December 18, 2024

Small v. Allianz Life Insurance Company of North America (2024) __ F.5^th __

Plaintiff sued her husband’s life insurer alleging that the insurer violated the California Insurance Code by failing to follow proper notice procedures before cancelling her husband’s life insurance policy for nonpayment of premiums. The district court certified one subclass seeking reinstatement of lapsed policies, and another subclass seeking damages for death benefits where the insured had died.
 
The Ninth Circuit reversed the class certification order. Because the California Insurance Code provisions at issue do not create a private right of action, a plaintiff must show not only a violation of the statutes but also that violation of the statutes caused harm. The court adopted this causation theory because life insurance policies often lapse intentionally when policyholders choose to stop paying premiums, and the statutes were meant to prevent inadvertent, not intentional, lapses. Thus, only those policyholders that could show they would have reinstated their policies had they received proper notice of cancellation were actually harmed by the lack of proper notice, and could therefore state a claim. Given this requirement to show causation, individual questions about whether each policyholder intentionally or inadvertently let their policy lapse would predominate over common questions, defeating class certification.