Yue v. Conseco Life Insurance
2012 U.S. Dist. LEXIS 46565
| C.D. Cal. | 2012Background
- Plaintiff Yue sues Conseco Life over its 2011 COI rate increase on Valulife/Valuterm policies.
- Court previously ruled in Yue I on COI language and mortality-based rate concepts.
- The 2011 change immediately increased COI for most; new six-group mortality methodology replaced old rate charts.
- Court divided class into two subclasses: current policyholders (Subclass I) and surrendered policyholders (Subclass II).
- Court grants certification and preliminarily enjoins the 2011 COI increase for Subclass I, contingent on appointment of a Subclass II representative.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do policy terms permit COI increases based on future mortality experience? | Yue argues COI must rise only if expected mortality increases and must reflect that increase. | Conseco contends COI can be based on mortality as one factor among many. | Likely the plain-language basis is violated; increase not based solely on mortality. |
| Is there commonality and injury across the proposed California class? | Common questions about whether COI language permits the 2011 increase affect all members. | There may be individualized issues about injury. | Common questions and common injury found; class certification warranted. |
| Are Subclass I and Subclass II appropriate under Rule 23? | Two-subclass structure ensures representative for each group. | Potentially different issues for surrendered policyholders. | Two subclasses approved; Subclass II contingent on a representative for that subclass. |
| Whether a preliminary injunction should issue to preserve status quo pending merits? | Injury and irreparable harm from COI increases justify relief. | Less urgency and potential hardship claims. | Winter factors satisfied; injunction granted for Subclass I; bond waived. |
| Should bond be required for the preliminary injunction? | Bond requirement waived; low likelihood of harm to defendant. |
Key Cases Cited
- Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571 (9th Cir. 2010) (requires rigorous analysis and common questions for class cert.)
- Winter v. NRDC, 555 U.S. 7 (S. Ct. 2008) (set forth four-factor test for preliminary injunctions.)
- Haynes v. Farmers Ins. Exch., 32 Cal.4th 1198 (Cal. 2004) (consider reasonable expectations defined by policy language.)
- London Market Insurers v. Superior Court, 146 Cal.App.4th 648 (Cal. App. 2d Dist. 2007) (interpretation of contract language in insurance policies.)
- Lazar v. Hertz Corp., 143 Cal.App.3d 128 (Cal. App. 2d Dist. 1983) (good faith covenant is objectively reasonable conduct.)
- Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998) (typicality standard and class representation principles.)
- Kaldenbach v. Mutual of Omaha Life Ins. Co., 178 Cal.App.4th 830 (Cal. App. 2d Dist. 2009) (commonality concerns when relying on illustrations and disclosures.)
- Stearns v. Ticketmaster Corp., 655 F.3d 1013 (9th Cir. 2011) (UCL relief available without individualized proof.)
- Molski v. Gleich, 307 F.3d 1155 (9th Cir. 2002) (limits on mandatory class action when large monetary damages.)
- U.S. v. Havelock, 664 F.3d 1284 (9th Cir. 2012) (guidance on determining ordinary meaning of terms.)