Summary
This Eighth Circuit opinion affirms a district court's judgment in a class action lawsuit alleging that Kansas City Life Insurance Company improperly inflated universal life insurance premiums by including profits and expenses in the cost-of-insurance calculation. The appellate court reviewed issues of class certification under Federal Rule of Civil Procedure 23, choice of law between Kansas and Missouri, and contract interpretation under Kansas law. Applying the canon of contra proferentem and statutory limitations, the court upheld the breach of contract claim and the jury's damages award, which was adjusted to approximately one million dollars.
Topics
Practice areas
Questions Presented
- Whether the district court abused its discretion in certifying a class under Federal Rule of Civil Procedure 23.
- Whether Kansas or Missouri law governed the conversion claim and the statute of limitations applicable to the breach-of-contract claim.
- Whether the universal-life policy permitted Kansas City Life to include profits and expenses in calculating the cost of insurance.
- Whether the evidence supported the jury's damages award and the district court's refusal to grant judgment as a matter of law, additur, or a new trial.
Holdings
- The district court did not abuse its discretion in certifying the class because the common policy language and the Kansas-law interpretation issue presented common questions capable of classwide resolution, and those questions predominated over individualized damages issues.
- Kansas law governed the conversion claim because Kansas had the more significant relationship to the alleged injury, which was the loss of cash value experienced by Kansas policyholders.
- Kansas's five-year statute of limitations governed the breach-of-contract claim because the cause of action originated in Kansas under Missouri's borrowing statute.
- The policy's cost-of-insurance provision did not permit Kansas City Life to include profits and expenses among the factors used to calculate the cost of insurance.
- The evidence provided a reasonable, non-speculative basis for the jury's damages award, and the district court properly denied Kansas City Life's request for judgment as a matter of law.
- The district court did not abuse its discretion by refusing to increase the damages award or order a new trial.
Key quotations
“A canon that helps here is expressio unius est exclusio alterius—a Latin phrase meaning “the expression of one thing is the exclusion of the other.”” (7-8)
“Giving Kansas City Life unlimited discretion to raise and lower the cost of insurance based on its unilateral assessment of its own profits and expenses would reward it for the ambiguity.” (11)
“The calculation need not be precise. If there is “some reasonable basis for computation which will enable the trier of fact to arrive at an approximate estimate,”” (12)
Factual background
Meek purchased a universal-life policy under which monthly premiums funded a savings account from which Kansas City Life deducted charges, including the cost of insurance. The policy stated that the cost of insurance was based on sex, age, risk class, and expected future mortality experience, but Meek alleged that Kansas City Life also included profits and expenses. The alleged deductions reduced policyholders' cash values, and the district court certified a class of approximately 6,000 Kansas policyholders.
Procedural history
Meek sued Kansas City Life in federal district court for breach of contract and conversion after alleging that the insurer improperly included profits and expenses in monthly cost-of-insurance deductions. The district court certified a class of approximately 6,000 Kansas policyholders, dismissed or rejected the conversion claim under Kansas law, granted partial summary judgment to Meek on the contract interpretation issue, and entered a jury damages award of $5 million-plus, reduced to $908,075 based on Kansas's five-year statute of limitations. Both parties appealed portions of the judgment.