The plaintiff in Otte v. Life Insurance Company of North America brought an action on behalf of approximately 100,000 beneficiaries of an estimated 5,000 employersponsored group life insurance plans underwritten by CIGNA-subsidiaries. Plan benefits were issued through a CIGNAssurance Retained Asset Account (RAA). Plaintiff alleged that this violated ERISA’s fiduciary duty and anti-self-dealing provisions and moved for class certification under Federal Rule of Civil Procedure Rule 23(b)(3).
Defendants opposed, asserting that material differences in the benefits payment provisions of the approximately 5,000 plans and Summary Plan Descriptions (SPDs) applicable to the class, as well as the existence of individualized statute of limitations defenses as to each class member, undermined Rule 23(a)’s typicality and adequacy requirements, and Rule 23(b)(3)’s predominance and superiority requirements.
In its June 10, 2011 opinion, the Massachusetts federal district court noted in dicta that the RAA was “no more than an IOU” which failed to transfer the funds out of an ERISA plan and thereby failed to discharge the defendants’ fiduciary obligations. Thus, the class could be certified irrespective of any differences in the language of the 5,000 plans and SPDs at issue. The court, however, troubled by the existence of individualized statute of limitations defenses, “provisionally certif[ied]” two subclasses: (1) those whose benefits were paid into RAAs within three years of the filing of the complaint and thus plainly within the applicable three-year limitations period, and (2) the remaining class members. As to the latter sub-class, the court appeared to shift from plaintiff the burden of satisfying Rule 23’s requirements by finding that a “brief period of discovery should establish whether the second sub-class can survive the commonality test and whether a suitable representative of the subclass can be identified.” The court’s provisional certification is difficult to reconcile with the rigorous analysis followed by the Supreme Court in Wal-Mart v. Dukes.