The Fifth Circuit granted interlocutory appeal, vacated order granting nationwide class action certification and remanded the case for further proceedings where district court failed to assess how state-law variations in contract law might negate the predominance element. Expert opinion to no avail.
Plaintiff Cruson and other Texas residents sued Jackson Life Ins. Co. (“Jackson”), a life insurance company that sells annuities, claiming it breached the annuities contracts by overcharging them for early withdrawals. Plaintiffs also alleged that their living and death benefits were improperly reduced by the inflated surrender charges. They sought to bring claims on behalf of a nationwide class consisting of all Jackson annuity customers who had incurred surrender charges. Jackson first filed two Rule 12 motions to dismiss, but did not question personal jurisdiction in the motions. Jackson subsequently filed an answer, stating that to the extent a nationwide class was certified, it denied that the court had personal jurisdiction over Jackson for the claims of class members residing outside of Texas. Plaintiffs moved to certify the class and Jackson filed an opposition to that motion, as well as a motion for summary judgment. The trial court held that Jackson had waived the personal jurisdiction issue by failing to raise it in its Rule 12 motions and by litigating the case on the merits, and granted nationwide class certification. Jackson was granted permission to file an interlocutory appeal, and raised three issues: 1) that the district court erred by finding it had waived its personal jurisdiction defense, 2) that the district court erred in finding that common issues predominated, and 3) that the district court erred by certifying a class when plaintiffs failed to provide a complete damage model.
Waiver Standard Not Settled
The Fifth Circuit notes that the standard for reviewing a finding of waiver of personal jurisdiction has not been settled, but find that, even under the abuse of discretion standard, the district court erred in finding waiver. This was so, because the personal jurisdiction defense was not “available” to Jackson at the time it filed the two Rule 12 motions. Jackson’s objections to personal jurisdiction concerned only class members who were non-residents of Texas, and at the time it filed its motions, those members were not before the court, as the nationwide class had not yet been certified. Similarly, Jackson did not waive the defense by litigating the merits of the case, because it raised the issue in its response to the motion for class certification the same day it filed a motion for summary judgment. The district court therefore abused its discretion in finding that Jackson waived its personal jurisdiction defense.
Addressing whether common issues predominated over individual issues, Jackson maintained that individual issues of state law concerning contract interpretation and breach should have been considered and analyzed by the district court. The district court decided not to address state law variations, because it concluded that the issue of breach would turn on the contract language alone, which was the same for every class member. The Fifth Circuit finds error. The district court should have conducted an extensive analysis to determine whether state-law variations existed and if so, whether they defeated the predominance element.
Expert Report Doesn’t Help
Finally, Jackson argued and the Fifth Circuit agreed that the plaintiffs failed to meet their burden of showing that their damages were capable of measurement on a class-wide basis. The plaintiffs sought two categories of damages – the excessive charges themselves, and the effect of those charges on the living and the death benefits paid under the annuities. Plaintiff offered an expert report to support its claim for class damages, but that expert addressed only the first category of damages. At oral argument, the plaintiffs admitted that the second category was more complex and probably too complicated for a class action. The Fifth Circuit vacated the district court’s order certifying a nationwide class action and remanded the case for further proceedings. (SOLA Ref. No. 2020-14-05)
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