Walker v. Life Ins. Co. of the Sw.

• Decision Date: 23 March 2020
• Docket Number: Nos. 19-55241,19-55242,s. 19-55241
• Citation: 953 F.3d 624
• Parties: Joyce WALKER ; Kim Bruce Howlett; Muriel Spooner; Taline Bedelian; Oscar Guevara, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees/Cross-Appellants, v. LIFE INSURANCE COMPANY OF THE SOUTHWEST, a Texas corporation, Defendant-Appellant/Cross-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

953 F.3d 624

Joyce WALKER ; Kim Bruce Howlett; Muriel Spooner; Taline Bedelian; Oscar Guevara, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees/Cross-Appellants,

v.LIFE INSURANCE COMPANY OF THE SOUTHWEST, a Texas corporation, Defendant-Appellant/Cross-Appellee.

Nos. 19-55241

19-55242

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 10, 2020 Pasadena, California

Filed March 23, 2020

Noah A. Levine (argued), Wilmer Cutler Pickering Hale & Dorr LLP, New York, New York; Andrea J. Robinson and Timothy J. Perla, Wilmer Cutler Pickering Hale & Dorr LLP, Boston, Massachusetts; Matthew T. Martens, Wilmer Cutler Pickering Hale & Dorr LLP, Washington, D.C.; Jonathan A. Shapiro, Baker Botts LLP, San Francisco, California; for Defendant-Appellant.

Brian P. Brosnahan (argued), Cornerstone Law Group, San Francisco, California; Lyn R. Agre, Margaret A. Ziemianek, and Veronica Nauts, Kasowitz Benson Torres LLP, San Francisco, California; for Plaintiffs-Appellees.

Xavier Becerra, Attorney General; Diane S. Shaw, Senior Assistant Attorney General; Lisa W. Chao, Supervising Deputy Attorney; Office of the Attorney General, Los Angeles, California; for Amicus Curiae Ricardo Lara, Insurance Commissioner of the State of California.

Before: Marsha S. Berzon, Richard C. Tallman, and Ryan D. Nelson, Circuit Judges.

TALLMAN, Circuit Judge:

Life Insurance Company of the Southwest ("LSW") appeals in case number 19-55241 a class-certification order, arguing the district court committed legal error by granting certification in a case featuring predominantly individualized questions. Joyce Walker and four other named plaintiffs in case number 19-55242 challenge, on behalf of the certified class ("Plaintiffs"), the same certification order. Plaintiffs seek to enlarge the class. LSW counters that Plaintiffs’ appeal is either too late or procedurally improper.

In disposing of the issues before us, we are guided by well-established canons of class-certification law, which collectively—and as specifically applied here—remind us that the class-action mechanism is remedial, but not absolute. On one hand, the district court’s order certifying a class properly enables the mechanism to serve its intended purpose: providing individual plaintiffs with a vehicle through which they can efficiently protect their rights and overcome potentially prohibitive economic barriers to seek legal relief. On the other hand, those equitable justifications for the class-action mechanism do not save Plaintiffs’ case from the straightforward, even if unforgiving, timing and procedural requirements that serve practical case-management purposes.

We invoke these principles in affirming the district court’s certification order and declining to consider Plaintiffs’ cross-appeal.

I

LSW sells life insurance policies, which also double as investment vehicles, two of which are challenged here. In the course of purchasing a policy, a prospective policyholder receives at least one type of "illustration," which is an informational document projecting a policy’s returns, over the life of the policy, on premiums in addition to the payment of a lump-sum benefit at death. The first kind of illustration is a "pre-application" illustration, which the applicant may, but is not required to, receive before or at the same time as obtaining the policy application. A "batch" illustration, in contrast, typically is delivered to the applicant along with a copy of the policy, after the applicant submits her application and LSW approves it. LSW does not always provide an applicant with a batch illustration. But it must do so under California law if either a pre-application illustration was never given to the applicant, or the policy as issued reflected different underwriting criteria from the pre-application illustration. All five named Plaintiffs received pre-application and batch illustrations.

Plaintiffs argue that LSW’s illustrations of potential earnings violate California’s Unfair Competition Law ("UCL") because they do not define or detail the meaning of policy column headings reading "Guaranteed Values at 2.00%" and "Guaranteed Values at 2.50%." Plaintiffs also allege the illustrations promised to eliminate a certain administrative fee after ten years, and that the illustrations fail to describe this "nonguaranteed" element in violation of California law. Plaintiffs allegedly relied on the illustrations in deciding to purchase policies.

Plaintiffs’ UCL case has taken a circuitous path. The district court originally dismissed the very claims underlying this appeal, finding that the part of the UCL under which Plaintiffs sued did not create a private right of action. Around the same time, in November 2012, the district court certified two classes advancing related but distinct claims. One class consisted of policyholders advancing common-law fraud claims against LSW. The other was made up of policyholders who received pre-application illustrations and brought claims under a different part of the UCL. The district court subsequently decertified the latter class, concluding that the task of determining on a plaintiff-by-plaintiff basis who received pre-application illustrations would predominate over questions common to the class, rendering class treatment inappropriate.

After a jury returned a defense verdict on the fraud and UCL claims, a panel of this Court reversed the district court’s dismissal order. Plaintiffs then sought to litigate the reinstated UCL claims through yet another class action. They proposed two alternative class definitions, both describing California residents who purchased certain LSW policies during a specified period. The narrower of the two classes was limited to recipients of pre-application illustrations:

All persons who purchased a Provider Policy or Paragon Policy from Life Insurance Company of the Southwest that was issued between September 24, 2006[,] and April 27, 2014, who resided in California at the time the Policy was issued, and who received an illustration on or before the date of policy application.

By extending membership only to pre-application illustration recipients, the proposed class—like the class the district court decertified—effectively excluded those policyholders who received only batch illustrations when their policies were delivered.

The district court certified the narrow class over the same objection LSW advanced in 2012 and 2013 regarding the later-decertified class: that Plaintiffs’ claims were incapable of class-wide proof because the court would have to individually establish each Plaintiff’s receipt of a pre-application illustration. LSW argued that certification would be improper under Rule 23(b)(3) of the Federal Rules of Civil Procedure because individualized questions predominated over class-wide ones. The court rejected LSW’s concern and responded to it, in part by citing our decision in Briseno v. ConAgra Foods, Inc. , 844 F.3d 1121, 1133 (9th Cir. 2017), which clarified that " Rule 23 neither provides nor implies that demonstrating an administratively feasible way to identify class members is a prerequisite to class certification." Based on Briseno , the district court held that "the concerns motivating [its] prior Decertification Order [of the pre-application illustration recipient class] are no longer valid justifications to find a lack of predominance."

Under the "Predominance" sub-heading of the certification order, the court determined Plaintiffs were entitled to a legal presumption that all class members relied on the illustrations before purchase. It reasoned, "[E]very member of the class was exposed to an illustration containing [UCL] violations prior to his or her purchase of an LSW policy" because the class definition excluded policyholders who did not obtain pre-application illustrations. The court rejected LSW’s argument that other information provided to applicants could have corrected any misimpression the illustrations caused.

LSW petitioned for permission to appeal the July 31, 2018, certification order on August 14. On the same day, Plaintiffs moved the district court to reconsider its certification order and adopt the broader of the two class definitions originally proposed, which did not limit class membership to pre-application illustration recipients and therefore included batch illustration recipients. The district court denied Plaintiffs’ motion on September 10, without prejudice, for failure to satisfy a local meet-and-confer rule. Plaintiffs re-noticed their motion for reconsideration on September 18, and the district court denied it on October 22, 2018. Plaintiffs petitioned our Court for permission to appeal the October 22 order fourteen days later. We granted LSW’s petition to appeal and Plaintiffs’ petition to appeal on a conditional basis.

II

The district court had jurisdiction under 28 U.S.C. § 1332(d)(2)(A). We have jurisdiction pursuant to 28 U.S.C. § 1292(e).

Two standards guide our review of class-certification decisions. The abuse-of-discretion standard applies to "any particular underlying Rule 23 determination involving a discretionary determination," Yokoyama v. Midland Nat’l Life Ins. Co. , 594 F.3d 1087, 1091 (9th Cir. 2010), including whether the district court "relies upon an improper factor, omits consideration of a factor entitled to substantial weight, or mulls the correct mix of factors but makes a clear error of judgment in assaying them," Wolin v. Jaguar Land Rover N. Am., LLC , 617 F.3d 1168, 1171 (9th Cir. 2010) (quoting Parra v. Bashas’, Inc. , 536 F.3d 975, 977–78 (9th Cir. 2008) ). The Court "accord[s] the district court noticeably more deference" to a grant of certification "than when [it] review[s] a denial." Wolin , 617 F.3d at 1171 (quoting In re Salomon Analyst Metromedia Litig. , 544 F.3d 474, 480 (2d Cir. 2008) ). But we grant no deference to the district court’s legal conclusions, which we review de novo. See Yokoyama , ...