In an opinion published yesterday, the Court of Appeal (Fourth Appellate District, Division Three) affirmed an order denying class certification of UCL (and other) claims based on alleged misrepresentations about "so-called 'vanishing premium'" life insurance policies. Kaldenbach v. Mutual of Omaha Life Ins. Co., ___ Cal.App.4th ___ (Sept. 30, 2009; pub. & mod. ord. Oct. 26, 2009).
The opinion acknowledges that Tobacco II preserved the pre-Prop. 64 "likely to deceive" formulation of the UCL's "fraudulent" prong, and that Tobacco II confirms that "UCL relief is available on a class basis 'without individualized proof of deception, reliance and injury.'" See, e.g., slip op. at 19-20, 22 (quoting Tobacco II). A sentence added to the opinion in the "Order Modifying Opinion and Directing Publication" reads: "The Supreme Court ... conclud[ed] individualized proof of injury to absent class members in a UCL action was not required." Slip op. at 26 (citing Tobacco II, 46 Cal.4th at 320, 324).
Nonetheless, class certification was correctly denied, the Court held, because the "individualized issues [that the trial court found] go not to the injury suffered by a purchaser, but to whether there was in fact an unfair business practice by [defendant]." Slip op. at 21. In particular, the trial court properly credited the defendant's evidence that its insurance policies were sold by myriad independent contractor sales agents, none of whom received the same training or were required to use any particular sales materials or adhere to any script. Id. at 9-12, 18-19. Therefore, whether the agents' representations were misleading, or even "likely to deceive," could not be resolved through common proof. See id., passim.
The Court of Appeal distinguished Tobacco II and Massachusetts Mutual Life Ins. Co. v. Superior Court, 97 Cal.App.4th 1282 (2002), on the basis that in those cases, "there was no issue about defendants' uniform business practices giving rise to the UCL claim." Slip op. at 22. In other words, "separate from whether any individual purchaser relied on alleged misrepresentations, or suffered injury as a result, here the determination of what business practices were allegedly unfair turns on individual issues." Id. at 23.
Plaintiff also sought class certification of a common-law fraud claim. The Court of Appeal held that the trial court correctly declined to infer classwide reliance under Vasquez because, again, "the evidence indicates there were not common representations or omissions." Id. at 24.
The Complex Litigator also has a post on Kaldenbach.