Justia Class Action Opinion Summaries

Wellness filed a putative class action in state court seeking a declaration that the form language Allstate used in the class members' personal injury protection insurance policies did not clearly and unambiguously indicate that payments would be limited to the levels provided for in Fla. Stat. 627.736(5)(a). The district court subsequently granted Wellness' motion to remand, concluding that the value of the declaratory relief was too speculative for purposes of satisfying the Class Action Fairness Act's (CAFA), 28 U.S.C. 1332(d)(2), amount-in-controversy requirement because Allstate had failed to show that declaratory judgment in this case necessarily triggered a flow of money to plaintiffs. The court concluded, however, that Allstate had carried its burden of establishing an amount in controversy that exceeded $5 million and Wellness did not provide any evidence to rebut Allstate's affidavit or controvert its calculations. Here, the amount that would be put at issue is the amount that the putative class members could be eligible to recover from Allstate in the event that they obtain declaratory relief. Accordingly, the court reversed and remanded. View "South Florida Wellness, Inc. v. Allstate Ins. Co." on Justia Law

In 1994, Norem purchased a “Flexible Premium Variable Life Insurance Policy” from Lincoln Benefit. With variable life insurance, part of the premium is allocated to the insurer’s investment funds, called subaccounts. Policyholders may move their investments within the subaccounts and the death benefit, which is guaranteed not to fall below a certain amount. With variable universal life, the policyholder may easily invest and alter insurance coverage. The policy is comprised of the policy value, which represents the investment component, and its net amount at risk, which represents the insurance component. Norem purchased his policy because he wanted both life insurance and an investment vehicle for the proceeds from the sale of his ownership of a medical business. The policy has a “cost of insurance” (COI) charge deducted monthly from the policy. The policy explains how the COI rate is calculated. Norem filed a putative class action on behalf of himself and other similarly situated policyholders, claiming that Lincoln Benefit breached the terms of its policies in its method of calculating the COI rate.Before deciding on class certification, the district court granted summary judgment to Lincoln Benefit, concluding that its calculation of COI rates did not breach the contract. The Seventh Circuit affirmed. View "Norem v. Lincoln Benefit Life Co." on Justia Law

In a proposed class action, Schilke alleged that Wachovia, her lender and holder of a mortgage on her home, fraudulently placed insurance on her property when her homeowner’s policy lapsed. Wachovia secured the replacement coverage from ASI and charged her for it, as specifically permitted by her loan agreement. The premium was more than twice what she had paid for her own policy and included a commission to Wachovia’s insurance-agency affiliate, also as permitted under the loan agreement. Schilke calls the commission a “kickback” and asserted statutory and common-law claims, most sounding in fraud or contract. The district court dismissed based on federal preemption and the filed-rate doctrine. The Seventh Circuit affirmed. The loan agreement and related disclosures and notices conclusively show that there was no deception at work. Wachovia fully disclosed that lender-placed insurance could be significantly more expensive than her own policy and could include a fee or other compensation to the bank and its insurance-agency affiliate. Maintaining property insurance was Schilke’s contractual obligation and she failed to fulfill it. . View "Schilke v. Am. Sec. Ins. Co." on Justia Law

Addison filed a class action, alleging that Domino had sent thousands of “junk faxes” in violation of the Telephone Consumer Protection Act, 47 U.S.C. 227, and the Illinois Consumer Fraud Act, and had committed the tort of conversion. Domino’s insurers refused to defend. Domino negotiated a settlement to protect its own interests; Addison and Domino agreed that the state court should certify a class and enter a judgment of $18 million. Addison agreed that the class would not recover any money from Domino, but that Domino would assign to Addison, as class representative and for the class, whatever claims Domino might have against its insurers. The state court approved the settlement. Addison sought a state court declaratory judgment holding Hartford liable for the judgment. Hartford removed the case to federal court. Addison dismissed the case voluntarily and filed another state court suit, naming Addison as the only plaintiff. Hartford again removed the case under the Class Action Fairness Act, 28 U.S.C. 1453. The district court granted remand, finding that the suit did not fit the CAFA definition. Hartford argued that under the assignment in the underlying settlement, Addison had standing only as a class representative. The Seventh Circuit agreed, reversed, and remanded to state court. View "Addison Automatics, Inc. v. Hartford Cas. Ins. Co." on Justia Law

CE is a small Chicago-area engineering firm that has filed at least 150 class action suits under the Telephone Consumer Protection Act. In this case, CE sued Cy’s Crab House on behalf of a class of junk-fax recipients. Truck is the liability carrier for the Cy’s Crab House restaurants and provided a defense under a reservation of rights. The case was certified as a class action, and went to trial. In the middle of trial, without notifying the insurer, Cy’s settled with the class, for policy limits. State-court coverage litigation ensued. The district court approved the final settlement and entered final judgment. Less than a month later, the Seventh Circuit issued a decision casting doubt on the conduct of class counsel. In light of that decision, Truck moved to intervene to reopen the judgment, challenge the settlement, and seek class decertification based on misconduct by class counsel. Instead of filing a conditional appeal, Truck asked the district court for a 14-day extension of the time to appeal. Ultimately the court denied intervention as untimely. Truck Insurance filed a notice purporting to appeal both the order denying intervention and the final judgment. The Seventh Circuit held that it had jurisdiction to review the order denying intervention, but could not grant any meaningful relief because it lacked jurisdiction to review the final judgment. View "Truck Ins. Exch. v. CE Design Ltd." on Justia Law

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