Ciofoletti v. Securian Financial Group, Inc.

Background

Eleanor Ciofoletti, Rocco Ciofoletti, and Larry Stospal sought to represent people who purchased indexed universal life insurance policies issued by Minnesota Life Insurance Company or Securian Life Insurance Company through Shurwest between April 1, 2016, and September 30, 2018. The proposed class consisted of policy purchasers whose premiums were funded in whole or in part with Future Income Payments, LLC products brokered through Shurwest.

The plaintiffs alleged that Future Income Payments operated a Ponzi scheme and that its products were used to fund life-insurance premiums. When Future Income Payments stopped making payments, the plaintiffs alleged that policyholders could no longer fund their policies, causing lapses, surrender charges, and other penalties. The plaintiffs sought class certification for a breach-of-fiduciary-duty claim against Securian Financial Group, Minnesota Life, Securian Life Insurance Company, and Minnesota Mutual Companies, Inc., collectively called the Securian Defendants, and for an aiding-and-abetting claim against Shurwest.

The opinion states that the court had previously dismissed claims against Shurwest for breach of fiduciary duty and vicarious liability. The remaining claims included breach of fiduciary duty against the Securian Defendants, aiding and abetting against Shurwest, strict vicarious liability against the Securian Defendants, and unjust enrichment against the Securian Defendants.

Class-Certification Standard

For a damages class under Federal Rule of Civil Procedure 23(b)(3), plaintiffs must satisfy Rule 23(a)’s prerequisites and show that common legal or factual questions predominate over questions affecting only individual class members. They must also show that a class action is superior to other available methods for resolving the dispute.

The court explained that this analysis can overlap with the merits of the underlying claims, but class certification asks whether the evidence for each class member can succeed or fail together. It does not decide whether the plaintiffs will ultimately win on the claims.

Breach of Fiduciary Duty

Under Minnesota law, a breach-of-fiduciary-duty claim requires a fiduciary duty, a breach, causation, and damages. Whether a fiduciary relationship exists is a factual question. The court described such a relationship as arising when one party places confidence in another and the second party has resulting superiority and influence.

The plaintiffs argued that common evidence would establish that the Securian Defendants owed the class members a fiduciary duty as financial planners. Minnesota law provides that people who represent themselves as financial planners have a fiduciary duty to people for whom they perform compensated services. The court found, however, that the plaintiffs had not identified class-wide evidence showing that Securian received compensation for providing financial-planning services to each proposed class member. Establishing that point would require individualized evidence.

The court also found that the plaintiffs had not shown common evidence establishing that Securian held itself out as a financial planner. The materials cited by the plaintiffs described Securian as a financial-services company and an insurance company, but did not answer whether it held itself out as a financial planner, counselor, or adviser under the applicable Minnesota statute.

The plaintiffs alternatively argued that other facts could establish a fiduciary relationship for the entire class. The court rejected that argument for class-certification purposes. Determining whether special circumstances created a fiduciary relationship would require examining each class member’s understanding of the insurance policies and investments, the person’s relationship with the financial adviser or insurance agent, and the person’s perception of and confidence in Securian.

The court acknowledged that some questions could be answered with common evidence, including whether Securian approved pairing its insurance policies with Future Income Payments investments and whether it allowed its agents to promote those investments. But the court concluded that the individualized question of whether Securian owed a fiduciary duty was a prerequisite to the other issues and would predominate over the common questions. The claim therefore would not prevail or fail for all class members together.

Aiding and Abetting

The plaintiffs alleged that Shurwest aided and abetted a breach of fiduciary duty by the Securian Defendants. The court identified three required components: the Securian Defendants breached fiduciary duties to the plaintiffs, Shurwest knew about the breach, and Shurwest substantially assisted or encouraged it.

Because the first component—whether the Securian Defendants owed and breached fiduciary duties—could not be established on a class-wide basis, the court held that the proposed class also could not be certified for the aiding-and-abetting claim. Individualized evidence about the fiduciary relationship between each class member and Securian would outweigh common questions about Shurwest’s role.

Disposition

The court ordered that the plaintiffs’ motion to certify the class, ECF No. 195, was DENIED. The ruling concerned the proposed class certification and did not determine the ultimate merits of the remaining claims.