PAPAK, United States Magistrate Judge.
Named plaintiffs Eileen Burk, David Youngbluth, Charles Ehrman Bates, and Lorraine Bates filed this putative class action against their insurer Bankers Life and Casualty Company ("Bankers"), Bankers' intermediate and ultimate parent companies CDOC, Inc. ("CDOC"), and CNO Financial Group, Inc. ("CNOFG"), individual defendant James Peterson, and ten corporate Doe defendants on April 4, 2013. On May 31, 2013, plaintiffs amended their complaint, abandoning their claims against Peterson and the corporate Doe defendants, adding Bankers' intermediate parent company Conesco Life Insurance Company of Texas ("CLIC") as an additional defendant, and adding David Castagno, Darla Castagno, Thomas Marier, and Dolores Marier as additional named plaintiffs. Effective October 23, 2013, plaintiffs amended their complaint a second time, abandoning their claims against Bankers' intermediate parent companies CDOC and CLIC. The parties' dispute arises out of the remaining defendants' alleged conduct in connection with the issuance of long-term health-care insurance policies to the plaintiffs, with raising plaintiffs' insurance premiums owed under those policies without commensurate increase in the benefits available thereunder, and with the handling and disposition of claims filed under the policies. By and through their second amended complaint, plaintiffs allege Bankers' and CNOFG's liability for elder abuse in violation of Oregon statutory law, breach of contract and of the implied covenant of fair dealing, fraudulent inducement to enter into the subject insurance agreements, and a tort styled as "intentional misconduct." Plaintiffs argue both that CNOFG may be found directly liable on each of their claims and, alternatively, that CNOFG may be found vicariously liable on their claims either on an alter ego or an agency theory. This court has subject-matter jurisdiction over plaintiffs' claims pursuant to 28 U.S.C. § 1332, based on the complete diversity of the parties and the amount in controversy.
Now before the court are CNOFG's motion (# 29) to dismiss for failure to state a claim and for lack of personal jurisdiction,
A motion to dismiss for lack of personal jurisdiction is governed by Federal Civil Procedure Rule 12(b)(2). See Fed. R.Civ.P. 12(b)(2). "In opposition to a defendant's motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing that jurisdiction is proper." Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir.2008), citing Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990). In evaluating the defendant's motion, "[t]he court may consider evidence presented in affidavits to assist it in its determination and may order discovery on the jurisdictional issues." Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir.2001), citing Data Disc, Inc. v. Systems Technology Assoc., Inc., 557 F.2d 1280, 1285 (9th Cir.1977). If the court decides the motion based on the pleadings and affidavits submitted by the parties without conducting an evidentiary hearing, "the plaintiff need make only a prima facie showing of jurisdictional facts to withstand the motion to dismiss." Id., quoting Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir.1995). In the absence of such an evidentiary hearing, the court accepts uncontroverted allegations contained within the plaintiff's complaint as true, and resolves conflicts between statements contained within the parties' affidavits in the plaintiff's favor. See id.
To survive dismissal for failure to state a claim pursuant to Rule 12(b)(6), a complaint must contain more than a "formulaic recitation of the elements of a cause of action;" specifically, it must contain factual allegations sufficient to "raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). To raise a right to relief above the speculative level, "[t]he pleading must contain something more ... than ... a statement of facts that merely creates a suspicion [of] a legally cognizable right of action." Id., quoting 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-236 (3d ed.2004); see also Fed.R.Civ.P. 8(a). Instead, the plaintiff must plead affirmative factual content, as opposed to any merely conclusory recitation that the elements of a claim have been satisfied, that "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). "In sum, for a complaint to survive a motion to dismiss, the non-conclusory `factual content,' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. United States Secret Serv., 572 F.3d 962, 970 (9th Cir.2009), citing Iqbal, 129 S.Ct. at 1949.
"In ruling on a 12(b)(6) motion, a court may generally consider only allegations contained in the pleadings, exhibits
In conducting an action under [Federal Civil Procedure Rule 23], the court may issue orders that:
Fed.R.Civ.P. 23(d).
Defendant Bankers is a Delaware corporation with its principal place of business in Illinois, engaged in the business of issuing and selling insurance policies, including elder disability care and long-term health-care policies such as those purchased from it by some of the named plaintiffs. Bankers is a wholly-owned indirect corporate subsidiary of defendant CNOFG.
CNOFG is a Delaware corporation with its principal place of business in Delaware. Plaintiffs allege that CNOFG (and/or its immediate corporate predecessor entity) at all material times oversaw Bankers' activities in marketing long-term health-care policies to older Oregonians, and played a direct role in reviewing and processing claims filed under such policies. Plaintiffs further allege that in the ordinary course of business CNOFG exercises "day-to-day management and control over Bankers," including by providing all human resources, public relations, legal affairs, product development, and employee training services and functionality to Bankers. Moreover, plaintiffs allege that it was William Kirsch, the CEO of CNOFG, who in 2005 was the architect of the policies and procedures complained of here, and who specifically and expressly required Bankers to begin denying legitimate claims under Bankers' long-term health-care policies and to create obstacles intentionally calculated to make filing such claims more burdensome for Bankers' insureds.
Each of the named plaintiffs, like the members of the proposed classes the named plaintiffs purportedly represent, is (and at all material times was) an individual resident of Oregon. Each of the named plaintiffs other than Youngbluth, who is the son of named plaintiff Eileen Burk, was issued a long-term health-care insurance policy by Bankers.
As discussed in greater detail below, the Bateses (Charles Ehrman Bates and Lorraine Bates), the Burk family (Eileen Burk and her uninsured son David Youngbluth), and the Mariers (Thomas Marier and Dolores
The Castagnos (David Castagno and Darla Castagno), by contrast, have never attempted to file a claim under their policy, but rather are concerned that should they need to avail themselves of the coverage they believed they were promised when they purchased the policy, Bankers will delay payment, deny coverage in whole or in part, and otherwise breach their agreement in the same manner as it allegedly did in connection with the claims filed on behalf of Lorraine Bates, Eileen Burk, and Thomas Marier.
The plaintiffs propose three classes of absent plaintiffs purportedly similarly situated to the named plaintiffs: (i) Oregonian policy-holders whose claims have been mishandled by Bankers through a combination of delay and nonpayment of claims between 2005 and the present, notwithstanding the insureds' timely payment of all policy premiums (plaintiffs' "Class A," putatively represented by Lorraine Bates, Eileen Burk, and Thomas Marier), (ii) family members and other representatives of such Oregonian policy-holders who have incurred expenses in the course of attempting to obtain benefits for their policy-holder family members under their policies (plaintiffs' "Class B," putatively represented by Charles Ehrman Bates, David Youngbluth, and Dolores Marier), and (iii) Oregonian policy-holders who have paid all policy premiums on a timely basis and who have not yet filed any claim under their policies (plaintiffs' "Class C," putatively represented by Charles Ehrman Bates, Dolores Marier, David Castagno, and Darla Castagno).
Bankers is in the business of selling annuities and elder disability care insurance policies to older Oregonians. Bankers aggressively marketed long-term health-care insurance policies to this demographic despite its awareness, by not later than 2005, that it would be unable to comply with its obligations under those policies due to rising health care costs and due to increased projected longevity among its insured population. At the time of sale of such a policy, Bankers would advise purchasers to "review carefully all policy limitations," but would provide neither a copy of the policy itself nor a summary of all applicable limitations, but rather only a misleading summary of select policy provisions.
In addition, defendants "developed onerous procedures" calculated to discourage policyholders from pursuing valid claims for insurance benefits under the policies and to delay and deny such claims improperly, including the following:
Second Amended Complaint, ¶ 37.
Charles Ehrman and Lorraine Bates purchased a long-term health-care policy from Bankers (Policy No. 980,155,343 or the "Bates policy") on or around June 30, 1998. In December 2009, Lorraine Bates moved into an elder care facility, and her husband Charles Ehrman Bates submitted a claim to Bankers on her behalf, seeking reimbursement of the costs thereby incurred. In September 2010, Bankers denied coverage on spurious grounds. Shortly thereafter, the Bateses retained the services of an attorney who pursued their claim against Bankers. In June 2011, Bankers agreed to pay the Bates' claim retroactively to July 9, 2010, but refused to cover the Bates' expenses incurred between December 2009 and July 2010. The Bateses continue to pay premiums under their Bankers policy, notwithstanding policy provisions that waive premiums following 90 consecutive days of benefits paid under the policy.
Elieen Burk purchased a long-term health-care policy from Bankers (Policy No. 950,193,392 or the "Burk policy") on or around July 27, 1995. In December 2008, Burk moved into an assisted living facility, and her son Youngbluth attempted to submit a claim to Bankers on her behalf, seeking reimbursement of the costs thereby incurred. Youngbluth was unsuccessful in his efforts to submit the claim, due to the failure of Bankers' employees and of the insurance agent who initially sold the policy to Burk to assist him or to respond to his inquiries. Youngbluth retained counsel to assist him, and his attorney ultimately submitted Burk's claim with supporting materials in April 2009. In May 2009, Bankers agreed to pay the claim retroactively to March 31, 2009, but failed to reimburse 63 days of covered expenses notwithstanding its concession that coverage existed during the material period. In December 2009, Bankers agreed to waive further premium payments under the policy retroactively to August 2009, although according to the terms of the policy such waiver should have taken effect as of April 2009. The Burk family's counsel requested a copy of the policy from Bankers, but in response Bankers provided only a summary of the policy. In May 2012, Bankers advised Burk that she had exhausted the benefits available under her policy, and ceased paying further benefits. In addition, because no further benefits were to be paid, Bankers
Thomas and Dolores Marier purchased a long-term health-care policy from Bankers (Policy No. 940,143,808 or the "Marier policy") on or around April 1, 1994. Thomas Marier received home health-care services for nine months from February 16, 2011, through November 24, 2011, and in February 2011 his wife Dolores Marier submitted a claim to Bankers on his behalf, seeking reimbursement of the costs thereby incurred. In April 2011, Bankers denied the claim on the spurious ground that the Marier policy did not pay for the first 30 days of home health care, whereas in fact the policy excluded coverage only for the first 14 days of home health care. In May 2011 Dolores Marier pointed out the error, and in August 2011 Bankers acknowledged its mistake and paid $840 of the $865 it owed for the first 16 covered days of Thomas Marier's home health care (without explanation for its failure to pay the full covered amount). In December 2011, Bankers characterized its payment of $840 as an overpayment, again citing the spurious 30-day exclusion invoked in connection with the initial denial, and demanded that the Mariers return the funds. The Mariers complied, out of concern that Bankers would otherwise void the policy in its entirety. Dolores Marier filed a complaint with the Oregon Insurance Division in March 2013, and in response to the complaint Bankers advised the agency that it had paid the claim, without acknowledging that its payment had been returned.
In November 2011, Thomas Marier moved into a nursing home, and Bankers began paying benefits 30 days thereafter. Thomas Marier remained in the nursing home until January 2012, when he was hospitalized until February 2012. In February 2012, Thomas Marier moved into a new nursing home that specialized in caring for residents with his condition. In December 2012, Bankers agreed to waive the Mariers' premium payments, which according to the Marier policy became waived after 90 days of consecutive benefits, retroactively to June 2012, on the purported ground that the hospitalization of early 2012 constituted an interruption in the care Thomas Maurier had been receiving. Dolores Marier again complained to the Oregon Insurance Division, and Bankers refunded the remaining waived premiums.
In October 2012, Thomas Marier moved to Oregon State Hospital, the only Oregon facility then willing to accept him as an inpatient given his condition. Bankers has refused to cover any of the costs thereby incurred, notwithstanding Thomas Marier's continued eligibility for coverage under the policy. Because Bankers stopped paying benefits, it additionally ceased waiving the Mariers' premiums.
David and Darla Castagno purchased a long-term health-care policy from Bankers (Policy No. 950,189,898 or the "Castagno policy") on or around July 31, 1995. They have timely paid all premiums under the policy, but have never made a claim under it.
According to defendants' evidentiary submissions, the Bates policy, the Burk policy, the Marier policy, the Castagno policy and all policies issued by Bankers to members of putative Class A and Class C all expressly provide that "[n]o legal action may be brought to recover on this policy. . . . after 3 years . . . from the time written proof of loss is required to be given." Except where it is not reasonably possible for an insured to do so, the policies provide that written proof of loss must be submitted "within 90 days after the end of each
As noted above, by and through its motion (#29) to dismiss, defendant CNOFG moves pursuant to Federal Civil Procedure Rule 12(b)(2) for dismissal of plaintiffs' claims against it for lack of personal jurisdiction, and in the alternative moves for dismissal of plaintiffs' claims for failure to state a claim upon which relief can be granted pursuant to Federal Civil Procedure Rule 12(b)(6), on the narrow ground that plaintiffs have failed adequately to allege CNOFG's involvement in and/or vicarious responsibility for the conduct complained of in plaintiffs' complaint. In addition, by and through their motion (#39) to dismiss, defendants Bankers and CNOFG together challenge the broader adequacy of plaintiffs' allegations to support their claims under Rule 12(b)(6). In the discussion that follows, I address first the jurisdictional issues raised by CNOFG's motion and then, following analysis of defendants' motion (#32) to strike class allegations, combine discussion and analysis of the issues raised by CNOFG's Rule 12(b)(6) arguments and defendants' Rule 12(b)(6) motion.
By and through its motion (#29) to dismiss, CNOFG argues that plaintiffs' claims against it should be dismissed for lack of personal jurisdiction. For the reasons set forth below, CNOFG's motion to dismiss for lack of personal jurisdiction is granted without prejudice as to plaintiffs' fraud in the inducement claim to the extent alleged against CNOFG only, and otherwise denied.
"When no federal statute governs personal jurisdiction, the district court applies the law of the forum state." Boschetto, 539 F.3d at 1015, citing Panavision Int'l L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir.1998). Oregon's long-arm statute creates a standard co-extensive with federal jurisdictional standards, see Or. R. Civ. P. 4L, so a federal court sitting in the District of Oregon may exercise personal jurisdiction wherever it is possible to do so within the limits of federal constitutional due process, see, e.g., Gray & Co. v. Firstenberg Mach. Co., 913 F.2d 758, 760 (9th Cir.1990).
Federal due process jurisprudence requires that, to be subject to the personal jurisdiction of a federal court, a nonresident defendant must have at least "`minimum contacts'" with the court's forum state such that "the exercise of jurisdiction `does not offend traditional notions of fair play and substantial justice.'" Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 801 (9th Cir.2004), quoting International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Two forms of personal jurisdiction are available for application to a nonresident defendant: general personal jurisdiction and specific personal jurisdiction.
"For general jurisdiction to exist over a nonresident defendant . . ., the defendant must engage in continuous and systematic general business contacts . . . that approximate physical presence in the forum state." Schwarzenegger, 374 F.3d at 801, quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984) and Bancroft & Masters, Inc. v. Augusta Nat'l,
The courts of the Ninth Circuit apply a three-pronged test for determining whether, in connection with a given claim, the exercise of specific personal jurisdiction over a nonresident defendant is appropriate:
Schwarzenegger, 374 F.3d at 802, quoting Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir.1987). The plaintiff bears the burden of satisfying the first two prongs of the test, whereupon the burden shifts to the defendant to "`present a compelling case' that the exercise of jurisdiction would not be reasonable." Id., quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476-78, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985).
In the context of cases that sound primarily in tort, courts have considered it sufficient to satisfy the first prong of the test where the only contact a nonresident defendant had with the forum state was "the `purposeful direction' of a foreign act having effect in the forum state." Haisten v. Grass Valley Medical Reimbursement Fund, Ltd., 784 F.2d 1392, 1397 (9th Cir. 1986) (emphasis original), citing Calder v. Jones, 465 U.S. 783, 789, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984). This "`effects' test requires that the defendant allegedly have (1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state." Dole Food Co. v. Watts, 303 F.3d 1104, 1111 (9th Cir.2002). "The requirement is but a test for determining the more fundamental issue of whether a `defendant's conduct and connection with the forum state are such that he should reasonably anticipate being haled into court there.'" Id., quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980).
In Bancroft & Masters, Inc. v. Augusta Nat'l Inc., 223 F.3d 1082 (9th Cir.2000), the Ninth Circuit discussed the
Bancroft & Masters, 223 F.3d at 1087-1088 (emphasis supplied; modifications original).
The second prong of the specific personal jurisdiction test requires that the plaintiff's claim arise out of the nonresident defendant's forum-related activities. See Boschetto, 539 F.3d at 1016. Moreover, it has long been settled law in the Ninth Circuit that "[w]here . . . a plaintiff raises two [or more] separate causes of action, the court must have in personam jurisdiction over the defendant with respect to each claim." Data Disc, Inc. v. Systems Technology Associates, Inc., 557 F.2d 1280, 1289, n. 8 (9th Cir.1977), citing 6 C. Wright & A. Miller, Federal Practice and Procedure § 1588, at p. 816 (1971).
At the third prong of the specific personal jurisdiction test, the burden shifts to the defendant to present a "compelling case" to rebut the presumption that the exercise of specific personal jurisdiction would be reasonable. See id.
Shute v. Carnival Cruise Lines, 897 F.2d 377, 386 (9th Cir.1990), citing Federal Deposit Ins. Corp. v. British-American Ins. Co., Ltd., 828 F.2d 1439, 1442 (9th Cir. 1987). "The court[s] must balance the seven factors to determine whether the exercise of jurisdiction would be reasonable." Id., citing British-American, 828 F.2d at 1442.
As noted above, plaintiffs allege that CNOFG both oversaw Bankers' activities in marketing long-term health-care policies to older Oregonians and played a direct role in some of the conduct plaintiffs complain of in this action, including by reviewing and processing claims filed by Bankers' insureds under the long-term health-care policies at issue here and by expressly instructing Bankers to deny or delay payment of benefits on legitimate claims filed under those policies, beginning in or around 2005. While mere oversight of marketing activities cannot meet the "purposeful direction" prong of the specific personal jurisdiction test, in that such oversight cannot properly be characterized
At the second prong of the test, the court's task is to determine whether each of the plaintiffs' claims arise out of CNOFG's forum-related activities. Analysis of plaintiffs' allegations establishes that plaintiffs' elder abuse, breach, and intentional misconduct claims are each premised in whole or in part upon defendants' claims-handling practices, in which CNOFG allegedly played a direct role. As to these three claims, therefore, the second prong of the test is satisfied.
As to the fraudulent inducement claim, however, a different analysis obtains. As a preliminary matter, it is not altogether obvious precisely what the gravamen of the claim is intended to be. Plaintiffs' original and first amended complaints each clearly alleged defendants' liability for fraud in inducing the plaintiffs to enter into Bankers' long-term health-care insurance policies. However, by and through their memorandum in opposition to defendants' motion to dismiss (and at oral argument in connection with that motion), plaintiffs expressly abandoned their pled theory of fraud in the inducement in favor of a novel, unpled theory according to which defendants' fraud was intended to induce plaintiffs not to enter into the insurance contracts but rather to continue paying premiums pursuant to the agreements they had already previously entered into. Nevertheless, following oral argument in connection with the motions now before the court, plaintiffs amended their complaint a second time, once again pleading a theory of fraudulent inducement to enter into the insurance contracts in the first instance, and making no allegations in support of the theory espoused by the plaintiffs in their briefing and at oral argument.
Plaintiffs' second amended complaint is plaintiffs' operative pleading in this matter and governs the scope of plaintiffs' claims. See, e.g., Brawner v. Pearl Assurance Co., 267 F.2d 45, 49 n. 2 (9th Cir.1958). I therefore construe plaintiffs' third enumerated claim for relief, alleging defendants' liability for fraud, as a claim for fraud in inducing plaintiffs to purchase long-term health-care insurance from Bankers. As such, the claim does not arise out of CNOFG's forum-related claims-handling activities (and as noted above cannot arise for jurisdictional purposes out of CNOFG's mere oversight of Bankers' marketing activities), and this court lacks personal jurisdiction over CNOFG in connection with plaintiffs' fraud claim, to the extent it is CNOFG's own Oregon-related conduct that is at issue.
At the third prong of the test, the court must determine whether CNOFG has met
As noted above, I agree with CNOFG that plaintiffs' allegations of CNOFG's forum-directed conduct are insufficient to support a finding that this court may properly exercise personal jurisdiction over CNOFG for purposes of plaintiffs' fraudulent inducement claim based on CNOFG's own contacts with Oregon. In the alternative, plaintiffs argue that this court may properly impute Bankers' contacts with Oregon to CNOFG, Bankers' ultimate corporate parent. Plaintiffs argue that such imputation may be appropriate on either an alter ego theory or an agency theory.
In general, "[t]he existence of a relationship between a parent company and its subsidiaries is not sufficient to establish personal jurisdiction over the parent on the basis of the subsidiaries' minimum contacts with the forum." Unocal, 248 F.3d at 925, citing Transure, Inc. v. Marsh and McLennan, Inc., 766 F.2d 1297, 1299 (9th Cir.1985). However, where "the parent and subsidiary are not really separate entities, or one acts as an agent of the other, the local subsidiary's contacts with the forum may be imputed to the foreign parent corporation." Id., quoting El-Fadl v. Central Bank of Jordan, 75 F.3d 668, 676 (D.C.Cir.1996).
In order to establish specific personal jurisdiction over a defendant based on the contacts of its subsidiary on an alter ego theory, a plaintiff must make out a prima facie case "(1) that there is such unity of interest and ownership that the separate personalities of the two entities no longer exist and (2) that failure to disregard their separate identities would result in fraud or injustice." Id. at 926 (internal modifications omitted), quoting American Telephone & Telegraph Co. v. Compagnie Bruxelles Lambert, 94 F.3d 586, 591 (9th Cir.1996). Such unity of interest is present where "a parent corporation uses its subsidiary `as a marketing conduit' and attempts to shield itself from liability based on its subsidiaries' activities," id., quoting United States v. Toyota Motor Corp., 561 F.Supp. 354, 359 (C.D.Cal.1983), or "where the record indicates that the parent dictates `every facet of the subsidiary's business—from broad
Id. at 927-928 (holding that because the corporate parent and subsidiary defendants before it "observe[d] all of the corporate formalities necessary to maintain corporate separateness" notwithstanding the parent's active involvement in the subsidiaries' operations, the evidence did not establish that the entities were alter egos of one another).
Here, plaintiffs proffer evidence that CNOFG "tightly controlled every aspect of Bankers' business, from hand-picking its executive Vice presidents to setting the budget goals and participating in Bankers strategy meetings." In addition, plaintiffs offer evidence that Banker did not maintain its own human resources department, but rather depended on CNOFG to provide HR services, and that CNOFG was involved in processing claims made on Bankers' insurance policies. As was the case in Unocal, however, such evidence is far short of what would be required to support the conclusion that CNOFG and
In order to establish specific personal jurisdiction over a defendant based on the contacts of its subsidiary on an agency theory, a plaintiff must make a prima facie showing that "the subsidiary functions as the parent corporation's representative in that it performs services that are `sufficiently important to the foreign corporation that if it did not have a representative to perform them, the corporation's own officials would undertake to perform substantially similar services.'" Id. at 928, quoting Chan v. Society Expeditions, Inc., 39 F.3d 1398, 1405 (9th Cir. 1994). That is, imputation of contacts is appropriate on an agency theory where the subsidiary "functions as `merely the incorporated department of its parent,'" and "the subsidiaries' presence substitutes for the presence of the parent" for all operational purposes. Id., quoting Gallagher v. Mazda Motor of America, Inc., 781 F.Supp. 1079, 1084 (E.D.Pa.1992).
Here, plaintiffs do not attempt to meet the foredescribed standard. Instead, plaintiffs argue that Bankers was CNOFG's agent because Bankers carried out directives issued by its parent entity and acted in some sense on authority delegated by CNOFG. If plaintiffs' argument were apposite, the result would be that virtually all corporate parents could be haled into court in any jurisdiction in which they had subsidiaries, on the ground that virtually all subsidiaries serve as their parents' agents for some purposes. However, such garden-variety forms of agency are insufficient to satisfy the jurisdictional agency standard, which requires that but for the subsidiary's presence in the jurisdiction, the parent would necessarily be present performing all of the same functions actually performed by its subsidiary. "At an irreducible minimum, the general agency test requires that the agent perform some service or engage in some meaningful activity in the forum state on behalf of its principal such that its `presence substitutes for presence of the principal.'" Id. at 930, quoting Gallagher, 781 F.Supp. at 1084; see also Daimler AG, 134 S.Ct. at 759-760, 760 n. 15 (rejecting agency theory of specific personal jurisdiction formally indistinguishable from that espoused by CNOFG here). Because plaintiffs have made no showing that Bankers serves as an incorporated department of CNOFG rather than as a genuine subsidiary, this court may not properly exercise specific personal jurisdiction over CNOFG in connection with plaintiffs' fraud in the inducement claim based on an agency theory. Plaintiffs' fraud in the inducement claim is therefore dismissed without prejudice to the extent alleged against CNOFG only, for lack of personal jurisdiction in this district. This court may properly exercise specific personal jurisdiction over each of plaintiffs' remaining claims.
As noted above, plaintiffs propose three separate classes of named and absent plaintiffs: (i) Oregonian policy-holders whose claims have been mishandled by Bankers through a combination of delay and nonpayment of claims between 2005
Federal Civil Procedure Rule 23(a) provides that named plaintiffs may represent a class of similarly situated persons in a class action lawsuit only where:
Fed.R.Civ.P. 23(a). Federal Civil Procedure Rule 23(b) provides, in addition, that a class action may only be maintained if at least one of the following three factors is satisfied:
Fed.R.Civ.P. 23(b).
In the context of a motion to certify a class, it is the plaintiffs who bears the burden to establish that the class is certifiable. However, in the context of a
Pursuant to Federal Civil Procedure Rule 23(a)(3):
Hanlon v. Chrysler Corp., 150 F.3d 1011, 1029 (9th Cir.1998). In support of their argument that plaintiffs cannot meet the requirements of Rule 23(a)(3), defendants point to evidence that the absent putative plaintiffs and/or their family members did not purchase identical long-term health-care policies from Bankers, but rather purchased policies with different lifetime and daily coverage maxima and different coverage exclusions, among other policy provisions. In consequence, defendants argue, both liability and damages will require individual analysis and calculation for every member of each putative class. Defendants additionally take the position that, as is the case for the named plaintiffs, all absent members of putative Class A and putative Class B will allege different conduct to establish breach of applicable policy provisions, necessitating individual analysis and determination of each such plaintiff's claims premised on defendants' claims-handling procedures and/or improper delay or denial of claims. In similar vein, defendants argue that each policyholder will have received a different combination of marketing materials and will have received different specific representations regarding the policy from defendants' (various) sales agents at the time of purchase, requiring separate individual evaluation of the fraud in the inducement and related claims for each absent member of putative Class A and putative Class B. As to the members of putative Class C, defendants argue that because such plaintiffs' claims are purely speculative, and because by proposed definition no such member has suffered any actual injury in consequence of defendants' alleged conduct, the claims are not appropriate for class treatment.
I agree with the defendants as to the members of putative Class A and putative Class B (and as to the members of putative Class C to the extent their claims are premised on fraud in the inducement). To the extent such plaintiffs' claims are premised on allegations of claims mishandling, such claims inevitably require case-by-case analysis of the operative facts, because the inquiry is in all respects fact-specific for every insured, including inquiry as to the insureds' particular health conditions and medical needs, the particular care provided and the nature of the particular institution within which care was provided, and the specific coverage and exclusion provisions of the particular policy at issue. That is, to establish that defendants are liable for breach of a provision of one insured's contract cannot establish that defendants are likewise liable for breach of all or even any other similarly situated insureds' contracts. To the extent such plaintiffs' claims are premised on fraud in the inducement, a similar case-by-case analysis of operative facts would be required, in that the policies at issue were sold following verbal negotiations between
As to the members of putative Class C to the extent their claims are premised on the concern that their possible future claims under their long-term health-care policies will one day be mishandled, defendants' arguments are entirely inapposite. Indeed, the claims of the named plaintiffs putatively representing Class C are necessarily entirely typical of those of all absent members of putative Class C, in that all such plaintiffs share the same combination of legal issues and (lack of) operative facts. However, for reasons discussed below, it is clear as a matter of law that to the extent any named or absent plaintiff is a member of putative Class C, that plaintiff lacks standing to pursue claims against the defendants. In consequence, the fact that proposed Class C may partially satisfy the typicality requirement of Rule 23(a)(3) provides no grounds for denial of defendants' motion to strike.
Plaintiffs argue that further proceedings in connection with defendants' motion to strike should be deferred until such time as the parties have exchanged documents in class-related discovery. I disagree. Even if such discovery were to establish clearly that defendants had a policy of improperly delaying and denying meritorious claims brought under Bankers' long-term health-care policies, as the named plaintiffs' claims illustrate, the details of the defendants' implementation of their uniform policy as to any given plaintiff, the court's determination whether the complained-of tactics were in any given instance actionable, and the calculation of any given plaintiff's resulting damages would require separate analysis and litigation for every plaintiff, whether named or absent. Similarly, even if discovery were to establish that defendants promulgated entirely uniform marketing materials to every one of Bankers' sales agents who sold policies to the putative class members, and that such sales agents had been instructed to market the policies according to a uniform script, such discovery would not obviate the need for individual inquiry into the extent to which the sales agents might have deviated from the script in specific cases, or the need for plaintiffs to make individualized showings of the elements of their claims to the extent premised on fraud.
Plaintiffs' inability to satisfy the requirements of Rule 23(a)(3) provides sufficient grounds, without more, for granting defendants' motion to strike. See Fed.R.Civ.P. 23(a). In addition, however, it is far from clear that plaintiffs could satisfy the requirements of Rule 23(b). As to Rule 23(b)(1), separate adjudication of the absent plaintiffs' claims does not appear likely to establish incompatible standards of conduct for defendants, because the applicable standards are well-established and unlikely to be changed as a result of fact-specific individual applications to an array of plaintiffs, and there appears to be little risk that adjudication of one such plaintiff's claims would be dispositive of any other such plaintiff's claims because, as discussed above, each plaintiff's claims will require individual analysis and inquiry. As to Rule 23(b)(2), the named and absent plaintiffs here primarily seek money damages rather than injunctive or declaratory relief from the defendants, and the putative class members' claims could not be resolved by the entry of a single injunctive order. As to Rule 23(b)(3), for the same reasons that the named plaintiffs' claims cannot be deemed typical of the absent putative class members' claims, individual
By and through their motion (# 39) to dismiss, defendants Bankers and CNOFG seek dismissal of plaintiffs' elder abuse, fraud in the inducement, and intentional misconduct claims in their entirety, dismissal of plaintiffs' breach claims to the extent premised on Bankers' conduct in raising the premium payments due under plaintiffs' long-term health-care insurance policies, and (partially in the alternative) dismissal of plaintiffs' claims to the extent they may be time-barred in whole or in part, to the extent certain plaintiffs may lack standing to bring their claims, and/or to the extent plaintiffs may seek impermissible relief in connection with their claims. In addition (as noted above), by and through its motion (#29) to dismiss for failure to state a claim, CNOFG challenges the adequacy of plaintiffs' allegations of CNOFG's direct involvement in the conduct underlying plaintiffs' claims and alternatively challenges the adequacy of plaintiffs' allegations in support of their alter ego and agency theories of CNOFG's liability on their claims.
For the reasons set forth below, (i) defendants' motion (# 39) to dismiss for failure to state a claim is granted with prejudice as to plaintiffs' elder abuse claim in its entirety, with prejudice as to plaintiffs' fraud claim to the extent premised on a theory of fraudulent inducement to continue paying policy premiums pursuant to
Or.Rev.Stat. 124.100(2) creates a statutory cause of action for financial or other abuse of a "vulnerable person," defined inter alia as a person aged 65 or older. See Or.Rev.Stat. 124.100(2),.100(1)(a), .100(1)(e)(A).
Or.Rev.Stat. 124.110(1). "A claim is stated under [Section 124.110(1)(b)] when it is alleged that (1) the vulnerable person requests that another person transfer money to the vulnerable person; (2) the money requested to be transferred belongs to the vulnerable person; (3) the other person continues to hold the money or fails to take reasonable steps to make the money readily available to the vulnerable person; (4) the money was acquired from the vulnerable person; and (5) the other person acts in bad faith, or knew or should have known of the right of the vulnerable person to have the money * * * transferred as requested or otherwise made available to the vulnerable person." Hoffart v. Wiggins,
As pled in plaintiffs' original and first amended complaints, plaintiffs' elder abuse claim was expressly premised on alleged financial abuse both in connection with defendants' claims-handling practices and in connection with inducing plaintiffs to enter into their long-term healthcare policies. However, in opposition to defendants' motion to dismiss and at oral argument in connection with the motion, plaintiffs expressly abandoned their elder abuse claim to the extent premised on fraud in the inducement, and argued only that defendants financially abused the plaintiffs by delaying and/or denying meritorious claims for benefits. Nevertheless, following oral argument in connection with defendants' motion, plaintiffs amended their pleading and restated their elder abuse claim as if premised on both claims mishandling and fraud in the inducement.
To the extent the claim is premised on wrongful delay and/or denial of meritorious claims filed under plaintiffs' long-term health-care policies, it is not cognizable as elder abuse under Oregon's statutory scheme. Pursuant to Hoffart, retention of moneys belonging to a vulnerable person is actionable under Section 124.100(2) only where "the money was acquired [by the defendant] from the [elderly] person," see Hoffart, 226 Or.App. at 549, 204 P.3d 173, which is to say under the bailment or trust scenarios expressly referenced in the statutory language, see Or.Rev.Stat. 124.110(1)(b). Because delay or denial of insurance benefits does not constitute retention of moneys "acquired from" the insured, there is no elder abuse claim under Section 124.100(2) arising out of defendants' alleged claims-handling practices.
To the extent the claim is premised on fraud in the inducement, such conduct does appear to be cognizable as elder abuse under Sections 124.100(2) and 124.110(1) as currently codified. See, e.g., Cruze v. Hudler, 246 Or.App. 649, 666, 267 P.3d 176 (2011). However, under the circumstances it is nevertheless not actionable as such, in that the Bates policy was purchased on or around June 30, 1998, the Burk policy was purchased on or around July 27, 1995, the Marier policy was purchased on or around April 1, 1994, and the Castagno policy was purchased on or around July 31, 1995, whereas Section 124.110(2) was only made applicable against non-fiduciaries of the vulnerable person in 1999, with no expression of intent to make the change applicable retroactively. See Or.Rev.Stat. 124.110(2) (1995); Or.Rev.Stat. 124.110(2) (1999); 1999 Or. Adv. Leg. Serv. 305. In consequence, plaintiffs' claims arising out of pre-1999 conduct are not actionable under the statute, notwithstanding the fact that the conduct was not discovered until after the change was enacted.
Because the complained of conduct does not give rise to any cause of action under Sections 124.100(2) and 124.110(1), plaintiffs' elder abuse claim is dismissed with prejudice in its entirety as to all defendants. In consequence, I need not address CNOFG's arguments in support of its Rule 12(b)(6) motion to the extent they address the elder abuse claim.
Under Oregon law, the elements of a fraud claim are:
Webb v. Clark, 274 Or. 387, 391, 546 P.2d 1078 (1976); Johnsen v. Mel-Ken Motors, 134 Or.App. 81, 89, 894 P.2d 540 (1995). While the elements of plaintiffs' fraud claim are governed by Oregon substantive law, federal procedural law governs the manner in which those elements must be pled. See Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103 (9th Cir.2003). By and through their motion (# 39) to dismiss, defendants challenge both the adequacy of plaintiffs' allegations to satisfy heightened federal pleading standards applicable to claims of fraud and, alternatively, whether plaintiffs have stated a fraud claim upon which relief can be granted under Oregon law.
Federal Civil Procedure Rule 9(b) provides, in relevant part, that "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally." Fed.R.Civ.P. 9(b). The Rule 9(b) particularity requirement is satisfied if the pleading "identifies the circumstances constituting fraud . . . so that the defendant can prepare an adequate answer from the allegations." Moore v. Kayport Package Express, Inc., 885 F.2d 531, 540 (9th Cir. 1989). That is, the allegations must be sufficiently specific "to give defendants notice of the particular misconduct which is alleged to constitute the fraud . . . so that they can defend against the charge and not just deny that they have done anything wrong." Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir.1985).
As noted above, by and through their originally filed and first amended complaints, plaintiffs alleged defendants' liability for fraud specifically in the inducement to enter into longterm health-care insurance policies with Bankers. However, in opposition to defendants' motion to dismiss and at oral argument in connection therewith, plaintiffs expressly abandoned their pled theory of fraud in the inducement in favor of a novel, unpled theory according to which defendants' fraud was intended to induce plaintiffs not to enter into the insurance contracts but rather to continue paying premiums pursuant to the agreements they had already entered into. Subsequently, plaintiffs amended their complaint a second time, and in their second amended complaint plaintiffs allege only defendants' fraud in the inducement to enter into the insurance agreements, and make no allegations in support of their theory of fraud in the inducement to continue paying insurance premiums in compliance with their contractual obligations under the existing policies.
To the extent that, notwithstanding their express abandonment of their pled theory of fraud, plaintiffs intend to pursue their claim on a theory of fraud in the inducement to enter into the insurance policies in the first instance, the allegations of plaintiffs' second amended complaint contain more than sufficient particularity to satisfy the Rule 9(b) pleading standard. Plaintiffs' allegations identify in great detail the material misrepresentations that defendants are alleged to have made
By contrast, to the extent that plaintiffs intend to pursue their alternative theory of fraud in the inducement to continue paying insurance premiums, the second amended complaint contains no allegations of fact in support of that theory, and therefore necessarily does not meet the Rule 9(b) standard. Normally it would be appropriate under the circumstances to provide plaintiffs a further opportunity to amend their pleading to clarify their allegations of fraud and to identify with precision the theory or theories they intend to pursue. However, because for reasons set forth below plaintiffs' argued-but-unpled theory does not lie as a matter of Oregon law, it is appropriate here to dismiss plaintiffs' fraud in the inducement claim with prejudice to the extent premised on fraudulent inducement to continue paying insurance premiums.
As noted above, by failing to plead allegations in support of their espoused theory of fraud in the inducement to continue paying insurance premiums, plaintiffs failed to meet the Rule 9(b) pleading standard with respect to that theory. Moreover, assuming arguendo that plaintiffs would, if given the opportunity, amend their pleading to state allegations in support thereof, the theory would nevertheless fail as a matter of Oregon law.
I am aware of no Oregon case suggesting that a party could be liable for fraudulent inducement to continue complying with existing and undisputed contractual obligations, and plaintiffs cite to none. In addition, good grounds exist for concluding that the Oregon courts would not endorse such a theory in the insurance context in particular, in that Oregon statutory law vests sole authority to regulate insurance practices in the Director of the Department of Consumer and Business Services, see Or.Rev.Stat. 731.004-016 et seq., and the Director has enacted no statute or regulation creating a cause of action for collecting insurance premiums with the intent not to pay claims. See, e.g., Pearson v. Provident Life & Accident Ins. Co., 834 F.Supp.2d 1199, 1205 (D.Or.2004) (analyzing Oregon law and so concluding). It would therefore be futile to provide plaintiffs with an opportunity to amend their complaint to cure the deficiencies in their allegations in support of their fraud claim to the extent intended to state a claim of fraudulent inducement to continue paying insurance premiums, and the claim is therefore to that extent dismissed with prejudice.
To the extent that, notwithstanding their express abandonment thereof, plaintiffs intend to pursue their claim as pled—that is, on a theory of fraud in the inducement to enter into the insurance policies in the first instance—the allegations of plaintiffs' Second Amended Complaint contained in paragraphs 145 to 155 thereof, considered in isolation from the rest of plaintiffs' complaint, are clearly
Under all of the circumstances, including plaintiffs' express repudiation of their pled theory of fraud in the inducement, I conclude that it is appropriate to dismiss plaintiffs' fraud claim without prejudice to the extent premised on a theory of fraudulent inducement to enter into insurance contracts with Bankers. In the event plaintiffs have cause to believe that they can in good faith prosecute a claim so premised, and on that basis move for leave to amend their pleading once again to state such a claim, such leave will be granted.
Under Oregon law, an insured's claim may sound against an insurer in tort as well as in contract, under appropriate circumstances, in particular in connection with the insurer's duty of care in the exercise of its duty to defend its insured. "[W]here a duty arises from a contractual relationship between the parties, an action in tort may lie." Georgetown Realty v. Home Ins. Co., 313 Or. 97, 102, 831 P.2d 7 (1992).
Id. at 106, 831 P.2d 7. The Georgetown Realty court reasoned as follows:
Id. at 110-111, 831 P.2d 7. Plaintiffs' fourth enumerated claim for relief, styled as a claim for "intentional misconduct," appears to be intended to state such a tort claim. Specifically, plaintiffs' theory appears to be that in enacting the elder-abuse provisions of the Elderly Persons and Persons with Disabilities Abuse Prevention Act codified at Or.Rev.Stat. 124.005 et seq., discussed supra, the state of Oregon imposed upon insurers a special duty of care owed to elderly insureds, and that this special duty creates a standard of care independent of the insurance policies at issue here, in connection with which plaintiffs may sue the defendants in negligence. The problem with plaintiffs' theory is that Oregon's Elderly Persons and Persons with Disabilities Abuse Prevention Act does not expressly or impliedly create such a duty of care, plaintiffs cite no case law indicating that the Oregon courts have ever read such a duty of care into the statute, and my own research has not uncovered any such law. In the absence of any cognizable extra-contractual duty of care owed by the defendants to the plaintiffs, plaintiffs' intentional misconduct claim cannot lie as a matter of Oregon law. In consequence, the intentional misconduct claim is dismissed with prejudice in its entirety. I therefore need not address CNOFG's arguments in support of its Rule 12(b)(6) motion to the extent they address the intentional misconduct claim.
Partially in the alternative to the arguments discussed above in support of defendants' motion (#39) to dismiss plaintiffs' elder abuse, fraud, and intentional misconduct claims in their entirety, defendants advance several arguments in support of partial dismissal of each of plaintiffs' claims. Specifically, defendants argue that plaintiffs' claims are subject to partial dismissal to the extent premised on policy premium rate increases promulgated by Bankers subsequent to issuance of the policies, to the extent the claims may be time-barred, to the extent plaintiffs lack standing to bring their claims, and to the extent plaintiffs seek impermissible relief in connection with their claims. In addition, in support of its Rule 12(b)(6) motion (# 29) to dismiss, CNOFG argues that each of plaintiffs' claims should be dismissed to the extent alleged against it because plaintiffs have failed adequately to allege its involvement in the conduct underlying the claims or, alternatively, because plaintiffs have failed adequately to allege an alter ego or agency theory of its vicarious liability. Because I have already dismissed plaintiffs' elder abuse, fraud, and intentional misconduct claims in their entirety, I address each of the foredescribed arguments for partial dismissal below as they apply to plaintiffs' breach claims only.
Plaintiffs allege, and defendants concede, that Bankers has in recent years significantly raised the premiums it charges in connection with the policies issued to the plaintiffs. Defendants characterize each of plaintiffs' claims, including in particular the claims of breach, as premised in large part on the theory that these rate increases were improper. To that extent, defendants argue that the claims fall afoul of the filed rate doctrine and are therefore subject to dismissal.
"The filed rate doctrine holds, generally, that any rate filed with and approved by the relevant ratemaking agency represents a contract between the utility and the customer and is conclusively lawful until a new rate is approved." Gearhart v. PUC of Or., 255 Or.App. 58, 72, 299 P.3d 533 (2013) (citation, internal quotation marks omitted). However, "[n]o Oregon court has expressly decided whether Oregon accepts the filed-rate doctrine or the corollary rule against retroactive ratemaking." Dreyer v. Portland GE, 341 Or. 262, 271, n. 10, 142 P.3d 1010 (2006).
Assuming arguendo that Oregon has adopted or would adopt the filed-rate doctrine under appropriate circumstances, it is inapposite here. Plaintiffs state expressly that their claims are not premised on any challenge to Bankers' authority to raise its premium rates or to the validity of the rates they have been charged, and analysis of plaintiffs' pleading supports plaintiffs' contention unambiguously. While plaintiffs' fraud and elder abuse claims are supported by allegations that defendants failed to disclose a contemporaneous intention to unilaterally raise rates without commensurate increases in coverage at the time plaintiffs purchased their policies, they do not depend on allegations that the rate increases themselves were invalid, ultra vires, or in any sense subject to challenge. Moreover, plaintiffs' breach claims in particular are not supported by any such allegation, but rather are supported
Because the filed-rate doctrine is inapplicable to plaintiffs' claims, defendants' motion (# 39) to dismiss should be denied to the extent it addresses claims premised on improper premium rate increases.
As a general rule, claims for breach of contract are subject to a six-year limitations period. See Or.Rev.Stat. 12.080. "It is well settled that a contract claim accrues on breach, and not when that breach is subsequently discovered." Doughton v. Morrow, 255 Or.App. 422, 432, 298 P.3d 578 (2013) (internal quotation marks, modifications omitted) (noting that "ORS 12.080 does not incorporate a discovery rule"), quoting Waxman v. Waxman & Associates, Inc., 224 Or.App. 499, 508-10, 198 P.3d 445 (2008).
Under Oregon law, however, "parties are free to contractually limit the timeframe in which to bring a claim, and that limit will be enforced unless unreasonable." Hatkoff v. Portland Adventist Med. Ctr., 252 Or.App. 210, 222, 287 P.3d 1113 (2012), citing Biomass One, L.P. v. S-P Construction, 103 Or.App. 521, 526 n. 4, 799 P.2d 152 (1990). Here, as noted above, plaintiffs are subject to a contractual three-year limitations period governing actions to "recover on" their Bankers policies, such three-year period to begin to run as of the date proof of loss is "required to be given" under the applicable policy, specifically "within 90 days after the end of each period" for periodic payment of a continuing loss and "within 90 days of the end of [any other] loss." Where it is not reasonably possible for an insured to file within 90 days after a loss or continuing loss period, proof of loss is required within one year.
Here, the contractual three-year limitations period is applicable to plaintiffs' breach claims to the extent cognizable as actions to "recover on" the policies, that is to the extent plaintiffs seek money damages in the form of unpaid benefits, whereas the statutory six-year limitations period is otherwise applicable to plaintiffs' breach claims, that is to the extent plaintiffs seek reimbursement of "expenses incurred in attempting to obtain their benefits" and/or unspecified "injunctive remedies" in connection with defendants' alleged breach.
First, defendants argue that all of plaintiffs' claims are time-barred to the extent premised on premium rate increases, on the grounds that plaintiffs were advised of Bankers' right to raise policy premiums on or before the date they purchased insurance from Bankers, and that therefore the applicable limitations periods began to run as of the date the policies were purchased. As noted above, however, none of plaintiffs' claims are so premised. Defendants' first argument in support of their time-bar theory is therefore entirely inapposite.
Second, defendants argue that the applicable limitations periods began to run as to each of plaintiffs' claims to the extent premised on improper claims handling practices by not later than 2008, when 40 states (excluding Oregon) found that Bankers had engaged in a pattern of such practices. However, Bankers offers no grounds to support the conclusion that plaintiffs knew or should have known about these states' purported findings, which in any event would be without bearing on the question whether any individual
Third, defendants argue that the claims brought by plaintiffs on behalf of Lorraine Bates and Eileen Burk are time-barred in their entirety. Defendants note that the Bates plaintiffs filed proof of loss on their claim for benefits in December 2009, and that the Burk plaintiffs filed proof of loss on their claim in April 2009. Defendants argue that the contractual three-year limitations period is applicable to these plaintiffs' breach claims in their entirety, and that the limitations period began to run as of the date proof of loss was filed in each case. Defendants note that this action was filed in April 2013.
I note, preliminarily, that these plaintiffs' claims are cognizable in part as claims other than claims to "recover on" the applicable insurance policies, and therefore that to the extent these plaintiffs seek reimbursement for expenses incurred in pursuing their claims for benefits, their claims are subject to the statutory six-year limitations period and are clearly not time-barred. I note further that even on the arguendo assumption that the dates these plaintiffs actually filed proof of loss were also the dates by which proof of loss was "required to be given" (rather than approximately 90 days thereafter), it appears likely from plaintiffs' allegations that the "loss" each set of plaintiffs suffered was cognizable as a "continuing loss," and thus that while each set of plaintiffs' claims for unpaid benefits might be time-barred in part, it is unlikely that such claims are time-barred in their entirety as to either set of plaintiffs.
Because appropriate determination of what portion, if any, of these plaintiffs' claims for unpaid benefits are time-barred will require consideration of evidence beyond the four corners of plaintiffs' complaint, defendants' motion raises questions better addressed at summary judgment than through a motion to dismiss. Because the requisite evidence is not now before the court, I do not now construe defendants' motion as a motion for summary judgment, but rather deny the motion at this pleading stage of these proceedings to the extent it addresses the limitations periods applicable to the Bates plaintiffs' and Burk plaintiffs' claims for unpaid benefits. Such disposition is without prejudice to defendants' right to raise these issues at a later stage of these proceedings, after an evidentiary record has been developed.
Defendants argue that the named (and absent) members of plaintiffs' putative Class C, who by proposed definition have never filed any claim under their Bankers policies and whose only asserted injury is concern that in the future their claims may be improperly handled, and the named (and absent) members of plaintiffs' putative Class B, who by proposed definition have only filed claims on behalf of a family member, lack standing to pursue their claims before this court.
Where a plaintiff lacks constitutional standing to bring a claim, the federal courts lack jurisdiction to award relief on or to decide the merits of the plaintiff's claim. See e.g., Allen v. Wright, 468 U.S. 737, 750-751, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984). The Supreme Court articulated the three elements necessary for constitutional standing in Lujan v. Defenders of Wildlife, 504 U.S. 555, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). Under Lujan, a plaintiff must have suffered an injury in fact, there must be a causal connection
As to members of plaintiffs' putative Class C, I agree with defendants' argument in its entirety. These plaintiffs have not suffered any cognizable injury in fact, and therefore lack standing to pursue their claims. In consequence, defendants' motion to the extent premised on lack of standing is granted as to all of the claims brought by plaintiffs David Castagno and Darla Castagno, and as to the claims brought by plaintiffs Charles Ehrman Bates and Dolores Marier to the extent premised solely on those plaintiffs' concern regarding possible future breach.
As to members of plaintiffs' putative Class B, based in part on representations made by plaintiffs' counsel at oral argument I disagree with defendants' characterization of their claims. Specifically, it appears that plaintiffs intend to pursue claims filed in the names of these plaintiffs on behalf of their family members who actually sought benefits under their Bankers' policies rather than on their own behalf. That said, I agree with the defendants that, to the extent these plaintiffs' claims may be construed as being pursued in their own behalf, these plaintiffs lack standing and their claims are subject to dismissal. The claims of plaintiffs Charles Ehrman Bates, David Youngbluth, and Dolores Marier fall into this category.
Defendants argue, on the basis of a decision of the Court of Appeals for the Seventh Circuit holding that injunctive relief is inappropriate in class actions where such relief "would merely lay an evidentiary foundation for subsequent determinations of liability," Kartman v. State Farm Mut. Auto. Ins. Co., 634 F.3d 883, 893 (7th Cir.2011) (citations omitted), that plaintiffs' prayer for unspecified injunctive relief should be dismissed. However, all class action allegations have been stricken from plaintiffs' pleading, and this action was never certified as a class action. In consequence, the Seventh Circuit's holding is inapposite here. Defendants' motion is therefore denied to the extent it addresses purportedly impermissible relief prayed for by the plaintiffs.
Plaintiffs' allegations of CNOFG's direct involvement in the conduct allegedly constituting breach of contract or breach of the implied covenant of good faith and fair dealing are plainly inadequate to support a finding of CNOFG's direct liability for breach. A sine qua non of a claim for breach is the existence of an enforceable agreement between plaintiff and defendant, see, e.g., Slover v. Oregon State Bd. of Clinical Social Workers, 144 Or.App. 565, 570, 927 P.2d 1098 (1996), and plaintiffs do not allege that CNOFG was a party to the insurance agreement between Bankers and any plaintiff. In consequence, CNOFG cannot be directly liable in connection with plaintiffs' claims of breach.
In the alternative to direct liability, plaintiffs allege CNOFG's indirect liability in connection with (inter alia) its breach claims on either an alter ego or an agency theory. By contrast with CNOFG's challenge
As to plaintiffs' alter ego theory, I note preliminarily that Oregon law requires plaintiffs to plead an alter ego theory of recovery as a separate count of their complaint, Amfac Foods, Inc. v. International Systems & Controls Corp., 294 Or. 94, 104, n. 12, 654 P.2d 1092 (1982), which plaintiffs have not done here. Moreover, assuming arguendo that plaintiffs could trivially amend their pleading to cure that deficiency, it is clear that under Oregon law, "[t]he disregard of a legally established corporate entity is an extraordinary remedy which exists as a last resort, where there is no other adequate and available remedy to repair the plaintiff's injury," id. at 103, 654 P.2d 1092, and that "the plaintiff must allege and prove not only that the debtor corporation was under the actual control of the shareholder but also that the plaintiff's inability to collect from the corporation resulted from some form of improper conduct on the part of the shareholder," id. at 108, 654 P.2d 1092. Here, plaintiffs have not alleged that Bankers is judgment-proof in any sense, and still less that Bankers is judgmentproof in direct consequence of CNOFG's improper conduct, as for example inadequate capitalization, milking, misrepresentation, or avoidance of Oregon's regulatory statutes. See id. at 108-110, 654 P.2d 1092. In the absence of any such allegation, plaintiffs' elder abuse, breach, and intentional misconduct claims cannot proceed against CNOFG on an alter ego theory.
As to plaintiffs' agency theory, "[w]here the corporation's liability to the plaintiff is incurred while the corporation is acting as agent for the shareholder [or parent entity], the liability of the shareholder [or parent entity], as the principal, is governed by traditional agency and respondeat superior principles. In such a case it is not necessary to disregard the separate corporate status to impose liability upon the shareholder for obligations not met by the corporation." Id. at 102-103, 654 P.2d 1092.
Eads v. Borman, 351 Or. 729, 735-736, 277 P.3d 503 (2012).
Under settled Oregon law, "[a]pparent authority to do any particular act can be created only by some conduct of the principal which, when reasonably interpreted, causes a third party to believe that the principal consents to have the apparent agent act for him on that matter." Id. at 736, 277 P.3d 503, quoting Jones v. Nunley, 274 Or. 591, 595, 547 P.2d 616 (1976). That is, "an agent's actions, standing alone and without some action by the principal, will not give rise to apparent authority. . . . Rather, the principal must take some affirmative step in creating the appearance of authority, one that the principal either intended to cause or `should realize' likely would cause a third party to believe that the putative agent has authority to act on the principal's behalf." Id. at 737, 277 P.3d 503 (citations omitted). "There accordingly are two keys to the analysis: (1) the principal's representations; and (2) a third party's reasonable reliance on those representations." Id. at 736, 277 P.3d 503.
Here, plaintiffs make no allegation that CNOFG ever made any representation upon which any plaintiff could have reasonably relied (or actually relied) to the effect that Bankers acted in CNOFG's behalf rather than its own when it marketed, sold, or operated long-tern health-care policies in Oregon. To the contrary, although plaintiffs allege that "[p]olicy holders of Bankers Life claims are instructed to send their claim forms, documentation, and appeals of claim denials to CNO[FG]'s headquarters in Indiana," Second Amended Complaint at ¶ 21, that allegation references exhibits incorporated into plaintiffs' complaint establishing that the instruction was provided to Bankers' policy-holders by Bankers rather than by CNOFG, that the address in question purported to be Bankers' own address rather than that of CNOFG, and that the instruction made no express mention of CNOFG, see id., Exh. 3 at 2806, 2818, 2858. In consequence, apparent authority is not at issue here.
Under Oregon law, actual agency liability is predicated on two requirements: the putative agent's complained-of conduct must have been subject to the putative principal's control, and the putative agent must have been acting on behalf of the putative principal in the course of engaging in the complained-of conduct. See Vaughn v. First Transit, Inc., 346 Or. 128, 136, 206 P.3d 181 (2009); see also id. at 135-136, 206 P.3d 181. Here, plaintiffs clearly allege CNOFG's requisite control of Bankers, and in particular expressly allege that CNOFG controlled and directed Bankers' complained-of conduct. See Second Amended Complaint at ¶¶ 21-23, 25-26, 28-20.
As to the question whether Bankers acted on CNOFG's behalf rather than its own, plaintiffs variously allege that "[r]evenues from Bankers account for the vast majority of [CNOFG]'s income and profits," see Second Amended Complaint at ¶ 19, and that "CNO[FG] crossed the line from acting as a mere investor to treating Bankers as its own business," see Second Amended Complaint at ¶ 30. Construing these allegations in the light most favorable to the plaintiffs, I find that a trier of fact could reasonably conclude therefrom that Bankers conducted its business in Oregon on CNOFG's behalf rather than its own. In consequence, although I make no finding that Bankers actually was CNOFG's agent for material purposes, I find that plaintiffs' elder abuse, breach, and intentional misconduct claims may survive CNOFG's Rule 12(b)(6) motion on a theory of actual agency. CNOFG's Rule 12(b)(6) motion (# 29) to dismiss is there-fore
For the reasons set forth above, CNOFG's motion (#29) to dismiss is granted on personal jurisdictional grounds as to plaintiffs' fraud in the inducement claim to the extent alleged against CNOFG, and otherwise denied (in part as moot and in part on its merits, as discussed above), defendants' motion (# 32) to strike class allegations is granted, and defendants' motion (#39) to dismiss is granted with prejudice as to plaintiffs' elder abuse and intentional misconduct claims in their entirety, with prejudice as to plaintiffs' fraud claim to the extent premised on a theory of fraudulent inducement to continue paying policy premiums pursuant to pre-existing insurance contracts, without prejudice as to plaintiffs' fraud claim to the extent premised on a theory of fraudulent inducement to enter into the insurance policies in the first instance, with prejudice as to the breach claims brought by the Castagno plaintiffs in their entirety and as to the breach claims brought by plaintiffs Charles Ehrman Bates and Dolores Marier to the extent premised solely on those plaintiffs' concern regarding possible future breach, and with prejudice as to the breach claims brought by plaintiffs Charles Ehrman Bates, David Youngbluth, and Dolores Marier to the extent brought on those plaintiffs' own behalf rather than on behalf of those plaintiffs' family members who sought benefits under their Bankers policies, and is otherwise denied. Accordingly: (i) all class action allegations are deemed stricken from plaintiffs' complaint; (ii) plaintiffs' elder abuse claim is dismissed with prejudice in its entirety; (iii) plaintiffs' fraud claim is dismissed without prejudice to the extent alleged against CNOFG for lack of personal jurisdiction, dismissed with prejudice to the extent alleged against Bankers on a theory of fraud in the inducement to continue paying insurance premiums pursuant to existing contracts, and dismissed without prejudice to the extent alleged against Bankers on a theory of fraud in the inducement to enter into insurance agreements with Bankers; (iv) plaintiffs' intentional misconduct claim is dismissed with prejudice in its entirety; (v) plaintiffs' breach claim is dismissed with prejudice for lack of standing to the extent brought by the Castagno plaintiffs, to the extent brought by plaintiffs Charles Ehrman Bates and Dolores Marier and premised on those plaintiffs' concern regarding possible future breach, and to the extent brought by plaintiffs Charles Ehrman Bates, David Youngbluth, and Dolores Marier on those plaintiffs' own behalf rather than on behalf of those plaintiffs' family members who sought benefits under their Bankers policies; and (vi) the Castagno plaintiffs are dismissed from this action.
