Paul Harrington v. Equitrust Life Ins Co, 778 F.3d 1089

In 2007 Paul Harrington purchased an EquiTrust MarketPower Bonus Index Annuity with an initial premium of $432,530.92 and a 10% premium bonus immediately credited to his accumulation value.
The annuity credits index-based interest tied to S&P 500 performance, has an insurer-set index cap (with a guaranteed minimum), allows 10% annual penalty-free withdrawals, and imposes surrender charges plus a market value adjustment (MVA) on larger early withdrawals.
Harrington sued in 2009 as a putative class action, alleging RICO (mail and wire fraud), Arizona consumer-fraud statutes, and unjust enrichment based on: (1) the 10% premium bonus; (2) the MVA formula; and (3) purported circumvention of Arizona nonforfeiture law (SNFLIDA).
The district court granted summary judgment for EquiTrust, denied class certification as moot, and entered judgment for EquiTrust but declined without explanation to award costs to the prevailing party.
On appeal the Ninth Circuit affirmed summary judgment on all claims but vacated the district court’s unexplained denial of costs and remanded for the district court either to award costs or explain denial.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Premium bonus fraud	Harrington: "10% bonus" is illusory and EquiTrust conceals that it recoups the bonus by later awarding lower index credits.	EquiTrust: Bonus was disclosed, credited, and provided liquidity/value; no fiduciary/statutory duty to disclose internal pricing.	No fraud — bonus was delivered as promised; no duty to disclose internal pricing.
MVA disclosure	Harrington: Brochure fails to disclose the .005 bias in the MVA formula which dampens upward adjustments and enlarges downward ones.	EquiTrust: Formula and examples were disclosed; the bias does not contradict the MVA’s stated operation and no promise was broken.	No actionable fraud — MVA explained and operates as promised even with the bias.
Nonforfeiture law (SNFLIDA)	Harrington: EquiTrust’s internal policy to consider post‑contract relief effectively makes the maturity date optional, violating SNFLIDA and defrauding regulators.	EquiTrust: Contract has an explicit fixed maturity date; unilateral, discretionary internal policies do not convert it to optional.	No violation — fixed maturity in contract controls; no injury from discretionary relief policy.
Costs under FRCP 54(d)	EquiTrust: As prevailing party, costs should be awarded; district court gave no reason for denial.	Harrington: (implicit) district court may decline costs in discretion.	Vacated denial of costs — district court must either award costs or explain its refusal.

Living Designs, Inc. v. E.I. Dupont de Nemours & Co., 431 F.3d 353 (9th Cir. 2005) (RICO requires predicate racketeering acts)
Grimmett v. Brown, 75 F.3d 506 (9th Cir. 1996) (predicate-act requirement discussion)
Benny, 786 F.2d 1410 (9th Cir. 1986) (fraud can be nondisclosure or affirmative misrepresentation)
Dowling, 739 F.2d 1445 (9th Cir. 1984) (nondisclosure supports fraud only where independent duty exists)
Cal. Architectural Bldg. Prods., Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466 (9th Cir. 1987) (failure to disclose internal pricing not fraud absent duty)
Thorman v. American Seafoods Co., 421 F.3d 1090 (9th Cir. 2005) (no duty to disclose internal wage/pricing methodology absent fiduciary relationship)
Volk v. D.A. Davidson & Co., 816 F.2d 1406 (9th Cir. 1987) (seller’s silence not fraudulent absent special duty)
Ass’n of Mex.-Am. Educators v. California, 231 F.3d 572 (9th Cir. 2000) (en banc) (district court must explain denial of costs)
Quan v. Computer Scis. Corp., 623 F.3d 870 (9th Cir. 2010) (remand required when district court fails to explain denial of costs)
Fifth Third Bancorp v. Dudenhoeffer, 134 S. Ct. 2459 (2014) (addresses standards referenced for appellate procedural treatment)