Ross v. AXA Equitable Life Insurance Co.
680 F. App'x 41
| 2d Cir. | 2017Background
- Multiple putative class actions brought against AXA Equitable Life Insurance Co. (AXA) and Metropolitan Life Insurance Co. (MLIC) challenging insurers’ alleged "shadow insurance" practices affecting life policies and annuity riders.
- Plaintiffs sought to represent classes of purchasers/renewers of life insurance and annuity riders over specified multi‑year periods.
- District courts dismissed all four actions for lack of Article III standing under Rule 12(b)(1).
- On appeal, plaintiffs argued standing based on (a) statutory violations of N.Y. Ins. Law § 4226 and (b) increased risk that insurers would be unable to pay claims (and that their products were inferior).
- The Second Circuit reviewed the dismissal de novo as to legal issues and for clear error as to factual findings, focusing on whether plaintiffs adequately pled injury‑in‑fact.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether alleging statutory violation of N.Y. Ins. Law § 4226 alone suffices for Article III injury‑in‑fact | Statutory violation itself creates a concrete injury and standing | A bare statutory violation does not automatically satisfy Article III without a concrete or material risk of harm | Held: Insufficient. A § 4226 violation alone did not allege a concrete, material risk of harm under Spokeo and Strubel |
| Whether increased risk that insurers might not pay in a future downturn constitutes an imminent injury | Risk of nonpayment from "shadow insurance" practice creates a concrete, imminent injury | The asserted risk is speculative and requires a chain of contingent events, so not certainly impending | Held: Insufficient. Risk allegation too speculative under Clapper; not clearly impending |
| Whether plaintiffs’ products were "inferior" such that value was reduced now | Policies/riders were inferior compared with versions without shadow arrangements, so plaintiffs suffered diminished value | Plaintiffs did not allege any present reduction in the amount payable; alleged harm is prospective and speculative | Held: Insufficient. No present diminution in policy value alleged; injury is hypothetical |
| Whether plaintiffs adequately alleged Article III standing at the pleading stage | Allegations in complaints should be accepted and construed favorably | Plaintiffs must plead concrete, particularized, and actual or imminent injury as required by Spokeo | Held: Insufficient. Complaints failed to clearly allege the required elements of injury‑in‑fact |
Key Cases Cited
- Cortlandt St. Recovery Corp. v. Hellas Telecomms., S.à.r.l., 790 F.3d 411 (2d Cir. 2015) (standard of review for Rule 12(b)(1) dismissals and pleading assumptions)
- Strubel v. Comenity Bank, 842 F.3d 181 (2d Cir. 2016) (statutory notice violations may supply standing when they create a material risk of concrete harm)
- Spokeo, Inc. v. Robbins, 136 S. Ct. 1540 (2016) (Article III requires a concrete injury even for statutory violations)
- Clapper v. Amnesty Int’l USA, 133 S. Ct. 1138 (2013) (alleged future injuries must be certainly impending; speculative chains insufficient)
- Foster Hose Supporter Co. v. Taylor, 184 F. 71 (2d Cir. 1911) (life insurance’s substance is the promise to pay; value tied to amount payable)