The Eighth Circuit’s 2010 decision in Avritt v. Reliastar Life Insurance Co., 615 F.3d 1023 (8th Cir. 2010) denied class certification for, among other claims, a California Unfair Competition Law claim where class members could not prove through uniform evidence that the defendants engaged in misconduct. Two subsequent California federal cases have, however, not been persuaded by Avritt’s reasoning.
In Avritt, Plaintiffs were purchasers of fixed deferred annuities from Defendant’s predecessor, Northern Life Insurance Company (Northern), which paid a higher introductory rate of return that could drop after three years, though never lower than 3%. Although Northern at all times paid Plaintiffs a rate of return of higher than 3%, Plaintiffs alleged that the practice of paying a higher rate of return on more recent deposits was unfair and deceptive. Plaintiffs brought a putative class action alleging, inter alia, violation of the California Unfair Competition Law (UCL). The district court denied class certification and the Eighth Circuit Court affirmed.
The UCL as originally drafted allowed any California citizen to bring claims even if they had not been harmed by the disputed business practice. It was later amended to curb the filing of frivolous lawsuits to require actual injury for standing to bring claims under the act. The California Supreme Court interpreted this amendment to apply only to class representatives, and not all class members in Tobacco II Cases,46 Cal.4th 298, 207 P.3d 20 (2009). Plaintiffs relied on Tobacco II in arguing for class certification without producing evidence of individual class members’ reliance on misrepresentations and actual injury. The court rejected this argument, finding the Tobacco II holding to permit “uninjured plaintiffs to join a class action, provided that a lone representative has satisfied the statutory requirements articulated in Tobacco II.” The court held, however, that to the extent Tobacco II allows a single injured plaintiff to bring a class action on behalf of individuals who have not been injured, “it is inconsistent with the doctrine of standing as applied by federal courts.” Because uninjured class members could not bring individual suits on their own behalves, they lack standing, and “a named defendant cannot represent a class of persons who lack the ability to bring suits themselves.” Finally, the court found that Plaintiffs’ UCL claim would turn on Northern’s alleged misrepresentations, which were not made to plaintiffs in a uniform manner. Northern’s annuities were sold by thousands of independent agents without a uniform script. The court concluded that “[g]iven the varying experiences of each of the members of the putative class, it is unlikely that any misconduct could be uniformly established as to all purchasers.”
Subsequently, in at least two cases in the Northern District of California, the courts have found Avritt to be unpersuasive and certified class actions where absent class members have not demonstrated standing. See Greenwood v. Compucredit Corp., 2010 WL 4807095 (N.D. Cal. Nov. 19, 2010); Chavez v. Blue Sky Nat. Bev. Co., 268 F.R.D. 365 (N.D. Cal. June 18, 2010).