Nat’l Western Annuities Litigation: Court Rejects Dukes-based Decertification Motion

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A nationwide class of annuity purchasers, who alleged that National Western Life Insurance Company made false representations about a “premium bonus,” have successfully rebuffed the defendant’s attempt to decertify the nationwide class. In its decertification motion, National Western argued that the U.S. Supreme Court’s opinion in Wal-Mart v. Dukes rendered the previously-issued certification order in this case untenable, since the judge did not perform a “rigorous analysis of commonality,” but instead found a classwide inference of misrepresentation. See In re: Nat’l Western Life Ins. Deferred Annuities Litig., No. 05-1018 (S.D. Cal. Feb. 14, 2013) (order denying motion to decertify).

The federal district court’s denial of the decertification motion underscored a trend in consumer class action jurisprudence whereby absent class members’ reliance on a misrepresentation can be inferred, and need not be affirmatively established, so long as the reliance comports with “common sense.” Order at 6-7.

The plaintiffs contend that National Western represented that annuity purchasers would receive a reduction in their premium payments, but failed to disclose that the savings realized by consumers through the premium bonus would be negated by countervailing reductions in the interest rates associated with the annuities.

The defendant attempted to demonstrate that the class could not establish reliance by common proof by proffering the deposition testimony of 15 class members, not all of whom testified to having relied on the at-issue representations concerning the premium bonus. However, the court held that the defendant’s depositions could not rebut the common sense presumption of reliance, stating, “National Western’s evidence cannot be properly generalized to the whole class.” Order at 8.

The decertification ruling held that the plaintiffs could in fact demonstrate classwide reliance because of the “common sense link” between the National Western’s alleged misrepresentations and the purchase of annuities by class members. Order at 6.