HANDORF GP LP PHT II LP v. TRANSAMERICA LIFE INSURANCE COMPANY (2025)

ORDER

TABLE OF CONTENTS

I. BACKGROUND․––––

A. The Policies․––––

B. Defendant Raises COI․––––

C. Complaint․––––

II. APPLICABLE LAW․––––

III. DISCUSSION․––––

A. The Proposed Classes․––––

B. Rule 23(a) Requirements․––––

1. Numerosity․––––

2. Commonality․––––

a. Common Questions and Answers․––––

b. Common Damages․––––

c. Interpretation Issues․––––

3. Typicality․––––

4. Adequacy․––––

C. Rule 23(b) Requirements․––––

1. Predominance․––––

a. Damages․––––

i. Plaintiffs’ Damages Methodology․––––

ii. Account for Different Adjustment Groups․––––

iii. Account for Individualized Policies․––––

iv. Comcast Requirements․––––

b. Common Effect․––––

c. Interpretive Issues․––––

2. Superiority․––––

IV. CONCLUSION․––––

This matter is before the Court on plaintiffs’ motion for class certification. (Doc. 142). Defendant filed a resistance (Doc. 152) and plaintiffs filed a reply (Doc. 158). On March 24, 2025, the Court heard oral argument on plaintiffs’ motion for class certification and defendant's motion for partial summary judgment.¹ (Doc. 161). For the following reasons, plaintiffs’ motion for class certification (Doc. 142) is granted.

I. BACKGROUND

A. The Policies

This case involves monthly deduction rate (“MDR”) and cost of insurance (“COI”) rate increases on universal life (“UL”) insurance policies. Plaintiffs assert one claim for breach of contract, arguing under various theories that the way defendant raised rates in 2022 and 2023 violated the terms of insurance policies.

Plaintiffs collectively own five life insurance policies issued by defendant (the “Policies”).² (Doc. 141, at 14). The Policies are from two blocks referred to as the LA UL and CR UL blocks. (Doc. 152, at 7). The LA UL policies were executed in Los Angeles by TOLIC and the CR UL policies were executed in Cedar Rapids, Iowa by LIIC. (Id.). Plaintiffs allege the Policies have different product names, like the “TransUltra 1997” or the “Lifetime Protector II,” but the relevant policy language in each of the products is materially identical. See (Doc. 141, at 14).

All five of the Policies are nonparticipating, flexible premium adjustable UL insurance policies that were issued on a non-negotiable policy form. (Id.). The Policies are considered “flexible” because they allow policyholders to determine what amount of premiums to pay and when to pay them, as opposed to having fixed, periodic premiums. (Doc. 152, at 7). The insured's premiums establish and add to a policy's “accumulation value,” from which defendant deducts monthly insurance charges (“monthly deductions”). (Id.). The cost of insurance (“COI”) (also sometimes called MDR) are typically the largest of the monthly deductions, which also include a policy fee or a deduction for policy riders. (Doc. 141, at 7). Defendant also credits interest to the accumulation value each month. (Doc. 152, at 7). The Policies are “adjustable” in that they allow defendant to change the MDR or COI rates used to calculate the monthly deductions and the interest rates used to determine the credited interest. (Id.).

According to plaintiffs, however, the Policies also limit the ways defendant can raise COI and MDR rates. The relevant policy provisions that limit rate increases and serve as the basis for the class claims here are described in what are referred to as the Past Losses Provision, the Conversion Provision, the Uniformity Provision, and the Mortality Factor Provision. According to plaintiff, all policies in the proposed Past Losses Class and Conversion Subclass contain a provision that states:

This is nonparticipating insurance. It does not participate in our profits or surplus. We do not distribute past surplus or recover past losses by changing the monthly deduction rates.

(Doc. 141, at 14–15). All policies in the proposed Uniformity Class contain the following provision:

Any change in the Cost of Insurance Rates will be applied uniformly to all members of the same premium class.

(Id., at 15). All policies in the proposed Mortality Factor Subclass have one of the following provisions, which are substantially similar:

The Monthly Cost of Insurance Rate is based on the insured's: Sex, Attained age, and Premium class shown on page 3; [or]

The Monthly Cost of Insurance Rate is based on the insured's: Attained age, and Premium class shown on page 3.

(Id.).

B. Defendant Raises COI

In August 2020, defendant hired an actuarial consultant, Milliman, Inc. (“Milliman”) to evaluate the performance of several of defendant's UL products. Milliman grouped policies generally by product into 43 different Adjustment Groups. (Doc. 152, at 14). The parties have significant disagreements about how Milliman approached and completed the performance evaluations, which largely serves as the basis of this lawsuit. The parties agree, however, that after Milliman completed the evaluations, defendant approved Milliman's adjustment factors and in 2022 and 2023 implemented COI and MDR rate increases that affected plaintiffs’ Policies (the “2022/23 Rate Increase”). To implement the 2022/23 Rate Increase, defendant created new MDR and COI rate tables by applying adjustment factors calculated by Milliman to the products grouped within the group's MDR and COI rate tables.

C. Complaint

Plaintiffs’ complaint alleges a single claim for breach of contract based on defendant's alleged failure to comply with the Policies’ terms when it raised rates. Plaintiffs’ breach of contract claim involves several different theories of how defendant breached the Policies. Plaintiffs narrowed their remaining theories throughout the course of discovery, which the Court addressed in its order on defendant's motion for partial summary judgment. (Doc. 162, at 9). The claims remaining are: Breach of the Mortality Factors Provision in the PHT King Policy; Breach of the Past Losses Provision in the Blackoak Policy; Breach of the Uniformity Provision in the PHT Policies and the Handorf Policy; and Breach of Cost Factor Provision in the Blackoak Policy. (Id., at 9, 27).

II. APPLICABLE LAW

Class certification is an exception to the norms of litigation. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 348 (2011). To justify a departure from these norms, “a class representative must be part of the class and possess the same interest and suffer the same injury as the class members.” Id. (internal quotation omitted). Only then does “a proposed class ha[ve] sufficient unity so that absent members can fairly be bound by decisions of class representatives” and a court can appropriately certify the class. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 621 (1997).

Federal Rule of Civil Procedure 23 governs class certification. To show that class certification is appropriate, the named plaintiff must satisfy all Rule 23(a) prerequisites for a class action and demonstrate that one of Rule 23(b)’s class-action types applies. Dukes, 564 U.S. at 345; Fed. R. Civ. P. 23; see also Postawko v. Mo. Dep't of Corr., 910 F.3d 1030, 1036 (8th Cir. 2018) (“Plaintiffs carry the burden of showing that they have met [the Rule 23] requirements.”). Plaintiffs “must affirmatively demonstrate ․ compliance with ․ Rule [23]—that is, [they] must be prepared to prove that there are in fact sufficiently numerous parties, common questions of law or fact, etc.” Dukes, 564 U.S. at 350. Determining whether a named plaintiff and class members share the same interest and same injury under Rule 23 such that class certification is appropriate “grants courts no license to engage in free-ranging merits inquiries[.]” Amgen Inc. v. Conn. Ret. Plans & Tr. Funds, 568 U.S. 455, 466 (2013). A court should not focus on “the final disposition of a plaintiff's claims[.]” Postawko, 910 F.3d at 1037.

III. DISCUSSION

A. The Proposed Classes

In their motion for class certification, plaintiffs seek the certification of four classes (two classes and two subclasses), defined as follows:

Past Losses Class: All owners of TransAdvantage, TransSavers, TransUltra 2K, TransUltra 1997, TransUltra LP, TransUltra LP 2005, TransValue, and TransValue 2002 issued or insured by Transamerica Life Insurance Company, or its predecessors, subjected to the monthly deduction rate and COI rate increases first announced in or after 2021.

Conversion Subclass: All members of the Past Losses Class, excluding owners of TransValue, TransUltra LP, and TransUltra LP 2005.

Uniformity Class: All owners of CR UL policies issued or insured by Transamerica Life Insurance Company, or its predecessors, subjected to the monthly deduction rate and COI rate increases first announced in or after 2021, excluding owners of Bond Continuation, ISL Security Plus, Life Security, Premier Life, Security Plus II, Security Plus ISWL, Triple Protector, Ultima Simplified Protector, and Youth Protector.

Mortality Factor Subclass: All members of the Uniformity Class that own Agri-VIP, Bankers Universal Life, Horizon 2, HUB, HUB PA, Pacific Fidelity UL, Preferred Gold II, Preferred UL, Summit UL, Uni-VIP HUB, and Single Premium (plan codes UL1020, UL1021, UL1022, UL1A28, UL1036, and UL1037).

(Doc. 142, at 1–2).

B. Rule 23(a) Requirements

One or more members of a class may sue or be sued as representative parties on behalf of all members only if:

(1) the class is so numerous that joinder of all members is impracticable;

(2) there are questions of law or fact common to the class;

(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and

(4) the representative parties will fairly and adequately protect the interests of the class.

Fed. R. Civ. P. 23(a). These are commonly referred to as the numerosity, commonality, typicality, and adequacy requirements. Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 156 (1982).

A class action “may only be certified if the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied.” Id. at 161. “[A]ctual, not presumed, conformance with Rule 23(a)” is “indispensable.” Dukes, 564 U.S. at 351.

1. Numerosity

Rule 23(a)(1) requires that the proposed class be “so numerous that joinder of all members is impracticable[.]” Fed. R. Civ. P. 23(a)(1). The Eighth Circuit Court of Appeals has not established a minimum number of plaintiffs that makes joinder impracticable and a class action desirable. Paxton v. Union Nat'l Bank, 688 F.2d 552, 599 (8th Cir. 1982). This Court has recognized that “a good rule of thumb” for determining whether a class is sufficiently numerous is if the proposed class is more than forty people. Richter v. Bowen, 669 F. Supp. 275, 281 n.4 (N.D. Iowa 1987); see also Alberts v. Nash Finch Co., 245 F.R.D. 399, 409 (D. Minn. 2007). However, this Court has cited a wide variety of class certification cases, both in and outside the Eighth Circuit, stating that a finding of numerosity turns in part on the facts of the case. See Sanft v. Winnebago Indus., Inc., 214 F.R.D. 514, 520–21 (N.D. Iowa 2003).

Plaintiffs and one of their experts, Robert Mills (“Mills”), claim there are thousands of policyholders who own policies that have been subjected to the 2022/23 Rate Increase. (Doc. 141, at 22). Specifically, “[t]here are 4,373 policies in the Past Losses Class, 4,108 policies in the Conversion Subclass, 32,387 policies in the Uniformity Class, and 3,167 policies in the Mortality Factor Subclass[.]” (Id.). According to plaintiffs, the classes are ascertainable because they are defined by policy ownership, which is an objective criteria. (Id.).

Defendant does not dispute plaintiffs’ numerosity argument. Given plaintiffs’ claim, which is supported by Mills’ declaration and is undisputed, the Court finds plaintiffs have demonstrated there is numerosity for each of the proposed classes.

2. Commonality 3

Rule 23(a)(2) first requires the existence of “questions of law or fact common to the class,” though not every “question of law or fact [must] be common to every member of the class[.]” Paxton, 688 F.2d at 561. The existence of common questions alone, however, is insufficient; the common questions must also “generate common answers apt to drive the resolution of the litigation.” Dukes, 564 U.S. at 350 (quoting Richard A. Nagareda, Class Certification in the Age of Aggregate Proof, 84 N.Y.U. L. Rev. 97, 132 (2009)). “Dissimilarities within the proposed class ․ impede the generation of common answers.” Id. (quoting Nagareda, supra, at 132). Comparing the evidence a plaintiff uses to sustain its individual claim to the evidence it uses to prove the class claims may also show whether common questions and answers exist. See Falcon, 457 U.S. at 159.

Second, a plaintiff must show that such questions are “applicable in the same manner to each member of the class.” Id. at 155 (quoting Califano v. Yamasaki, 442 U.S. 682, 701 (1979)). Dukes calls this “a common contention.” Dukes, 564 U.S. at 350. By demonstrating that a common contention exists, the plaintiff shows that the “determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” Id.

Third, a plaintiff must “demonstrate that the class members ‘have suffered the same injury[.]’ ” Id. at 349–50 (quoting Falcon, 457 U.S. at 157); see also Webb v. Exxon Mobil Corp., 856 F.3d 1150, 1156 (8th Cir. 2017) (describing suffering the same injury as “[p]ivotal” to the court's determination).

Plaintiffs argue the commonalty factor is met here. (Doc. 141, at 23). According to plaintiffs, all policies within each class and subclass are essentially form contracts with the same or materially identical provisions, so the answers to the common questions will apply to all the policies. (Id., at 24). Plaintiffs generally argue that for each class and subclass the common questions involve interpretation of the respective provisions and whether defendant adhered to the provisions when it raised rates. (Id., at 23). Plaintiffs also conclude all classes and subclasses share the common question of the proper measure of damages. (Id.).

According to defendant, none of the commonality considerations are met. (Doc. 152, at 19–29). First, defendant argues that even if there are common questions, there are not common answers to the questions. Specifically, defendant asserts that even if the policy provisions are interpreted in plaintiffs’ favor and there is a finding that defendant breached the provisions, the effect of the breaches will not be the same on all policies. (Id., at 20–24). Second, defendant argues not all class members have suffered the same injury because a breach will not have the same impact on each policy and because a policyholder's funding choice is an individual decision that determines damages on an individual basis. (Id., at 26–27). Last, defendant argues that the difficulties in applying different states’ laws undermines the commonality of interpreting ambiguous policy provisions. (Id., at 27–29).

a. Common Questions and Answers

“Claims arising out of form contracts are particularly appropriate for class action treatment” and satisfy the commonality requirement. See McKeage v. TMBC, LLC, 847 F.3d 992, 999 (8th Cir. 2017) (per curiam) (quoting Flanagan v. Allsate Ins. Co., 242 F.R.D. 421, 428 (N.D. Ill. 2007)); see also In re AXA Equitable Life Ins. Co. COI Litig., 16-CV-740 (JMF), 2020 WL 4694172, at *6 (S.D.N.Y. Aug. 13, 2020) (“Given that the [policies] are form contracts, and that the COI increase resulted from a single decision based on common analysis, both the commonality and typicality requirements are easily met.”). Plaintiffs’ claim in this lawsuit turns on interpretation of the policies, which are form contracts with materially identical provisions. See Vogt v. State Farm Life Ins. Co., No. 2:16-cv-04170-NKL, 2018 WL 1955425, at *3 (W.D. Mo. Apr. 24, 2018), aff'd, 963 F.3d 753 (8th Cir. 2020). Indeed, the first question plaintiffs ask for each of the classes and subclasses is whether the respective policy provision is ambiguous and how it should be interpreted. Specifically, for the Past Losses Class and Conversion Subclass, the first question is what it means to recover past losses. For the Uniformity Class, the question is the meaning of “premium class.” For the Mortality Factor Subclass the first question is the meaning of the phrase “based on.” (Doc. 141, at 23). These are all common questions that arise from form contracts and are appropriate for class action treatment. McKeage, 847 F.3d at 999.

Defendant argues that even if there are common questions, the alleged breaches will not have the same effect on all the Adjustment Groups or policies and thus, class certification is inappropriate. The Court finds defendant's argument is more relevant to the predominance issue, and the Court will address the issue in the predominance section below.

Here, however, the Court is satisfied plaintiffs have met the commonality requirement. The common contentions, capable of class wide resolutions, arise out of form policies and how each policy was affected when defendant implemented the 2022/23 Rate Increase. The answer to the questions will resolve central issues that apply to all class members in “one stroke” and drive resolution of the litigation. Thus, plaintiffs have met the commonality requirement of Rule 23(a).

b. Common Damages

Defendant's arguments that plaintiffs’ claims do not have common damages overlaps with its argument that plaintiffs cannot meet the predominance requirements of Rule 23(b)(3). Indeed, defendant's damages arguments appear primarily in its Rule 23(b)(3) argument and defendant's resistance directs the Court to that section of its briefing for additional analysis. Taking the lead from defendant, the Court points to Section III(C)(1)(a) below relating to predominance of the damages for a complete analysis of the damages issue. Because the Court finds the damages issues do not defeat predominance, here too the Court must find it does not undermine commonality.

c. Interpretation Issues

Last, defendant argues the differences in state law rules for contract interpretation undermine commonality. (Doc. 152, at 27–29). Defendant, however, does not argue there is any variation in the relevant language of individual contracts that would require interpretation of policies on an individual basis.

Like the damages issue, issues relating to interpretation of policy provisions is more fully argued by the parties and analyzed under the Rule 23(b)(3) framework. In short, the Court finds the requirement that the policies be interpreted under different state laws complicates the matter, but it can be addressed through trial management and does not defeat Rule 23(b)(3)’s predominance requirement. Thus, it also does not defeat the commonality requirement.

The Court finds plaintiffs have satisfied the commonality factor.

3. Typicality

Rule 23(a)(3) requires that the “claims or defenses of the representative parties [be] typical of the claims or defenses of the class[.]” Typicality is “a demonstration that there are other members of the class who have the same or similar grievances as the [class representative].” Paxton, 688 F.2d at 562 (finding typicality requirement satisfied because plaintiffs and other employees were similarly denied timely promotions based on their race). Typicality “is fairly easily met so long as other class members have claims similar to the named plaintiff.” DeBoer v. Mellon Mortg. Co., 64 F.3d 1171, 1174 (8th Cir. 1995) (citing Paxton, 688 F.2d at 562). This prerequisite for class certification, however, is more demanding in suits seeking monetary damages than injunctive or declaratory relief. See id. at 1174–75.

Typicality may appropriately be found when the plaintiff's claim is “based on patterns and practices not special or unique to herself and [she] has made a showing that a significant number of other members of the class have been similarly victimized by the same patterns and practices.” Donaldson v. Pillsbury Co., 554 F.2d 825, 831 (8th Cir. 1977) (emphasis added); see also Alpern v. UtiliCorp United, Inc., 84 F.3d 1525, 1540 (8th Cir. 1996) (“Factual variations in the individual claims will not normally preclude class certification if the claim arises from the same event or course of conduct as the class claims, and gives rise to the same legal or remedial theory.”). Because commonality also requires that plaintiffs show that they and the proposed class members suffered the same injury, “[t]he commonality and typicality requirements of Rule 23(a) tend to merge.” Falcon, 457 U.S. at 157 n.13. “Both [requirements] serve as guideposts for determining whether under the particular circumstances maintenance of a class action is economical and whether the named plaintiff's claim and the class claims are so interrelated that the interests of the class members will be fairly and adequately protected in their absence.” Id.

Here, plaintiffs’ claims all arise out of the same form insurance policies that have materially identical policy language within each class. All of plaintiffs’ claims also relate to the interpretation and application of the policies and they all arise out of the same rate increases. Thus, the typicality requirement is satisfied. See Vogt, 2018 WL 1955425, at *5 (“Both the contractual language and [defendant's] methodology for determining the COI rates were uniform for all class members. The requirement of typicality thus is satisfied.”); Bally v. State Farm Life Ins. Co., 335 F.R.D. 288, 302 (N.D. Cal. 2020) (“[Plaintiff's] claims and the claims of the putative Class members all arise out of the interpretation and application of the [policy], satisfying the typicality requirement.”); Robin Drug Co. v. PharmaCare Mgmt. Servs., Inc., No. Civ.033397(PAM/RLE), 2004 WL 1088330, at *2 (D. Minn. May 13, 2004) (“Because the claims arise out of PharmaCare's alleged breach of the same master contract and are premised on the same legal theories, Plaintiffs’ claims are typical.”).

Defendant argues that plaintiffs’ policies account for only four of the 43 Adjustment Groups, so plaintiffs’ claims are not typical because even if they can establish a breach for those four Adjustment Groups, that will not establish a breach as to the other 39 Adjustment Groups. (Doc. 152, at 36). The large number of Adjustment Groups does not defeat the typicality requirement. For starters, plaintiffs’ request for class certification does not include 43 products, the number is far lower. Also, even if there are several different products and Adjustment Groups at issue, that does not defeat typicality. For the Uniformity Class, the number of products is irrelevant. The issue involved with the Uniformity Class provision is whether the Uniformity Provision requires rate increases to be applied uniformly across all premium classes or only within each specific product. The answer to that question is either it does, or it does not and is not dependent on the effect of the increase on different Adjustment Groups. The Past Loss Class and Conversion Subclass contain eight products and five products, respectively. Similar theories of breach apply across all these products, though plaintiffs concede the theories are not identical. The typicality requirement, however, does not require that everything be identical, it only requires that the claims are typical. As discussed, claims involving form contracts that are subject to the same rate increase satisfy the typicality factor. The same is true for the Mortality Factor Class, which contains five products. All the products involve similar breach theories classwide that are typical, even if not identical.

Defendant also argues Blackoak's claims are not typical of the class because it did not pay consideration for the Policy, it never paid a premium before or after the 2022/23 Rate Increase, and any recovery for Blackoak in this case would be a “windfall.” (Doc. 152, at 37). The Court disagrees. Even if Blackoak is in a different position than other class members, the Blackoak Policy was still subjected to the same rate increases as the other class members and like other class members is seeking damages for the lost value to its account caused by the allegedly unlawful raises. In other words, even if Blackoak is getting a good deal by receiving damages on a policy it did not pay consideration for, that does not change the fact they are still holding a policy that has been subjected to the allegedly improper rate increases. Blackoak's claim is still to recover damages to the policy that would not have occurred but for the alleged improper conduct, which is typical of the claims for other class members.

4. Adequacy

Rule 23(a)(4) requires that the representative parties “fairly and adequately protect the interests of the class.” To make this determination, a court must ascertain “whether: (1) the class representatives have common interests with the members of the class, and (2) whether the class representatives will vigorously prosecute the interests of the class through qualified counsel.” Paxton, 688 F.2d at 562–63; Rattray v. Woodbury Cnty., 253 F.R.D. 444, 455 (N.D. Iowa 2008), aff'd, 614 F.3d 831 (8th Cir. 2010).

Plaintiffs argue that their interests align with the class members they seek to represent, i.e. they seek to maximize recovery of overcharges from defendant's alleged breach. (Doc. 141, at 26). Plaintiffs also argue the three plaintiffs have actively participated in discovery and each understands their obligations as a class representative. (Id.). Plaintiffs’ counsel, who mostly hail from the firm Susman Godfrey LLP, asserts it is experienced in this area of law, has been appointed class counsel in many similar cases, and “has vigorously and diligently litigated the claims on behalf of the Classes and will continue to do so.” (Id.).

Defendant argues Blackoak cannot serve as a class representative because it no longer owns a class policy. (Doc. 152, at 38). Defendant also argues plaintiffs Handorf and PHT cannot represent the Uniformity Class because, if plaintiffs succeed and a uniform rate is applied across different products and adjustment groups, it will result in some policyholders having a higher rate increase than they would have otherwise received. (Id.). In other words, plaintiffs’ desired result will create winners and losers within the class, according to defendant.

Although Blackoak transferred ownership of the Blackoak Policy to a securities intermediary, the transfer was temporary and the intermediary returned the Blackoak Policy to Blackoak. (Docs. 158-4 through 158-9). Blackoak's alleged harm also happened both before and after it temporarily transferred the Blackoak Policy. (Doc. 158, at 26). Thus, defendant's argument that Blackoak does not have standing to serve as a class representative is moot.

The Court also rejects defendant's second argument that plaintiffs cannot represent the Uniformity Class because their requested relief will create winners and losers. Here, plaintiffs are seeking retrospective relief for the alleged breach. They are not asking for prospective relief to change rates, which could potentially result in an insured being charged a higher COI than they would have been charged under defendant's construction of the contract. When plaintiffs are seeking damages for past breaches the “winners and losers argument is not especially relevant[.]” Advance Tr. & Life Escrow Servs., LTA v. N. Am. Co. for Life & Health Ins., 592 F. Supp. 3d 790, 809 (S.D. Iowa 2022). In other words, if plaintiffs prevail, their requested remedy will not change the rates charged and will not raise the rate of an insured who would have otherwise had a lower rate. Thus, the Court finds plaintiffs adequately represent the interests of the classes.

Last, defendant does not object to Susman Godfrey serving as class counsel. Susman Godfrey has handled several similar cases and has so far adequately represented plaintiffs here. The Court is confident it will continue to do so.

C. Rule 23(b) Requirements

In addition to the Rule 23(a) prerequisites for class certification, the proposed class must also satisfy one of three Rule 23(b) requirements, thereby demonstrating that the suit is the type of case the Federal Rules would deem appropriate for class action resolution. See Fed. R. Civ. P. 23(b). Plaintiffs seek certification under Rule 23(b)(3).

1. Predominance

“The Rule 23(b)(3) predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation.” Amchem Prods., 521 U.S. at 623. It “goes to the efficiency of a class action as an alternative to individual suits.” Ebert v. Gen. Mills, Inc., 823 F.3d 472, 479 (8th Cir. 2016) (quoting Parko v. Shell Oil Co., 739 F.3d 1083, 1085 (7th Cir. 2014)). Rule 23(b)(3)’s predominance requirement “is not satisfied if ‘individual questions ․ overwhelm the questions common to the class.’ ” Id. at 478–79 (quoting Amgen Inc., 568 U.S. at 468). “An individual question is one where members of a proposed class will need to present evidence that varies from member to member, while a common question is one where the same evidence will suffice for each member to make a prima facie showing or the issue is susceptible to generalized, class-wide proof.” Id. at 479 (cleaned up). Rule 23(b)(3)’s predominance criteria is more demanding than the Rule 23(a)’s commonality factor, and the Eighth Circuit has instructed:

When determining whether common questions predominate, a court must conduct a limited preliminary inquiry, looking behind the pleadings, but that inquiry should be limited to determining whether, if the plaintiffs’ general allegations are true, common evidence could suffice to make out a prima facie case for the class. While limited in scope, this analysis should also be rigorous.

Luiken, 705 F.3d at 377 (internal citations and quotation marks omitted).

As discussed above, the relevant terms of the policies are materially the same for all class members. Defendant has not made any showing that the circumstances of any individual policyholder will impact the question of contract interpretation. Thus, the Court finds that common questions predominate. See Advance Tr. & Life Escrow Servs., LTA v. ReliaStar Life Ins. Co., Civil No. 18-2863 (DWF/BRT), 2022 WL 911739, at *12 (D. Minn. Mar. 29, 2022).

Defendant, however, argues that the alleged damages are too individualized to satisfy the predominance prong. Defendant also argues the effect of the answers to the common questions varies between Adjustment Groups and the difference in state law interpretations undermine the predominance requirement. The Court will address each argument in turn.

a. Damages

Rule 23(b)(3)’s predominance test also requires that plaintiffs “present a model of damages that (1) identifies damages that stem from the defendant's alleged wrongdoing and (2) is ‘susceptible of measurement across the entire class.’ ” Bally, 335 F.R.D. at 303 (quoting Comcast Corp. v. Behrend, 569 U.S. 27, 35 (2013)).

Plaintiffs have indisputably provided a damages model. Defendant, however, makes two arguments why plaintiffs’ damages model is insufficient and the lack of a common damages calculation renders class certification improper. (Doc. 152, at 26–27). First, defendant argues plaintiffs’ breach theories within an Adjustment Group will have a different impact on different policies. Second, defendant argues damages are individualized to each policyholder because funding choices and other decisions each policyholder makes relating to their policy results in individualized damages and are therefore not susceptible of measurement across the entire class.

i. Plaintiffs’ Damages Methodology

Plaintiffs’ damages expert, Robert Mills (“Mills”), opined that a uniform methodology can be applied to determine damages caused by the alleged breach of contract. (Doc. 151-3, at 696). Mills concedes that the values and inputs for the damages formula vary across the policies at issue, but the overall approach is uniform and can be “readily and mechanically applied class-wide and policy-by-policy,” as demonstrated in his declaration. (Id.).

Mills’ formula for calculating damages for past overcharges is relatively straight-forward. It measures the reduction in a policyholder's accumulation value caused by the rate increase through the following formula: Overcharge equals the difference between the actual COI charge and the value of the net amount at risk (“NAAR”) times the pre-increase COI rate. In other words, it is essentially the accumulation value based on what defendant actually charged minus the accumulation value based on the rate defendant charged before the 2022/23 Rate Increase went into effect. Mills received data from defendant showing the NAAR, the actual COI charge, and the pre-increase COI rate applicable to the policies at issue for a specified period. Mills inputted the information into his formula and was able to calculate the aggregate amount each class and subclass was overcharged. Mills also performed the calculation for each of defendant's products, but asserts that the same methodology can determine damages for all policies within the different classes. (Id.).

ii. Account for Different Adjustment Groups

Defendant first argues plaintiffs’ damages calculation will have a different impact on the different products and Adjustment Groups. For example, defendant argues that within the Past Losses Class, the “shock lapse assumption” may have resulted in an 11% rate increase for one product but resulted in a 61% increase for another product. (Doc. 152, at 21). Thus, if defendant is found to have breached the policies’ Prior Loss Provision, the damages will be a different percentage across different Adjustment Groups.

The Court is not convinced this is as fatal to plaintiffs’ motion as defendant suggests. Plaintiffs’ damages model calculates the same type of damages across all Adjustment Groups and products by calculating the decrease in a policyholder's adjustment value. The effect of defendant's rate increase is not different for different policyholders, it reduces the accumulation value for individual policyholders. According to plaintiffs, that is the same across all policies and all Adjustment Groups. Plaintiffs’ damages equation also applies across all policies and Adjustment Groups. It is immaterial that one Adjustment Group faced a more significant increase than another Adjustment Group. That difference can be easily explained by the different inputs into the common equation and it does not create such individualized damages questions that outweigh the common damages and factors.

iii. Account for Individualized Policies

Defendant next argues that the damages are too individualized to support class certification. Specifically, defendant argues that even if there was a breach, “whether that breach translates into harm to a specific class member within that Adjustment Group requires an individualized analysis.” (Id., at 30). A brief overview of how universal life insurance policies work is crucial to fully understanding defendant's argument.⁴

Universal life insurance policies require the policyholder to pay premiums to keep the policy in force, which is true for any insurance policy. A flexible adjustable life insurance policy, like the policies here, allows policyholders to make premium payments at different times and in different amounts. The only requirement is that the policyholder pays enough to cover the cost of insurance. For instance, a policyholder may make a single lump premium payment and then never make another payment because the initial payment was enough to cover the cost of insurance. Others may make monthly premium payments.

When a policyholder makes a premium payment, the funds go into an account called the “accumulation value.” Defendant withdraws certain charges, including the COI or MDR, from the policyholder's accumulation value to keep the policy in effect. The funds that are left in the accumulation value after defendant withdraws the charges earn interest. For lack of a better term, the accumulation value is essentially the policyholder's account.

Unlike a standard checking or savings account, however, a policyholder can only “access” the funds in its accumulation value in a few different ways. Generally, a policyholder can take a loan against the accumulation value, he or she can surrender the policy in which case the accumulation value is paid to the policyholder in cash, or the policyholder can make smaller premium payments so the accumulation value alone covers the cost of insurance. If the policyholder does not do one of these things, defendant retains the accumulation value until the policyholder dies. Whether, and how much, defendant pays the accumulation value to the policyholder's beneficiary upon the policyholder's death depends on the death benefit the policyholder selected.

According to defendant, this explanation means that Mills’ damage model mistakenly equates a $1 reduction of accumulation value with a $1 loss to the policyowner, but this is not accurate because there are restrictions on the accumulation value that prevent it from being used like a bank account. (Doc. 152, at 31). The actual reduction in the accumulation value depends on a policyholder's individualized circumstances and decisions on how to use the accumulation value. For example, there are 4,886 policies in the proposed classes that were terminated for different reasons, which determines if (and how much) the accumulation value was returned to a policyholder and the policyholder's ability to use the accumulation value for the limited purposes allowed by the policy. (Doc. 152, at 31). According to defendant, the answers to these questions cannot be determined without individualized inquiries into each policyholder's reason for terminating the policy. Similarly, defendant argues the potential for damages for active policyholders will depend on the Adjustment Groups and funding choices. For instance, the alleged breaches may have caused a low-funded policy holder to increase their premiums to keep the policy from lapsing. The damage to that policyholder would be the portion of the premiums a policyholder had to pay to keep the policy in force, but it would not have resulted in a reduction of the accumulation value because there was nothing in the accumulation value to be affected. In short, different damage measurements are required for different policyholders, which requires individual analysis that is not conducive to classwide resolution.

The Court has conducted a “rigorous analysis” and finds plaintiffs’ damages model sufficient for class certification. Whether this is ultimately the proper measure of damages is a merits question that is inappropriate for class certification. As other courts have found, however, a damages model which measures the lost accumulation value “for all policyholders during the period in which they held the policies, provide[s] the most reasonable basis for measuring the harm[.]” Vogt, 963 F.3d at 770. Accepting this basis for damages as true, it applies across all policies, both terminated and active. Vida Longevity Fund, LP v. Lincoln Life & Annuity Co. of N.Y., 19-cv-06004 (ALC), 2022 WL 986071, at *4 (S.D.N.Y. Mar. 31, 2022) (“All policyholders have a common interest in the calculation of the extent of disparity in the COI charges that were debited from the cash value accounts and the COI charge that would have been charged had Defendant incorporated declining mortality rates.”); ReliaStar, 2022 WL 911739, at *13 (“Even policies that have been paid in full may have suffered damage to their account values by paying excess COI charges.”). For example, policyholders who died and had their full death benefit paid “still suffered a depleted account value during [their] lifetime[.]” Vogt, 963 F.3d at 770. A policy that lapsed or was surrendered could have also suffered a depleted value while the policy was in effect. The same is true for both high and low funded policies. The Court is satisfied that for class certification purposes, plaintiffs’ damages model is sufficient.

A jury can reject plaintiffs’ damage model and find that the damages to some policies was more substantial than others. For purposes of class certification, however, the individualized inquires do not predominate.

iv. Comcast Requirements

Defendant also argues that plaintiffs have not satisfied the Comcast requirements because plaintiffs’ damages methodology is not sufficiently linked to plaintiffs’ theory of liability. (Doc. 152, at 29). Defendant's argument is similar to its argument that individual damages preclude class certification but instead of arguing that damages are too individualized to support class certification, defendant argues that plaintiffs’ damages model that amounts to a difference in accumulation value due to the 2022/23 Rate Increases is not tied to the damages incurred by lapsed, terminated, low funded, and well-funded policies. (Id., at 31–32).

In Comcast, the United States Supreme Court considered whether a class had been properly certified. 569 U.S. at 29. The Comcast plaintiffs filed an antitrust suit and proposed four theories of antitrust impact in the suit. Id. at 31. The district court accepted one theory for classwide certification but rejected the rest. Id. The plaintiff's damages expert designed a model to calculate damages, but the model did not isolate damages based on the different theories of antitrust impact. Id. at 32. The Supreme Court held that at the class certification stage a plaintiff must present a damages model that shows damages are capable of measurement on a classwide basis and that the damages must be consistent with its liability case. Id. at 35. Because the Court found the damages model did not even attempt to show damages consistent with the remaining theory of liability, the Court reversed the district court's order granting class certification. Id. at 38.

Here, plaintiffs’ damages model is consistent with its theory of liability. Specifically, plaintiffs’ theory is that defendant improperly raised rates which improperly depleted the policyholders’ accumulation value from which the costs were withdrawn. Plaintiffs’ damages model calculates damages based on the difference in the accumulation value between the values under the raised rates and what they were before the allegedly improper rate increase. Plaintiffs directly connect their damages model to the alleged breach. As discussed, all policyholders have a common interest in the calculation of the extent of disparity in the COI, and plaintiffs’ damages model measures just that.

b. Common Effect

Defendant also argues that predominance is lacking because the “effect” and “impact” of the COI increases will differ by product.

“Even if individual damages varied, what matters is plaintiff provided a way of measuring them on a classwide basis, ensuring that common questions of liability predominated over individual damage calculations.” Meek v. Kan. City Life Ins. Co., 126 F.4th 577, 584 (8th Cir. 2025) (cleaned up). Plaintiffs’ model provides this. The Court agrees with plaintiffs that while “the percentage by which COI rates were increased varies by product, the determination of the relevant inputs and outputs, and proof of breach and damages, does not depend on any individualized evidence[.]” (Doc. 158, at 13). Indeed, in his report Mills was able to demonstrate the general formula for damages and show how changing the same basic inputs allowed for damages to be calculated for each product. The fact that some products had a greater percentage change than others is of no effect. Plaintiffs’ theory of damages and methodology for calculating damages is the same across all products.

c. Interpretive Issues

Last, defendant argues the potential for contract ambiguities and the different state law variations to resolve ambiguities undermines both commonality and the predominance question. For example, defendant argues that even though both Michigan and Massachusetts are “Four Corners States,” their interpretive canons differ. According to defendant, Massachusetts law requires an immediate application of the contra proferentem canon, but Michigan law requires a factfinder to consider extrinsic evidence about industry custom before relying on the contra proferentem canon. (Doc. 152, at 28). This could lead to different answers to common questions, or at a minimum, create confusion that undermines commonality.

The Court disagrees that the application of different state laws defeats predominance or precludes class certification, but the Court is concerned with how the differences in state law impact the manageability of proceeding on a classwide basis. Plaintiffs, however, “have convincingly shown that common choice-of-law issues predominate and that variations of state law will be manageable.” ReliaStar, 2022 WL 911739, at *12. Plaintiffs included state law surveys that appear to accurately summarize the relevant states’ breach of contract and contract interpretation laws and have divided the states into groups based on the similarities of the laws. Plaintiffs have also provided a detailed plan using different stages to interpret form contracts when multiple states’ laws are at issue. Plaintiffs also pointed to model jury instructions that have been adopted by other courts on how to instruct a jury when multiple state contract interpretation laws are at issue. There are undoubtedly difficulties in managing a case with variations of state laws and multiple stages of interpretation, but the difficulties do not outweigh the common questions and issues that exist here.

2. Superiority

Federal Rule of Civil Procedure 23(b)(3) also requires “that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” The superiority “consideration encompasses the whole range of practical problems that may render the class action format inappropriate for a particular suit.” Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 164 (1974).

Defendant argues the cumulative challenges flowing from the multitude of breach theories across different policies and classes, combined with the different state laws on contract ambiguity, and the potential for individualized damages shows that class treatment is neither superior nor tenable. (Doc. 152, at 38).

The Court agrees with defendant that this is a difficult case to manage on a classwide basis but disagrees that class treatment is neither superior nor tenable. As discussed, plaintiffs have provided a detailed roadmap, complete with supporting documentation, of how a trial could proceed. Plaintiffs also provided state law surveys and references to model jury instructions that address the very management issues the Court must consider here. The Court does not mean to imply this is necessarily the precise plan the Court will follow if this matter goes to trial, but plaintiffs have met their burden of showing it is feasible to address the issues through a trial court's case management procedures.

Further, trial courts have significant authority to organize cases as necessary to move cases towards a just and speedy resolution. Included is the authority to bifurcate claims and hold separate trials on specific issues. Fed. R. Civ. P. 23(d) & 42; see also Simon v. Philip Morris Inc., 200 F.R.D. 21, 28 (E.D.N.Y. 2001) (explaining the historical and constitutional authority for trial judges to sever issues for trial). After dispositive motions are fully decided and the Court gets additional input from the parties on the remaining claims, the Court may decide to hold separate trials to make the issues more manageable for the Court, the parties, and the jury. This could be done, for example, by holding separate trials for each class, or by having separate trials for liability and damages. The Court does not need to decide this now as the claims could be narrowed through additional motions practice or by agreement of the parties.

Even with the management difficulties, the Court still finds class treatment is superior to other available methods. This matter involves contract interpretation and application of the provisions to thousands of identical form contracts. There is nothing that suggests individual class members have a significant interest in litigating their claims separately, or that it would be more efficient or just. See Bally, 335 F.R.D. at 304–05. Thus, the Court finds plaintiffs satisfy the superiority requirement and the Court grants the motion to certify the classes and subclasses under Rule 23(b)(3).

IV. CONCLUSION

For these reasons, IT IS HEREBY ORDERED that:

1. Plaintiffs’ motion for Class Certification (Doc. 142) is granted.

2. The following classes and subclasses are certified under Federal Rule of Civil Procedure 23:

Past Losses Class: All owners of TransAdvantage, TransSavers, TransUltra 2K, TransUltra 1997, TransUltra LP, TransUltra LP 2005, TransValue, and TransValue 2002 issued or insured by Transamerica Life Insurance Company, or its predecessors, subjected to the monthly deduction rate and COI rate increases first announced in or after 2021.

Conversion Subclass: All members of the Past Losses Class, excluding owners of TransValue, TransUltra LP, and TransUltra LP 2005.

Uniformity Class: All owners of CR UL policies issued or insured by Transamerica Life Insurance Company, or its predecessors, subjected to the monthly deduction rate and COI rate increases first announced in or after 2021, excluding owners of Bond Continuation, ISL Security Plus, Life Security, Premier Life, Security Plus II, Security Plus ISWL, Triple Protector, Ultima Simplified Protector, and Youth Protector.

Mortality Factor Subclass: All members of the Uniformity Class that own Agri-VIP, Bankers Universal Life, Horizon 2, HUB, HUB PA, Pacific Fidelity UL, Preferred Gold II, Preferred UL, Summit UL, Uni-VIP HUB, and Single Premium (plan codes UL1020, UL1021, UL1022, UL1A28, UL1036, and UL1037).

Excluded from each of the foregoing Classes and Subclasses are Defendant Transamerica Life Insurance Company, its officers and directors, members of their immediate families, and their heirs, successors or assigns of any of the foregoing; anyone employed with Plaintiffs’ counsel's firms; any Judge to whom this case is assigned, and his or her immediate family; and any owners of policies issued in any foreign country, United States Territory, the Armed Forces, Alaska, New Mexico, and South Carolina.

3. The parties are directed to meet and confer within thirty (30) days of the date of this Order to submit a joint proposed procedure for providing notice of the Class Action.

4. The Court appoints BlackOak Life Limited as class representative for the Past Losses Class and Conversion Subclass; PHT Holding II LP and Lawrence Handorf as class representatives for the Uniformity Class; and PHT Holding II LP as class representative for the Mortality Factor Subclass.

5. The Court appoints Susman Godfrey LLP as class counsel.

IT IS SO ORDERED this 3rd day of June, 2025.

FOOTNOTES

1.   The Court addressed defendant's motion for partial summary judgment through a separate order. (Doc. 162).

2.   The Blackoak Policy was issued by Transamerica Occidental Life Insurance Company (“TOLIC”) and the PHT and Handorf Policies were issued by Life Investors Insurance Company of America (“LIIC”). TOLIC merged with LIIC in 2008 to become defendant Transamerica Life Insurance Company. (Doc. 151-1, at 6).

4.   Defendant's counsel provided this helpful summary at oral argument. See also LSIMC, LLC v. Am. Gen. Life Ins. Co., Case No. 2:20-cv-11518-SVW, 2022 WL 4596597, at *2 (C.D. Cal. Aug. 4, 2022) (providing a helpful and succinct explanation of flexible adjustable universal life insurance).

C.J. Williams, Chief Judge