Life Partners Investors Unlikely To Win Class Cert.: Judge By Jess Davis
Law360, Dallas (February 04, 2013, 9:18 PM ET) -- A Texas federal judge on Monday said she’s likely to deny class certification to investors who say Life Partners Inc. defrauded them by selling life settlements based on flawed predictions of life expectancy, saying the claims were too individualized to move forward as a class.
U.S. District Judge Barbara M.G. Lynn, speaking from the bench after oral arguments, said she would issue a written ruling after further weighing the issues but “remained troubled” by a class approach to the claims in part because of the complex questions raised by valuing human lives. Judge Lynn also blocked a move to intervene in the case by a group of investors who raised a different theory of recovery, saying they had waited too long to file and that adding them would unduly prejudice the existing parties.
The claims against Life Partners raise “innately and pervasive individual questions” that probably make the case inapt for class certification, Judge Lynn said.
The suit, filed in 2011, alleges Life Partners advertised investments in life settlements for insured persons predicted to die within 10 years, but based its life expectancy assessments entirely on the judgment of a doctor with no training in actuarial work. Investors paid more to buy stakes in policies with a shorter predicted lifespan and expected to recoup their money sooner, but allege they were duped and claim the company breached its contracts with and fiduciary duty to them by relying on the too-short life expectancy predictions.
Judge Lynn said while the plaintiffs have shown oncologist Donald Cassidy’s predictions were largely wrong, they didn’t raise a common theory of recovery that challenges his method as unreasonable at the time he made those evaluations, instead relying on the benefit of hindsight to show his inaccuracy. To show Cassidy’s predictions were unreasonable might require calculation of a more accurate life expectancy for each policy sold, she said.
Terrell W. Oxford of Susman Godfrey LLP, an attorney for the putative class, said the common question is whether Life Partners breached its duty to investors by retaining, overcompensating and failing to supervise Cassidy or check the accuracy of his evaluations. He argued the class could prove its claims without evaluating individual policies and said the question of whether Cassidy’s methods were sound should be reserved for the merits stage of the case.
Elizabeth L. Yingling of Baker & McKenzie LLP, who represents Life Partners, said Cassidy’s predictions were based on his medical judgment and an evaluation of risk factors for each of 757 life insurance policies, and argued the fact that many policyholders have lived longer than his predictions doesn’t in itself show a class claim.
Oxford said class counsel may file an appeal if class certification is denied but wouldn’t make that decision until Judge Lynn hands down her opinion.
A group of investors involved in state court suits against Life Partners moved to intervene in the case, arguing they were inadequately represented by the interim class counsel and stood to lose an opportunity to raise claims that they overpaid premiums for the investments. Judge Lynn denied the motion, saying it was filed too late and allowing the intervention would majorly delay Life Partners and the interim class from moving forward.
Judge Lynn said she did not think the investors would be precluded from making those claims, which class counsel chose not to pursue, in the state suits and would not be substantially prejudiced by excluding them from the federal case.
The putative class is represented by Kim E. Miller and Lewis Kahn of Kahn Swick & Foti LLC, Terrell W. Oxford and Steven G. Sklaver of Susman Godfrey LLP, Thomas E. Loeser, Steve W. Berman, Elaine T. Byszewski and Leonard W. Aragon of Hagens Berman Sobol Shapiro LLP, and Eric G. Calhoun of Travis Calhoun & Conlon PC.
The intervenors are represented by James C. Orr Jr. and Michael E. Heygood of Heygood Orr & Pearson.
Life Partners is represented by Elizabeth L. Yingling, Kimberly F. Rich and Will R. Daugherty of Baker & McKenzie LLP.
The case is Turnbow et al. v. Life Partners Inc. et al., case number 3:11-cv-01030, in the U.S. District Court for the Northern District of Texas.
--Editing by Jeremy Barker.
All Content © 2003-2013, Portfolio Media, Inc. |
