The case involved a class action filed by an annuity beneficiary alleging that the insurer sold his mother and similarly situated plaintiffs a deferred annuity that did not comply with disclosure requirements of individual annuity contracts pursuant to California Insurance Code (“CIC”) §§ 10127.10(c) and 10127.13.

The parties do not dispute that: (a) the deferred annuity provides that it is a certificate issued under a group annuity contract delivered in another state; (b) the deferred annuity does not comply with the CIC disclosure requirements; (c) the annuitant paid for the annuity with her own funds; (d) the annuitant was not a member of the group before applying for the annuity; and (e) the group was not within any California statutory definition of an insurance group, and consequently the insurer could not have issued the group annuity contract in California.

The insurer moved to dismiss the action on the grounds that the deferred annuity was not subject to the California disclosure laws because it was merely a certificate of coverage under a group insurance contract lawfully issued in another state.  The plaintiff argued that because the group was not eligible under California law, the deferred annuity was an individual annuity contract for California purposes.

The US District Court for the Northern District of California (Chesney, J.), agreed with the insurer and dismissed the complaint, reasoning that: (a) an individual insurance policy is underwritten individually and a group insurance policy is underwritten on a group basis; (b) the plain language of the annuity certificate purchased by the plaintiff’s decedent establishes it as a group annuity; and (c) there was no authority for the plaintiff’s claim that “California law limiting the types of group insurance policies that may be issued in California governs the types of group policies that may be issued in other states.”