UNITED STATES DISTRICT COURT                             
                    DISTRICT OF MINNESOTA                                


Advance Trust & Life Escrow Services,  Case No. 18-cv-02863 (DWF/ECW)    
LTA, as securities intermediary for Life                                 
Partners Position Holder Trust, and                                      
Alice Curtis on behalf of themselves and                                 
all others similarly situated,                                           

          Plaintiffs,                                                    

     v.                                     ORDER                        

ReliaStar Life Insurance Company,                                        

          Defendant.                                                     


    This matter is before the Court on the Motion for Leave to File Second Amended 
Class Action Complaint (Dkt. 105) (“Motion to Amend”) brought by Plaintiffs Advance 
Trust & Life Escrow Services, LTA, as securities intermediary for Life Partners Position 
Holder Trust, and Alice Curtis (collectively, “Plaintiffs”).  For the reasons discussed 
below, the Court grants the Motion to Amend.                              
         I.   FACTUAL AND PROCEDURAL BACKGROUND                          
    Advance Trust & Life Escrow Services, LTA (“Advance Trust”) filed this putative 
class action on October 5, 2018.  (Dkt. 1.)  A First Amended Class Action Complaint was 
filed on February 24, 2020, which added Curtis as a named plaintiff and alleged 
subclasses for which Plaintiffs may alternatively seek class certification.  (Dkt. 84 ¶¶ 10, 
31.)  Both the original Complaint and the First Amended Class Action Complaint alleged 
a single count for breach of contract.  (Dkt. 1; Dkt. 84.)                
    Specifically, Plaintiffs alleged that Defendant ReliaStar Life Insurance Company 
(“ReliaStar”) breached universal life insurance policies that ReliaStar, or its 
predecessors-in-interest, issued by failing to determine cost of insurance (“COI”) rates 
based solely on expected future mortality experience and deducting COI charges based 

on those impermissibly determined rates.1  (Dkt. 84 ¶¶ 1, 5, 7, 15, 18, 26-27, 41.)  
Plaintiffs alleged that ReliaStar is obligated by a provision in certain standardized form 
contracts to decrease COI rates to reflect improved projected mortality experience but has 
not so decreased the rates.  (Id. ¶¶ 5, 7, 15, 18, 26-27, 41.)            
    The Court entered a Pretrial Scheduling Order on February 1, 2019.  (Dkt. 41.)  

That Order set the following deadlines:                                   
        July 12, 2019 – deadline to file motions seeking to amend pleadings or add 
         parties;                                                        
        September 6, 2019 – deadline to file class certification motion and opening 
         of pre-class certification expert discovery;                    
        September 27, 2019 – deadline for substantial completion of fact discovery; 
         and                                                             
        December 23, 2019 – close of fact discovery and pre-class certification 
         expert discovery, including depositions.                        
(Id. at 3, 5-6.)2                                                         
    Deadlines relating to trial experts, dispositive motions, and trial were to be 
addressed following an order on class certification.  (Id. at 3.)  The parties stipulated to 

1    According to Plaintiffs, the COI covers the death benefit protection.  (Dkt. 107 at 
9.)                                                                       

2    Citations to page numbers refer to the ECF pagination unless otherwise indicated. 
several amendments to the Scheduling Order, each time extending the deadlines for class 
certification briefing and disclosures regarding pre-class certification experts, substantial 
completion of fact discovery, the close of fact discovery, and the close of pre-class 
certification expert discovery.  (Dkt. 54; Dkt. 80; Dkt. 89; Dkt. 126.)  The current 

schedule (Dkt. 126), entered on July 1, 2020, after the June 12, 2020 hearing on the 
Motion to Amend,3 sets the following deadlines:                           
        October 23, 2020 – deadline to file class certification motion and opening 
         of pre-class certification expert discovery;                    
        November 13, 2020 – deadline for substantial completion of fact discovery; 
         and                                                             
        March 11, 2021 – close of fact discovery and pre-class certification expert 
         discovery, including depositions.                               
(Dkt. 126.)  None of the amendments extended the original July 12, 2019 deadline for 
filing motions seeking to amend pleadings or add parties.                 
    On January 4, 2019, Plaintiffs requested information related to COI rates and 
charges, namely documents showing data over time for the policies at issue that reflected 
changes to policy charges, premiums, and riders and that separately identified amounts of 
charges and deductions.  (Dkt. 108-2 at 3, 7-8.)  Plaintiffs also asked in an interrogatory 
for identification of “monthly COI rate scales used to determine COI charges for policies 

issued on” certain policy forms.  (Dkt. 108-4 at 6-7.)  ReliaStar served its answer to that 

3    The parties’ briefs and arguments at the June 12 hearing refer to deadlines set by 
the March 18, 2020 Amended Pretrial Scheduling Order, which was effective at the time 
of those arguments and set a deadline for the class certification motion of July 24, 2020 
and a close of fact discovery and pre-class certification expert discovery of December 11, 
2020.  (Dkt. 89.)                                                         
interrogatory on March 14, 2019 (Dkt. 108-5 at 5), then amended its response on July 2, 
2019 (Dkt. 108-6 at 6), and amended it again on November 8, 2019 (Dkt. 108-7 at 6).  
Each response identified documents that contained COI rate tables, with the amended 
responses identifying new documents not previously identified.4  (Dkt. 108-5 at 5; Dkt. 

108-6 at 6; Dkt. 108-7 at 6.)                                             
    In March 2020, Plaintiffs asked ReliaStar follow-up questions about the COI rate 
information that had been produced, including requesting that ReliaStar identify, on a 
monthly basis, the amount “used to calculate the COI and rider charges for [Advance 
Trust’s] policy, (2) the COI and rider charges deducted, and (3) the COI and rider rates 

applied,” prompted by Plaintiffs’ determination that certain produced information could 
not be reconciled with other information.  (Dkt. 108-8 at 3; Dkt. 108-9 at 2-3.)  In 
particular, Plaintiffs sought this information because they could not reconcile the COI 
charges and rates with the rest of the policy data.  (See Dkt. 107 at 11-12.)  In response, 
on March 26, 2020, ReliaStar provided a spreadsheet breaking out various data points for 

the policy.  (Dkt. 108-3 at 9; Dkt. 108-11.)  The formulas in the spreadsheet showed 15% 
added to the COI charge (“Base COI”) and WP Rider charge (“WP COI”) for Advance 
Trust’s policy every month.  (Dkt. 107 at 12.)  The rider at issue provides for a waiver of 
all policy charges in the event that the insured becomes totally disabled.  (Dkt. 108-19 ¶ 
31; Dkt. 107 at 9.)  The same day, Plaintiffs responded, pointing out the “15% bump up 

for COI rates and rider charges” and specifically asking where the “15% bump come[s] 

4    ReliaStar’s discovery responses and document production include information 
from Gibraltar Life Services, Ltd. (“Gibraltar”), a third party that administers some of the 
policies at issue in the Amended Complaint, including Advance Trust’s.  (Dkt. 78 at 1-2.) 
from” and for source documents explaining the bump.  (Dkt. 108-3 at 9.)  ReliaStar 
responded on April 13, 2020 that “the 15% increase shown in COI rates in the breakout 
reflects a COI increase . . . sometime in 1989,” attaching a memorandum from 1989 that 
documented the increase and stating the memorandum would be formally produced in 

discovery.  (Id. at 6-7.)  ReliaStar stated it would produce revised current COI tables for 
the Gibraltar-administered policies and sent the tables later that week.  (Id. at 6-7.) 
    Plaintiffs emailed again on April 20, 2020, asking additional follow-up questions 
about the COI tables and notifying ReliaStar that Plaintiffs “plan[ned] to amend the 
complaint to add a breach of contract claim/class since the rider rates apparently are now 

also 15% higher than permitted in the policy.”  (Id. at 5-6.)  Plaintiffs attached a draft 
amended complaint and asked if ReliaStar would oppose a request for leave to amend the 
complaint.  (Id. at 6.)  Plaintiffs asked again by email for a response to the proposed 
amendment on April 27, April 30, and May 4, 2020.  (Id. at 4-5.)  On May 4, 2020 
ReliaStar stated that it would not consent to the amendment.  (Id. at 3.)  In response to 

Plaintiffs’ question about the reasons for ReliaStar’s opposition to the motion for leave to 
amend, ReliaStar stated that “[ReliaStar] opposes because it believes the claims are time-
barred, and thus futile, and also that it is prejudicial to RLIC to add a different claim so 
far into the case.”  (Id. at 2-3.)  After the parties conferred by phone, ReliaStar confirmed 
by email on May 6 that it would not consent to the motion.  (Id. at 2.)  Plaintiffs then filed 

the present motion for leave to amend their complaint on May 21, 2020 (Dkt. 105), 
attaching their proposed Second Amended Class Action Complaint (Dkt. 108-19). 
    The proposed Second Amended Class Action Complaint (“Second Amended  
Complaint”) adds allegations for a new “class of policyholders who have been forced to 
pay excessive rider charges for their policies.”  (Dkt. 108-19 ¶ 1.)  It further alleges that 
the policies at issue, including Advance Trust’s, “provide that this rider charge is to be 

calculated using rates specified in the policies” and “do not give ReliaStar any discretion 
to charge rider rates that diverge from the contractually-specified rates,” but ReliaStar has 
imposed “overcharges of at least 15 percent, and possibly more,” thus breaching the 
terms of the policies.  (Id. ¶ 9.)  According to the proposed Second Amended Complaint, 
for policies with a waiver rider, the rider “specifies that ‘[t]he cost of this Rider is 

payable at the same time and in the same manner as the monthly deduction for the 
Policy,’” and the rider “charges are calculated using rates specified in the policy.”  (Id. ¶ 
32.)  Further, each of the policies “specify the exact rates that ReliaStar is obliged to 
charge for the Waiver Rider in each year that the insured is alive and the rider is in 
force.”  (Id.)  The proposed Second Amended Complaint alleges that Advance Trust’s 

policy states “that ‘[t]he monthly cost for this Rider is shown in the Table of Monthly 
Cost For Rider per $1,000’” and includes an alleged copy of the Table of Monthly Cost 
that specifies rates according to an insured’s attained age.  (Id.)  “ReliaStar is in breach of 
the terms of the policies in the proposed Rider Overcharge Class because it has been 
calculating and deducting rider charges using rates other than these fixed rates (i.e., those 

set forth in the table of monthly costs).”  (Id. ¶ 33.)  “The Advanced Trust policy, for 
instance, has been charged approximately $42.24 in excess rider charges over the last 
eight policy years, an overcharge of 15 percent of the amount permitted by the table of 
monthly rider costs.”  (Id.)  According to the proposed Second Amended Complaint, 
“[o]ther policies that were issued by ReliaStar and administered by third party Gibraltar 
Life Services, Inc., have suffered the same 15 percent overcharges.”  (Id.)  The proposed 
Second Amended Complaint also alleges that ReliaStar “secretly hiked rider rates” (id. ¶ 

33) and “concealed this rider overcharge,” by “fail[ing] to separately disclose the amount 
of monthly Waiver Rider charges deducted from the policy value” in annual reports to 
policyholders and “fail[ing] to send policyholders any other notification or 
documentation of the excess rider rates it applied” (id. ¶ 34).           
    Advance Trust seeks to represent a class of policyholders, the “Rider Overcharge 

Class,” consisting of “[a]ll current and former owners of universal life (including variable 
universal life) insurance policies issued by ReliaStar Life Insurance Company, or its 
predecessors, that include a Waiver Rider with a table of monthly cost for rider.”  (Dkt. 
108-19 ¶ 37.)  Plaintiff Curtis is not encompassed by this definition and does not seek to 
represent the Rider Overcharge Class.  (Dkt. 111 at 6, 16 n.11; see Dkt. 108-19 ¶ 37.)  As 

Plaintiffs did in their First Amended Class Action Complaint—for what they now call the 
“COI Overcharge Class”—Plaintiffs alleged subclasses to the Rider Overcharge Class for 
which they may alternatively seek class certification.  (Dkt. 108-19 ¶ 38.) 
    In addition to Plaintiffs’ brief in support of its motion (Dkt. 107) and ReliaStar’s 
brief in opposition (Dkt. 111), the Court permitted Plaintiffs to file a reply brief and 

ReliaStar to file a sur-reply limited to the issues of futility and prejudice.  (Dkts. 116, 
117, 119.)  The Court held a hearing on the motion on June 12, 2020.  (Dkt. 122.) 
                    II.  LEGAL STANDARD                                  
    Plaintiffs’ Motion to Amend is generally governed by Rules 15 and 16 of the 
Federal Rules of Civil Procedure and Local Rule 16.3 of the Local Rules for the District 
of Minnesota.                                                             

A.   Rule 15                                                              
    Federal Rule of Civil Procedure 15(a) provides that leave to amend “shall be 
freely given when justice so requires.”  The determination as to whether to grant leave to 
amend is entrusted to the sound discretion of the trial court.  See, e.g., Niagara of Wis. 
Paper Corp. v. Paper Indus. Union Mgmt. Pension Fund, 

, 749 (8th Cir. 

1986) (citation omitted).  The Eighth Circuit has held that “[a]lthough amendment of a 
complaint should be allowed liberally to ensure that a case is decided on its merits . . . 
there is no absolute right to amend.”  Ferguson v. Cape Girardeau Cty., 

, 
650-51 (8th Cir. 1996) (citing Thompson-El v. Jones, 

 (8th Cir. 1989); 
Chesnut v. St. Louis Cty., 

 (8th Cir. 1981)).  Denial of leave to amend 

may be justified by “undue delay, bad faith on the part of the moving party, futility of the 
amendment or unfair prejudice to the opposing party.”  Sanders v. Clemco Indus., 

 (8th Cir. 1987) (citing Foman v. Davis, 

 (1962)); see also 
Hillesheim v. Myron’s Cards and Gifts, Inc., 

 (8th Cir. 2018) (citation 
omitted) (“A district court’s denial of leave to amend a complaint may be justified if the 

amendment would be futile.”).                                             
    In this case, where ReliaStar has alleged that the proposed amendments are futile, 
this Court must determine whether the proposed claims state a claim for relief at this 
stage of the case.  See Zutz v. Nelson, 

 (8th Cir. 2010) (“Denial of a 
motion for leave to amend on the basis of futility means the district court has reached the 
legal conclusion that the amended complaint could not withstand a motion to dismiss 
under Rule 12(b)(6) of the Federal Rules of Civil Procedure.  Accordingly, in reviewing a 

denial of leave to amend we ask whether the proposed amended complaint states a cause 
of action under the Twombly pleading standard . . . .”) (citation and marks omitted); see 
also Hillesheim, 

; In re Senior Cottages of Am., LLC, 

, 1001 
(8th Cir. 2007) (“[W]hen a court denies leave to amend on the ground of futility, it means 
that the court reached a legal conclusion that the amended complaint could not withstand 

a Rule 12 motion.”); United States ex rel. Gaudineer & Comito, L.L.P. v. Iowa, 

 (8th Cir. 2001) (“The denial of leave to amend based on futility means that the 
court found that the amended complaint failed to state a claim . . . .”).  To “survive a 
motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 
‘state a claim to relief that is plausible on its face.’”  Ashcroft v. Iqbal, 

, 678 

(2009) (quoting Bell Atl. Corp. v. Twombly, 

 (2007)).  “A claim has 
facial plausibility when the plaintiff pleads factual content that allows the court to draw 
the reasonable inference that the defendant is liable for the misconduct alleged.”  

 
(quoting Twombly, 

).  Analysis under Rules 15 and 12(b)(6) generally 
requires a court not consider matters outside the pleadings to determine whether leave to 

amend should be given.  See Arias v. Am. Family Mut. Ins. Co., No. CV 13-1681 
(PJS/JJG), 

, at *2 (D. Minn. Oct. 28, 2013) (citing Casazza v. Kiser, 

 (8th Cir. 2002)) (finding “[n]o matters outside the pleading may be 
considered” when conducting a futility analysis under Rules 12(b)(6) and 15).  Further, 
“a motion to amend should be denied on the merits only if it asserts clearly frivolous 
claims or defenses.”  Becker v. Univ. of Neb. at Omaha, 

 (8th Cir. 
1999) (internal quotation marks and citation omitted).  In other words, the “[l]ikelihood 

of success on the new claim or defenses is not a consideration for denying leave to amend 
unless the claim is clearly frivolous.”  Becker, 

 (citations omitted). 
B.   Rule 16                                                              
    Under Rule 15(a), leave to amend should be granted liberally, if “justice so 
requires.”  However, the Eighth Circuit has held that when a party has filed a motion to 

amend the complaint after the deadline provided in a court’s pretrial scheduling order, 
then the court may properly require, pursuant to Federal Rule of Civil Procedure 16(b), 
that good cause be shown for leave to file a pleading that is out of time with that order.  
See Freeman v. Busch, 

 (8th Cir. 2003) (citing In re Milk Prod. 
Antitrust Litig., 

 (8th Cir. 1999)).  “If we considered only Rule 15(a) 

without regard to Rule 16(b), we would render scheduling orders meaningless and 
effectively would read Rule 16(b) and its good cause requirement out of the Federal 
Rules of Civil Procedure.”  In re Milk Prod. Antitrust Litig., 

 (citation 
omitted).                                                                 
    Scheduling orders pursuant to Rule 16(b)(1) “assure[ ] that at some point both the 

parties and the pleadings will be fixed . . . .”  Fed. R. Civ. P. 16(b), advisory committee’s 
note to 1983 amendment.  Moreover, “Rule 16(b) assures that ‘[a] magistrate judge’s 
scheduling order ‘is not a frivolous piece of paper, idly entered, which can be cavalierly 
disregarded . . . without peril.’”  Archer Daniels Midland v. Aon Risk Servs., Inc., 

 (D. Minn. 1999) (quoting Gestetner Corp. v. Case Equip. Co., 

 (D. Me. 1985)).  Under Rule 16(b), “[a] schedule may be modified only 
for good cause and with the judge’s consent.”  Fed. R. Civ. P. 16(b)(4).  Similarly, Local 

Rule 16.3 requires a party moving to modify a scheduling order to “establish good cause” 
for the proposed modification.                                            
    “The primary measure of good cause is the movant’s diligence in attempting to 
meet the order’s requirements.”  Sherman v. Winco Fireworks, Inc., 

 
(8th Cir. 2008) (citing Rahn v. Hawkins, 

 (8th Cir. 2006)); see also Fed. 

R. Civ. P. 16(b), advisory committee’s note to 1983 amendment (“[T]he court may 
modify the schedule on a showing of good cause if it cannot reasonably be met despite 
the diligence of the party seeking the extension.”).  “[T]he ‘good cause’ standard [of Rule 
16(b)] is an exacting one, for it demands a demonstration that the existing schedule 
cannot be reasonably met despite the diligence of the party seeking the extension.”  

Scheidecker v. Arvig Enters., 

 (D. Minn. 2000) (citation omitted).   
    While the prejudice to the nonmovant resulting from modification of the 
scheduling order may also be a relevant factor, generally, the Court will not consider 
prejudice if the movant has not been diligent in meeting the scheduling order’s deadlines. 
See Bradford v. DANA Corp., 

 (8th Cir. 2001) (concluding that there 

was “no need to explore beyond the first criterion, [diligence,] because the record clearly 
demonstrate[d] that Bradford made only minimal efforts to satisfy the [scheduling 
order’s] requirements”).  In short, Rule 16(b) focuses on “the diligence of the party 
seeking to modify a Scheduling Order, as opposed to the litany of unpersuasive excuses, 
inclusive or inadvertence and neglect, which commonly undergird an untimely Motion to 
Amend.”  Scheidecker, 

 n.1 (citations omitted).          
    With these standards in mind, the Court turns to Plaintiffs’ Motion to Amend. 

                        III.  ANALYSIS                                   
A.   Whether Plaintiffs Have Established Good Cause Under Rule 16         
    Plaintiffs contend they were diligent because the information about the 15% 
adjustment to the rider charge constitutes “newly discovered facts” that “only came to 
light as a result of Plaintiffs’ repeated and specific inquiries.”  (Dkt. 107 at 16.)  Plaintiffs 

further contend that they were diligent in seeking amendment once those facts came to 
light in March 2020.  (Id. at 16-17.)                                     
    ReliaStar’s opening brief cites the Rule 16 good cause standard (Dkt. 111 at 7) and 
makes a passing reference to “[Plaintiffs’] delay in seeking amendment” when opposing 
amendment under the Rule 15 standard (id. at 13), but does not contend that Plaintiffs did 

not demonstrate the diligence required by Rule 16.  And although ReliaStar contended in 
its brief that Plaintiffs “paint a misleading picture of the history of the proceedings” (id. 
at 13), ReliaStar did not contend that Plaintiffs actually were in possession of the facts 
underlying the rider charge allegations before they received the spreadsheet on March 26, 
2020.  ReliaStar also does not dispute that Plaintiffs were diligent in seeking the 

amendment once they had those facts.  Indeed, not until the June 12 hearing did ReliaStar 
assert that there is no good cause to extend the deadline for amending pleadings.  (See 
Dkt. 127 at 23-24.)  The Court could find that ReliaStar has waived its “good cause” 
argument for failing to raise it in its opening brief.  See, e.g., Bahl v. Cty. of Ramsey, 

, 983 n.4 (D. Minn. 2009) (citing Jenkins v. Winter, 

 
(8th Cir. 2008) (“Claims not raised in an opening brief are deemed waived.”)).  
Moreover, as explained below, the Court finds that Plaintiffs were diligent in seeking 

leave to amend to add the proposed rider charge claim.                    
    Here, Plaintiffs received the spreadsheet breaking out “each piece of the monthly 
deduction calculation for Advance Trust’s policy” and containing the formulas with the 
15% adjustment to the COI charge and the rider charge on March 26, 2020.  (Dkt. 107 at 
12 (citing Dkt. 108-3 at 9 (cited as page 8); Dkt. 108-11).)  At the hearing, ReliaStar 

argued that Plaintiffs could have discovered the rider rates earlier had they investigated 
discrepancies in documents that ReliaStar had produced before March 2020.  (See Dkt. 
127 at 25-27.)  However, it is still unclear to the Court which documents ReliaStar thinks 
should have triggered an earlier investigation, when those documents were actually 
produced, and how Plaintiffs’ response should have or would have differed had they 

started their investigation earlier, particularly in view of ReliaStar’s supplementation of 
its interrogatory responses to identify additional documents.  In other words, ReliaStar 
has not identified an earlier date when the diligence clock should have started ticking 
than the March 26, 2020 date when the spreadsheet containing the formulas showing the 
15% adjustment was provided.                                              

    As to after receiving the March 26 spreadsheet, Plaintiffs asked about “the 15% 
bump” for COI rates and rider charges on the same day (Dkt. 108-3 at 9) and, after 
further communication with ReliaStar, notified ReliaStar of their intent to file a motion to 
amend the complaint on April 20 (id. at 5-6) and filed the motion on May 21, 2020 (Dkt. 
105).  Less than two months passed from when Plaintiffs learned of the facts underlying 
their new allegations and when they filed the motion, which included time waiting for 
ReliaStar to answer questions about the rider rates and to state whether it would oppose 

the motion.  (See Dkt. 108-3 at 3-7.)                                     
    In sum, for the reasons discussed above, the Court finds that the spreadsheets 
produced on March 26, 2020 constitute “newly discovered information that could not 
have been obtained earlier through the exercise of reasonable diligence,” Doeling v. 
Bryniarski, No. CV 10-1047, 

, at *7 (D. Minn. Apr. 25, 2011), and 

that Plaintiffs were diligent in seeking amendment after that discovery.   
    “If the court is satisfied that the movant was diligent, it will also generally 
consider possible prejudice to the nonmovant.”  Shank v. Carleton Coll., 

, 
614 (D. Minn. 2019) (citing Sherman, 

).  As noted above, ReliaStar made 
only a passing reference to Rule 16’s good cause standard in its opening brief and did not 

argue prejudice separate and apart from the undue prejudice at issue in connection with 
Rule 15.  For the reasons explained in Section III.B.2, the Court concludes that the 
extension of the schedule to permit the Motion to Amend will not prejudice ReliaStar to 
the extent that it vitiates Plaintiffs’ showing of good cause based on diligence—which is 
the primary measure of good cause.  See Sherman, 

.  Moreover, any 

prejudice imposed on ReliaStar as a result of the amendment can be cured in part by an 
appropriate extension of the pretrial schedule.                           
B.   Whether Plaintiffs Have Met the Rule 15 Standard for Leave to Amend  
    ReliaStar argues that Plaintiffs’ motion for leave to amend under Rule 15 should 
be denied on grounds of futility and undue prejudice.  According to ReliaStar, first, 
Plaintiffs’ new claim is time-barred because it relates to alleged conduct by ReliaStar in 

1989 and 1990 and is therefore futile.  (Dkt. 119 at 1-2.)  Second, ReliaStar argues that a 
new claim at this stage of the litigation that is based on a different contract provision and 
new theory of liability on behalf of a new proposed class is highly prejudicial.  (Id. at 2.)  
ReliaStar’s arguments are unavailing, and the Court concludes that Plaintiffs’ new claim 
is not clearly frivolous and does not place an undue burden on ReliaStar. 

    1.   Futility                                                        
    ReliaStar’s primary futility argument is that the 15% increase in rider charges that 
forms the basis of Plaintiffs’ proposed new claim occurred in 1990, and therefore a claim 
for breach of contract based on that increase is barred by the statute of limitations under 
Minnesota law (six-year statute of limitations) or Texas law (four-year statute of 

limitations).  (Dkt. 111 at 7-11; Dkt. 119 at 2-5.)  In particular, ReliaStar relies on the 
1989 memorandum that ReliaStar emailed to Plaintiffs on April 13, 2020 when 
explaining when “the 15% increase shown in COI rates” occurred and later produced in 
discovery.  (See Dkt. 111 at 9-10; Dkt. 108-3 at 6-7.)  Plaintiffs respond that the 1989 
memorandum relates to COI rates and does not mention rider rates.  (Dkt. 117 at 7, 10.)  

Plaintiffs further contend that the Court cannot consider the 1989 memorandum in 
connection with their Motion to Amend and that, in any event, each year that ReliaStar 
“overcharged” the rider rate constitutes a separate breach with its own accrual date.  (Id. 
at 7-9 (“That is because when the policy states that, at attained age 55 (which is in 2019), 
ReliaStar can only charge a rider rate of 0.2122, ReliaStar’s decision to charge more than 
that in 2019 is plainly not time-barred.”); id. at 11-12.)                
    The Court first considers whether it can consider the 1989 memorandum in the 

context of the Motion to Amend.  A futility analysis under Rules 15 and 12(b)(6) 
generally requires a court not consider matters outside the pleadings to determine whether 
leave to amend should be given.  See Arias, 

, at *2 (citing Casazza, 

) (finding “[n]o matters outside the pleading may be considered” when 
conducting a futility analysis under Rules 12(b)(6) and 15).  However, “[t]hough ‘matters 

outside the pleading’ may not be considered in deciding a Rule 12 motion to dismiss, 
documents ‘necessarily embraced by the complaint’ are not matters outside the pleading.”  
Enervations, Inc. v. Minn. Mining & Mfg. Co., 

 (8th Cir. 2004) 
(citations omitted).                                                      
    Here, the proposed Second Amended Complaint does not reference the 1989 

memorandum.  Rather, it alleges:                                          
    The policies provide that this rider charge is to be calculated using rates 
    specified in the policies.  The policies do not give ReliaStar any discretion to 
    charge  rider  rates  that  diverge  from  the  contractually-specified  rates.  
    ReliaStar,  however,  has  ignored  these  contractual  rider  rates,  imposing 
    overcharges of at least 15 percent, and possibly more.  These overcharges are 
    a breach of the terms of the policies.                               
(Dkt. 108-19 ¶ 9.)                                                        
    The proposed Second Amended Complaint further alleges that the rider charge is 
deducted on a monthly basis based on rates specified in the policy, alleges that those rider 
rates are based on the insured’s attained age, and includes a table showing the monthly 
rider cost based on attained age.  (Id. ¶ 32.)  There are no allegations in the proposed 
Second Amended Complaint that refer to the 1989 memorandum or any change made to 
rider rates in 1989 or 1990.  (See generally id.)  Moreover, ReliaStar has not argued that 
the 1989 memorandum is “necessarily embraced by the complaint” such that the Court 

could properly consider the memorandum under the Rule 12(b)(6) standard applicable 
here.  The Court concludes that the 1989 memorandum is not necessarily embraced by 
the proposed Second Amended Complaint such that the Court can properly consider it on 
this Motion to Amend.  Indeed, the 1989 memorandum is not even part of the record 
because neither Plaintiffs nor ReliaStar filed it in connection with the Motion to Amend.5  

For all of these reasons, the Court will not consider the 1989 memorandum in connection 
with the Motion to Amend.6                                                
    The Court next considers ReliaStar’s argument that the rider charge claim in the 
proposed Second Amended Complaint is futile because it is barred by the statute of 
limitations.  A statute of limitations defense is not typically a ground for a Rule 12(b)(6) 

dismissal “unless the complaint itself establishes the defense.”  Jessie v. Potter, 

    Since the 1989 memorandum is not part of the record, the Court will not attempt to 
decide whether it relates only to COI charges (as Plaintiffs contend (see Dkt. 117 at 7, 
10)) or also to rider charges (as ReliaStar contends (see Dkt. 119 at 2)).   

6    ReliaStar seems to suggest Plaintiffs have acted improperly by not attaching to or 
referencing the 1989 memorandum in the proposed Second Amended Complaint.  (See 
Dkt. 111 at 10; Dkt. 119 at 3.)  ReliaStar has not argued that the proposed Second 
Amended Complaint would not satisfy Rule 11 based on this omission and did not file 
the 1989 memorandum for the Court’s consideration in connection with the Motion to 
Amend.  The Court declines to impute improper motives to Plaintiffs based on the 
drafting of the proposed Second Amended Complaint.                        
709, 713 n.2 (8th Cir. 2008).  However, “when it ‘appears from the face of the complaint 
itself that the limitations period has run,’ a limitations defense may properly be asserted 
through a Rule 12(b)(6) motion to dismiss.”  Varner v. Peterson Farms, 

, 
1016 (8th Cir. 2004) (citation omitted).                                  

    Here, the parties take a variety of positions regarding whether Texas or Minnesota 
substantive law applies to the rider charge claim and which State’s statute of limitations 
applies.7  (See, e.g., Dkt. 111 at 7-10 & n.5-7 (ReliaStar arguing Texas substantive law 
and the Minnesota statute of limitations applies); Dkt. 117 at 10-13 & n.4 (Plaintiffs 
making arguments under Minnesota and Texas substantive law); Dkt. 119 at 3-5 

(ReliaStar arguing claims accruing before 2004 are subject to Minnesota statute of 
limitations and that any post-2004 claims are time-barred under Texas law).)  Regardless, 
the real dispute is whether Plaintiffs have plausibly alleged a breach of contract claim—
under Texas or Minnesota law—based on a theory that a breach occurred each time 
ReliaStar charged a monthly rider rate in excess of that specified in the contract.  To 

summarize the parties’ positions, Plaintiffs contend:                     
    By the plain terms of Advance Trust’s policy, ReliaStar has a continuing 
    contractual obligation to apply these charges monthly and change the charge 
    each year.                                                           

7    On one point, ReliaStar argues that “Plaintiffs’ post-August 1, 2004 ‘new-breach-
with-every-charge’ theory would accrue on the first alleged overcharge after August 1, 
2004 and be time-barred four years later” under Texas’s statute of limitations.  (Dkt. 119 
at 4.)  ReliaStar appears to be suggesting that Plaintiffs’ claim would accrue first in 1990 
and again in 2004 when Minnesota’s borrowing statute, 

, became 
effective.  The basis for this reasoning is unclear to the Court, but in any event, because 
the Court finds Plaintiffs’ separate breaches theory is not futile, the Court need not 
address the effect of Minnesota’s borrowing statute.                      
    When ReliaStar fails to comply with the numbers provided for in the table, 
    and instead improperly charges policyholders more than the contractually 
    specified monthly rates, a new cause of action accrues.  So, even if ReliaStar 
    began  overcharging  policyholders  in  1989,  which  ReliaStar  has  not 
    demonstrated, that still would not bar Plaintiffs’ claims for overcharges that 
    were not imposed until decades later—in 2014, 2015, 2016, 2017, 2018, 
    2019, and 2020.                                                      
(Dkt. 117 at 12 (citation omitted).)                                      
    ReliaStar responds that “[a] breach of contract claim accrues at the time of the 
alleged breach, regardless of whether the plaintiff was aware of the breach,” In re RFC & 
ResCap Liquidating Trust Action, 

 (D. Minn. 2018), and 
argues:                                                                   
    Recognizing the problem with the accrual of their claim, Plaintiffs double 
    down on the notion that they can avoid a limitations bar because a new breach 
    occurred every time Plaintiffs were charged the higher rate over the course 
    of the 30 years since implementation of the new rate.  Plaintiffs’ argument 
    runs  them  headlong  into  another  problem:  the  controlling  authority.  
    Although Plaintiffs rely heavily on cases from Illinois, California, and other 
    states, they point to no authority in the jurisdictions that matter—Minnesota 
    and Texas.                                                           
(Dkt. 119 at 3-4.)                                                        
    In other words, the real dispute is over whether Plaintiffs’ separate breaches based 
on the monthly rider overcharges theory is futile because Minnesota or Texas would not 
recognize that theory.  If the Court finds that Plaintiffs’ breach of contract theory is not 
futile under Minnesota or Texas law, it does not matter at this time which statute of 
limitations applies, because Plaintiffs have alleged, as an example, excess rider charges 
occurring “over the last eight policy years” (Dkt. 108-19 ¶ 33), which would encompass 
conduct in both the last four and last six years.8                        
    Relying on Park Nicollet Clinic v. Hamann, 

 (Minn. 2011), 
ReliaStar argues that the claim is futile under Minnesota law because it is time-barred.  

(Dkt. 111 at 9.)  This argument is primarily based on the assumption that the rider 
charges increased in 1989—which is not apparent from the face of the proposed Second 
Amended Complaint and which the Court cannot properly consider because the 1989 
memorandum on which this argument is based is not necessarily embraced by the 
proposed Second Amended Complaint.  (Dkt. 119 at 2-3.)  Perhaps recognizing that the 

1989 memorandum cannot be considered, ReliaStar argues that the allegation that excess 
rider charges occurred “over the last eight policy years” constitutes an allegation “that the 
rate increase dates from at least two years outside the longest potential limitations period 
under either the law of Minnesota (six years) or Texas (four years).”  (Id. at 3 (citing Dkt. 
108-19 ¶ 33).)  The Court does not interpret a straightforward allegation exemplifying 

excess charges occurring over the last eight years as a concession or pleading that the 
cause of action accrued eight years ago so as to render the claim futile.   


8    The Court notes the potential applicability of the discovery rule, addressed in 
ReliaStar’s brief and raised at the hearing.  (Dkt. 111 at 8; Dkt. 127 at 35-38, 43.)  Since 
the Court does not accept, for the present motion, ReliaStar’s position that Plaintiffs’ 
rider charge claim accrued once in 1990 and thus is time-barred, the Court need not 
determine whether the discovery rule could apply and leave Plaintiffs with some claim 
that accrued in 1990.  The Court notes that Texas law does not categorically foreclose 
application of the discovery rule to breach of contract cases.  See Beavers v. Metro. Life 
Ins. Co., 

 (5th Cir. 2006); Gallier v. Woodbury Fin. Servs., Inc., 

 (S.D. Tex. 2016).                                 
    Moreover, the claim alleged in Hamann is distinguishable from the rider charge 
claim alleged in proposed Second Amended Complaint.  In Hamann, “the wrongful 
conduct underlying the breach of contract claim [wa]s Park Nicollet’s refusal to honor the 
Policy” that the plaintiff could be exempt from night call with no salary reduction, which 

“occurred in April 2005, according to the complaint.”  

 (emphasis 
added).  In deciding Hamman, the Minnesota Supreme Court explained:       
    The wrongful conduct at issue here, according to the complaint, is Park 
    Nicollet’s decision to require that physicians over age 60 take night call.  
    Requiring physicians over age 60 to take night call is wrongful only because 
    of the benefits Park Nicollet offered in the Policy.  Aside from the promise 
    in the Policy itself, Hamann alleges no other contractual provision or law that 
    would bind Park Nicollet to the night call restriction.  Because Park Nicollet 
    revoked the Policy in April 2005, it had no continuing obligation to pay 
    Hamann’s original salary after he ceased taking night call in February 2008. 

.                                                               
    In the earlier case of Levin v. C.O.M.B. Co., however, the Minnesota Supreme 
Court found that a complaint of a series of breaches, namely the “repeated failures to pay 
commissions in excess of the annual guaranteed minimum compensation, each of which 
breaches could have occurred only at the close or at some date after the close of a 
contract year,” constituted “separate causes of action with different accrual dates.”  

 (Minn. 1989).  Indeed, the Minnesota Supreme Court in Hamann 
distinguished Levin because “the obligation at issue in this case was not something that 
Park Nicollet was contractually or otherwise required to perform on an ongoing basis.”  

.                                                        
    Here, the proposed Second Amended Complaint does not allege the breach 
occurred in 1989, or that the breach occurred before either Minnesota’s or Texas’s statute 
of limitations ran.  Rather, it alleges a series of breaches occurring each time a rider 
charge in excess of the specified rate was charged, that ReliaStar was in breach of the 
terms of the policies because it has been calculating and deducting rider charges using 
rates other than these fixed rates (i.e., those set forth in the table of monthly costs), and 

also that the specified rate was based on the insured’s attained age.  (Dkt. 108-19 ¶ 33.)  
The Court concludes that Plaintiffs have plausibly alleged, at a minimum, that ReliaStar 
had an ongoing obligation to charge the rider rates specified in the table and that a breach 
of contract occurred each year when the insured was charged a rider rate that exceeded 
the rate specified for that attained age, and consequently that Plaintiffs’ breach of contract 

claim is not “clearly frivolous” under Minnesota law so as to require denial of the Motion 
to Amend.  See Becker, 

.                                   
    Although ReliaStar made arguments under Minnesota law, it contends that 
substantive Texas law controls the proposed rider charge claim.  (Dkt. 111 at 8 n.5.)  
ReliaStar cites Howard v. Sunset Life Ins. Co. of Am., No. 03-01-00407-CV, 

, at *5 (Tex. App. Jan. 10, 2002), and Beavers v. Metro. Life Ins. Co., 

 (5th Cir. 2006), in support of its argument that Texas law renders the proposed 
claim futile.  (Dkt. 119 at 4-5.)  In particular, ReliaStar contends: “Texas courts have 
squarely held that periodic payments under insurance contracts do not give rise to ‘new’ 
claims at the time of each payment.”  (Id. at 4.)                         

    The Court does not read the Texas cases cited by ReliaStar as rendering Plaintiffs’ 
proposed rider charge claim clearly frivolous.  Howard addressed whether an increase to 
an insurance premium by the insurer was a breach of the terms of the policy where the 
plaintiff contended that only the policyholder was permitted to increase the premium.  

, at *1.  In other words, the dispute centered on a promise that only the 
policy holder could increase the premium, not a promise to charge certain rates.  The 
plaintiff did not pursue any ongoing breach theory—in fact, the parties did not seem to 

dispute that the conduct allegedly giving rise to the breach was a single incident—and the 
court did not state any general rule against such a theory.  See id. at *5.   
    ReliaStar also cites Howard for the proposition that: “Where an insurance 
company allegedly breaches a life insurance policy by charging higher premiums than the 
contract permits, a new cause of action for breach does not accrue with each monthly 

overcharge; rather the claim as a whole accrues ‘when [the insured] was first charged and 
paid the wrong premium amount.’”  (Dkt. 111 at n.7.)  This language is actually found in 
Davis v. Minnesota Life Insurance Co., which held: “Minnesota Life showed the cause of 
action accrued in 1986, when Jacquelyn was first charged and paid the wrong premium 
amount, and negated the applicability of the discovery rule.  Thus, appellants’ claims are 

time-barred.”  No. 03-99-00882-CV, 

, at *3 (Tex. App. June 22, 2000).  
As with ReliaStar’s other cases, this case does not appear to involve an insured who put 
forth an ongoing breach theory, nor does it contain any general rule against such a theory.  
Rather, it addressed “the applicability of the discovery rule.”  See 

   
    Finally, in Beavers, the plaintiffs did not make any argument based on an ongoing 

breach theory and conceded that Texas’s four-year statute of limitations would ordinarily 
bar their claim.  

.  The issue in Beavers was the applicability of the 
discovery rule, not whether Texas law recognized an ongoing breach theory.  See 

.                                                                 
    In sum, these cases do not establish that Plaintiffs’ rider charge claim, as pleaded, 
is clearly frivolous under Texas law.  Moreover, both Howard and Davis were decided on 

summary judgment motions, illustrating the need for discovery to decide questions on, 
for example, the correct accrual date and applicability of the discovery rule, and 
reinforcing the Court’s conclusion that adopting ReliaStar’s statute of limitations defense 
at this stage would be premature.                                         
    For these reasons, the Court concludes that Plaintiffs’ rider charge claim based on 

a series of separate breaches of an ongoing obligation to charge certain rates based on the 
insured’s attained age is not clearly frivolous under Minnesota or Texas law and 
consequently is not futile.  Rather, at this stage in the proceedings, Plaintiffs have 
plausibly alleged such a claim.                                           
    2.   Unfair Prejudice                                                

    ReliaStar also opposes amendment on prejudice grounds, contending that allowing 
the proposed amendment would subject it to totally new and burdensome discovery 
obligations and would delay the resolution of the case by many months.  (Dkt. 111 at 13-
15; Dkt. 119 at 7.)  The Court has carefully considered ReliaStar’s prejudice arguments 
and concludes that they do not warrant denial of the Motion to Amend.     

    A party opposing a motion to amend a pleading must not merely show prejudice: it 
must show unfair prejudice.  See Sanders, 

 (citing Foman, 

).  Much of ReliaStar’s argument goes to the prejudice imposed by the burden of 
discovery, but discovery, even if voluminous and complicated, does not on its own 
constitute unfair prejudice.  Brown v. Pfeiffer, No. 019CV03132MWWKMM, 

, at *4 (D. Minn. Mar. 11, 2020) (quoting Dennis v. Dillard Dep’t Stores, Inc., 

 (8th Cir. 2000)) (“Denial of leave to amend is not appropriate when 

unfair prejudice is claimed merely because the non-moving party would have the ‘burden 
of undertaking discovery.’”).  ReliaStar has described a complicated and lengthy 
discovery process, both for the existing claim and for the potential new claim (Dkt. 111 at 
3-4, 12, 14), but it has not identified what about that process is or would be unfairly 
prejudicial as compared to that which is necessary to litigate the new claim. 

    Cases finding undue prejudice based on discovery burdens, moreover, often 
involve movants who have delayed unduly in bringing the amendments into the case.  
See, e.g., Bell v. Allstate Life Ins. Co., 

 (8th Cir. 1998) (finding no 
abuse of discretion where district court denied a motion to add new claims due to the 
movant’s delay and lack of diligence in addition to prejudice to the defendants in having 

to reopen discovery after the deadline and near trial); United States v. Bos. Sci. Corp., 
No. 11-CV-2453 (JNE/SER), 

, at *6-8 (D. Minn. Oct. 30, 2018) 
(describing movant’s undue delay in asserting a new claim, the burdens directly resulting 
from that delay, supplemental jurisdiction issues, and concluding “[t]his grim prospect 
[of all-consuming discovery on a new claim], combined with the other prejudicial 

results should the proposed amendment be granted, requires denial of Higgins’ motion”) 
(emphasis added); IBEW Local 98 Pension Fund v. Best Buy Co., 

, 527 
(D. Minn. 2018) (denying motion to amend because the request was unduly delayed and 
defendant would suffer prejudice); Harris v. Chipotle Mexican Grill, Inc., No. 13-CV-
1719 (SRN/SER), 

, at *2 n.2 (D. Minn. Oct. 13, 2016).  As discussed 
above, the Court finds that Plaintiffs were diligent and did not delay in bringing the 
Motion to Amend.                                                          

    Moreover, this case is not at such a late stage as to make a new claim unfairly 
prejudicial.  Though the case has been pending since October 2018 (Dkt. 1) and 
discovery has been ongoing since January 2019, fact discovery has not yet closed and, 
under the current schedule, is not set to be substantially complete until November 13, 
2020 and to close until March 11, 2021.  (Dkt. 126 at 2.)  The deadline for Plaintiffs’ 

class certification motion is October 23, 2020.  (Id.)  The Court has not set a deadline for 
dispositive motions or trial, and the parties have not taken any depositions.  In contrast to 
cases where leave to amend was denied on prejudice grounds based on the late stage of 
the case, this case—although pending for some time—is still in the relatively early 
stages.  See, e.g., Popoalii v. Corr. Med. Servs., 

 (8th Cir. 2008) 

(district court did not abuse its discretion in denying a motion to amend due to potential 
prejudice from a new claim proposed after most discovery, including depositions of the 
parties, was completed, one month of discovery remained, and defendants represented 
that “they would have to redo much of the discovery that had already been completed, 
including depositions of the parties” ); Bell, 

 (finding no abuse of 

discretion where district court denied a motion to add new claims because of, in addition 
to the movant’s delay and lack of diligence, prejudice to the defendants in having to 
reopen discovery on new claims when the motion to amend was filed after the discovery 
deadline and five weeks before trial).                                    
    Accordingly, ReliaStar has not established that the proposed amendment will 
impose an undue burden on it.  However, the Court recognizes that granting the Motion 

to Amend will expand the scope of discovery and will permit the parties to seek an 
appropriate extension of the schedule to permit ReliaStar adequate time to prepare its 
defense to the new claim and Plaintiffs adequate time to explore the new claim.  In 
propounding new discovery, Plaintiffs should remember their representation to the Court 
that “ReliaStar will primarily need to produce only two categories of documents: (1) 

documents sufficient to prove the rider rates provided for in the policies at issue (e.g., 
copies of the subject policies), and (2) policy-level data, including applicable fields 
related to rider rates applied, rider charges, and insureds’ attained ages.”  (Dkt. 117 at 
15.)                                                                      
    For all of the reasons stated above, the Court grants Plaintiffs’ Motion to Amend. 

                         IV.  ORDER                                      
    Based on the files, records, and proceedings herein, IT IS ORDERED THAT: 
Plaintiffs’ Motion for Leave to File Second Amended Class Action Complaint (Dkt. 105) 
is GRANTED.                                                               


DATED: September 2, 2020                s/Elizabeth Cowan Wright          
                                       ELIZABETH COWAN WRIGHT            
                                       United States Magistrate Judge    

                UNITED STATES DISTRICT COURT                             
                    DISTRICT OF MINNESOTA                                


Advance Trust & Life Escrow Services,  Case No. 18-cv-02863 (DWF/ECW)    
LTA, as securities intermediary for Life                                 
Partners Position Holder Trust, and                                      
Alice Curtis on behalf of themselves and                                 
all others similarly situated,                                           

          Plaintiffs,                                                    

     v.                                     ORDER                        

ReliaStar Life Insurance Company,                                        

          Defendant.                                                     


    This matter is before the Court on the Motion for Leave to File Second Amended 
Class Action Complaint (Dkt. 105) (“Motion to Amend”) brought by Plaintiffs Advance 
Trust & Life Escrow Services, LTA, as securities intermediary for Life Partners Position 
Holder Trust, and Alice Curtis (collectively, “Plaintiffs”).  For the reasons discussed 
below, the Court grants the Motion to Amend.                              
         I.   FACTUAL AND PROCEDURAL BACKGROUND                          
    Advance Trust & Life Escrow Services, LTA (“Advance Trust”) filed this putative 
class action on October 5, 2018.  (Dkt. 1.)  A First Amended Class Action Complaint was 
filed on February 24, 2020, which added Curtis as a named plaintiff and alleged 
subclasses for which Plaintiffs may alternatively seek class certification.  (Dkt. 84 ¶¶ 10, 
31.)  Both the original Complaint and the First Amended Class Action Complaint alleged 
a single count for breach of contract.  (Dkt. 1; Dkt. 84.)                
    Specifically, Plaintiffs alleged that Defendant ReliaStar Life Insurance Company 
(“ReliaStar”) breached universal life insurance policies that ReliaStar, or its 
predecessors-in-interest, issued by failing to determine cost of insurance (“COI”) rates 
based solely on expected future mortality experience and deducting COI charges based 

on those impermissibly determined rates.1  (Dkt. 84 ¶¶ 1, 5, 7, 15, 18, 26-27, 41.)  
Plaintiffs alleged that ReliaStar is obligated by a provision in certain standardized form 
contracts to decrease COI rates to reflect improved projected mortality experience but has 
not so decreased the rates.  (Id. ¶¶ 5, 7, 15, 18, 26-27, 41.)            
    The Court entered a Pretrial Scheduling Order on February 1, 2019.  (Dkt. 41.)  

That Order set the following deadlines:                                   
        July 12, 2019 – deadline to file motions seeking to amend pleadings or add 
         parties;                                                        
        September 6, 2019 – deadline to file class certification motion and opening 
         of pre-class certification expert discovery;                    
        September 27, 2019 – deadline for substantial completion of fact discovery; 
         and                                                             
        December 23, 2019 – close of fact discovery and pre-class certification 
         expert discovery, including depositions.                        
(Id. at 3, 5-6.)2                                                         
    Deadlines relating to trial experts, dispositive motions, and trial were to be 
addressed following an order on class certification.  (Id. at 3.)  The parties stipulated to 

1    According to Plaintiffs, the COI covers the death benefit protection.  (Dkt. 107 at 
9.)                                                                       

2    Citations to page numbers refer to the ECF pagination unless otherwise indicated. 
several amendments to the Scheduling Order, each time extending the deadlines for class 
certification briefing and disclosures regarding pre-class certification experts, substantial 
completion of fact discovery, the close of fact discovery, and the close of pre-class 
certification expert discovery.  (Dkt. 54; Dkt. 80; Dkt. 89; Dkt. 126.)  The current 

schedule (Dkt. 126), entered on July 1, 2020, after the June 12, 2020 hearing on the 
Motion to Amend,3 sets the following deadlines:                           
        October 23, 2020 – deadline to file class certification motion and opening 
         of pre-class certification expert discovery;                    
        November 13, 2020 – deadline for substantial completion of fact discovery; 
         and                                                             
        March 11, 2021 – close of fact discovery and pre-class certification expert 
         discovery, including depositions.                               
(Dkt. 126.)  None of the amendments extended the original July 12, 2019 deadline for 
filing motions seeking to amend pleadings or add parties.                 
    On January 4, 2019, Plaintiffs requested information related to COI rates and 
charges, namely documents showing data over time for the policies at issue that reflected 
changes to policy charges, premiums, and riders and that separately identified amounts of 
charges and deductions.  (Dkt. 108-2 at 3, 7-8.)  Plaintiffs also asked in an interrogatory 
for identification of “monthly COI rate scales used to determine COI charges for policies 

issued on” certain policy forms.  (Dkt. 108-4 at 6-7.)  ReliaStar served its answer to that 

3    The parties’ briefs and arguments at the June 12 hearing refer to deadlines set by 
the March 18, 2020 Amended Pretrial Scheduling Order, which was effective at the time 
of those arguments and set a deadline for the class certification motion of July 24, 2020 
and a close of fact discovery and pre-class certification expert discovery of December 11, 
2020.  (Dkt. 89.)                                                         
interrogatory on March 14, 2019 (Dkt. 108-5 at 5), then amended its response on July 2, 
2019 (Dkt. 108-6 at 6), and amended it again on November 8, 2019 (Dkt. 108-7 at 6).  
Each response identified documents that contained COI rate tables, with the amended 
responses identifying new documents not previously identified.4  (Dkt. 108-5 at 5; Dkt. 

108-6 at 6; Dkt. 108-7 at 6.)                                             
    In March 2020, Plaintiffs asked ReliaStar follow-up questions about the COI rate 
information that had been produced, including requesting that ReliaStar identify, on a 
monthly basis, the amount “used to calculate the COI and rider charges for [Advance 
Trust’s] policy, (2) the COI and rider charges deducted, and (3) the COI and rider rates 

applied,” prompted by Plaintiffs’ determination that certain produced information could 
not be reconciled with other information.  (Dkt. 108-8 at 3; Dkt. 108-9 at 2-3.)  In 
particular, Plaintiffs sought this information because they could not reconcile the COI 
charges and rates with the rest of the policy data.  (See Dkt. 107 at 11-12.)  In response, 
on March 26, 2020, ReliaStar provided a spreadsheet breaking out various data points for 

the policy.  (Dkt. 108-3 at 9; Dkt. 108-11.)  The formulas in the spreadsheet showed 15% 
added to the COI charge (“Base COI”) and WP Rider charge (“WP COI”) for Advance 
Trust’s policy every month.  (Dkt. 107 at 12.)  The rider at issue provides for a waiver of 
all policy charges in the event that the insured becomes totally disabled.  (Dkt. 108-19 ¶ 
31; Dkt. 107 at 9.)  The same day, Plaintiffs responded, pointing out the “15% bump up 

for COI rates and rider charges” and specifically asking where the “15% bump come[s] 

4    ReliaStar’s discovery responses and document production include information 
from Gibraltar Life Services, Ltd. (“Gibraltar”), a third party that administers some of the 
policies at issue in the Amended Complaint, including Advance Trust’s.  (Dkt. 78 at 1-2.) 
from” and for source documents explaining the bump.  (Dkt. 108-3 at 9.)  ReliaStar 
responded on April 13, 2020 that “the 15% increase shown in COI rates in the breakout 
reflects a COI increase . . . sometime in 1989,” attaching a memorandum from 1989 that 
documented the increase and stating the memorandum would be formally produced in 

discovery.  (Id. at 6-7.)  ReliaStar stated it would produce revised current COI tables for 
the Gibraltar-administered policies and sent the tables later that week.  (Id. at 6-7.) 
    Plaintiffs emailed again on April 20, 2020, asking additional follow-up questions 
about the COI tables and notifying ReliaStar that Plaintiffs “plan[ned] to amend the 
complaint to add a breach of contract claim/class since the rider rates apparently are now 

also 15% higher than permitted in the policy.”  (Id. at 5-6.)  Plaintiffs attached a draft 
amended complaint and asked if ReliaStar would oppose a request for leave to amend the 
complaint.  (Id. at 6.)  Plaintiffs asked again by email for a response to the proposed 
amendment on April 27, April 30, and May 4, 2020.  (Id. at 4-5.)  On May 4, 2020 
ReliaStar stated that it would not consent to the amendment.  (Id. at 3.)  In response to 

Plaintiffs’ question about the reasons for ReliaStar’s opposition to the motion for leave to 
amend, ReliaStar stated that “[ReliaStar] opposes because it believes the claims are time-
barred, and thus futile, and also that it is prejudicial to RLIC to add a different claim so 
far into the case.”  (Id. at 2-3.)  After the parties conferred by phone, ReliaStar confirmed 
by email on May 6 that it would not consent to the motion.  (Id. at 2.)  Plaintiffs then filed 

the present motion for leave to amend their complaint on May 21, 2020 (Dkt. 105), 
attaching their proposed Second Amended Class Action Complaint (Dkt. 108-19). 
    The proposed Second Amended Class Action Complaint (“Second Amended  
Complaint”) adds allegations for a new “class of policyholders who have been forced to 
pay excessive rider charges for their policies.”  (Dkt. 108-19 ¶ 1.)  It further alleges that 
the policies at issue, including Advance Trust’s, “provide that this rider charge is to be 

calculated using rates specified in the policies” and “do not give ReliaStar any discretion 
to charge rider rates that diverge from the contractually-specified rates,” but ReliaStar has 
imposed “overcharges of at least 15 percent, and possibly more,” thus breaching the 
terms of the policies.  (Id. ¶ 9.)  According to the proposed Second Amended Complaint, 
for policies with a waiver rider, the rider “specifies that ‘[t]he cost of this Rider is 

payable at the same time and in the same manner as the monthly deduction for the 
Policy,’” and the rider “charges are calculated using rates specified in the policy.”  (Id. ¶ 
32.)  Further, each of the policies “specify the exact rates that ReliaStar is obliged to 
charge for the Waiver Rider in each year that the insured is alive and the rider is in 
force.”  (Id.)  The proposed Second Amended Complaint alleges that Advance Trust’s 

policy states “that ‘[t]he monthly cost for this Rider is shown in the Table of Monthly 
Cost For Rider per $1,000’” and includes an alleged copy of the Table of Monthly Cost 
that specifies rates according to an insured’s attained age.  (Id.)  “ReliaStar is in breach of 
the terms of the policies in the proposed Rider Overcharge Class because it has been 
calculating and deducting rider charges using rates other than these fixed rates (i.e., those 

set forth in the table of monthly costs).”  (Id. ¶ 33.)  “The Advanced Trust policy, for 
instance, has been charged approximately $42.24 in excess rider charges over the last 
eight policy years, an overcharge of 15 percent of the amount permitted by the table of 
monthly rider costs.”  (Id.)  According to the proposed Second Amended Complaint, 
“[o]ther policies that were issued by ReliaStar and administered by third party Gibraltar 
Life Services, Inc., have suffered the same 15 percent overcharges.”  (Id.)  The proposed 
Second Amended Complaint also alleges that ReliaStar “secretly hiked rider rates” (id. ¶ 

33) and “concealed this rider overcharge,” by “fail[ing] to separately disclose the amount 
of monthly Waiver Rider charges deducted from the policy value” in annual reports to 
policyholders and “fail[ing] to send policyholders any other notification or 
documentation of the excess rider rates it applied” (id. ¶ 34).           
    Advance Trust seeks to represent a class of policyholders, the “Rider Overcharge 

Class,” consisting of “[a]ll current and former owners of universal life (including variable 
universal life) insurance policies issued by ReliaStar Life Insurance Company, or its 
predecessors, that include a Waiver Rider with a table of monthly cost for rider.”  (Dkt. 
108-19 ¶ 37.)  Plaintiff Curtis is not encompassed by this definition and does not seek to 
represent the Rider Overcharge Class.  (Dkt. 111 at 6, 16 n.11; see Dkt. 108-19 ¶ 37.)  As 

Plaintiffs did in their First Amended Class Action Complaint—for what they now call the 
“COI Overcharge Class”—Plaintiffs alleged subclasses to the Rider Overcharge Class for 
which they may alternatively seek class certification.  (Dkt. 108-19 ¶ 38.) 
    In addition to Plaintiffs’ brief in support of its motion (Dkt. 107) and ReliaStar’s 
brief in opposition (Dkt. 111), the Court permitted Plaintiffs to file a reply brief and 

ReliaStar to file a sur-reply limited to the issues of futility and prejudice.  (Dkts. 116, 
117, 119.)  The Court held a hearing on the motion on June 12, 2020.  (Dkt. 122.) 
                    II.  LEGAL STANDARD                                  
    Plaintiffs’ Motion to Amend is generally governed by Rules 15 and 16 of the 
Federal Rules of Civil Procedure and Local Rule 16.3 of the Local Rules for the District 
of Minnesota.                                                             

A.   Rule 15                                                              
    Federal Rule of Civil Procedure 15(a) provides that leave to amend “shall be 
freely given when justice so requires.”  The determination as to whether to grant leave to 
amend is entrusted to the sound discretion of the trial court.  See, e.g., Niagara of Wis. 
Paper Corp. v. Paper Indus. Union Mgmt. Pension Fund, 

, 749 (8th Cir. 

1986) (citation omitted).  The Eighth Circuit has held that “[a]lthough amendment of a 
complaint should be allowed liberally to ensure that a case is decided on its merits . . . 
there is no absolute right to amend.”  Ferguson v. Cape Girardeau Cty., 

, 
650-51 (8th Cir. 1996) (citing Thompson-El v. Jones, 

 (8th Cir. 1989); 
Chesnut v. St. Louis Cty., 

 (8th Cir. 1981)).  Denial of leave to amend 

may be justified by “undue delay, bad faith on the part of the moving party, futility of the 
amendment or unfair prejudice to the opposing party.”  Sanders v. Clemco Indus., 

 (8th Cir. 1987) (citing Foman v. Davis, 

 (1962)); see also 
Hillesheim v. Myron’s Cards and Gifts, Inc., 

 (8th Cir. 2018) (citation 
omitted) (“A district court’s denial of leave to amend a complaint may be justified if the 

amendment would be futile.”).                                             
    In this case, where ReliaStar has alleged that the proposed amendments are futile, 
this Court must determine whether the proposed claims state a claim for relief at this 
stage of the case.  See Zutz v. Nelson, 

 (8th Cir. 2010) (“Denial of a 
motion for leave to amend on the basis of futility means the district court has reached the 
legal conclusion that the amended complaint could not withstand a motion to dismiss 
under Rule 12(b)(6) of the Federal Rules of Civil Procedure.  Accordingly, in reviewing a 

denial of leave to amend we ask whether the proposed amended complaint states a cause 
of action under the Twombly pleading standard . . . .”) (citation and marks omitted); see 
also Hillesheim, 

; In re Senior Cottages of Am., LLC, 

, 1001 
(8th Cir. 2007) (“[W]hen a court denies leave to amend on the ground of futility, it means 
that the court reached a legal conclusion that the amended complaint could not withstand 

a Rule 12 motion.”); United States ex rel. Gaudineer & Comito, L.L.P. v. Iowa, 

 (8th Cir. 2001) (“The denial of leave to amend based on futility means that the 
court found that the amended complaint failed to state a claim . . . .”).  To “survive a 
motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 
‘state a claim to relief that is plausible on its face.’”  Ashcroft v. Iqbal, 

, 678 

(2009) (quoting Bell Atl. Corp. v. Twombly, 

 (2007)).  “A claim has 
facial plausibility when the plaintiff pleads factual content that allows the court to draw 
the reasonable inference that the defendant is liable for the misconduct alleged.”  

 
(quoting Twombly, 

).  Analysis under Rules 15 and 12(b)(6) generally 
requires a court not consider matters outside the pleadings to determine whether leave to 

amend should be given.  See Arias v. Am. Family Mut. Ins. Co., No. CV 13-1681 
(PJS/JJG), 

, at *2 (D. Minn. Oct. 28, 2013) (citing Casazza v. Kiser, 

 (8th Cir. 2002)) (finding “[n]o matters outside the pleading may be 
considered” when conducting a futility analysis under Rules 12(b)(6) and 15).  Further, 
“a motion to amend should be denied on the merits only if it asserts clearly frivolous 
claims or defenses.”  Becker v. Univ. of Neb. at Omaha, 

 (8th Cir. 
1999) (internal quotation marks and citation omitted).  In other words, the “[l]ikelihood 

of success on the new claim or defenses is not a consideration for denying leave to amend 
unless the claim is clearly frivolous.”  Becker, 

 (citations omitted). 
B.   Rule 16                                                              
    Under Rule 15(a), leave to amend should be granted liberally, if “justice so 
requires.”  However, the Eighth Circuit has held that when a party has filed a motion to 

amend the complaint after the deadline provided in a court’s pretrial scheduling order, 
then the court may properly require, pursuant to Federal Rule of Civil Procedure 16(b), 
that good cause be shown for leave to file a pleading that is out of time with that order.  
See Freeman v. Busch, 

 (8th Cir. 2003) (citing In re Milk Prod. 
Antitrust Litig., 

 (8th Cir. 1999)).  “If we considered only Rule 15(a) 

without regard to Rule 16(b), we would render scheduling orders meaningless and 
effectively would read Rule 16(b) and its good cause requirement out of the Federal 
Rules of Civil Procedure.”  In re Milk Prod. Antitrust Litig., 

 (citation 
omitted).                                                                 
    Scheduling orders pursuant to Rule 16(b)(1) “assure[ ] that at some point both the 

parties and the pleadings will be fixed . . . .”  Fed. R. Civ. P. 16(b), advisory committee’s 
note to 1983 amendment.  Moreover, “Rule 16(b) assures that ‘[a] magistrate judge’s 
scheduling order ‘is not a frivolous piece of paper, idly entered, which can be cavalierly 
disregarded . . . without peril.’”  Archer Daniels Midland v. Aon Risk Servs., Inc., 

 (D. Minn. 1999) (quoting Gestetner Corp. v. Case Equip. Co., 

 (D. Me. 1985)).  Under Rule 16(b), “[a] schedule may be modified only 
for good cause and with the judge’s consent.”  Fed. R. Civ. P. 16(b)(4).  Similarly, Local 

Rule 16.3 requires a party moving to modify a scheduling order to “establish good cause” 
for the proposed modification.                                            
    “The primary measure of good cause is the movant’s diligence in attempting to 
meet the order’s requirements.”  Sherman v. Winco Fireworks, Inc., 

 
(8th Cir. 2008) (citing Rahn v. Hawkins, 

 (8th Cir. 2006)); see also Fed. 

R. Civ. P. 16(b), advisory committee’s note to 1983 amendment (“[T]he court may 
modify the schedule on a showing of good cause if it cannot reasonably be met despite 
the diligence of the party seeking the extension.”).  “[T]he ‘good cause’ standard [of Rule 
16(b)] is an exacting one, for it demands a demonstration that the existing schedule 
cannot be reasonably met despite the diligence of the party seeking the extension.”  

Scheidecker v. Arvig Enters., 

 (D. Minn. 2000) (citation omitted).   
    While the prejudice to the nonmovant resulting from modification of the 
scheduling order may also be a relevant factor, generally, the Court will not consider 
prejudice if the movant has not been diligent in meeting the scheduling order’s deadlines. 
See Bradford v. DANA Corp., 

 (8th Cir. 2001) (concluding that there 

was “no need to explore beyond the first criterion, [diligence,] because the record clearly 
demonstrate[d] that Bradford made only minimal efforts to satisfy the [scheduling 
order’s] requirements”).  In short, Rule 16(b) focuses on “the diligence of the party 
seeking to modify a Scheduling Order, as opposed to the litany of unpersuasive excuses, 
inclusive or inadvertence and neglect, which commonly undergird an untimely Motion to 
Amend.”  Scheidecker, 

 n.1 (citations omitted).          
    With these standards in mind, the Court turns to Plaintiffs’ Motion to Amend. 

                        III.  ANALYSIS                                   
A.   Whether Plaintiffs Have Established Good Cause Under Rule 16         
    Plaintiffs contend they were diligent because the information about the 15% 
adjustment to the rider charge constitutes “newly discovered facts” that “only came to 
light as a result of Plaintiffs’ repeated and specific inquiries.”  (Dkt. 107 at 16.)  Plaintiffs 

further contend that they were diligent in seeking amendment once those facts came to 
light in March 2020.  (Id. at 16-17.)                                     
    ReliaStar’s opening brief cites the Rule 16 good cause standard (Dkt. 111 at 7) and 
makes a passing reference to “[Plaintiffs’] delay in seeking amendment” when opposing 
amendment under the Rule 15 standard (id. at 13), but does not contend that Plaintiffs did 

not demonstrate the diligence required by Rule 16.  And although ReliaStar contended in 
its brief that Plaintiffs “paint a misleading picture of the history of the proceedings” (id. 
at 13), ReliaStar did not contend that Plaintiffs actually were in possession of the facts 
underlying the rider charge allegations before they received the spreadsheet on March 26, 
2020.  ReliaStar also does not dispute that Plaintiffs were diligent in seeking the 

amendment once they had those facts.  Indeed, not until the June 12 hearing did ReliaStar 
assert that there is no good cause to extend the deadline for amending pleadings.  (See 
Dkt. 127 at 23-24.)  The Court could find that ReliaStar has waived its “good cause” 
argument for failing to raise it in its opening brief.  See, e.g., Bahl v. Cty. of Ramsey, 

, 983 n.4 (D. Minn. 2009) (citing Jenkins v. Winter, 

 
(8th Cir. 2008) (“Claims not raised in an opening brief are deemed waived.”)).  
Moreover, as explained below, the Court finds that Plaintiffs were diligent in seeking 

leave to amend to add the proposed rider charge claim.                    
    Here, Plaintiffs received the spreadsheet breaking out “each piece of the monthly 
deduction calculation for Advance Trust’s policy” and containing the formulas with the 
15% adjustment to the COI charge and the rider charge on March 26, 2020.  (Dkt. 107 at 
12 (citing Dkt. 108-3 at 9 (cited as page 8); Dkt. 108-11).)  At the hearing, ReliaStar 

argued that Plaintiffs could have discovered the rider rates earlier had they investigated 
discrepancies in documents that ReliaStar had produced before March 2020.  (See Dkt. 
127 at 25-27.)  However, it is still unclear to the Court which documents ReliaStar thinks 
should have triggered an earlier investigation, when those documents were actually 
produced, and how Plaintiffs’ response should have or would have differed had they 

started their investigation earlier, particularly in view of ReliaStar’s supplementation of 
its interrogatory responses to identify additional documents.  In other words, ReliaStar 
has not identified an earlier date when the diligence clock should have started ticking 
than the March 26, 2020 date when the spreadsheet containing the formulas showing the 
15% adjustment was provided.                                              

    As to after receiving the March 26 spreadsheet, Plaintiffs asked about “the 15% 
bump” for COI rates and rider charges on the same day (Dkt. 108-3 at 9) and, after 
further communication with ReliaStar, notified ReliaStar of their intent to file a motion to 
amend the complaint on April 20 (id. at 5-6) and filed the motion on May 21, 2020 (Dkt. 
105).  Less than two months passed from when Plaintiffs learned of the facts underlying 
their new allegations and when they filed the motion, which included time waiting for 
ReliaStar to answer questions about the rider rates and to state whether it would oppose 

the motion.  (See Dkt. 108-3 at 3-7.)                                     
    In sum, for the reasons discussed above, the Court finds that the spreadsheets 
produced on March 26, 2020 constitute “newly discovered information that could not 
have been obtained earlier through the exercise of reasonable diligence,” Doeling v. 
Bryniarski, No. CV 10-1047, 

, at *7 (D. Minn. Apr. 25, 2011), and 

that Plaintiffs were diligent in seeking amendment after that discovery.   
    “If the court is satisfied that the movant was diligent, it will also generally 
consider possible prejudice to the nonmovant.”  Shank v. Carleton Coll., 

, 
614 (D. Minn. 2019) (citing Sherman, 

).  As noted above, ReliaStar made 
only a passing reference to Rule 16’s good cause standard in its opening brief and did not 

argue prejudice separate and apart from the undue prejudice at issue in connection with 
Rule 15.  For the reasons explained in Section III.B.2, the Court concludes that the 
extension of the schedule to permit the Motion to Amend will not prejudice ReliaStar to 
the extent that it vitiates Plaintiffs’ showing of good cause based on diligence—which is 
the primary measure of good cause.  See Sherman, 

.  Moreover, any 

prejudice imposed on ReliaStar as a result of the amendment can be cured in part by an 
appropriate extension of the pretrial schedule.                           
B.   Whether Plaintiffs Have Met the Rule 15 Standard for Leave to Amend  
    ReliaStar argues that Plaintiffs’ motion for leave to amend under Rule 15 should 
be denied on grounds of futility and undue prejudice.  According to ReliaStar, first, 
Plaintiffs’ new claim is time-barred because it relates to alleged conduct by ReliaStar in 

1989 and 1990 and is therefore futile.  (Dkt. 119 at 1-2.)  Second, ReliaStar argues that a 
new claim at this stage of the litigation that is based on a different contract provision and 
new theory of liability on behalf of a new proposed class is highly prejudicial.  (Id. at 2.)  
ReliaStar’s arguments are unavailing, and the Court concludes that Plaintiffs’ new claim 
is not clearly frivolous and does not place an undue burden on ReliaStar. 

    1.   Futility                                                        
    ReliaStar’s primary futility argument is that the 15% increase in rider charges that 
forms the basis of Plaintiffs’ proposed new claim occurred in 1990, and therefore a claim 
for breach of contract based on that increase is barred by the statute of limitations under 
Minnesota law (six-year statute of limitations) or Texas law (four-year statute of 

limitations).  (Dkt. 111 at 7-11; Dkt. 119 at 2-5.)  In particular, ReliaStar relies on the 
1989 memorandum that ReliaStar emailed to Plaintiffs on April 13, 2020 when 
explaining when “the 15% increase shown in COI rates” occurred and later produced in 
discovery.  (See Dkt. 111 at 9-10; Dkt. 108-3 at 6-7.)  Plaintiffs respond that the 1989 
memorandum relates to COI rates and does not mention rider rates.  (Dkt. 117 at 7, 10.)  

Plaintiffs further contend that the Court cannot consider the 1989 memorandum in 
connection with their Motion to Amend and that, in any event, each year that ReliaStar 
“overcharged” the rider rate constitutes a separate breach with its own accrual date.  (Id. 
at 7-9 (“That is because when the policy states that, at attained age 55 (which is in 2019), 
ReliaStar can only charge a rider rate of 0.2122, ReliaStar’s decision to charge more than 
that in 2019 is plainly not time-barred.”); id. at 11-12.)                
    The Court first considers whether it can consider the 1989 memorandum in the 

context of the Motion to Amend.  A futility analysis under Rules 15 and 12(b)(6) 
generally requires a court not consider matters outside the pleadings to determine whether 
leave to amend should be given.  See Arias, 

, at *2 (citing Casazza, 

) (finding “[n]o matters outside the pleading may be considered” when 
conducting a futility analysis under Rules 12(b)(6) and 15).  However, “[t]hough ‘matters 

outside the pleading’ may not be considered in deciding a Rule 12 motion to dismiss, 
documents ‘necessarily embraced by the complaint’ are not matters outside the pleading.”  
Enervations, Inc. v. Minn. Mining & Mfg. Co., 

 (8th Cir. 2004) 
(citations omitted).                                                      
    Here, the proposed Second Amended Complaint does not reference the 1989 

memorandum.  Rather, it alleges:                                          
    The policies provide that this rider charge is to be calculated using rates 
    specified in the policies.  The policies do not give ReliaStar any discretion to 
    charge  rider  rates  that  diverge  from  the  contractually-specified  rates.  
    ReliaStar,  however,  has  ignored  these  contractual  rider  rates,  imposing 
    overcharges of at least 15 percent, and possibly more.  These overcharges are 
    a breach of the terms of the policies.                               
(Dkt. 108-19 ¶ 9.)                                                        
    The proposed Second Amended Complaint further alleges that the rider charge is 
deducted on a monthly basis based on rates specified in the policy, alleges that those rider 
rates are based on the insured’s attained age, and includes a table showing the monthly 
rider cost based on attained age.  (Id. ¶ 32.)  There are no allegations in the proposed 
Second Amended Complaint that refer to the 1989 memorandum or any change made to 
rider rates in 1989 or 1990.  (See generally id.)  Moreover, ReliaStar has not argued that 
the 1989 memorandum is “necessarily embraced by the complaint” such that the Court 

could properly consider the memorandum under the Rule 12(b)(6) standard applicable 
here.  The Court concludes that the 1989 memorandum is not necessarily embraced by 
the proposed Second Amended Complaint such that the Court can properly consider it on 
this Motion to Amend.  Indeed, the 1989 memorandum is not even part of the record 
because neither Plaintiffs nor ReliaStar filed it in connection with the Motion to Amend.5  

For all of these reasons, the Court will not consider the 1989 memorandum in connection 
with the Motion to Amend.6                                                
    The Court next considers ReliaStar’s argument that the rider charge claim in the 
proposed Second Amended Complaint is futile because it is barred by the statute of 
limitations.  A statute of limitations defense is not typically a ground for a Rule 12(b)(6) 

dismissal “unless the complaint itself establishes the defense.”  Jessie v. Potter, 

    Since the 1989 memorandum is not part of the record, the Court will not attempt to 
decide whether it relates only to COI charges (as Plaintiffs contend (see Dkt. 117 at 7, 
10)) or also to rider charges (as ReliaStar contends (see Dkt. 119 at 2)).   

6    ReliaStar seems to suggest Plaintiffs have acted improperly by not attaching to or 
referencing the 1989 memorandum in the proposed Second Amended Complaint.  (See 
Dkt. 111 at 10; Dkt. 119 at 3.)  ReliaStar has not argued that the proposed Second 
Amended Complaint would not satisfy Rule 11 based on this omission and did not file 
the 1989 memorandum for the Court’s consideration in connection with the Motion to 
Amend.  The Court declines to impute improper motives to Plaintiffs based on the 
drafting of the proposed Second Amended Complaint.                        
709, 713 n.2 (8th Cir. 2008).  However, “when it ‘appears from the face of the complaint 
itself that the limitations period has run,’ a limitations defense may properly be asserted 
through a Rule 12(b)(6) motion to dismiss.”  Varner v. Peterson Farms, 

, 
1016 (8th Cir. 2004) (citation omitted).                                  

    Here, the parties take a variety of positions regarding whether Texas or Minnesota 
substantive law applies to the rider charge claim and which State’s statute of limitations 
applies.7  (See, e.g., Dkt. 111 at 7-10 & n.5-7 (ReliaStar arguing Texas substantive law 
and the Minnesota statute of limitations applies); Dkt. 117 at 10-13 & n.4 (Plaintiffs 
making arguments under Minnesota and Texas substantive law); Dkt. 119 at 3-5 

(ReliaStar arguing claims accruing before 2004 are subject to Minnesota statute of 
limitations and that any post-2004 claims are time-barred under Texas law).)  Regardless, 
the real dispute is whether Plaintiffs have plausibly alleged a breach of contract claim—
under Texas or Minnesota law—based on a theory that a breach occurred each time 
ReliaStar charged a monthly rider rate in excess of that specified in the contract.  To 

summarize the parties’ positions, Plaintiffs contend:                     
    By the plain terms of Advance Trust’s policy, ReliaStar has a continuing 
    contractual obligation to apply these charges monthly and change the charge 
    each year.                                                           

7    On one point, ReliaStar argues that “Plaintiffs’ post-August 1, 2004 ‘new-breach-
with-every-charge’ theory would accrue on the first alleged overcharge after August 1, 
2004 and be time-barred four years later” under Texas’s statute of limitations.  (Dkt. 119 
at 4.)  ReliaStar appears to be suggesting that Plaintiffs’ claim would accrue first in 1990 
and again in 2004 when Minnesota’s borrowing statute, 

, became 
effective.  The basis for this reasoning is unclear to the Court, but in any event, because 
the Court finds Plaintiffs’ separate breaches theory is not futile, the Court need not 
address the effect of Minnesota’s borrowing statute.                      
    When ReliaStar fails to comply with the numbers provided for in the table, 
    and instead improperly charges policyholders more than the contractually 
    specified monthly rates, a new cause of action accrues.  So, even if ReliaStar 
    began  overcharging  policyholders  in  1989,  which  ReliaStar  has  not 
    demonstrated, that still would not bar Plaintiffs’ claims for overcharges that 
    were not imposed until decades later—in 2014, 2015, 2016, 2017, 2018, 
    2019, and 2020.                                                      
(Dkt. 117 at 12 (citation omitted).)                                      
    ReliaStar responds that “[a] breach of contract claim accrues at the time of the 
alleged breach, regardless of whether the plaintiff was aware of the breach,” In re RFC & 
ResCap Liquidating Trust Action, 

 (D. Minn. 2018), and 
argues:                                                                   
    Recognizing the problem with the accrual of their claim, Plaintiffs double 
    down on the notion that they can avoid a limitations bar because a new breach 
    occurred every time Plaintiffs were charged the higher rate over the course 
    of the 30 years since implementation of the new rate.  Plaintiffs’ argument 
    runs  them  headlong  into  another  problem:  the  controlling  authority.  
    Although Plaintiffs rely heavily on cases from Illinois, California, and other 
    states, they point to no authority in the jurisdictions that matter—Minnesota 
    and Texas.                                                           
(Dkt. 119 at 3-4.)                                                        
    In other words, the real dispute is over whether Plaintiffs’ separate breaches based 
on the monthly rider overcharges theory is futile because Minnesota or Texas would not 
recognize that theory.  If the Court finds that Plaintiffs’ breach of contract theory is not 
futile under Minnesota or Texas law, it does not matter at this time which statute of 
limitations applies, because Plaintiffs have alleged, as an example, excess rider charges 
occurring “over the last eight policy years” (Dkt. 108-19 ¶ 33), which would encompass 
conduct in both the last four and last six years.8                        
    Relying on Park Nicollet Clinic v. Hamann, 

 (Minn. 2011), 
ReliaStar argues that the claim is futile under Minnesota law because it is time-barred.  

(Dkt. 111 at 9.)  This argument is primarily based on the assumption that the rider 
charges increased in 1989—which is not apparent from the face of the proposed Second 
Amended Complaint and which the Court cannot properly consider because the 1989 
memorandum on which this argument is based is not necessarily embraced by the 
proposed Second Amended Complaint.  (Dkt. 119 at 2-3.)  Perhaps recognizing that the 

1989 memorandum cannot be considered, ReliaStar argues that the allegation that excess 
rider charges occurred “over the last eight policy years” constitutes an allegation “that the 
rate increase dates from at least two years outside the longest potential limitations period 
under either the law of Minnesota (six years) or Texas (four years).”  (Id. at 3 (citing Dkt. 
108-19 ¶ 33).)  The Court does not interpret a straightforward allegation exemplifying 

excess charges occurring over the last eight years as a concession or pleading that the 
cause of action accrued eight years ago so as to render the claim futile.   


8    The Court notes the potential applicability of the discovery rule, addressed in 
ReliaStar’s brief and raised at the hearing.  (Dkt. 111 at 8; Dkt. 127 at 35-38, 43.)  Since 
the Court does not accept, for the present motion, ReliaStar’s position that Plaintiffs’ 
rider charge claim accrued once in 1990 and thus is time-barred, the Court need not 
determine whether the discovery rule could apply and leave Plaintiffs with some claim 
that accrued in 1990.  The Court notes that Texas law does not categorically foreclose 
application of the discovery rule to breach of contract cases.  See Beavers v. Metro. Life 
Ins. Co., 

 (5th Cir. 2006); Gallier v. Woodbury Fin. Servs., Inc., 

 (S.D. Tex. 2016).                                 
    Moreover, the claim alleged in Hamann is distinguishable from the rider charge 
claim alleged in proposed Second Amended Complaint.  In Hamann, “the wrongful 
conduct underlying the breach of contract claim [wa]s Park Nicollet’s refusal to honor the 
Policy” that the plaintiff could be exempt from night call with no salary reduction, which 

“occurred in April 2005, according to the complaint.”  

 (emphasis 
added).  In deciding Hamman, the Minnesota Supreme Court explained:       
    The wrongful conduct at issue here, according to the complaint, is Park 
    Nicollet’s decision to require that physicians over age 60 take night call.  
    Requiring physicians over age 60 to take night call is wrongful only because 
    of the benefits Park Nicollet offered in the Policy.  Aside from the promise 
    in the Policy itself, Hamann alleges no other contractual provision or law that 
    would bind Park Nicollet to the night call restriction.  Because Park Nicollet 
    revoked the Policy in April 2005, it had no continuing obligation to pay 
    Hamann’s original salary after he ceased taking night call in February 2008. 

.                                                               
    In the earlier case of Levin v. C.O.M.B. Co., however, the Minnesota Supreme 
Court found that a complaint of a series of breaches, namely the “repeated failures to pay 
commissions in excess of the annual guaranteed minimum compensation, each of which 
breaches could have occurred only at the close or at some date after the close of a 
contract year,” constituted “separate causes of action with different accrual dates.”  

 (Minn. 1989).  Indeed, the Minnesota Supreme Court in Hamann 
distinguished Levin because “the obligation at issue in this case was not something that 
Park Nicollet was contractually or otherwise required to perform on an ongoing basis.”  

.                                                        
    Here, the proposed Second Amended Complaint does not allege the breach 
occurred in 1989, or that the breach occurred before either Minnesota’s or Texas’s statute 
of limitations ran.  Rather, it alleges a series of breaches occurring each time a rider 
charge in excess of the specified rate was charged, that ReliaStar was in breach of the 
terms of the policies because it has been calculating and deducting rider charges using 
rates other than these fixed rates (i.e., those set forth in the table of monthly costs), and 

also that the specified rate was based on the insured’s attained age.  (Dkt. 108-19 ¶ 33.)  
The Court concludes that Plaintiffs have plausibly alleged, at a minimum, that ReliaStar 
had an ongoing obligation to charge the rider rates specified in the table and that a breach 
of contract occurred each year when the insured was charged a rider rate that exceeded 
the rate specified for that attained age, and consequently that Plaintiffs’ breach of contract 

claim is not “clearly frivolous” under Minnesota law so as to require denial of the Motion 
to Amend.  See Becker, 

.                                   
    Although ReliaStar made arguments under Minnesota law, it contends that 
substantive Texas law controls the proposed rider charge claim.  (Dkt. 111 at 8 n.5.)  
ReliaStar cites Howard v. Sunset Life Ins. Co. of Am., No. 03-01-00407-CV, 

, at *5 (Tex. App. Jan. 10, 2002), and Beavers v. Metro. Life Ins. Co., 

 (5th Cir. 2006), in support of its argument that Texas law renders the proposed 
claim futile.  (Dkt. 119 at 4-5.)  In particular, ReliaStar contends: “Texas courts have 
squarely held that periodic payments under insurance contracts do not give rise to ‘new’ 
claims at the time of each payment.”  (Id. at 4.)                         

    The Court does not read the Texas cases cited by ReliaStar as rendering Plaintiffs’ 
proposed rider charge claim clearly frivolous.  Howard addressed whether an increase to 
an insurance premium by the insurer was a breach of the terms of the policy where the 
plaintiff contended that only the policyholder was permitted to increase the premium.  

, at *1.  In other words, the dispute centered on a promise that only the 
policy holder could increase the premium, not a promise to charge certain rates.  The 
plaintiff did not pursue any ongoing breach theory—in fact, the parties did not seem to 

dispute that the conduct allegedly giving rise to the breach was a single incident—and the 
court did not state any general rule against such a theory.  See id. at *5.   
    ReliaStar also cites Howard for the proposition that: “Where an insurance 
company allegedly breaches a life insurance policy by charging higher premiums than the 
contract permits, a new cause of action for breach does not accrue with each monthly 

overcharge; rather the claim as a whole accrues ‘when [the insured] was first charged and 
paid the wrong premium amount.’”  (Dkt. 111 at n.7.)  This language is actually found in 
Davis v. Minnesota Life Insurance Co., which held: “Minnesota Life showed the cause of 
action accrued in 1986, when Jacquelyn was first charged and paid the wrong premium 
amount, and negated the applicability of the discovery rule.  Thus, appellants’ claims are 

time-barred.”  No. 03-99-00882-CV, 

, at *3 (Tex. App. June 22, 2000).  
As with ReliaStar’s other cases, this case does not appear to involve an insured who put 
forth an ongoing breach theory, nor does it contain any general rule against such a theory.  
Rather, it addressed “the applicability of the discovery rule.”  See 

   
    Finally, in Beavers, the plaintiffs did not make any argument based on an ongoing 

breach theory and conceded that Texas’s four-year statute of limitations would ordinarily 
bar their claim.  

.  The issue in Beavers was the applicability of the 
discovery rule, not whether Texas law recognized an ongoing breach theory.  See 

.                                                                 
    In sum, these cases do not establish that Plaintiffs’ rider charge claim, as pleaded, 
is clearly frivolous under Texas law.  Moreover, both Howard and Davis were decided on 

summary judgment motions, illustrating the need for discovery to decide questions on, 
for example, the correct accrual date and applicability of the discovery rule, and 
reinforcing the Court’s conclusion that adopting ReliaStar’s statute of limitations defense 
at this stage would be premature.                                         
    For these reasons, the Court concludes that Plaintiffs’ rider charge claim based on 

a series of separate breaches of an ongoing obligation to charge certain rates based on the 
insured’s attained age is not clearly frivolous under Minnesota or Texas law and 
consequently is not futile.  Rather, at this stage in the proceedings, Plaintiffs have 
plausibly alleged such a claim.                                           
    2.   Unfair Prejudice                                                

    ReliaStar also opposes amendment on prejudice grounds, contending that allowing 
the proposed amendment would subject it to totally new and burdensome discovery 
obligations and would delay the resolution of the case by many months.  (Dkt. 111 at 13-
15; Dkt. 119 at 7.)  The Court has carefully considered ReliaStar’s prejudice arguments 
and concludes that they do not warrant denial of the Motion to Amend.     

    A party opposing a motion to amend a pleading must not merely show prejudice: it 
must show unfair prejudice.  See Sanders, 

 (citing Foman, 

).  Much of ReliaStar’s argument goes to the prejudice imposed by the burden of 
discovery, but discovery, even if voluminous and complicated, does not on its own 
constitute unfair prejudice.  Brown v. Pfeiffer, No. 019CV03132MWWKMM, 

, at *4 (D. Minn. Mar. 11, 2020) (quoting Dennis v. Dillard Dep’t Stores, Inc., 

 (8th Cir. 2000)) (“Denial of leave to amend is not appropriate when 

unfair prejudice is claimed merely because the non-moving party would have the ‘burden 
of undertaking discovery.’”).  ReliaStar has described a complicated and lengthy 
discovery process, both for the existing claim and for the potential new claim (Dkt. 111 at 
3-4, 12, 14), but it has not identified what about that process is or would be unfairly 
prejudicial as compared to that which is necessary to litigate the new claim. 

    Cases finding undue prejudice based on discovery burdens, moreover, often 
involve movants who have delayed unduly in bringing the amendments into the case.  
See, e.g., Bell v. Allstate Life Ins. Co., 

 (8th Cir. 1998) (finding no 
abuse of discretion where district court denied a motion to add new claims due to the 
movant’s delay and lack of diligence in addition to prejudice to the defendants in having 

to reopen discovery after the deadline and near trial); United States v. Bos. Sci. Corp., 
No. 11-CV-2453 (JNE/SER), 

, at *6-8 (D. Minn. Oct. 30, 2018) 
(describing movant’s undue delay in asserting a new claim, the burdens directly resulting 
from that delay, supplemental jurisdiction issues, and concluding “[t]his grim prospect 
[of all-consuming discovery on a new claim], combined with the other prejudicial 

results should the proposed amendment be granted, requires denial of Higgins’ motion”) 
(emphasis added); IBEW Local 98 Pension Fund v. Best Buy Co., 

, 527 
(D. Minn. 2018) (denying motion to amend because the request was unduly delayed and 
defendant would suffer prejudice); Harris v. Chipotle Mexican Grill, Inc., No. 13-CV-
1719 (SRN/SER), 

, at *2 n.2 (D. Minn. Oct. 13, 2016).  As discussed 
above, the Court finds that Plaintiffs were diligent and did not delay in bringing the 
Motion to Amend.                                                          

    Moreover, this case is not at such a late stage as to make a new claim unfairly 
prejudicial.  Though the case has been pending since October 2018 (Dkt. 1) and 
discovery has been ongoing since January 2019, fact discovery has not yet closed and, 
under the current schedule, is not set to be substantially complete until November 13, 
2020 and to close until March 11, 2021.  (Dkt. 126 at 2.)  The deadline for Plaintiffs’ 

class certification motion is October 23, 2020.  (Id.)  The Court has not set a deadline for 
dispositive motions or trial, and the parties have not taken any depositions.  In contrast to 
cases where leave to amend was denied on prejudice grounds based on the late stage of 
the case, this case—although pending for some time—is still in the relatively early 
stages.  See, e.g., Popoalii v. Corr. Med. Servs., 

 (8th Cir. 2008) 

(district court did not abuse its discretion in denying a motion to amend due to potential 
prejudice from a new claim proposed after most discovery, including depositions of the 
parties, was completed, one month of discovery remained, and defendants represented 
that “they would have to redo much of the discovery that had already been completed, 
including depositions of the parties” ); Bell, 

 (finding no abuse of 

discretion where district court denied a motion to add new claims because of, in addition 
to the movant’s delay and lack of diligence, prejudice to the defendants in having to 
reopen discovery on new claims when the motion to amend was filed after the discovery 
deadline and five weeks before trial).                                    
    Accordingly, ReliaStar has not established that the proposed amendment will 
impose an undue burden on it.  However, the Court recognizes that granting the Motion 

to Amend will expand the scope of discovery and will permit the parties to seek an 
appropriate extension of the schedule to permit ReliaStar adequate time to prepare its 
defense to the new claim and Plaintiffs adequate time to explore the new claim.  In 
propounding new discovery, Plaintiffs should remember their representation to the Court 
that “ReliaStar will primarily need to produce only two categories of documents: (1) 

documents sufficient to prove the rider rates provided for in the policies at issue (e.g., 
copies of the subject policies), and (2) policy-level data, including applicable fields 
related to rider rates applied, rider charges, and insureds’ attained ages.”  (Dkt. 117 at 
15.)                                                                      
    For all of the reasons stated above, the Court grants Plaintiffs’ Motion to Amend. 

                         IV.  ORDER                                      
    Based on the files, records, and proceedings herein, IT IS ORDERED THAT: 
Plaintiffs’ Motion for Leave to File Second Amended Class Action Complaint (Dkt. 105) 
is GRANTED.                                                               


DATED: September 2, 2020                s/Elizabeth Cowan Wright          
                                       ELIZABETH COWAN WRIGHT            
                                       United States Magistrate Judge