Wiener v. AXA Equitable Life Ins. Co.

• Decision Date: 20 January 2023
• Docket Number: 21-2165
• Citation: 58 F.4th 774
• Parties: Malcolm WIENER, Plaintiff – Appellant, v. AXA EQUITABLE LIFE INSURANCE COMPANY, Defendant – Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

58 F.4th 774

Malcolm WIENER, Plaintiff – Appellant,

v.AXA EQUITABLE LIFE INSURANCE COMPANY, Defendant – Appellee.

No. 21-2165

United States Court of Appeals, Fourth Circuit.

Argued: December 6, 2022

Decided: January 20, 2023

ARGUED: Ross Fulton, RAYBURN COOPER & DURHAM, P.A., Charlotte, North Carolina, for Appellant. Matthew Woodruff Sawchak, ROBINSON, BRADSHAW & HINSON, P.A., Raleigh, North Carolina, for Appellee. ON BRIEF: David G. Webbert, JOHNSON, WEBBERT & GARVAN, LLP, Augusta, Maine; Richard H. Fallon, Jr., Cambridge, Massachusetts; Carolyn T. Seely, Greenwich, Connecticut, for Appellant. John R. Wester, Stephen D. Feldman, ROBINSON, BRADSHAW & HINSON, P.A., Charlotte, North Carolina, for Appellee.

Before GREGORY, Chief Judge, WILKINSON, Circuit Judge, and John A. GIBNEY, Jr., Senior United States District Judge for the Eastern District of Virginia, sitting by designation.

Reversed and remanded by published opinion. Judge Wilkinson wrote the opinion, in which Chief Judge Gregory and Senior Judge Gibney joined.

WILKINSON, Circuit Judge:

Malcolm Wiener appeals the district court's post-trial dismissal of his case for lack of subject-matter jurisdiction. A jury found that AXA Equitable Life Insurance Company negligently reported false medical information about Wiener to an information clearinghouse used by insurance companies, causing him to become uninsurable. Despite the fact that the parties satisfied the requirements for federal diversity jurisdiction, and the fact that both parties litigated the entire case through trial under North Carolina law, the district court decided that Connecticut law applied and found itself deprived of subject-matter jurisdiction by virtue of a Connecticut statute. This was error. Choice of law is waivable and was waived here. And even if Connecticut's law applied, it would not have ousted federal jurisdiction. Finding no merit in the alternative ground for affirmance that AXA advances with respect to liability, we reverse and remand the case for further proceedings in accordance with this opinion.

I.

Because Wiener won a jury verdict, we recite the facts as the jury found them, construe all disputed facts in his favor, and give him the benefit of all reasonable inferences. See Konkel v. Bob Evans Farms Inc. , 165 F.3d 275, 279 (4th Cir. 1999).

Wiener, a citizen of Connecticut, purchased $16 million in life insurance from AXA Equitable, a citizen of New York, in the 1980s. After Wiener's policy lapsed in 2013, he applied for reinstatement and authorized AXA to access his medical records. AXA conducted a medical assessment of Wiener's reinstatement application without attempting to speak to Wiener's primary care doctor and without reviewing the follow-up tests in his medical records. AXA then negligently and erroneously concluded that Wiener suffered from four serious medical conditions.

Based on its flawed review of Wiener's medical history, AXA's North Carolina office reported false diagnosis "codes" to an information exchange—the Medical Information Bureau (MIB). The MIB is a consortium of about 400 companies, which write about 90–95% of the individual life insurance policies in the United States. When an MIB member reviews an applicant's medical records, it reports any medical conditions that might be relevant to a later underwriter in the form of standardized six-character codes. Wiener's application was assigned to an AXA underwriter in Connecticut, Hallie Hawkins, who reviewed his medical records and asked her colleague in AXA's North Carolina office, Sandra Huffstetler, to report Wiener's MIB codes.

In 2014, AXA declined Wiener's application for reinstatement. So Wiener's insurance agent submitted new applications for a $16 million policy to at least eight other insurers. Two carriers made preliminary offers for $10 million policies at double the standard rate. No other carrier offered Wiener a policy. Several insurance-company representatives informed Wiener's agent that Wiener's MIB codes adversely affected their determination, and an expert testified that at least one code that AXA incorrectly reported was a "hot button[ ]" that would deter carriers from offering insurance. J.A. 1581.

Wiener sued AXA in North Carolina state court in 2018. His complaint alleged that Huffstetler, who worked in AXA's North Carolina operations center, reported false conclusions about his medical conditions to the MIB, causing him to become uninsurable. The complaint included four counts under North Carolina law: (1) negligent misrepresentation; (2) libel; (3) negligence; and (4) violation of North Carolina's Unfair and Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-1.1. AXA removed the case to the Western District of North Carolina based on diversity of citizenship. AXA's answer cited North Carolina law and did not raise any choice-of-law issues. See J.A. 146.

The district court denied AXA's motion for summary judgment with respect to Wiener's claim that AXA negligently caused him to become uninsurable. It concluded that there was a "genuine dispute of fact as to whether the MIB codes effectively rendered [Wiener] uninsurable or insurable at a significantly increased cost." Id. at 235. The court granted AXA summary judgment on Wiener's remaining claims. AXA's memorandum supporting its summary-judgment motion, the court's summary-judgment decision, and AXA's trial brief all cited North Carolina law as the governing law.

A jury trial on Wiener's negligence claim was held in September 2020. AXA moved for a directed verdict, arguing that Wiener's claimed injury was categorical uninsurability, and that this injury was contradicted by his own evidence because several companies gave Wiener preliminary offers of insurance. The district court denied the motion. The jury subsequently found AXA liable for negligence and awarded Wiener $8 million—the value of the $16 million death benefit from his lapsed policies less $8 million because Wiener had not mitigated his damages.

AXA moved for post-trial relief. Its motion objected to the court's subject-matter jurisdiction for the first time. Relying on North Carolina law, AXA asserted that an exclusive-remedies provision of North Carolina's Consumer and Customer Information Privacy Act (CCIPA) preempted Wiener's negligence claim and deprived the court of subject-matter jurisdiction. AXA also challenged the sufficiency of the evidence. In response, Wiener argued, inter alia , that the North Carolina statute did not apply because it only applies to North Carolina residents, and Wiener lives in Connecticut.

The district court concluded that it lacked subject-matter jurisdiction and dismissed the case. While the court noted that the parties had not disputed that North Carolina law governed as the case proceeded through trial, the court undertook a choice-of-law analysis sua sponte based on the possibility that Connecticut law applied. It held that Connecticut law applied because the North Carolina choice-of-law inquiry looks to the place of injury, and Wiener's injury—his inability to procure life insurance—occurred in his home state of Connecticut. The court then determined that Connecticut 's Insurance Information and Privacy Protection Act (CIIPPA) provided exclusive statutory remedies for AXA's reporting of inaccurate MIB codes and thereby deprived the court of subject-matter jurisdiction over Wiener's common-law negligence claim. So the court dismissed the case for lack of jurisdiction without reaching AXA's remaining arguments.

Wiener timely appealed.

II.

We review de novo a district court's dismissal for lack of subject-matter jurisdiction. See Holbrook v. United States , 673 F.3d 341, 345 (4th Cir. 2012).

At the outset, we note that there is no dispute that Wiener and AXA satisfy the statutory requirements for federal diversity jurisdiction under 28 U.S.C. § 1332. Wiener is a citizen of Connecticut, AXA is a citizen of New York, and the amount in controversy exceeds $75,000. See 28 U.S.C. § 1332(a).

Moreover, while AXA argues that the choice of Connecticut law made no difference in this case, it is clear that the district court's decision to apply Connecticut's law instead of North Carolina's was determinative. AXA claims that North Carolina has a Consumer and Customer Information Privacy Act that, like the Connecticut statute, would preempt Wiener's negligence claim. But the North Carolina statute applies only to "persons who are residents" of North Carolina. N.C. Gen. Stat. § 58-39-10(b)(1). Because Wiener has never been a resident of North Carolina, the North Carolina CCIPA would not preempt his negligence claim. So the district court's dismissal of Wiener's case depended on the court's decision to apply Connecticut law.

We must therefore determine whether the district court erred in dismissing for lack of subject-matter jurisdiction based on its choice of Connecticut law. We conclude that choice of law is waivable, not jurisdictional, and AXA waived the possible application of Connecticut law by affirmatively litigating under the substantive law of North Carolina. It was therefore error for the district court to apply Connecticut law. And even assuming arguendo that it was proper for the court to apply Connecticut law, that law would not have ousted its subject-matter jurisdiction.

A.

"All U.S. Courts of Appeals to have addressed the issue have held that choice of law issues may be waived." Williams v. BASF Catalysts LLC , 765 F.3d 306, 316 (3d Cir. 2014) ; see, e.g., P.R. Hosp. Supply, Inc. v. Bos. Sci. Corp. , 426 F.3d 503, 505–06 (1st Cir. 2005) ; Saks v. Franklin Covey Co. , 316 F.3d 337, 349 (2d Cir. 2003) ; Fruge v. Amerisure Mut. Ins. Co. , 663 F.3d 743, 747 (5th Cir. 2011) (per curiam); Meridia Prods. Liab. Litig. v. Abbott Labs. , 447 F.3d 861, 865 (6th Cir. 2006) ; Wachovia Sec., LLC v. Banco Panamericano, Inc. , 674 F.3d 743, 751 (7th Cir. 2012) ; P&O Nedlloyd, Ltd. v. Sanderson Farms, Inc. , 462 F.3d 1015, 1017 n.3 (8th Cir. 2006) ; ...