The District of Minnesota recently declined to grant class certification to a putative class of fixed deferred annuity owners who alleged that Reliastar Life Insurance Company wrongfully set higher interest rates on “new money” than on “old money,” even though the rates for all policies were at or higher than the contractual guarantees. The plaintiffs claimed that the practice breached the duty of good faith implied in the contract provision “interest greater than the guaranteed rate may be credited in a way set by our Board of Directors” and that alleged misrepresentations or omissions concerning the interest crediting violated various consumer protection statutes.

The court found that individual class members’ expectations regarding interest crediting would predominate over common issues because a class member could not recover on their contract claims if their expectations were consistent with the company’s interest crediting mechanism. Because “class members could have obtained information about interest crediting through point-of-sale interactions or publicly available materials,” the court anticipated that at least some purchasers’ expectations were consistent with the company’s crediting methodology.

The court also refused to certify the consumer protection act claims because those claims centered on alleged misrepresentations and nondisclosures, and, as in In re St. Jude, evidence of reliance by individual class members would be relevant to proving causation. The court further held that the statute of limitations defense would require individual proof, as the accrual of the claims depends on when each individual knew of the company’s interest crediting practices.