Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—C.D. Cal.: Decertification of class denied despite death of class representative, (Jul 8, 2013)

By Tobias J. Gillett, J.D., LL.M.

In a RICO lawsuit against Allianz Life Insurance Company of North America, the federal district court in Los Angeles has denied Allianz’s motion to decertify a California subclass asserting claims under California’s Unfair Competition Law, False Advertising Law, and Elder Abuse Act, even though the class representative had passed away (Negrete v. Allianz Life Insurance Company of North America, July 3, 2013, Snyder, C.). The court also approved modifications to the nationwide RICO class and California subclass definitions to exclude certain products and individuals.

On November 26, 2006, the court granted certification of a nationwide RICO class and a California subclass asserting claims under California’s Unfair Competition Law, False Advertising Law, and Elder Abuse Act. The court later appointed Vida F. Negrete, conservator for Everett Ow, as class representative for the California subclass. On December 27, 2012, the court denied Allianz’s motion to decertify the RICO class.

On October 6, 2012, Ow passed away. On June 3, 2013, Allianz filed a motion to decertify the California subclass on the ground that Negrete would be an inadequate class representative in light of Ow’s death. In addition, the plaintiffs filed a motion to modify the nationwide and California class definitions to exclude certain individuals and products.

Motion to decertify. The court concluded that Allianz’s motion to decertify the California subclass was untimely. The court had set a deadline of May 30, 2012, for filing motions to decertify the class. Although Allianz had filed a motion to decertify the nationwide RICO class by that date, it did not file a motion regarding the California subclass, and therefore had to “demonstrate ‘good cause’ for amending the scheduling order.”

The court found Allianz had failed to establish “good cause.” Allianz had known that Ow would be unable to testify at trial due to his declining mental faculties since July 2008, yet failed to object to Negrete’s continued representation of the California subclass until the present motion. The court observed that “courts will normally permit the estate’s representative to be substituted for the decedent as the class’s representative,” and found that Negrete’s change in status from conservator to executor did not render her an inadequate class representative.

The court also rejected Allianz’s argument that the motion to decertify was timely because a 2006 deposition by Ow would not be admissible at trial due to a November 8, 2012, statement by plaintiffs’ counsel that Ow was “incompetent, suffering from dementia and advanced Alzheimer’s” when he was deposed. The court observed that Negrete had testified that Ow was competent at the time of the deposition, and the testimony itself demonstrated that Ow “was, in large part, able to understand counsel’s questions and articulate responses.” The deposition would therefore be admissible at trial.

Motion to modify class definitions. The parties agreed that the class definitions should be modified to exclude certain Allianz products that did not “exhibit recoverable class-wide damages resulting from the alleged misrepresentations at issue,” and to exclude class members encompassed by two prior settlements with Allianz. The court found there modifications were “adequate.”

However, the parties disputed the notice that should be provided to class members regarding the statute of limitations applicable to their claims. The court agreed with the plaintiffs “that excluded class members be advised of the fact that the any tolling of the statute of limitations will expire upon their exclusion from the class,” contrary to Allianz’s “more general” proposed language regarding the “effect” of the amended definitions on the timeliness of their claims.

The cases are CV 05-6838-CAS (MANx) and CV 05-8908-CAS (MANx).

Attorneys: Andrew S. Friedman (Bonnett Fairbourn Friedman and Balint PC) for Vida F. Negrete, as Conservator for Everett E. Ow. Arthur G. Boylan (Leonard Street and Deinard) for Allianz Life Insurance Company of North America.

Companies: Allianz Life Insurance Company of North America

Cases: RICO StateUnfairTradePractices CaliforniaNews