Freeman Investments, L.P., et al v. Pacific Life Ins. Co., No. 09-55513 (9th Cir. 2013)
Annotate this CasePlaintiffs purchased variable universal life insurance policies from defendant. Plaintiffs subsequently filed a class action suit against defendant under the Securities Litigation Uniform Standards Act (SLUSA), 15 U.S.C. 78bb(f)(1), for levying excessive cost of insurance charges. The court concluded that claims of breach of contract and breach of the duty of good faith and fair dealing were not precluded by SLUSA, even if such claims related to the purchase or sale of a covered security. The court reversed the district court's dismissal of the two contract claims, on the condition that plaintiffs amend their complaint to remove any reference to deliberate concealment or fraudulent omission. The court affirmed the dismissal of the class claim for unfair competition in violation of California law.
Court Description: Securities Litigation Uniform Standards Act of 1998. The panel affirmed in part and reversed in part the district court’s dismissal of a class action as precluded by the Securities Litigation Uniform Standards Act. SLUSA precludes state law class actions that allege misrepresentations or fraudulent omission in connection with the purchase or sale of covered securities. In this case, appellants purchased variable universal life insurance policies (under which the policy holder bears risks associated with the investment of premiums), and alleged various state law claims against their insurer. The panel held that the class claims for breach of contract and breach of the duty of good faith and fair dealing were not precluded by SLUSA, even if such claims related to the purchase or sale of a covered security, because these contract claims did not rest on misrepresentation or fraudulent omission. The panel reversed the district court’s dismissal of these two contract claims, on the condition that plaintiffs amend their complaint to remove any reference to deliberate concealment or fraudulent omission. The panel affirmed the dismissal of the class claim for unfair competition in violation of California law. The panel remanded with instructions that the district court grant leave for appellants to file an amended complaint.
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