at 360-62. The majority, without citation to any case
or statute, then reaches the quite far-reaching conclusion
that "an insured's reliance on the PIP coverage that the policy
provides is inherent in the purchase of the insurance." Id. at
361 (emphasis added). Based on that understanding, it is but
a small step for the majority to conclude that "a jury could
infer from evidence common to the class that the individual
class members relied on Farmers's misrepresentation that it
would pay its insureds' reasonable medical expenses." Id. at
362.
What is missing from the majority opinion, however,
is a discussion of how the class representatives relied on
Farmers's misrepresentations: what the plaintiffs did, or did
not do, because o{Farmers's misrepresentations. Ordinarily,
in fraud cases, the plaintiff must prove that the misrepresen-
tation "induced [the plaintiff] to make the 	agreement,"
Gardner, 280 Or at 671. Even in the rare case where this
court has allowed a fraud claim to proceed in the absence of a
direct misrepresentation conveyed to the plaintiff, we always
have insisted that the plaintiff allege and prove reliance. See
Handy v. Beck, 282 Or 653, 656, 581 P2d 68 (1978) (permit-
ting fraud claim based on false drilling report filed with state

374 	Strawn v. Farmers Ins. Co.
engineer; plaintiffs "testified that they would not have pur-
chased the property had they known the well did not meet
state standards").
The majority's position, in contrast, seems to be that
it doesn't really matter whether any of the named plaintiffs
(or the class members) either received or relied upon any rep-
resentations about Farmers's PIP coverage, either before or
after they bought the policies, or before or after they submit-
ted PIP claims. 3 That gap is bridged by the majority's asser-
tion, quoted above, that reliance is "inherent in the purchase
of the insurance." Although the majority suggests at one
point that it was important that the representations were
"uniform" and that all class members received "written and
binding contract[s] of insurance," 350 Or at 359, the logic of
the majority's position has nothing to do with those facts.
Indeed, the majority's reasoning detaches "reliance" from any
affirmative representation of any kind to a policyholder and
from any action or omission by that policyholder, and makes
it depend instead on the statutory requirements of the finan-
cial responsibility law and the insurance code. That analysis
would seem to support including within the class any person
who had a Farmers policy, whether or not they ever received
a copy of it or had any idea of its terms.
Indeed, although the class here included only per-
sons who had PIP charges that exceeded Farmers's payment
level, one can easily imagine a fraud claim on behalf of a class
of all Farmers policyholders who assert that they overpaid for
their policies because they were paying for (and thought that
they had) policies that complied with ORS 742.524(1)(a),
when in fact those policies did not comply. It is difficult to see
why "misrepresentation," "reliance," and "loss" all could not
be inferred on a classwide basis for such a class, given the
majority's conclusion that "reliance * * * is inherent in the
purchase of the insurance." 350 Or at 361.
One case that the majority does cite is Klay v.
Humana, 382 F3d 1241 (11th Cir 2004), cert den, 541 US
1081 (2005), which the majority states is instructive because
3 The majority states that a policyholder "does not need to read the policy to
justifiably rely on its provisions." 350 Or at 361. It follows logically that it does not
matter whether the policyholder ever received a copy of the policy.

Cite as 350 Or 336 	375
it involved fraud claims by physicians against a group of
HMOs alleging that the HMOs had agreed to reimburse the
physicians for all medically necessary services when, in fact,
the HMOs covertly underpaid the physicians by using undis-
closed 	statistical 	criteria 	to 	calculate 	reimbursement
amounts. Klay bears some similarities to this case, but does
not support the majority on the issue where the majority and
I part ways. Klay was only a case about class certification
itself-it concluded that a class of physicians making the
allegations described above could be certified. Klay says
nothing about what evidence of reliance would be sufficient
for a jury to render a fraud verdict in favor of plaintiffs.
Klay also reiterates the well-established rule that
"each plaintiff must prove reliance" to make out a fraud
claim, and also makes the point, with which I agree, that" 'he
or she may do so through common evidence (that is, through
legitimate inferences based on the nature of the alleged mis-
representations * * *).' "350 Or at 358, quoting Klay, 382 F3d
at 1259. But Klay also emphasizes-in a way that directly
undercuts the majority's holding here-that "reliance may
not be presumed in fraud-based RICO actions; instead the
evidence must demonstrate that each individual plaintiff
actually relied upon the misrepresentations at issue." Klay,
382 F3d at 1257-58 (emphasis added). And the case that Klay
relies upon for that proposition, Sikes v. Teleline, Inc., 281
F3d 1350, 1362 (11th Cir 2002), makes the point even more
forcefully: A plaintiff must demonstrate that he or she "relied
on a misrepresentation made in furtherance of[a] fraudulent
scheme" because "lilt would be unjust to employ a presump-
tion to relieve a party of its burden of production when that
party has all the evidence regarding that element of the
claim.'' (Emphasis added.) By holding that reliance, in this
case, is inherent in the purchase of the insurance and thus
that the jury could infer classwide reliance based on the
existence of the insurance contracts, the majority creates the
very presumption that Klay and Sikes caution against.
Klay contrasts with this case in another way that
demonstrates why the majority errs in allowing reliance to be
presumed in this case because it is inherent in the purchase
of insurance. There, the representation by the HMOs that

376 	Strawn v. Farmers Ins. Co.
they would reimburse the physicians for all medically neces-
sary services went to the entire purpose of the agreement
between the physicians and the HM Os. If reliance can be pre-
sumed from the nature of the representation, Iaay might be a
case where that would be permitted-although, as noted, the
court in Iaay explicitly held that reliance could not be pre-
sumed. Here, in contrast, Farmers's misrepresentation was
about a small part of the PIP coverage, which was itself a
small part of the policy as a whole, because the policy also
provided liability coverage, uninsured motorist coverage,
underinsured motorist coverage, collision coverage, and com-
prehensive coverage. The particular method of PIP reim-
bursement was not significant enough to allow the jury to
conclude that reliance was "inherent" when a policyholder
purchased a Farmers policy or made a PIP claim. 4
In terms of the significance of the misrepresentation
to any action that a plaintiff might take in reliance upon it,
this case is far more like Newman v. Tualatin Development
Co. Inc., 287 Or 47, 597 P2d 800 (1979), than Klay. In
Newman this court rejected an effort by plaintiffs in a class
action to prove reliance based on an express representation to
class members. We did so, not because reliance always must
be proved by individual evidence from each class member-
as the majority notes, we expressly rejected that argument-
but because, in that case, "the alleged express warranty is
such a small part of the item purchased and the representa-
tion is interspersed with many other descriptive statements."
287 Or at 54. "[R]eliance upon the express warranty," we con-
cluded, "is not proved merely by evidence that the warranty
was contained in a sales brochure given to all class mem-
bers." Id. (emphasis added). For the same reasons, it is not
appropriate in this case to permit the jury to infer that each
class member, simply by buying a policy from Farmers, relied
on 	Farmers's 	misrepresentations 	regarding "reasonable"
medical expenses for PIP claims.
There are, of course, cases where courts allow reli-
ance to be proved without actual evidence that the plaintiff
4 Even PIP medical expenses that exceeded the eightieth percentile-those
that Farmers declined to pay-did so by only a modest amount. Ninety percent
were for $25 or less; more than 25 percent were for $3 or less.

Cite 	377
acted or failed to act based on the defendant's misrepresen-
tation. Some securities fraud cases, such as Affiliated Ute
Citizens of Utah v. United States, 406 US 128, 152-53, 92 S Ct
1456, 31LEd2d 741 (1972), have permitted a presumption of
reliance when the defendant had a specific duty to disclose
information that it failed to disclose-a circumstance not
present here. Other cases have presumed reliance under a
"fraud on the market" theory, where the defendant's misrep-
resentations affected the market price of the stock, even
though the purchaser did not actually rely on the mis-
statements in purchasing the stock. See, e.g., Basic Inc. v.
Levinson, 485 US 243, 24 7, 108 S Ct 978, 99 L Ed 2d 194
(1988). That doctrine, too, is unavailable to plaintiffs here.
Having concluded that reliance on Farmers's repre-
sentations cannot be presumed on these facts and is not
"inherent" in the plaintiffs' purchase of insurance, I consider
briefly what evidence might be sufficient to show reliance
here and whether the record contains such evidence. The
fraud 	cases 	discussed 	above 	tell 	us 	what ordinarily is
required to prove reliance: in Gardner, that the misrepresen-
tation "induced [plaintift1 to make the agreement," 280 Or at
671; in Handy, that plaintiffs "would not have purchased the
property," absent the misrepresentation, 282 Or at 656. And
that is the way reliance ordinarily is proved in cases ranging
from common-law fraud to statutory class actions.
Here, one would expect plaintiffs to prove reliance by
testifying that, had they known the truth about Farmers's
PIP reimbursement policy, they would not have bought the
policy-and that they would bolster those assertions by
showing that, after they learned that Farmers had misrep-
resented its practices, they changed insurance companies. At
the very least, a plaintiff would offer credible testimony that
he or she was induced to take some action, or intentionally
declined to take some action, because ofFarmers's misrepre-
sentations and that the action or omission caused harm to
the plaintiff.
The record contains virtually no such evidence. Most
of the six plaintiffs who testified explained the representa-
tions that Farmers made to them in a way that was inconsis-
tent with the allegations in the complaint (and with plain-
tiffs' theory of the case). Strawn, for example, believed that

Strawn v. Farmers Ins.
the policy would "pay for all the bills up to a year" and would
pay "all [medical and hospital] expenses," even though a pol-
icy that complied with ORS 742.524(1)(a)-the policy the
majority 	says 	plaintiffs 	thought 	they 	had, 	because 	of
Farmers's representations-would only cover all "reasonable
and necessary'' expenses, rather than "all" expenses. 5 And
Strawn certainly could not have relied upon those misrepre-
sentations when he purchased his Farmers policy because he
bought that policy in 1997, before Farmer instituted its eight-
ieth percentile reimbursement plan.
Strawn did testify that the PIP benefit amount actu-
ally stated in the policy looked like it would "not go very far."
But when asked what he did in reliance on that observation,
Strawn said that if he had known about Farmer's reduction
plan, he would have "gotten more coverage" because he knew
medical bills can add up quickly. Plaintiffs' theory in this
case, however, was not that the total amount of PIP benefits
was too low-that amount was clearly set out in the policy
and met statutory requirements-but rather that Farmers
promised to pay all reasonable and necessary expenses
incurred, up to the amount stated in the policy, when in fact
it did not intend to do so. So, even if the jury believed Strawn
when he said he would have gotten "more coverage" than the
basic PIP amount, that testimony supports no allegation in
the complaint. Strawn's testimony simply does not show any
reliance on Farmers's misrepresentation that it would pay
"all reasonable and necessary" PIP expenses.
Moreover, hard as it is to believe, even after some of
Strawn's medical charges were denied because they exceeded
the eightieth percentile, Strawn continued to maintain his
Farmers automobile insurance policy and still was insured by
Farmers at the time of trial. Similarly, plaintiff Weiss contin-
ued to be insured by Farmers, despite the fact that Farmers
paid less for his PIP-related medical expenses than he
thought they should. (Although several plaintiffs testified
5 Similarly, Weiss testified that "[i]fI had known that my bills would not have
been paid, I would not have gone to this doctor. I would have waited to find out if
they were going to be paid * * *." Weiss, like Strawn, believed incorrectly that
Farmers had promised to pay all PIP expenses in full. Weiss provided no evidence
of any reliance on Farmers's misrepresentation as to how reasonable and neces-
sary medical expenses would be calculated.

Cite as 350 Or 336 	379
that they changed insurers after finding out about Farmers's
reimbursement policy, the differing conduct of the named
plaintiffs demonstrates that it was improper to allow the jury
to infer reliance by all class members on the basis of that
evidence.)
The six plaintiffs who testified expressed various
degrees of dissatisfaction with Farmers's PIP reimbursement
policy and some testified to efforts made by medical providers
to recover unpaid fees from them. But there was virtually no
testimony from any plaintiff that he or she received and read
Farmers's misrepresentations or that he or she took any par-
ticular action (or failed to take any particular action) in reli-
ance on those misrepresentations. Much less was there any
evidence from which a jury could infer that the entire class of
Farmers policyholders who made PIP claims relied on any
misrepresentation.
Whatever 	the 	strength 	of 	plaintiffs' 	nonfraud
claims-and of the other elements of plaintiffs' fraud claim-
plaintiffs failed to offer sufficient evidence of reliance for the
fraud claim to go to the jury. 6
I dissent.
• Presumably because of the paucity of evidence of reliance, the lower courts
never discussed any actual reliance, but presumed that reliance could be found
because there was evidence of misrepresentation. When Farmers moved for a
directed verdict on the fraud claim, based in part on lack of proof of reliance, the
trial court simply ignored that element of the claim. "[T]here are omissions and
nondisclosures of material fact that are involved here," the court stated, and
"[L]ooking at plaintiffs' evidence in the light most favorable to plaintiffs, there were
half-truths involved here, again, using the same standard which the jury could
choose to believe the evidence. So the defendant's motion fails on that ground."
Similarly, the Court of Appeals stated that, based on evidence of Farmers' s misrep-
resentations, a jury could "reasonably infer that plaintiffs relied on Farmers's mis-
representation that it would pay reasonable and necessary PIP-related expenses
when they continued to pay their premiums." Strawn v. Farmers Ins. Co., 228 Or
App 454, 4 71, 209 P3d 357 (2009). But the Court of Appeals pointed to no testimony
or other evidence that any named plaintiffs, in fact, relied on Farmers's misrepre-
sentation when they "continued to pay their premiums," and the court's holding-
that reliance could be "inferred"-made such proof unnecessary. The majority's
legal analysis is more plausible than that of the lower courts, but, for the reasons
set out above, ultimately is not persuasive.