451 Mass. 483 | Mass. | 2008
The plaintiffs in these consolidated actions, who are purchasers of life insurance from the defendant, Berkshire Life Insurance Company (Berkshire), moved to certify a nationwide class of Berkshire policyholders under G. L. c. 93A, § 9 (2), or, in the alternative, a Massachusetts-based class.
Facts. Berkshire is a Massachusetts mutual insurance company that sells life insurance policies through its own agents as well as independent insurance brokers in offices across the country.
The plaintiffs in these consolidated actions, who would be the named plaintiffs in the proposed class action, Herbert I. Moelis, Richard F. Tucker, Edward F. Coyman, and Helen F. Coyman, purchased the disappearing premium policies from Berkshire agents or from independent brokers in their respective home States in different years. After various periods of time, each of the plaintiffs learned that his or her premium would not disappear as originally illustrated. Each separately sued Berkshire, claiming that the company engaged in deceptive practices in violation of Massachusetts consumer protection law, G. L. c. 93A, §§ 2 and 9, by failing to inform policyholders adequately that dividend reductions could increase the number of years they had to pay premiums.
The plaintiffs sought to certify a nationwide class under G. L. c. 93A, § 9 (2), of 4,028 policyholders residing in forty-three different States, the District of Columbia, and Puerto Rico, as
“All persons who own or owned a whole life policy identified as a Disappearing Premium or Premium Offset policy issued by Berkshire Life Insurance Company after January 1, 1980, excluding those policyholders whose policies went out-of-force due to death of the insured prior to the date when the obligations to make out-of-pocket payments was to cease or disappear, and further excluding those policyholders from whom Berkshire obtained a signed Statement entitled “Disappearing Premium Disclosure,” a practice Berkshire adopted on or about March 15, 1993.”
In the alternative, they petitioned to certify a class of Massachusetts policyholders composed of 718 Massachusetts residents.
Discussion. We review the denial of a motion for class certification for an abuse of discretion. Fletcher v. Cape Cod Gas Co., 394 Mass. 595, 606-607 (1985).
1. Nationwide class certification. The Superior Court judge properly denied the plaintiffs’ motion to certify a national class. In Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 811 (1985) (Shutts), the United States Supreme Court held that the due process clause of the Fourteenth Amendment to the United States Constitution gave “some protection” to nonresident plaintiffs, as well as nonresident defendants, from the jurisdiction of a forum State seeking to adjudicate their claims.
In the instant case, the Superior Court judge correctly refused to certify a national class on the ground that the court could not properly assert personal jurisdiction over out-of-State class plaintiffs. The judge first determined that neither G. L. c. 93A, § 9 (2), nor Mass. R. Civ. R 23, 365 Mass. 767 (1974), permits a judge to allow individual parties to remove themselves or “opt out” of a class action. See Weld v. Glaxo Wellcome Inc., 434 Mass 81, 84 (2001); Fletcher v. Cape Cod Gas Co., supra at 602. Thus, the due process protections prescribed by Shutts as an alternative to the traditional minimum contacts test could not be satisfied.
The judge then turned to the traditional “minimum contacts” test to evaluate whether asserting jurisdiction over nonresident plaintiffs comported with due process. The plaintiffs here, relying on the statement in Shutts that the due process clause affords less protection to nonresident plaintiffs than it does to nonresident defendants, Shutts, supra at 811, argued that the judge should require less substantial contact between nonresident plaintiffs and the forum State than that required by the traditional minimum contacts of nonresident defendants. The judge rejected this argument. The plaintiffs cited no cases, and the judge found none, identifying the parameters of a lesser standard for minimum contacts applicable to nonresident plaintiffs in a class action.
There was no error here in applying the traditional defendant minimum contacts test to nonresident plaintiffs in the absence of an opt out provision. The Shutts decision did not explicitly address the personal jurisdiction standard to apply to nonresident plaintiffs when one of the Shutts alternative due process protections is absent. However, at least two United States Courts of Appeals have interpreted Shutts as holding that a court may assert personal jurisdiction over a nonresident plaintiff if basic due process protections exist, or if the minimum contacts test is satisfied. See, e.g., Carlough v. Amchem Prods., Inc., 10 F.3d
An exercise of personal jurisdiction comports with due process when the nonresident established minimum contacts in the forum. Tatro v. Manor Care, Inc., 416 Mass. 763, 772 (1994). Minimum contacts must have a basis in some act by which the nonresident purposefully avails himself of the privilege of conducting activities in Massachusetts, thus invoking the benefits and protections of its laws. Good Hope Indus., Inc. v. Ryder Scott Co., 378 Mass. 1, 7 (1979). In addition, the exercise of jurisdiction over a nonresident must not offend traditional notions of fair play and substantial justice. Id.
Here, the only contacts the nonresident policyholders have with Massachusetts is their purchase of an insurance policy from Berkshire, a Massachusetts company, through agents located in their home States, and their mailing of annual premium payments to Berkshire in Massachusetts. We conclude that these facts are not sufficient to warrant the assertion of personal jurisdiction. See New Hampshire Ins. Guar. Assoc. v. Markem Corp., 424 Mass. 344, 349 (1997) (personal jurisdiction lacking over policyholders where insurance company contracted for insurance policy in New Hampshire, activity that was insured did not occur in Massachusetts, and only relevant contacts were mailing of policy from Massachusetts to New Hampshire, policyholder’s payment of premiums to insurer’s offices in Massachusetts, and policyholder’s submission of claims to Massachusetts). See also “Automatic” Sprinkler Corp. of Am. v. Seneca Foods Corp., 361 Mass. 441, 444-445 (1972) (no personal jurisdiction over New York company that signed purchase order to buy goods from Massachusetts seller, mailed purchase order to Massachusetts, received invoice from Massachusetts and sent check to Massachusetts). The instant case is distinguishable from situations where nonresidents more intentionally take ad
2. Statewide class certification. The Superior Court judge did not abuse her discretion in denying, without prejudice to renew, the plaintiffs’ motion to certify a Statewide class under G. L. c. 93A, § 9 (2). Section 9 (2) requires satisfaction of the same elements of numerosity, commonality, typicality, and adequacy of representation as are required by Mass. R. Civ. R 23 (a).
The judge concluded that the proposed class satisfied the nu-merosity, commonality, typicality, and adequacy of representation elements. She also determined that class members were “similarly situated” under § 9 (2) with respect to the question whether Berkshire engaged in deceptive sales practices. However, the judge concluded that Berkshire had raised a substantial statute of limitations defense to the plaintiffs’ claims. Berkshire contended in this regard that the inquiry relative to when the statute of limitations had begun to run with respect to each of the putative class members was highly fact specific. As such, the judge determined that the members were not “similarly situated,” and a class action was inappropriate.
The judge acted within her discretion in deciding that, at the present juncture, individual differences with respect to the statute of limitations appeared to be significant and appeared not to lend themselves to adjudication on a representative basis. Affirmative defenses should be considered in making class certification decisions. Waste Mgt. Holdings, Inc. v. Mowbray, 208 F.3d 288, 295 (1st Cir. 2000). Where factual and legal issues with respect to a statute of limitations defense are amenable to resolution on a class-wide, representative basis, certification of a class is proper. Id. at 296-297 (court properly certified class in breach of warranty claim against company that used its stock to purchase businesses where statute of limitations defense was unlikely to affect most class members, and fact that company had exclusive
In Massachusetts, a statute of limitations begins to run when the plaintiff learned or should reasonably have learned that he has been harmed. See Szymanski v. Boston Mut. Life Ins. Co., 56 Mass. App. Ct. 367, 371 (2002), citing Williams v. Ely, 423 Mass. 467, 475 (1996). In the instant case, the inquiry regarding the statute of limitations could require determining when each plaintiff knew or reasonably should have known that the policy would not perform as expected because the illustrations provided by Berkshire were misleading. The judge acted within her discretion in concluding that, given the potentially different information available to each of the plaintiffs, this appeared to be a highly fact-specific inquiry. For instance, the judge noted that while Berkshire failed directly to inform or notify policyholders that even a small change in the interest rate could have a significant impact on the elimination of out-of-pocket premiums, it did emphasize, in materials distributed to its sales agents, that dividends could be reduced given changes in interest rates, and it suggested the provision of updated illustrations for certain policies that were in force. Thus, some members of the class might have received updated illustrations, which might have reasonably alerted them that their policies would not perform as expected. The resolution of the statute of limitations issue for a particular plaintiff might depend on when, and whether, these updated illustrations were received.
As the judge also noted, however, if one or more of the named plaintiffs were to proceed to trial on their claims, the statute of limitations issue would be tried as part of the case, and those plaintiffs might petition again to certify a Statewide class. If that were to happen, the judge would be in a better position to
We affirm the denial of certification of the nationwide class and the denial without prejudice of the plaintiffs’ motion for Statewide class certification.
So ordered.
General Laws c. 93A, § 9 (2), provides, in relevant part: “Any persons entitled to bring [a consumer protection] action may, if the use or employment of [an] unfair or deceptive act or practice has caused similar injury to numerous other persons similarly situated and if the court finds in a preliminary hearing that he adequately and fairly represents such other persons, bring the action on behalf of himself and such other similarly injured and situated persons . . . .”
General Laws c. 93A, § 2, states, in relevant part: “Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.” General Laws c. 93A, § 9(1), provides, in pertinent part, that “[a]ny person . . . who has been injured by another person’s use or employment of any method, act or practice declared to be unlawful by [§ 2] or any rule or regulation issued thereunder . . . may bring an action in the superior court ... for damages and such equitable relief, including an injunction, as the court deems to be necessary and proper.”
We acknowledge the amicus briefs of the American Association of Retired Persons, the National Association of Shareholder and Consumer Attorneys, and the National Consumer Law Center; the American Council of Life Insurers; the Life Insurance Association of Massachusetts; and New England Legal Foundation and Associated Industries of Massachusetts.
A “mutual” insurance company is one whose policyholders possess certain ownership rights in the company, which may include the right to receive a portion of the company’s surplus in the form of dividends. B.M. Anderson, Life Insurance §§ 6.3, 6.5 (1991).
The Fourteenth Amendment to the United States Constitution states, in relevant part: “No state shall make or enforce any law which shall abridge the privileges or immunities of the citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law . . . .”
Rule 23 of the Massachusetts Rules of Civil Procedure, 365 Mass. 767 (1974), provides:
“(a) Prerequisites to Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.
“(b) Class Actions Maintainable. An action may be maintained as a class action if the prerequisites of subdivision (a) are satisfied, and the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy.
“(c) Dismissal or Compromise. A class action shall not be dismissed or compromised without the approval of the court. The court may require notice of such proposed dismissal or compromise to be given in such manner as the court directs.
“(d) Orders to Insure Adequate Representation. The court at any stage of an action under this rule may require such security and impose such terms as shall fairly and adequately protect the interests of the class in whose behalf the action is brought or defended. It may order that notice be given, in such manner as it may direct, of the pendency of the action, of a proposed settlement, of entry of judgment, or of any other proceedings in the action, including notice to the absent persons that they may come in and present claims and defenses if they so*490 desire. Whenever the representation appears to the court inadequate fairly to protect the interests of absent parties who may be bound by the judgment, the court may at any time prior to judgment order an amendment of the pleadings, eliminating therefrom all reference to representation of absent persons, and the court shall order entry of judgment in such form as to affect only the parties to the action and those adequately represented.”