Vogt v. State Farm Life Insurance Co., No. 18-3419 (8th Cir. 2020)
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Over 25,000 life insurance policyholders filed a class action, alleging that State Farm impermissibly included non-listed factors in calculating Cost of Insurance (COI) fees assessed on life insurance policies. After the jury returned a $34 million verdict in the class's favor, State Farm and the named plaintiff appealed.
The Eighth Circuit affirmed the judgment with respect to State Farm's appeal, holding that the phrase "based on" in the COI provision is at least ambiguous and thus must be construed against State Farm. Therefore, the district court did not err in construing the policy language in this manner and granting summary judgment to plaintiff on issues of liability. The court also held that the district court did not err in granting summary judgment to plaintiff on State Farm's affirmative defense of limitations. Furthermore, the court held that the district court did not err in certifying the class or in denying State Farm's motion to decertify the class. The court also held that the district court did not err in denying State Farm's motion for judgment as a matter of law based on the alleged insufficiency of the damages models as evidence of damages suffered by class members. Finally, the court rejected State Farm's claims of evidentiary errors, and challenges to the judgment in favor of the named plaintiff.
However, the court reversed and remanded with respect to the named plaintiff's cross appeal, holding that the district court erroneously denied plaintiff's motion for an award of prejudgment interest because the damages model does not include prejudgment interest for the entire time up until judgment.
Court Description: [Shepherd, Author, with Grasz and Kobes, Circuit Judges] Civil case - Class Actions. In this class action, more than 25,000 life insurance policyholders alleged defendant State Farm impermissibly included non-listed factors in calculating Cost of Insurance fees assessed on life insurance policies; a jury awarded them $34 million and State Farms appeals; the named plaintiff cross-appeals the district court's decision to deny the class prejudgment interest. Held: The district court did not err in determining that no ordinary person of average understanding purchasing the policies would conclude that State Farm would use non-listed factors to calculate COI when the policy stated the COI would be "based on" listed factors; the phrase is at least ambiguous and thus must be construed against State Farm; the district court did not err in denying State Farm's oral motion for summary judgment based on a statute-of-limitations defense; no error in certifying the suit as a class-action based on existing Eighth Circuit case law; nor were there class conflicts so substantial as to overbalance common interests of the class members as a whole; the district court's certification did not create an impermissible "fail-safe" class; plaintiff's damages models were sufficient to sustain the jury's damages award; various evidentiary challenges rejected; plaintiffs' judgment on their conversion claim affirmed; on the prejudgment interest cross-appeal, the district court properly denied plaintiffs request for the Missouri statutory rate of interest; however, plaintiffs were entitled to prejudgment interest at the 4% rate contained in the contract; remanded for further proceedings on calculating the interest award.
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