A Nevada federal court recently handed a resounding victory to the defendants in a putative class action alleging wrongdoing in how an indexed annuity’s index values are captured. Plaintiffs in Rivera v. Allianz Life Ins. Co. of North America, et al. had filed a putative class action complaint in Nevada state court last November, alleging breach of contract and consumer fraud in connection with their purchases of index annuity policies. Plaintiffs alleged that certain language in their Statements of Understanding (SOUs) was contradictory and fraudulent because it stated that the index value would be captured on each contract’s “monthiversary,” while the policies defined the “initial index value” as the value of the index at the end of the last business day before the start of a monthly term. Defendants removed the action and moved to dismiss the complaint, and plaintiffs moved to remand.
The court first denied plaintiffs’ motion to remand, rejecting plaintiffs’ contention that the securities exception to the Class Action Fairness Act applied because the claims concerning capturing of index values involved securities. The court held that the securities exception did not apply “by any reasonable reading of the statutory language” because none of plaintiffs’ claims involved securities “except as to the effect of a stock index” which “clearly does not meet the criteria for the exception.” The next day, the court issued an order dismissing one of the named Allianz defendants, finding that plaintiffs’ collectivized allegations had failed to comply with Federal Rule of Civil Procedure 9(b) because they failed to allege any facts specific to that entity. And the following day, the court granted the remaining defendants’ motions to dismiss the complaint for failure to state a claim and dismissed the action.
The court found that the “SOUs are clearly not part of the Policy contract, and even if they were, there is no inconsistency between the SOU, which states when the value would be captured, and the annuity Policy, which stated how it would be captured.” The court also held, among other things, that the lawsuit was barred under the doctrine of claim preclusion because the plaintiffs were members of a previously certified class action “that fully litigated to final judgment the merits of claims arising from these particular annuity purchases and in which Allianz prevailed.” Jorden Burt represented the Allianz defendants in the action.