In Mooney v. Allianz Life Ins. Co. of North America, No. 06-00545 (D. Minn.), Plaintiffs claimed that the insurer’s marketing of deferred annuity products as providing an “up-front” or “immediate” bonus violates Minnesota’s consumer protection statute, because the bonus is not available until annuitization. On February 26, 2009, the federal district court denied a motion to decertify the national class it had previously certified. The court also granted in part and denied in part the insurer’s motion for summary judgment. (For the opinion, click here.)
Plaintiffs alleged that statements that the deferred annuities they purchased would provide an immediate 10% bonus were misleading because to realize the full value of the bonus, a policyholder must wait the five-year deferral period and then annuitize the policy for at least 10 years. Plaintiffs asserted claims for unjust enrichment and violations of the Minnesota Prevention of Consumer Fraud Act (MPCFA), which prohibits the use of “any fraud, false promise, misrepresentation, misleading statement or deceptive practice … in connection with the sale of any merchandise.”
The court denied class certification in January 2007, finding that Plaintiffs had failed to brief the choice of law and conflict of law issues that needed to be addressed given that they were seeking to certify a national class to assert state law claims. However, the court permitted Plaintiffs to provide supplemental briefing on those issues. (Please click here for that decision.) In May 2007, after the supplemental briefing, the court held that the Minnesota consumer protection statute could constitutionally be applied to class members nationwide and that under Minnesota choice of law rules, Minnesota law should apply to the entire class. The court then found the remaining class certification requirements met and certified a nationwide class under Rule 23(b)(3) consisting of individuals who purchased certain bonus annuities between 2000 and 2007, excluding California residents 65 and older (who are included in a class certified in another case). (Please click here for that decision.) The Eighth Circuit denied the insurer’s petition for interlocutory review of class certification.
In July 2008, the court denied the insurer’s first motion to decertify the class, which had argued that a new Eighth Circuit decision compelled the conclusion that individual issues predominated. (Please click here for that opinion.) After discovery was completed, the insurer moved to decertify again, arguing that the evidence showed a very individualized sales process and decision-making process by the customer. In last week’s decision, the court denied this second motion to decertify.
The insurer argued that individual inquiries into the causation and reliance elements of the MPCFA claim would be required, as evidenced by its depositions of 19 absent class members demonstrating that the decision-making process for each class member was highly individualized. Plaintiffs contested the insurer’s characterization of the deposition evidence and presented a survey of a larger sample of class members regarding the decision-making process.
The court held that Plaintiffs were not required to show under the MPCFA that the misrepresentation was the sole or primary cause of damages, but merely that the misrepresentation had some impact on the damages. Further, Plaintiffs were not required to show individual reliance; rather, “[p]laintiffs must prove that the alleged misrepresentation was a cause of their damages and that there was some reliance” (emphasis in original).
The court found that Plaintiffs’ survey demonstrated that the majority of class members relied on either the written material presented by the sales agent or the sales agent’s representations. The court noted that sales agents signed a statement that their oral representations did not differ from the written material. The court further found that the survey showed that the majority of the class indicated that the bonus was a factor in their decision-making process and that 100% would not have chosen the annuity had the bonus not been offered. Applying a preponderance of the evidence standard, the court found that common issues predominated.
The court distinguished this case from Avritt v. Reliastar Life Ins. Co., No. 07-1817 (D. Minn. Feb. 23, 2009), a case in which another judge in the same court had recently denied class certification with respect to claims challenging interest-crediting practices in deferred annuities. The court noted that Avritt addressed claims under a different state’s consumer protection statute and characterized Avritt as involving “generic, nonspecific assertions of ‘illegality, unfairness and deceptiveness,’ whereas, the alleged misrepresentations [in Mooney] are of a quite specific nature and the majority of the class members received substantially the same misrepresentation.” (Please click here for our prior Legal Alert on the Avritt decision.)
In the same opinion, the court in Mooney also denied in part and granted in part the insurer’s motion for summary judgment. The court denied summary judgment on the MPCFA claim, finding genuine issues of material fact as to that claim. The court granted summary judgment on the unjust enrichment claim, noting that Plaintiffs had not responded to this part of the summary judgment motion and also holding that Plaintiffs’ adequate remedy at law under the MPCFA precluded asserting an unjust enrichment claim.