Summary
In Owens, the court rejected the argument that variations in language in SPDs that allowed for payment by a retained asset account required a plan-by-plan analysis that would defeat predominance.
Summary of this case from Huffman v. Prudential Ins. Co. of Am.Opinion
[Copyrighted Material Omitted]
John Chapman Bell, Jr., Leroy Weathers Brigham, Bell & Brigham, Augusta, GA, John W. Oxendine, John Oxendine, P.C., Atlanta, GA, Michael Jordan Lober, Lober & Dobson, LLC, Woodstock, GA, Todd L. Lord, Law Office of Todd L. Lord, Cleveland, GA, William Gregory Dobson, Lober & Dobson, LLC, Macon, GA, for Plaintiff.
Brendan Ballard, Phillip E. Stano, Pro Hac Vice, Sutherland, Asbill & Brennan, LLP, Washington, DC, Thomas W. Curvin, Eversheds Sutherland (U.S.) LLP, Atlanta, GA, for Defendant.
ORDER
RICHARD W. STORY, UNITED STATES DISTRICT JUDGE
This case is before the Court on Plaintiff’s Renewed Motion for Class Certification [113] and Defendant Metropolitan Life Insurance Company’s Motion for Leave to File Surreply to Plaintiff’s Renewed Motion for Class Certification [138]. After reviewing the record, the Court enters the following Order.
Background
This case arises out of Metropolitan Life Insurance Company’s (" MetLife" ) administration of life insurance death benefits paid on employee benefit plans. On April 17, 2014, Plaintiff Laura Owens, on behalf of herself and of a class of all others similarly situated, brought this action pursuant to the Employment Retirement Income Security Act of 1974 (" ERISA" ), 29 U.S.C. § 1001 et seq.
Plaintiff Laura Owens is the beneficiary of a life insurance policy that provided $95,000.00 in coverage on her husband’s life (the " Policy" ). (Def.’s SOMF., Dkt. [76-2] ¶ 61.) Owens’s husband, Robert F. Owens, was employed prior to his death on April 7, 2012 by CB Richard Ellis, Inc. and was a participant in the CB Richard Ellis Group Insurance Plan (the " Plan" ). (Pl.’s SOMF, Dkt. [74-1] ¶ 1.) The Policy provides, " We will pay the Life Insurance in one sum. Other modes of payment may be available upon request." (Id. ¶ 12.)
On or around May 21, 2012, CB Richard Ellis, Inc., submitted a claim for life insurance benefits on Plaintiff’s behalf. (Id. ¶ 19.) MetLife approved the claim and established a " Total Control Account" in Owens’s name (the " TCA" ). (Id. ¶ 20.) MetLife provided a book of blank drafts to Plaintiff, which allowed her to withdraw funds from the TCA in increments of $250 or more. (Def.’s SOMF, Dkt. [76-2] ¶ 81-82.) The TCA accrued interest at a rate tied to one of two indices; the rate fluctuated weekly but the annual effective interest rate was no lower than 0.50%. (Id. ¶ 84.)
" Total Control Account" is the trade name used by Defendant for what is known in the life insurance industry as a " retained asset account." (Pl.’s SOMF, Dkt. [74-1] ¶ 21.)
MetLife’s practice is to hold payable benefits in its own general account until called upon to transfer funds to cover drafts drawn on Total Control Accounts. (Id. ¶ 25.) This practice extended to the benefits paid on Plaintiff’s claim. MetLife established a TCA for Ms. Owens, paying interest at the rate of 0.50%. (Pl.’s SOMF, Dkt. [74-1] ¶ 27.) The funds remained in MetLife’s general account, earning interest for MetLife at a higher rate than that paid to Plaintiff. (Id. ¶ 28-29.)
This practice is the basis of Plaintiff’s Complaint. Plaintiff alleges that MetLife profited from " investing [Plaintiff’s] benefits for its own account." (Id. ¶ 17.) Plaintiff further alleges that MetLife did not disclose that profit or similar profits to Ms. Owens or to the Plan’s sponsor or administrator. (Id. ¶ 18.) Plaintiff claims that this conduct constitutes a breach of fiduciary duty.
Plaintiff alleges that MetLife routinely profits in this manner from plan benefits paid on group life insurance policies. (Compl., Dkt. [1] ¶¶ 19-25.) Plaintiff claims that this practice violates the terms of the payment clauses in these policies, which provide " We will pay the Life Insurance in one sum. Other modes of payment may be available upon request." (Id. ¶ 20.)
Plaintiff now brings her claims pursuant to ERISA on behalf of herself and the class of others similarly situated. Plaintiff further brings claims on behalf of a subclass of Georgia residents. Plaintiff claims that MetLife functioned as a fiduciary when it engaged in the conduct described above. (Id. ¶ 31.) Further, Plaintiff claims that MetLife is a party in interest to the Plan. (Id. ¶¶ 36-37.) On those bases, Plaintiff brings the following causes of action: breach of the duty of loyalty imposed by ERISA § 404(a)(l)(A) (Count I); breach of the fiduciary duties imposed by ERISA § 406(b)(l) (Count II), § 406(a)(l)(B) (Count III), and § 406(a)(l)(C) (Count IV); and postmortem interest for the Georgia subclass (Count VI).
Count V, for declaratory relief regarding coverage by state insurance guaranty funds for the Georgia subclass, was dismissed on Defendant’s Motion to Dismiss for Failure to State a Claim. (Dkt. [41].)
On November 30, 2015, Plaintiff filed a Motion for Partial Summary Judgment [75] as to the five remaining counts, and, on the same day, Defendant filed a Motion for Summary Judgment [76]. The Court, in its Order [110] dated September 27, 2016, granted Plaintiff’s Motion for Partial Summary Judgment [75] as to Counts II, III, and VI and denied the motion as to Counts I and IV. The Court denied Defendant’s Motion for Summary Judgment [76]. Defendant subsequently and simultaneously filed Defendant Metropolitan Life Insurance Company’s Motion for Reconsideration or, in the Alternative, Motion for Certification for Interlocutory Appeal Under 28 U.S.C. § 1292(b) [111] and its Motion to Stay Class Certification Briefing Deadlines [112]. The Court denied both motions. (Order, Dkt. [136].)
Plaintiff seeks to certify a class and Georgia subclass. (Pl.’s Renewed Mot. for Class Certification (" Pl.’s Renewed Mot." ), Dkt. [113].) The Court now considers the parties’ arguments in turn.
Discussion
I. Defendant Metropolitan Life Insurance Company’s Motion for Leave to File Surreply to Plaintiff’s Renewed Motion for Class Certification [138]
" Neither the Federal Rules of Civil Procedure nor this Court’s Local Rules authorize the filing of surreplies." Fedrick v. Mercedes-Benz USA, LLC, 366 F.Supp.2d 1190, 1197 (N.D.Ga. 2005). " To allow such surreplies as a regular practice would put the court in the position of refereeing an endless volley of briefs." Garrison v. Ne. Ga. Med. Ctr., Inc., 66 F.Supp.2d 1336, 1340 (N.D.Ga. 1999). Rather, surreplies typically will be permitted by the Court only in unusual circumstances, such as where a movant raises new arguments or facts in a reply brief, or where a party wishes to inform the Court of a new decision or rule implicating the motion under review. See, e.g., Fedrick, 366 F.Supp.2d at 1197 (" [V]alid reason for ... additional briefing exists ... where the movant raises new arguments in its reply brief." ).
In this case, Plaintiff’s reply brief directly addresses arguments raised by Defendant in its response brief and does not raise new arguments or facts. Accordingly, a surreply is not warranted. Defendant Metropolitan Life Insurance Company’s Motion for Leave to File Surreply to Plaintiff’s Renewed Motion for Class Certification [138] is therefore DENIED.
II. Plaintiff’s Renewed Motion for Class Certification [113]
Plaintiff seeks certification in accordance with Federal Rule of Civil Procedure 23 of a class consisting of:
All live insurance beneficiaries of ERISA-governed employee benefit plans that were insured by group life insurance policies issued by MetLife that provide for payment in " one sum" for whom MetLife established a " Total Control Account" between April 18, 2008, and the date when the Court decides Ms. Owens’ motion for class certification. Expressly excluded from the class are beneficiaries under policies that, at the time of the insured’s death, contained the statement in the policy certificate or an amendment to the policy certificate that expressly states that claims for benefits can be settled " by establishing an account that earns interest."
Plaintiff also seeks certification of a Georgia subclass consisting of:
All members of the Class as defined above who were residents of the State of Georgia at the time of their decedent’s death or are the beneficiaries of insureds who were residents of the State of Georgia at the time of their death.
A. Legal Standard
Rule 23 of the Federal Rules of Civil Procedure establishes the criteria for certifying a case as a class action. Specifically, " [a] class action may be maintained only when it satisfies all the requirements of Fed.R.Civ.P. 23(a) and at least one of the alternative requirements of Rule 23(b)." Rutstein v. Avis Rent-A-Car Sys. Inc., 211 F.3d 1228, 1233 (11th Cir. 2000). The party seeking class certification bears the burden of establishing that the requirements of Rule 23 have been satisfied. Id. Rule 23(a) requires a plaintiff to show:
(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.
" These four requirements commonly are referred to as the prerequisites of numerosity, commonality, typicality, and adequacy of representation, and they are designed to limit class claims to those fairly encompassed by the named plaintiffs’ individual claims." Piazza v. Ebsco Indus., Inc., 273 F.3d 1341, 1346 (11th Cir. 2001) (internal quotations omitted).
After satisfaction of Rule 23 (a)’s requirements, a plaintiff must meet the requirements of at least one of the requirements in Rule 23(b). Here, Plaintiff relies on Rule 23(b)(3), which requires " that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy."
Finally, " [b]efore a district court may grant a motion for class certification, a plaintiff seeking to represent a proposed class must establish that the proposed class is adequately defined and clearly ascertainable." Little v. T-Mobile USA, Inc., 691 F.3d 1302, 1304 (11th Cir. 2012) (internal quotation omitted).
In determining whether class certification is proper, the Court must conduct a " rigorous analysis" of the prerequisites of Rule 23. Gen. Tel. Co. v. Falcon, 457 U.S. 147, 161, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982). " Rule 23 does not set forth a mere pleading standard." Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350, 131 S.Ct. 2541, 180 L.Ed.2d 374 (2011). While the likelihood of the plaintiff’s success on the merits is not a relevant consideration, the Court may be required to decide disputed questions of fact that bear on the certification inquiry. " Rule 23 grants courts no license to engage in free-ranging merits inquiries at the certification stage," however, and merits questions may be considered " only to the extent" they pertain to the Rule 23 analysis. Amgen Inc. v. Conn. Ret. Plans & Tr. Funds, 568 U.S. 455, 466, 133 S.Ct. 1184, 185 L.Ed.2d 308 (2013).
A. Ascertainability
" Although not explicit in Rule 23(a) or (b), courts have universally recognized that the first essential ingredient to class treatment is the ascertainability of the class." Grimes v. Rave Motion Pictures Birmingham, LLC, 264 F.R.D. 659, 663 (N.D. Ala. 2010) (emphasis omitted). A plaintiff " must establish that the proposed class is adequately defined and clearly ascertainable." Carriuolo v. Gen. Motors Co., 823 F.3d 977, 984 (11th Cir. 2016) (internal quotation omitted). Class definitions must contain " objective criteria that allow for class members to be identified in an administratively feasible way." Karhu v. Vital Pharm., Inc., 621 Fed.Appx. 945, 946 (11th Cir. 2015).
Administrative feasibility exists where there is " a manageable process that does not require much, if any, individual inquiry." Id. (internal quotation omitted). However, this does not mean " that no level of inquiry as to the identity of class members can ever be undertaken. If that were the case, no Rule 23(b)(3) class could ever be certified." Byrd v. Aaron’s Inc., 784 F.3d 154, 171 (3d Cir. 2015). " [T]he size of a potential class and the need to review individual files to identify its members are not reasons to deny class certification." Id. (quoting Young v. Nationwide Mut. Ins. Co., 693 F.3d 532, 539-40 (6th Cir. 2012)).
A plaintiff may rely on a defendant’s business records in identifying class membership. See Bussey v. Macon Cty. Greyhound Park, Inc., 562 Fed.Appx. 782, 788 (11th Cir. 2014). Reliance on business records alone, however, is insufficient to establish ascertainability, and " the plaintiff must also establish that the records are in fact useful for identification purposes, and that identification will be administratively feasible." Karhu, 621 Fed.Appx. at 948.
As an initial matter, the Court finds that the proposed class and subclass definitions are adequately defined by objective criteria. Defendant does not contest this. Class membership requires a person be a beneficiary of an ERISA-governed employee benefit plan during the relevant time and that the plan contain certain specific language. The subclass adds the additional requirement of living in Georgia. These are objective criteria which adequately define membership.
Plaintiff has explained how it intends to determine membership in the Class and Subclass using Defendant’s records and publically available information. Defendant objects, however, arguing that Plaintiff has set forth no administratively feasible method of determining membership. It contests Plaintiff’s ability to " prove that each of the policies and certificates covered by 32,000 plans contains the specific payment language that Plaintiff seeks to litigate (while not containing other language specified in the proposed class definition), and that each of those plans is in fact governed by ERISA." (Def. Metro. Life Ins. Co.’s Resp. in Opp’n to Pl.’s Renewed Mot., Dkt. [124], at 13.)
As to the plans’ ERISA status, an employee benefit plan is governed by ERISA " if it is established or maintained (1) by any employer engaged in commerce or in any industry or activity affecting commerce; or (2) by any employee organization or organizations representing employees engaged in commerce or in any industry or activity affecting commerce; or (3) by both." 29 U.S.C. § 1003(a). Those plans established by certain entities, including governments and churches, are not covered by ERISA. 29 U.S.C. § 1003(b). ERISA requires plan administrators to file annual reports with the Department of Labor, which are available for public inspection. 29 U.S.C. § § 1023(a)(l)(A), 1024(a)(l), 1026(a).
To determine which plans are governed by ERISA in the instant case, Plaintiff’s counsel explain the process used in prior class actions that they litigated. (Second Decl. of M. Scott Barrett in Supp. of Pl.’s Mot. for Class Certification, Dkt. [113], at 3-4.) First, policyholders’ names are examined to make initial determinations. These names often easily show that a policyholder is a private corporation and therefore governed by ERISA, or a government or church and therefore not governed by ERISA. For any policyholders whose name is indeterminate, publically available records are consulted to determine whether the plan administrator filed an annual report with the Department of Labor, in which case it is governed by ERISA.
To determine which plans contain the specific language set forth in the Class definition while excluding other specific language, Plaintiff states that this information can be determined by looking at the policies’ payment provisions, which are in Defendant’s records.
As this process explains, individual records will have to be examined in order to determine class membership. That alone is not fatal. The ascertainability requirement is intended to avoid the necessity of mini-trials to determine membership in a class. Cordoba v. DirecTV, LLC, 320 F.R.D. 582, 596-97 (N.D.Ga. 2017) (quoting EQT Prod. Co. v. Adair, 764 F.3d 347, 358 (4th Cir. 2014)). That will not be necessary here. Class membership will be determined by answering three yes or no questions: (1) is the plan governed by ERISA?; (2) does the plan contain language providing for payment " in one sum" ?; and (3) does the plan contain language providing for payment " by establishing an account that earns interest?" . Plaintiff has set forth a process for answering all three questions. While this might take time and effort, that is due solely to the number of possible class members, not the difficulty or thoroughness of the inquiry. Denying certification on such a basis is not the purpose of ascertainability. See, e.g., Byrd, 784 F.3d at 171 (stating that if " no level of inquiry as to the identity of class members can ever be undertaken ..., no Rule 23(b)(3) class could ever be certified" ); Clavell v. Midland Funding LLC, No. 10-3593, 2011 WL 2462046, at *2 (E.D. Penn. June 21, 2011) (" [The] proposed class is identifiable only if the information necessary to identify those class members is available through a ‘ministerial review’ rather than ‘arduous individual inquiry.’ " ). The class and subclass definitions are therefore ascertainable.
B. Rule 23(a)
1. Numerosity
To satisfy the numerosity requirement, Plaintiff must establish that the members of the proposed class and subclass are so numerous that joinder of all members is impracticable. Fed.R.Civ.P. 23(a). In order to demonstrate numerosity, plaintiffs need not prove that joinder is impossible; rather, plaintiffs " need only show that it would be extremely difficult or inconvenient to join all members of the class." Anderson v. Garner, 22 F.Supp.2d 1379, 1384 (N.D.Ga. 1997). Courts have considered several factors in determining the practicability of joinder, including the size of the class, the ease of identifying its numbers and determining their addresses, the facility of making service on them if joined, and their geographic dispersion. Kilgo v. Bowman Transp., Inc., 789 F.2d 859, 878 (11th Cir. 1986). A plaintiff " need not prove the exact size of the proposed class, but rather need demonstrate only that the number is exceedingly large, and joinder impracticable." In re Fla. Cement & Concrete Antitrust Litig., 278 F.R.D. 674, 679 (S.D. Fla. 2012).
Defendant does not challenge that Plaintiff has met the numerosity requirement. From April 16, 2008, to April 15, 2014, Defendant established 451, 416 TCAs. (Def.’s Resps. & Objs. to Pl.’s First Set of Interrogs., Dkt. [74-9], at 42.) Of those accounts, 15,281 beneficiaries reside in Georgia, and 14,765 insureds reside in Georgia. (Id. ) As a general rule in the Eleventh Circuit, a prospective class with more than forty members is generally deemed to satisfy the numerosity requirement. Cox v. Am. Cast Iron Pipe Co., 784 F.2d 1546, 1553 (11th Cir. 1986). Plaintiff has more than met this requirement, and the Court finds that joinder would be impracticable. The first requirement of Rule 23(a) is therefore met.
2. Commonality
Rule 23(a)(2) requires Plaintiff show that " there are questions of law or fact common to the class." The " claims must depend upon a common contention" that is " of such a nature that it is capable of classwide resolution— which means 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." Dukes, 564 U.S. at 350, 131 S.Ct. 2541. This looks not to " the raising of common ‘questions’ ... but rather the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation." Id.
The commonality requirement " does not require that all questions of law and fact raised by the dispute be common or that common questions of law or fact predominate over individual issues." Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1268 (11th Cir. 2009) (internal quotations and citation omitted). " For purposes of Rule 23(a)(2) even a single common question will do." Carriuolo, 823 F.3d at 984 (quoting Dukes, 564 U.S. at 359, 131 S.Ct. 2541). This is a " low hurdle" to overcome. Williams v. Mohawk Indus., Inc., 568 F.3d 1350, 1356 (11th Cir. 2009).
Plaintiff has met the commonality requirement here. The claims of each and every class member will necessarily turn on common questions, which include those going to Defendant’s business practices, Defendant’s status as a fiduciary or party in interest within the meaning of ERISA, and the amount, if any, in which Defendant was unjustly enriched, among others. Plaintiff has therefore overcome the " low hurdle" that is commonality and met her burden as to this portion of Rule 23(a). Williams, 568 F.3d at 1356.
3. Typicality
To be typical, " [a] class representative must possess the same interest and suffer the same injury as the class members ...." Murray v. Auslander, 244 F.3d 807, 811 (11th Cir. 2001). The Eleventh Circuit has explained the typicality requirement as follows:
[T]here must be a nexus between the class representative’s claims or defenses and the common questions of fact or law which unite the class. A sufficient nexus is established if the claims or defenses of the class and the class representative arise from the same event or pattern or practice and are based on the same legal theory. Typicality, however, does not require identical claims or defenses. A factual variation will not render a class representative’s claim atypical unless the factual position of the representative markedly differs from that of other members of the class.
Kornberg v. Carnival Cruise Lines, Inc., 741 F.2d 1332, 1337 (11th Cir. 1984).
Defendant argues that Plaintiff cannot meet the typicality requirement. Since the applicable law is that of the state in which each individual insurance contract was made, and since there is a variation in contract law from state to state, Plaintiff’s claims cannot be typical of all Class members. As discussed below, however, federal common law applies in this case, not the laws of each individual case. Defendant’s argument as to typicality therefore fails.
The claims of Plaintiff and of the other members of the class and subclass arise from the same acts of Defendant, and they are based on the same legal theory. The Court finds that Plaintiff’s claims are typical of the class and subclass, and the requirement of Rule 23(a)(b)(3) are therefore satisfied.
4. Adequacy
To satisfy the adequacy requirement of Rule 23(a), Plaintiff must be able to " fairly and adequately protect the interests of the class." This requires a showing that no " substantial conflicts of interest exist between the representatives and the class" and that " the representatives will adequately prosecute the action." Valley Drug Co. v. Geneva Pharm., Inc., 350 F.3d 1181, 1189 (11th Cir. 2003). These requirements apply to both the named plaintiff and to the class counsel. London v. Wal-Mart Stores, Inc., 340 F.3d 1246, 1253 (11th Cir. 2003).
A " party’s claim to representative status is defeated only if the conflict between the representative and the class is a fundamental one, going to the specific issues in controversy." Pickett v. Iowa Beef Processors, 209 F.3d 1276, 1280 (11th Cir. 2000). " A conflict is not fundamental when ... all class members share common objectives and the same factual and legal positions and have the same interest in establishing the liability of defendants." Ward v. Dixie Nat’l Life Ins. Co., 595 F.3d 164, 180 (4th Cir. 2010) (internal quotations and alterations omitted). Minor conflicts alone are insufficient to defeat adequacy. Valley Drug, 350 F.3d at 1189.
Plaintiff has shown that she understands this litigation, that she is aware of her responsibilities as class representative, that she is obligated to protect the interests of the class and subclass, and that she is unaware of any interest that she has that might conflict with other members of the class or subclass. (Aff. of Laura A. Owens, Dkt. [7-3].) Plaintiff’s counsel has experience in this area of the law and lacks any interest that conflict with the class or subclass. (Aff. of John C. Bell, Jr., Dkt. [7-2].)
Defendant argues, however, that Plaintiff cannot meet the adequacy requirement because her claims are atypical to that of the Class. And since the adequacy-of-representation requirement tends to merge with the commonality and typicality criteria of Rule 23(a), she also cannot adequately represent the Class. Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 157 n.13, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982). Defendant’s argument is predicated on the application of the laws of each individual state. As discussed below, however, federal common law applies in this case. Plaintiff’s claims are typical of the class and subclass, and Defendant’s argument as to adequacy therefore fails.
The Court finds that Plaintiff’s counsel is qualified, experienced, and will vigorously prosecute the action. Griffin v. Carlin, 755 F.2d 1516, 1533 (11th Cir. 1985). The Court further finds that Plaintiff’s interest is not antagonistic to or in conflict with the other members of the class and subclass." Id. The final requirement of Rule 23(a) is therefore met.
C. Rule 23(b)(3)
After satisfying the requirements of ascertainability and Rule 23(a), a plaintiff must still satisfy one of the prongs of Rule 23(b) in order to obtain class certification. Plaintiff here relies on Rule 23(b)(3), which requires " that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." These two requirements are commonly referred to as predominance and superiority. Plaintiff need not show that she will succeed on the merits to satisfy these requirements. Miller v. Mackey Int’l., Inc., 452 F.2d 424, 427 (5th Cir. 1971). However, the Court must still perform the rigorous analysis required by Dukes . Comcast Corp. v. Behrend, 569 U.S. 27, 34, 133 S.Ct. 1426, 185 L.Ed.2d 515 (2013) (" If anything, Rule 23(b)(3)’s predominance criterion is even more demanding than Rule 23(a)." ).
1. Predominance
The " central and overriding prerequisite" for certification under Rule 23(b)(3) is the predominance of common questions over individual questions. Vega, 564 F.3d at 1278. A plaintiff must show that " the issues in the class action that are subject to generalized proof and thus applicable to the class as a whole, must predominate over those issues that are subject only to individualized proof." Kerr v. City of W. Palm Beach, 875 F.2d 1546, 1558 (11th Cir. 1989) (quoting Nichols v. Mobile Bd. of Realtors, Inc., 675 F.2d 671, 676 (5th Cir. 1982)).
" Common issues of fact and law predominate if they have a direct impact on every class member’s effort to establish liability and on every class member’s entitlement to injunctive and monetary relief." Babineau v. Fed. Express Corp., 576 F.3d 1183, 1191 (11th Cir. 2009) (internal quotations and alterations omitted). However, " if, as a practical matter, the resolution of an overarching common issue breaks down into an unmanageable variety of individual legal and factual issues," common issues will not predominate. Id. (internal citations and alterations omitted). " If common issues truly predominate over individualized issues in a lawsuit, then the addition or subtraction of any of the plaintiffs to or from the class should not have a substantial effect on the substance or quantity of evidence offered." Vega, 564 F.3d at 1270 (internal alterations omitted). When " the addition of more plaintiffs leaves the quantum of evidence introduced by the plaintiffs as a whole relatively undisturbed, then common issues are likely to predominate. Id.
Rule 23(b)(3)’s predominance requirement does not, however, require each and every issue be susceptible of common proof. Certification is proper when " one or more of the central issues in the action are common to the class and can be said to predominate" " even though other important matters will have to be tried separately, such as damages or some affirmative defenses peculiar to some individual class members." Tyson Foods, Inc. v. Bouaphakeo, __ U.S. __, 136 S.Ct. 1036, 1045, 194 L.Ed.2d 124 (2016). " [P]redominance is a qualitative rather than a quantitative concept. It is not determined simply by counting noses: that is, determining whether there are more common issues or more individual issues, regardless of relative importance." Brown v. Electrolux Home Prods., Inc., 817 F.3d 1225, 1239 (11th Cir. 2016) (internal quotation omitted).
Plaintiff first must prove that she can establish by common evidence whether Defendant violated ERISA and O.C.G.A. § 33-25-10(a). Plaintiff’s theory of her case argues that Defendant violated its fiduciary duties when it decided to create a system in which beneficiaries received TCAs while Defendant kept the funds backing the TCAs in its general account, when Defendant decided to make TCAs the default payment method, when Defendant set the portion of the interest it would keep, and when Defendant kept the majority of the interest earned for itself. Plaintiff argues that the claims arise out of the same practice by Defendant and thus depend on a common factual predicate. The evidence pertaining to these issues will inevitably focus on Defendant’s conduct and communications and will not vary among class members.
In addition, the Court resolved several issues in its prior Order [110] granting Plaintiff partial summary judgment. These include: Defendant’s status as a fiduciary; Defendant’s performance of fiduciary functions in distributing benefits; whether funds backing TCAs are plan assets; whether a policy with language requiring " payment in one sum" permits payment via a TCA; whether a form sent to beneficiaries denoting payment via TCA as the default option is sufficient to serve as an election for a different mode of payment; and whether Defendant violated ERISA § § 406(b)(l) and 406(a)(l)(B) and O.C.G.A. § 33-25-10(a). Although these common issues have already been resolved, they remain relevant for the predominance analysis. See Waste Mgmt. Holdings, Inc. v. Mowbray, 208 F.3d 288, 299 (1st Cir. 2000). The addition or subtraction of any class members will have no effect on the substance or quantity of the evidence offered on these issues.
Defendant argues, however, that predominance is defeated by several different individualized issues. First, Defendant argues that variations in the language of different plan documents create individualized issues that must be resolved on a plan-by-plan basis. In support, Defendant points to the language of several Summary Plan Documents (" SPDs" ) which provide for payment via a TCA. It argues that these SPDs alter the meaning of " payment in one sum" in the policies. Since each SPD is different, analysis must occur on a plan-by-plan basis.
The Supreme Court has held that " summary documents, important as they are, provide communication with beneficiaries about the plan, but that their statements do not themselves constitute the terms of the plan ...." CIGNA Corp. v. Amara, 563 U.S. 421, 438, 131 S.Ct. 1866, 179 L.Ed.2d 843 (2011). When the terms of the SPD conflict with governing plan documents, the terms of the SPD are not enforceable. Eugene S. v. Horizon Blue Cross Blue Shield of N.J., 663 F.3d 1124, 1131 (10th Cir. 2011). But see Heffner v. Blue Cross & Blue Shield of Ala., Inc., 443 F.3d 1330, 1341-42 (11th Cir. 2006) (enforcing conflicting terms in a SPD when the insureds relied upon them to their detriment). As the Court previously held, the policy language included in the governing plan documents unambiguously requiring payment in one sum is not satisfied by the creation of a TCA. (Order, Dkt. [110], at 10-19.) Thus, any language in an SPD permitting payment via TCA conflicts with the unambiguous terms of the governing plan documents and is therefore unenforceable. As such, SPDs are not relevant as to whether TCAs are permitted by the plan documents, and this issue does not defeat predominance.
Second, Defendant argues that variations in plan sponsor’s intent will affect whether the policy language requiring payment in one sum permits payment via a TCA. The Court addressed this issue at summary judgment, finding that the policy language is unambiguous and therefore that extrinsic evidence is inadmissible. (Id. at 10-11, 14 n.7.) That decision stands.
In its prior Order [110], the Court discussed Georgia’s law of contract interpretation in declining to admit extrinsic evidence. As this case is governed by ERISA, a uniform body of federal law applies. N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 656, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995) (noting Congress’ intent " to ensure that plans and plan sponsors would be subject to a uniform body of benefits law" ). " Although comprehensive in many respects, ERISA is silent on matters of contract interpretation." Dixon v. Life Ins. Co. of N. Am., 389 F.3d 1179, 1183 (11th Cir. 2004). Courts therefore " have the authority to develop a body of federal common law to govern issues in ERISA actions not covered by the act itself." Tippitt v. Reliance Standard Life. Ins. Co., 457 F.3d 1227, 1234-35 (11th Cir. 2006) (quoting Horton v. Reliance Standard Life. Ins. Co., 141 F.3d 1038, 1041 (11th Cir. 1998)). " When crafting a body of common law, federal courts may look to state law as a model because of the states’ greater experience in interpreting insurance contracts ...." Id. at 1235 (quoting Horton, 141 F.3d at 1041.)
In the Court’s prior orders, Georgia law was used as a model in creating federal common law necessary to supplement ERISA. While the Court looked to one specific state’s law in doing so, Georgia’s principles of contract interpretation comport with traditional rules of contract interpretation. M & G Polymers USA, LLC v. Tackett, __ U.S. __, 135 S.Ct. 926, 933, 190 L.Ed.2d 809 (2015) (" Where the words of a contract in writing are clear and unambiguous, its meaning is to be ascertained in accordance with its plainly expressed intent." ) (quoting 11 R. Lord, Williston on Contracts § 30:6, at 108 (4th ed. 2012) (Williston)). The Court may therefore look to them in developing federal common law under ERISA so long as they " further ERISA’s scheme and goals, which include: (1) protection of the interests of employees and their beneficiaries in employee benefit plans; and (2) uniformity in the administration of employee benefit plans." Tippitt, 457 F.3d at 1235 (internal quotations omitted).
The Eleventh Circuit has already held that the interpretive rule of contra proferentem meets this standard, and it is therefore a part of the body of federal common law governing ERISA actions. Lee v. Blue Cross/Blue Shield of Ala., 10 F.3d 1547, 1551 (11th Cir. 1994). The Court also finds that the traditional rule of contract interpretation barring the introduction of extrinsic evidence when the terms of the contract are unambiguous meets this standard. See Downs v. U.S. Army Corps. of Eng’rs, 333 Fed.Appx. 403, 411 (11th Cir. 2009) (" A contract term must be ambiguous on its face before a court can resort to parol evidence to define that term." ). Such a rule protects the interests of employees and beneficiaries by allowing them to rely on the written terms of the contract. ERISA’s requirement that contracts only be modified in writing supports this conclusion. 29 U.S.C. § 1102(b)(3); see also M & G Polymers USA, LLC, 135 S.Ct. at 933 (" [T]he rule that contractual ‘provisions ordinarily should be enforced as written is especially appropriate when enforcing an ERISA [welfare benefits] plan’ ... because the ‘focus on the written terms of the plan is the linchpin of a system that is not so complex that administrative costs, or litigation expenses, unduly discourage employers from offering [welfare benefits] plans in the first place.’ " ); Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 84, 115 S.Ct. 1223, 131 L.Ed.2d 94 (1995) (" In the words of the key congressional report, ‘[a] written plan is to be required in order that every employee may, on examining the plan documents, determine exactly what his rights and obligations are under the plan." ); Nachwalter v. Christie, 805 F.2d 956, 959-61 (11th Cir. 1986) (declining to create a federal common law rule permitting oral modification of ERISA governed plans because employee’s interests would be undermined if they cannot rely on written terms). Adopting this rule has the additional effect of enhancing national uniformity in the administration of employee benefit plans. Extrinsic evidence is therefore inadmissible. The intent of individual plan sponsors will therefore be unnecessary to resolve this case and cannot defeat predominance.
Defendant next argues that whether its compensation was reasonable within the meaning of ERISA § 408(b)(2), an exception to ERISA § 406(a)(l)(C) (Count IV), must be determined on a plan-by-plan basis. Defendant has the burden of proof for this exception. See, e.g., Keach v. U.S. Trust Co., 419 F.3d 626, 636 (7th Cir. 2005); Donovan v. Cunningham, 716 F.2d 1455, 1467-68, 1467 n.27 (5th Cir. 1983) (" As the Supreme Court has observed in a different context, it seems ‘fair and reasonable’ to place the burden of proof upon a party who seeks to bring his conduct within a statutory exception to a broad remedial scheme." ). Plaintiff argues that it will defeat this exception by showing Defendant failed to follow guidelines set forth by the Department of Labor. As such, Defendant’s defense would be subject to defeat by generalized proof. It therefore does not defeat predominance.
Similarly, Defendant next argues that whether it breached its duty of loyalty under ERISA § 404(a)(l)(A) (Count I) must be determined on a plan-by-plan basis. Plaintiff has, however, shown that it intends to prove this element via common evidence of Defendant’s behavior surrounding the implementation of the TCA policy. Since this issue is capable of resolution on a class wide basis, it does not create an individualized issue that defeats predominance.
Finally, Defendant sets forth several defenses it argues creates individualized issues sufficient to defeat predominance. Defendant’s first argued defense is that some beneficiaries may have selected to receive a TCA as a permitted other mode of payment. The Court has previously held that forms treating TCA as the default payment option are insufficient to qualify as a selection of a TCA. (Order, Dkt. [110], at 12 n.5.) Thus, beneficiaries can only be said to have selected payment via TCA if they received a form that allowed for voluntary selection of a TCA and they did in fact make such a selection, or if they requested a TCA by telephone. Defendant will have records of either method of selection. The Court notes that Defendant has not provided examples of beneficiaries who elected to receive payment via TCA by either method. However, if such beneficiaries exist, the fact that " some affirmative defenses peculiar to some individual class members" may have to be tried separately is insufficient to defeat predominance when " one or more of the central issues in the action are common to the class and can be said to predominate." Tyson Foods, Inc., 136 S.Ct. at 1045. That is the case here. This defense is insufficient to defeat predominance.
Defendant next argues that Plaintiff must prove that Defendant’s ERISA violations were the proximate cause of the class members’ harms, citing to Edmonson v. Lincoln National Life Insurance Co., 725 F.3d 406 (3d Cir. 2013), in support. Defendant previously raised this issue at summary judgment and in its motion for reconsideration. As the Court previously stated, this argument has been " heard and dismissed," and Edmonson " is sufficiently factually distinguishable as to be inapplicable here." (Order, Dkt. [136], at 10-11.) It therefore cannot defeat a finding of predominance.
Defendant’s third defense argues that whether each beneficiary consented to or ratified any breach of fiduciary duties is an individualized issue. Defendant bears the burden of proof as to this defense. See Gen. Am. Life Ins. Co. v. AmSouth Bank, 100 F.3d 893, 901 (11th Cir. 1996). In order to show consent or ratification, Defendant must show that class members were informed of the possible conflict of interest and breach of fiduciary duty. See Merrimon v. Unum Life Ins. Co. of Am., 845 F.Supp.2d 310, 321 (D. Me. 2012) (rejecting defendant’s ratification and consent defense), aff’d in part, rev’d in part on other grounds, 758 F.3d 46 (1st Cir. 2014); Restatement (Third) of Trusts § 97 (2012) (requiring a beneficiary be " aware of the beneficiary’s rights and of all material facts and implications that the trustee knew or should have known relating to the matter" at the time of consent or ratification for it to be valid).
Defendant has, at this time, provided no facts to suggest any class members had the requisite knowledge for any consent or ratification to be valid. Additionally, Plaintiff may respond to this defense by the use of common evidence regarding the notice sent out by Defendant to class members. While this affirmative defense may be available to Defendant as to some individual class members, this is insufficient to defeat predominance since other issues central to the claims and common to the class predominate. Tyson Foods, Inc., 136 S.Ct. at 1045.
Finally, Defendant argues that ERISA’s three-year statute of limitations on claims for breach of fiduciary duty in which the plaintiff had actual knowledge of the breach or violation bars the claims of some class members. 29 U.S.C. § 1113(2). This argument is based on a disclosure Defendant began sending on June 6, 2010. (Ex. T, Decl. of Kathy Callaghan, Dkt. [126-23].) Thus, according to Defendants, any beneficiary who received a TCA after that date had actual knowledge and is restricted by the three-year statute of limitations. The recipients of these disclosures, however, would be entitled to testify as to their understanding of the disclosure, thus creating individualized issues for a multitude of class members.
For there to be actual knowledge of an ERISA violation such that the three-year limitations period applies, " it is not enough that [a plaintiff] had notice that something was awry; he must have had specific knowledge of the actual breach of duty upon which he sues." Brock v. Nellis, 809 F.2d 753, 755 (11th Cir. 1987). Thus, actual knowledge does not exist until a plaintiff " is aware that an ERISA requirement has been violated." Id.
Defendant has failed to meet its burden in proving that this disclosure provided actual knowledge to its recipients. While it does state that the " assets backing the Total Control Accounts are maintained in MetLife’s general account and are subject to MetLife’s creditors" and that " MetLife will bear the positive or negative investment experience of such assets," it is unclear that recipients would understand how Defendant was profiting from these funds. (Ex. T, Decl. of Kathy Callaghan, Dkt. [126-23], at 5.) In addition, it states that the " Customer Agreement and the Account Relationship do not create a fiduciary, quasi-fiduciary, or special relationship between us." (Id. at 6.) Since the claims brought here are based upon Defendant’s fiduciary status with the class members, they could not have had actual knowledge that provisions of ERISA had been violated with this disclaimer included. The Court notes, however, that some class members may have understood from this disclaimer that Defendant was violating ERISA. If such members come to light, the parties may request certification of a sub-class to represent the interests of this group.
In accordance with the foregoing, the Court finds that Plaintiff has met her burden in showing that common issues predominate over individualized issues under Rule 23(b)(3).
2. Superiority
Finally, in order to certify a class under Rule 23(b)(3), resolution by class action must be superior to other forms of adjudication. The following factors are relevant to the Court’s inquiry:
(A) the class members’ interests in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already begun by or against class members; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and (D) the likely difficulties in managing a class action.
Fed. R. Civ. P. 23(b)(3). Superiority is not defeated merely because " the number of plaintiffs makes the proceeding complex or difficult." In re Domestic Air Transp. Antitrust Litig, 137 F.R.D. 677, 693 (N.D.Ga. 1991). " Certification should not be denied for lack of superiority solely because a class action would make a district court’s task complex or difficult." In re Conagra Peanut Butter Prods. Liab. Litg., 251 F.R.D. 689, 699 (N.D.Ga. 2008). " Instead, the focus is on the relative advantages of a class action suit over whatever other forms of litigation might be realistically available to the plaintiffs. Id. (internal quotation and alteration omitted).
The Eleventh Circuit has held that the superiority analysis depends in large part on the predominance analysis. Williams, 568 F.3d at 1358. " [T]he more common issues predominate over individualized issues, the more desirable a class action lawsuit will be as a vehicle for adjudicating the plaintiffs’ claims." Id. " [W]here a court has already made a finding that common issues predominate over individualized issues, we would be hard pressed to conclude that a class action is less manageable than individual actions." Id.
Common issues predominate over individualized issues in this case. For the same reasons discussed above, the Court finds that the superiority requirement is satisfied in this case as well. A class action is the only fair method of adjudication for Plaintiff and the members of the class and subclass. Plaintiff has therefore satisfied her burden under Rule 23(b)(3).
Conclusion
In accordance with the foregoing, Plaintiff’s Renewed Motion for Class Certification [113] is GRANTED. Defendant Metropolitan Life Insurance Company’s Motion for Leave to File Surreply to Plaintiff’s Renewed Motion for Class Certification [138] is DENIED. The Class is hereby CERTIFIED as follows:
All live insurance beneficiaries of ERISA-governed employee benefit plans that were insured by group life insurance policies issued by MetLife that provide for payment in " one sum" for whom MetLife established a " Total Control Account" between April 18, 2008, and the date when the Court decides Ms. Owens’ motion for class certification.
Expressly excluded from the class are beneficiaries under policies that, at the time of the insured’s death, contained the statement in the policy certificate or an amendment to the policy certificate that expressly states that claims for benefits can be settled " by establishing an account that earns interest."
The Georgia Subclass is hereby CERTIFIED as follows:
All members of the Class as defined above who were residents of the State of Georgia at the time of their decedent’s death or are the beneficiaries of insureds who were residents of the State of Georgia at the time of their death.
The parties are DIRECTED to confer and submit a proposed scheduling order regarding any remaining issues within 14 days.
SO ORDERED, this 29th day of September, 2017.