Quantcast

PENNSYLVANIA RECORD

Friday, April 19, 2024

Subclass certified in Prudential payment method case

Insurance 01

ALLENTOWN – Despite a third ruling denying certification of a class of insurance beneficiaries in payment method litigation filed against Prudential Insurance Co. of America, the U.S. District Court for the Eastern District of Pennsylvania did certify a subclass in a Jan. 29 opinion after making a partial ruling in favor of the plaintiffs on Dec. 6.

According to the opinion written by U.S. District Judge Joseph F. Leeson Jr., the plaintiffs, who are the beneficiaries of life insurance plans obtained by deceased family members who worked for JPMorgan Bank and Con-Way, alleged that Prudential’s practice of using so-called “Alliance Accounts” to pay benefits “violated Prudential’s fiduciary duties under ERISA (Employee Retirement Income Security Act) and violated ERISA’s prohibited transaction provisions.”

In a previous unsuccessful class certification attempt, the district court ruled that the “plaintiffs did not show that common questions of law or fact would predominate over individual disputes.”


However, the court said it ruled in favor of the plaintiffs in the Dec. 6 partial summary judgment, “finding that because the terms of the plans required payment in ‘one sum,’ and payment by establishment of Alliance Accounts was not payment in ‘one sum,’ Prudential failed to comply with the payment terms of the JPMorgan and Con-Way plans and thus breached its fiduciary duties under ERISA.”

In their third class certification request, the plaintiffs attempted to restrict the class to beneficiaries of plans containing certain operative provisions that they said brought the plans within the scope of the court’s decision on summary judgment.

Specifically, the members of the proposed scaled-down class would be beneficiaries for whom Prudential established an "Alliance Account" between Sept. 30, 2004, and Oct. 31, 2011, in contracts that contained:

-A provision providing that "life Insurance is normally paid to the beneficiary in one sum;" 

-An integration clause that did not include other portions of the ERISA plan or a Summary Plan Description (SPD) as a part of the contract with Prudential; and

-A provision that the contract with Prudential could only be amended with the consent of an officer of Prudential.

In addition, the court said lead plaintiffs Clark R. Huffman, Patricia L. Grantham, Linda M. Pace and Brandi K. Winters also asked the court to certify a subclass “limited to beneficiaries of the JPMorgan and Con-Way plans.”

The district court said the beneficiaries to be included in the proposed subclass would be those who during the Sept. 30, 2004, to Oct. 31, 2011, period were “under group life insurance policies that provided ‘life insurance is normally paid to the beneficiary in one sum.’”

In the opinion, Leeson said the “proposed class still fails to satisfy the predominance requirement of Federal Rule of Civil Procedure 23(b)(3).” However, according to the ruling, “because plaintiffs’ proposed subclass, limited to beneficiaries of the JPMorgan and Con-Way plans this court construed at summary judgment, satisfies the requirements of Rule 23, this court will grant plaintiffs’ motion in part and certify the subclass.”

More News