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Vogt v. State Farm Life Insurance Co.

United States District Court, W.D. Missouri, Central Division

April 20, 2018

MICHAEL VOGT, on behalf of himself and all others similarly situated, Plaintiff,


          NANETTE K. LAUGHREY United States District Judge

         Plaintiff Michael Vogt moves for an order certifying a class of “[a]ll persons who own or owned a universal life insurance policy issued by State Farm on Form 94030 in the State of Missouri.”[1] Doc. 145. For the reasons discussed below, the Court grants Plaintiff's motion.

         I. BACKGROUND

         In 1999, Vogt purchased policy form 94030 (the “Policy”), a flexible premium adjustable whole life insurance policy, from State Farm. The Policy was a universal life insurance policy, a type of “permanent” life insurance that, unlike standard term insurance, is supposed to provide lifetime death benefit protection. Policy owners paid premiums that were deposited into their “Account Value, ” which accumulated interest at or above a minimum rate that the Policy guarantees.

         Each month, State Farm was permitted to make a deduction from the Policy that included “(1) the cost of insurance, (2) the monthly charges for any riders, and (3) the monthly expense charge.” The Policy remained in force so long as there was sufficient money in the Account Value to cover these monthly deductions.

         The cost of insurance (“COI”) charge was calculated using a monthly cost of insurance rate. The Policy provides that COI rates “for each policy year are based on the Insured's age on the policy anniversary, sex, and applicable rate class, ” and “can be adjusted for projected changes in mortality.” Doc. 145-1, at 10. These factors are commonly used to determine mortality expectations for an insured or group of insureds. However, Plaintiff contends that State Farm in fact uses other, unauthorized factors, having nothing to do with mortality expectations, in determining the Policy's COI rates, and that State Farm thereby deducts COI charges from Account Values in amounts exceeding those authorized by the Policy.[XXXXX] Doc. 150-3, at 3; Doc. 150-4, at 5.

         The Policy sets the monthly expense charge at $5.00. However, Vogt contends that, by including unauthorized expenses in the Policy's COI rates, State Farm deducts more than $5.00 in expense charges, breaching the expense charge provision.

         State Farm does not deny that it did not disclose to policy owners the assumptions underlying the current COI rates. Doc. 199 (Defendant's Reply in Support of Its Motion For Summary Judgment Motion, State Farm's Response to Plaintiff's Statement of Additional Facts), at XII, ¶ 27, and at XXII, ¶¶ 43-44. There is no dispute that a policyholder without knowledge, experience, or training likely would not be able to understand, without assistance, how State Farm determined whether to set COI rates below the maximum rates identified in the Policy, and how much such rates should be. Id., at XXIII, ¶ 45.

         The Policy is a fully integrated contract, and its language is materially the same for all members of the putative class. Doc. 145-1, at 11. Neither State Farm's nor the Policy-holder's obligations can be obviated by informal consent or waiver because “[o]nly an officer has the right to change th[e] [P]olicy, ” and “[n]o agent has the authority to change the [P]olicy or to waive any of its terms.” Id. The allegedly unauthorized charges result from the uniform application of the Policy's terms. All policy owners are subject to the same set of COI rates, and all COI rates are calculated using the same undisclosed factors. Id.

         Vogt brings four claims: two claims for breach of contract, specifically with regard to the COI charges (Count I) and the expense charges (Count II), a claim for conversion with respect to the Account Value (Count III), and a claim for declaratory relief relating to the alleged breaches of the Policy provisions concerning COI and expense charges (Count IV). The class Vogt seeks to certify consists, with the exception of the Excluded Persons, of “[a]ll persons who own or owned a universal life insurance policy issued by State Farm on Form 94030 in the State of Missouri.”

         The Court previously denied State Farm's motion for summary judgment. Doc. 218.


         Under Federal Rule of Civil Procedure 23, a motion for class certification involves a two-part analysis. First, under Rule 23(a), the proposed class must satisfy the requirements of “numerosity, commonality, typicality, and fair and adequate representation.” Luiken v. Domino's Pizza, LLC, 705 F.3d 370, 372 (8th Cir. 2013). Second, the proposed class must meet at least one of the three requirements of Rule 23(b). Comcast Corp. v. Behrend, 133 S.Ct. 1426, 1432 (2013).

         The burden of showing that the class should be certified is on Vogt. See Luiken, 705 F.3d at 372. Vogt will meet this burden only if, “after a rigorous analysis, ” the Court is convinced that the Rule 23 requirements are satisfied. Comcast, 133 S.Ct. at 1432 (quotation marks and citation omitted). The Court has broad discretion in deciding whether class certification is appropriate. Prof'l Firefighters Ass'n of Omaha, Local 385 v. Zalewski, 678 F.3d 640, 645 (8th Cir. 2012) (citation omitted).

         A. Rule 23(a)

         1. Numerosity

         Rule 23(a)(1) requires that a class be sufficiently numerous to render joinder of all members impracticable. In assessing whether the numerosity requirement has been met, courts examine factors such as the number of persons in the proposed class, the nature of the action, the size of the individual claims, and the inconvenience of trying individual claims. Paxton v. Union Nat'l Bank, 688 F.2d 552, 561 (8th Cir. 1982). State Farm does not contest that this requirement is satisfied.

         [XXXXX] See Doc. 150-6, at 48-49 and 66-67. Thus, the proposed class members are sufficiently numerous.

         2. Commonality

         Rule 23(a)(2) requires that there be “questions of law or fact common to the class.” Fed.R.Civ.P. 23(a)(2). A plaintiff must show that the claims “depend upon a common contention” that “is capable of class wide resolution, ” such that “determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350, 131 S.Ct. 2541 (2011). Commonality “‘does not require that every question of law or fact be common to every member of the class . . . and may be satisfied, for example, where the question of law linking the class members is substantially related to the resolution of the litigation even though the individuals are not identically situated.'” Downing v. Goldman Phipps PLLC, No. 13-206 CDP, 2015 WL 4255342, at *4 (E.D. Mo. July 14, 2015) (quoting Paxton, 688 F.2d at 561). Commonality is easily satisfied in most cases. See Wineland v. Casey's General Stores, Inc., 267 F.R.D. 669, 674 (S.D. Iowa 2009) (“The burden imposed by [the commonality] requirement is light and easily met in most cases.”) (citing In re Hartford Sales Practices Litig., 192 F.R.D. 592, 603 (D. Minn. 1999), and Newberg on Class Actions § 3:10 (4th ed.)).

         Plaintiffs claims in this action-for breach of the COI provision, for breach of the expense charge provision, for conversion, and for a declaratory judgment-all turn on interpretation of the Policy, which is a standard form contract to which each putative class member was a party. The claims also turn on State Farm's determination of COI rates, which was uniform. Doc. 150-2, at ¶¶ 7(c), 7(e), 29-30, 33, 37; Doc. 150-1, at 166:7-22, 171:21- 172:11. Thus, the following questions are common to each putative class member:

. Is State Farm limited to using only those factors disclosed in the Policy when ...

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