Class Action Defense Cases-Mooney v. Allianz Life: Minnesota Court Certifies Class Action Holding Class Action Premised On State Consumer Fraud Laws And Common Law Unjust Enrichment Could Be Applied To Non-Resident Class Members

May 30, 2007 | By: Michael J. Hassen

Federal Court Rejects Defense Constitutional Objection to Certification of Class Action and Holds Rule 23(b)(3) Predominance Test Satisfied in Class Action Premised on Minnesota Consumer Fraud Laws and Common Law for Unjust Enrichment because Minnesota’s Contacts with Non-Resident Class Members were Significant Enough to Permit Application of Minnesota Law to all Class Action Claims

Plaintiffs filed a class action against Allianz Life Insurance alleging consumer fraud claims arising out of the marketing of certain annuity products to senior citizens. Mooney v. Allianz Life Ins. Co., __ F.Supp.2d __ (D. Minn. May 10, 2007) [Slip Opn., at 2]. Plaintiffs moved for certification of a class action; defense attorneys objected in part on the grounds that predominance did not exist under Rule 23(b)(3) because of choice-of-law and conflicts-of-law issues. Id. The district court denied class action treatment, concluding that “because Plaintiffs had not performed the conflicts-of-law and choice-of-law analyses required by the Eighth Circuit’s opinion in In re St. Jude Medical, Inc., 425 F.3d 1116, 1120-21 (8th Cir. 2005), the Court was unable to determine whether class-wide questions of law predominate, or whether class-wide treatment is superior to other means of resolving this controversy.” Id. The court otherwise found that all of the class action requirements of Rule 23(a) had been met, id. Plaintiffs and defense filed supplemental briefing on the predominance issue, and the federal court certified a class action as requested.

Rule 23(b)(3) requires that “questions of law or fact common to the members of the class predominate over any questions affecting only individual members.” Plaintiffs argued that this test was met because Minnesota’s consumer fraud statutes and common law regarding unjust enrichment constitutionally may be applied to the claims of each class member; defense attorneys countered that “the law of each class member’s home state must be applied and therefore individualized questions of law predominate.” Mooney, at 3. According to the defense, applying Minnesota law to the claims of out-of-state residents is unconstitutional; alternatively, the defense argued that Minnesota’s choice of law rules required that the claims of each class member be examined under the laws of the states in which the class members lived. Id. The district court rejected the defense arguments and granted class certification.

Preliminarily the federal court examined whether substantive conflicts of law existed among the states at issue. Mooney, at 4. The court concluded that conflicts existed as to both the consumer fraud claims and the common law unjust enrichment claims. Id., at 4-5. The court then turned to the question of whether application of Minnesota law would be “arbitrary” or “fundamentally unfair.” Id., at 5 (citation omitted). The court identified several relevant facts including, “Allianz is incorporated and headquartered in Minnesota, Allianz created and distributed the allegedly fraudulent marketing materials from Minnesota, the policies were prepared and issued from Minnesota, Allianz received premium payments in Minnesota, and Allianz’s Consumer Brochures list the address and telephone number of Allianz’s Minnesota home office.” Id.

The district court found that Minnesota law could be applied to all class member claims because “Minnesota has significant contacts with an out-of-state class member’s claims.” Mooney, at 6 (citing Allstate Ins. Co. v. Hague, 449 U.S. 302, 308 (1981)). Defense attorneys argued in part that “non-Minnesota class members would not expect that Minnesota law could apply because they engage insurance agents from their home state, each annuity policy is governed by the law of the class member’s home state, and Allianz’s performance of those contracts is regulated by each state’s insurance department.” Id., at 8. The federal court disagreed, stating that “both non-Minnesota class members and Allianz could have predicted that Minnesota law would govern claims based on Allianz’s allegedly fraudulent activities that emanated from Minnesota.” Id.

Finally, the district court found that the superiority aspect of Rule 23(b)(3) was satisfied. See Mooney, at 11-12.

NOTE: The certified class is defined as “All individuals who from February 9, 2000 to the present purchased one of the following two-tiered annuities from Allianz Life Insurance Company of North America: BonusMaxxx, BonusMaxxx Elite, BonusDex, BonusDex Elite, 10% Bonus PowerDex Elite, MasterDex 10, and the InfiniDex 10 (‘Annuities’). The Class excludes all persons who purchased the above-listed Annuities from Allianz while they were California residents and when they were 65 or older.” Mooney, at 2.

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