Thurman v. Cuna Mutual Insurance Society
2013 SD 63
| S.D. | 2013Background
- In 1995 Edward and Kathy Thurman obtained a closed-end home equity loan from Black Hills Federal Credit Union (BHFCU) and purchased a 30-day non-retroactive credit disability policy issued by CUNA Mutual (CUNA).
- In July 1999 BHFCU unilaterally changed its group credit disability coverage to a 14-day retroactive policy and raised premiums; notice was given by a member newsletter but not directly to each borrower.
- The Thurmans later discovered the change during a payoff inquiry in 2009; they filed complaints that led to a regulatory consent order and fine paid by CUNA.
- In June 2011 the Thurmans filed a class action on behalf of 4,461 similarly situated borrowers alleging breach of contract, unjust enrichment, deceptive trade practices, and related claims based on the unauthorized policy change and increased premiums.
- The trial court denied class certification, finding inadequacy of representatives under Rule 23(a)(4) and that individual issues (especially statute of limitations/notice) would predominate under Rule 23(b)(3).
- The South Dakota Supreme Court granted discretionary review, reversed, and remanded for certification, concluding the trial court misapplied Rules 23(a) and 23(b).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Adequacy of class representatives (Rule 23(a)(4)) | Thurmans are typical class members and will fairly protect class interests | Potential conflicts exist because some class members may have known of and accepted the change | Reversed: trial court erred; no record evidence showing Thurmans would inadequately represent the class |
| Predominance (Rule 23(b)(3)) | Common questions (uniform policy change, notice by newsletter, uniform premium calculation) predominate; statute of limitations/notice can be decided classwide (objective constructive‑notice test) | Individualized inquiries about when each claimant discovered the change and whether claims are time‑barred predominate | Reversed: common issues predominate; constructive notice is an objective, classwide inquiry; actual‑notice defenses can be addressed later individually if needed |
| Superiority (Rule 23(b)(3)) | Class adjudication is the fair and efficient method given uniform practices and large number of small claims | Many individual hearings (statute of limitations, damages) make class action inferior | Reversed: trial court failed to apply Rule 23(b)(3) factors; class action is superior on the facts presented (modifications possible later) |
| Scope / definition of class | Class as alleged captures all similarly situated borrowers harmed by the unilateral plan change | Defendants suggested narrower or individualized subclasses may be required | Court did not decide redefinition now; remanded for certification consistent with its rulings |
Key Cases Cited
- Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997) (adequacy and commonality inquiries uncover conflicts between named plaintiffs and class)
- Wal‑Mart Stores v. Dukes, 564 U.S. 338 (2011) (individualized relief often requires additional individualized proceedings after classwide liability is resolved)
- Katz v. Carte Blanche Corp., 496 F.2d 747 (3d Cir.) (framework for Rule 23(a) prerequisites and Rule 23(b)(3) predominance/superiority analysis)
- Trapp v. Madera Pacific, Inc., 390 N.W.2d 558 (S.D. 1986) (South Dakota discussion of adequacy of class representatives)
- In re S.D. Microsoft Antitrust Litig., 657 N.W.2d 668 (S.D. 2003) (rigorous analysis and threshold showing for class certification)