Justia Class Action Opinion Summaries

Plaintiff sued the servicer of his loan (Bank) in a putative class action, asserting that the Bank's requirement that he maintain flood insurance coverage in an amount sufficient to cover the replacement value of his home breached the terms of his mortgage contract. The mortgage was insured by the Federal Housing Administration (FHA). Specifically, Defendant contended that the Bank, under a covenant of the mortgage contract, could not require more than the federally mandated minimum flood insurance. The covenant was a standard uniform covenant prescribed by the FHA pursuant to federal law. The district court dismissed the complaint for failure to state a claim. The judgment of dismissal was affirmed by an equally divided en banc First Circuit Court of Appeals, holding that Plaintiff failed to state a claim for breach of contract, as (1) the Bank's reading of the contract was correct and Plaintiff's was incorrect; (2) Plaintiff could not avoid dismissal on the grounds that his specific understanding or the actions of the parties created an ambiguity; and (3) the United States' position articulated in its amicus brief, which stated that Plaintiff's interpretation of the contract was incorrect, reinforced the Court's conclusion. View "Kolbe v. BAC Home Loans Servicing, LP" on Justia Law

Plaintiffs filed a class action suit against Auto-Owners, alleging breach of contract and bad faith. On appeal, Auto-Owners challenged the district court's certification of a class for those policy owners whose policies were issued in North Dakota. The court reversed, concluding that the certified class did not meet the predominance requirement of Rule 23 where the reasonableness of any claim payment may have to be individually analyzed and, therefore, the district court abused its discretion in certifying the class. View "Halvorson, et al. v. Auto-Owners Ins. Co., et al." on Justia Law

Exchange is a reciprocal insurance exchange, under 40 PA. STAT. 961. Members purchase insurance policies and receive indemnification for losses out of Exchange’s pool of funds. A 2012 Complaint alleged that Exchange is owned by subscribers and has no independent officers or governing body; that Indemnity is a public corporation that serves as Exchange’s attorney-in-fact; that Indemnity is permitted to retain up to 25% of Exchange’s premiums; that the balance of premiums is to be used for insurance losses and operational costs and may be distributed to Exchange members as dividends at Indemnity’s discretion; that members who pay premiums in installments must pay service charges and are subject to late payment and policy reinstatement fees; that, beginning in 1997, Indemnity began to retained for itself service charges paid to Exchange, which belonged to Exchange; and that, beginning in 2008, Indemnity misappropriated fees, totaling more than $300 million. The complaint was filed for Exchange by certain members and “on behalf of” all other members. Contending that the words “on behalf of” converted the case into a class action, Indemnity removed the case to federal court. The district court remanded to state court. The Third Circuit affirmed, stating that the case was brought under state rules that bear no resemblance to Rule 23 in that they allow for suits by entities, not a conglomerate of individuals, and does not meet the statutory definition of “class action.” View "Erie Ins. Exch. v. Erie Indem. Co" on Justia Law

Companies underwriting workers’ compensation insurance participate in a reinsurance pool administered by the National Workers Compensation Reinsurance Association. Insurers share in the pool’s profit or loss according to the volume of business they underwrite. When the pool is profitable, it is beneficial to have a larger book of business; when the pool loses money, a smaller book means that the underwriter needs to contribute less toward the losses. The class contends that AIG underreported the size of its business in losing years, causing the pool’s other members to bear a disproportionate share of the losses and sought$3.1 billion. Some of the insurers had independent claims against AIG. AIG advanced its own claims against Liberty Mutual. The district judge approved a settlement. Liberty Mutual appealed, arguing that its share would not compensate it adequately for its stand-alone claims against AIG and that the conflicts of interest within the reinsurance pool meant that the case never should have been certified as a class. After argument, Liberty Mutual settled with AIG. The Seventh Circuit dismissed the appeal, holding that the settlement does not jeopardize the interests of the unrepresented class members. View "Am. Int'l Grp. v. Liberty Mut. Ins. Co" on Justia Law

Plaintiff left his senior position in 1996, having participated in the Retirement Income Security Plan for Employees (RISPE), a tax-qualified defined benefits plan that guarantees specified retirement benefits, and in the Excess Benefit Plan, a defined unfunded benefits pension plan under which benefits are paid directly by the employer rather than by a trust funded by the employer. Both plans allowed him to choose between an annuity and an actuarial equivalent lump sum distribution. In 2009 he received his RISPE lump sum, $325,054.28 and his Excess Plan lump sum, $218,726.38. The discount rate used to calculate lump sum RISPE benefits was a “segment rate,” 26 U.S.C. 417(e)(3)(C), of 5.24 percent. The discount rate applied to the Excess Plan lump sum was 7.5 percent. The district court rejected his ERISA claim that the discount rate required by both plans was a rate computed by the Pension Benefit Guaranty Corporation on the basis of annuity premiums charged by insurance companies. The Seventh Circuit affirmed. With respect to the RISPE, the accrued benefit, which cannot be reduced retroactively, is the annuity; the lump sum is not the accrued benefit and can be reduced retroactively. The court rejected a conflict-of-interest argument concerning calculation of the Excess Benefit Plan discount rate. View "Dennison v. MONY Life Ret. Income Sec. Plan for Emps." on Justia Law

Plaintiffs purchased variable universal life insurance policies from defendant. Plaintiffs subsequently filed a class action suit against defendant under the Securities Litigation Uniform Standards Act (SLUSA), 15 U.S.C. 78bb(f)(1), for levying excessive cost of insurance charges. The court concluded that claims of breach of contract and breach of the duty of good faith and fair dealing were not precluded by SLUSA, even if such claims related to the purchase or sale of a covered security. The court reversed the district court's dismissal of the two contract claims, on the condition that plaintiffs amend their complaint to remove any reference to deliberate concealment or fraudulent omission. The court affirmed the dismissal of the class claim for unfair competition in violation of California law. View "Freeman Investments, L.P., et al v. Pacific Life Ins. Co." on Justia Law

Homeowners, who were represented by the Mostyn Law Firm, filed claims against State Farm in Texas state court after Hurricane Ike. State Farm removed several cases to federal court on diversity grounds. The Firm and State Farm then entered into an agreement whereby the Firm promised to abandon its clients' claims against individual adjusters and forgo suing them in the future in exchange for State Farm's promise not to remove any Hurricane Ike cases to federal court. At issue on appeal was whether the phrase "any Hurricane Ike cases," in a contract covering "all Hurricane Ike cases that either have been filed or will be filed in the future," encompassed class-action lawsuits. The court affirmed and agreed with the district court's conclusion that the negotiated contract covered all past, present, and future lawsuits filed by the Firm against State Farm on behalf of homeowners, as individuals or part of a class, whose properties were damaged during Hurricane Ike. View "Horn, et al v. State Farm Lloyds" on Justia Law

This case principally involved challenges to the application, in Missouri, of the provision of the Plan administered by BCBS-KC that required a Plan enrollee who received benefits in connection with any injury in addition to compensation from a third party must reimburse BCBS-KC the amount of benefits paid. Given the state's antisubrogration laws, plaintiff contended that BCBS-KC was unable to recover its reimbursement liens in Missouri. BCBS-KC removed the action to federal district court and plaintiff then moved to remand the matter to state court. BCBS-KC subsequently appealed the district court's remand based upon the local controversy exception to the Class Action Fairness Act (CAFA), 28 U.S.C. 1332(d); its determination that federal common law was not contemplated in this action; and its decision that BCBS-KC could not remove this matter under the federal officer removal statute. Because the court determined that this matter was properly in federal court under the federal officer removal statute, the court need not address plaintiff's remaining claims. That said, the court did not delve into the CAFA claim, but rather reversed the district court's judgment and remanded this matter for further consideration, directing that this action remain in federal court. View "Jacks v. Meridian Resource Co., et al" on Justia Law

In 1992 Navistar attempted to reduce its costs for retired employee health and life insurance benefits. Navistar’s retirement benefit plan is a registered employee health benefit plan under the Employee Retirement Income Security Act, 29 U.S.C. § 1001 and Navistar is both plan administrator and fiduciary. In 1993, the district court entered judgment in a class action challenging the change, adopting an agreement between the parties and retaining jurisdiction. The Agreement established the Retiree Health Benefit and Life Insurance Plan. The Plan established the Health Benefit Program Summary Plan Description, which contains a description of the health benefits and is furnished to all beneficiaries. The Agreement divides health benefits into two plans: Plan 2 for those eligible for Medicare and Plan 1 for those who are not eligible. A prescription drug benefit was provided under the Agreement, identical for both Plan 1 and Plan 2. When Navistar moved to substitute Medicare Part D into the Plan, class members claimed violation of the Agreement. The district court ordered Navistar to reinstate, retroactively, the prescription drug benefit that was in effect before Navistar made the unilateral substitution. The Sixth Circuit affirmed,View "Shy v. Navistar Int'l Corp." on Justia Law

Northwestern sold an annuity to approximately 36,000 persons: about 3,000 live in Wisconsin. In 1985 Northwestern changed its calculation of the annual dividend. In a 2001 suit by annuitants in Wisconsin state court, the judge declined to certify the class, ruling that a claim for damages creates individual issues that make class treatment imprudent, and a national class is not manageable given differences in applicable state laws. A second suit initially proposed a class limited to Wisconsin annuitants and sought only a declaratory judgment that the 1985 change is invalid. The suit was certified as a class action and the judge declared that Northwestern violated the contracts, breached fiduciary duties, and should pay substantial damages. The class then amended to seek damages for annuitants in every state. Contending that the amendment implicated the Class Action Fairness Act, 28 U.S.C. 1332(d), 1453, Northwestern filed notice of removal. The district court remanded the suit. The Seventh Circuit vacated and remanded, reasoning that the doctrine of law of the case does not apply on appeal and that it will review the state trial court decision on the merits as it would, had the identical decision been made initially by the federal district judge. View "Laplant v. NW Mut. Life Ins. Co." on Justia Law