In re: AXA Equitable Life Insurance Company

Background

Policyholders brought claims against AXA arising from an increase in the cost of insurance, a monthly charge deducted from the value of an insurance policyholder’s account. The court had previously certified two nationwide classes: a Policy-Based Claims Class and an Illustration-Based Claims Class, along with a New York subclass of the Illustration-Based Claims Class.

The court later ruled that Wells Fargo, which was the registered owner of many policies, lacked standing to pursue the illustration-based claims. Standing means having the legally required injury or connection to bring a claim in federal court. The court then asked whether the Illustration-Based Claims Class should be decertified or modified. The policyholders asked to replace securities intermediaries serving as registered owners with the underlying entitlement holders. AXA argued that the class had to be decertified.

Court’s analysis

The court rejected AXA’s argument that the class could not remain certified because some entitlement holders might lack standing. The court explained that the Supreme Court’s decision in TransUnion v. Ramirez held that every class member must have standing to recover individual damages, but did not decide whether every class member must establish standing before a class is certified. The court followed Second Circuit law that standing for class certification is satisfied when at least one named plaintiff shows the required injury, and that absent class members generally need not submit individual evidence of standing at the certification stage.

The court also rejected AXA’s arguments under Rule 23(b)(3). Rule 23(b)(3) requires that common issues predominate over individual ones and that a class action be superior to other methods of resolving the dispute. The court said AXA’s arguments improperly assumed that the court had to decide each class member’s standing at the outset. It also reaffirmed that the key common questions—whether the illustrations were materially misleading and whether AXA knew that they were—remained more important than any additional individualized inquiries. The court stated that any people who ultimately could not show an injury could be excluded at the remedies stage.

The court further held that replacing registered owners who were securities intermediaries with the underlying entitlement holders was permissible under Rule 17(a)(3), which allows substitution of the real party in interest when identifying the proper plaintiff is difficult or an understandable mistake occurred. The court found no evidence that the policyholders acted in bad faith or intended to deceive or prejudice AXA. Although modifying the class could require additional discovery and cause some prejudice to AXA, the court concluded that the prejudice did not justify decertifying the class.

Ruling and next steps

The court DENIED AXA’s request for decertification. It modified the Illustration-Based Claims Class to include individuals who, on or after March 8, 2016, are or were registered owners of qualifying AUL II policies issued by AXA after July 10, 2006 and subjected to the announced cost-of-insurance increase. When a registered owner is a securities intermediary, that intermediary is excluded and the entitlement holder for the policy is included instead. The modified definition also excludes people who purchased policies after the cost-of-insurance increase was announced, AXA and specified people connected to AXA, and plaintiffs in related actions.

The New York Illustration-Based Claims Subclass remained defined as all members of the Illustration-Based Claims Class who reside in New York. The court ordered the parties to meet and file a joint letter addressing any needed discovery, renewed notice to the class, the trial plan and schedule, whether liability and remedies should be tried separately, and related issues including settlement. The court also directed the clerk to docket the opinion in the listed member cases.