Carrier, et a l . v. American Bankers 05-CV-430-JD 02/01/08 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Lori Carrier and Valerie Whitman

v. Civil No. 05-CV-430-JD Opinion No.

American Bankers Life Assurance Co. of Florida

O R D E R

Lori Carrier and Valerie Whitman filed a putative class

action, alleging that American Bankers Life Assurance Company of

Florida breached the terms of its credit insurance policies with

them and other putative class members when it failed to refund

the unearned portion of premiums that had been prepaid as part of

their vehicle financing. Carrier and Whitman move for class

certification. American Bankers opposes the motion.

Standard of Review

The circuits differ on the standard of proof necessary to

support a motion for class certification. See In re Initial Pub.

Offering Sec. Litiq.,

(2d Cir. 2006)

(discussing law in the circuits). The First Circuit follows the

majority view, holding that "a district court must conduct a

rigorous analysis of the prerequisites established by Rule 23 before certifying a class."1 In re PolvMedica Corp. Sec. Litiq..

(1st Cir. 2005) (internal quotation marks omitted).

In doing so, a district court may resolve disputed factual issues

that arise in the course of class certification by considering

materials beyond the pleadings.

Background

Carrier and Whitman each purchased a car at a dealership in

New Hampshire on credit. As part of their car financing

arrangements. Carrier and Whitman also purchased credit

disability insurance issued by American Bankers through the car

dealerships. They paid a single premium that was included in

their vehicle financing when they bought their cars. Both paid

off the loans before the due dates.

The American Bankers insurance policies issued to Carrier

and Whitman provide that "[a]ny unearned premium will be: (1)

credited to the insured's account, if financed, or paid to the

insured; and (2) computed by the formula on file and approved by

the Insurance Commissioner." Neither Carrier nor Whitman

received a refund or credit for the part of the premium that

would have covered the remainder of the financing period after

1Although the issue arises most frequently in securities fraud litigation, neither the First Circuit nor other circuits have limited the analysis to that context.

2 they prepaid their loans.

Carrier and Whitman brought suit, as a putative class

action, against American Bankers, alleging that American Bankers

breached the term of its insurance policies that promised to

refund the unearned part of the premium each of them paid and

breached the implied covenant of good faith and fair dealing.

They also seek a declaratory judgment that American Bankers is

obligated to refund unearned premiums to its insureds.

In their motion for class certification. Carrier and

Whitman, as class representatives, propose the following class:

"All persons charged for American Bankers single premium credit

life and/or disability insurance; 1) produced by a motor vehicle

dealership located within IA, ID, KS, ME, MI, MT, ND, NH, NJ, OH,

OR, RI, or TX; 2) who paid off their credit-insured loans prior

to the coverage expiration date and within the applicable

limitations period; but 3) did not receive a refund of their

unearned premium." They also propose, but not as part of the

class definition, that those who bought insurance but

(1) who timely and properly request exclusion from the class; (3) [sic] who are present or former officers and directors of American Bankers; (4) whose credit insurance was rescinded by mutual consent of the parties or whose coverage was canceled by either the insured or the insurer prior to the prepayment date; (5) whose indebtedness was discharged in bankruptcy and not reaffirmed; (6) whose coverage was terminated because the collateral was repossessed; (7) who have signed contracts with American Bankers that contain a provision requiring arbitration of claims for unearned

3 premium; and (8) as to whom American Bankers has paid a claim

be excluded from the class.

Discussion

Carrier and Whitman seek to represent a class of people who

paid a single premium for credit insurance from American Bankers

when they purchased vehicles and then did not receive a refund of

the unearned part of the premium when they prepaid their loans.

They contend that the proposed class satisfies the requirements

of Federal Rule of Civil Procedure 23(a) and 23(b)(3). American

Bankers opposes class certification, arguing that the plaintiffs'

proposed class definition is defective and that the plaintiffs

cannot satisfy the requirements of Rule 23(a) or Rule 23(b)(3).

"To obtain class certification, the plaintiff must establish

the four elements of Rule 23(a) and one of [the] several elements

of Rule 23(b)." Smilow v. Southwestern Bell Mobile Sv s ., Inc..

(1st Cir. 2003). For purposes of class

certification, the court does not decide whether the plaintiffs

will prevail on the merits of their claims but may consider the

probable course of the case to "'formulate some prediction as to

how specific issues will play out in order to determine whether

common or individual issues predominate.'" In re PolvMedica.

(quoting Waste M q m t . Holdings. Inc. v. Mowbrav. 208

4 F .3d 288, 298 (1st Cir. 2 0 0 0 ) )

I. Oral Argument

Carrier and Whitman move for oral argument on the motion for

class certification. The rule in this district is that

ordinarily the court will decide motions without oral argument.

LR 7.1(d). The court may allow argument if a party shows, in a

written statement, that it would provide assistance to the court

in deciding the motion.

In support of their motion. Carrier and Whitman contend that

oral argument would assist the court in deciding class

certification because they "would be available to respond to any

concerns the Court may have pertaining to the mechanics and

procedures for obtaining payoff dates to verify class membership

and quantify damages." Mot. at 1. Counsel for American Bankers

did not concur in the motion or file a response.

The court does not believe that oral argument on the issue

proposed by the plaintiffs would be of assistance in deciding the

motion for class certification.

II. Goulette Declaration

In a footnote, American Bankers challenges the declaration

of Aaron Goulette and the appendix to the declaration that

Carrier and Whitman filed in support of their motion for class

5 certification. American Bankers contends that the declaration is

double hearsay and that the appendix lacks authentication. In

addition, American Bankers disputes some of the information

provided in the declaration and appendix. Carrier and Whitman

argue that the rules of evidence do not apply at the class

certification stage because they need only provide some facts to

support certification and need not prove a prima facie case.

The First Circuit has not addressed the question raised here

as to whether extrinsic materials that may be considered by the

court in deciding whether to certify a class must be admissible

under the rules of evidence. The Fifth Circuit requires that the

loss causation issue in fraud on the market securities cases be

established by admissible evidence at the class certification

stage. Unger v. Amedisvs Inc..

(5th Cir.

2005). Outside of securities litigation, other courts have not

required admissible evidence for purposes of class certification.

See, e.g.. Bell v. Addus Healthcare. Inc..

at *2

(W.D. Wash. Oct. 12, 2007); Tedrow v. Cowles.

at

*2 (S.D. Ohio Sept. 12, 2007) (citing cases).

Aaron Goulette states that he is Senior Project Manager for

the New Hampshire Unearned Premiums Litigation Center, which was

established by plaintiffs' counsel in coordination with the New

Hampshire law firm of Douglas, Leonard & Garvey, PC, in Concord,

New Hampshire. He explains that the Center administers

6 settlements in cases involving claims of unearned premiums and

collects and distributes unearned premiums obtained through class

actions, which have been filed against motor vehicle finance

companies in New Hampshire state court. He further explains that

in the course of discovery in cases against creditors who

provided automobile financing, he has found documents pertaining

to credit insurance issued by American Bankers.

In particular, Goulette found that 101 members of a class in

the creditor cases purchased credit insurance from American

Bankers, that their car loans were paid before the due dates, and

that no refunds were paid to them. He adds that these results do

not show all of American Bankers1s New Hampshire insureds who

prepaid their loans and did not get a refund, but only those who

financed their cars through creditors who are defendants in other

class actions.

American Bankers assails Goulette1s information based on the

affidavit of its Vice President for Credit Operations, Marilyn

Wycoff. Wycoff states that she has checked American Bankers1s

records for the 101 insureds identified by the plaintiffs and

found no record for seven of them, found that at least forty-six

were sent refunds, found that six did not purchase disability

insurance (which is the kind of insurance purchased by both

Whitman and Carrier), and found that four did not prepay their

loans. Because of those asserted inaccuracies, American Bankers

7 contends that Goulette1s information is neither admissible nor

reliable.

Since the rules of evidence do not strictly apply for

purposes of determining class certification, the court will

consider both Goulette1s declaration and Wycoff's affidavit in

assessing the information provided by Goulette.

III. Class Definition

Federal Rule of Civil Procedure 23(c)(1)(B) requires that an

order certifying a class include a definition of the class and

the class claims, issues, or defenses. American Bankers contends

that the Rule 23(c)(1)(B) requirement cannot be met in this case

because the class is defined to include those who purchased

disability credit insurance, like the named plaintiffs, along

with those who purchased life credit insurance, which the named

plaintiffs did not purchase. American Bankers contends that the

named plaintiffs lack standing to represent those who purchased

only life credit insurance. American Bankers also asserts that

the proposed class definition would require a finding of

liability to identify class members and that it is too indefinite

to permit identification of the class. The plaintiffs oppose

these arguments.

A. Standing In a class action, the named class representatives must

allege and show that they suffered an injury and cannot base

their claim on the injuries suffered by other unidentified

members of the proposed class. Lewis v. Casev.

(1996). "To have standing to sue as a class representative it is

essential that a plaintiff must be a part of that class, that is,

he must possess the same interest and suffer the same injury

shared by all members of the class he represents." Schlesinger

v. Reservists Comm, to Stop the W a r .

(1974).

The plaintiffs bear the burden of showing that they have standing

to maintain the action. Lewis.

.

Carrier and Whitman assert that they have standing to

represent all of the members of the described class who did not

receive a refund of the unearned portion of the credit insurance

premium each paid to American Bankers after each class member

prepaid the car loan. They contend that American Bankers offered

both disability and life credit insurance on the same form. They

also contend that the termination and refund provisions and

procedures for disability and life credit insurance are the same.

Therefore, Carrier and Whitman argue, their injuries are the same

as those who bought life credit insurance and did not receive

refunds of the unearned parts of their premiums.

Carrier and Whitman, along with the putative class members,

purchased credit insurance and did not receive refunds when they

9 prepaid their loans. On the present record, no material

difference is apparent between those who purchased life credit

insurance and those who purchased disability credit insurance.

Therefore, at this stage. Carrier and Whitman have demonstrated

that they have standing to represent the putative class,

including those who purchased life credit insurance.

B. Class Definition

American Bankers asserts that the class definition does not

allow identification of class members based on objective criteria

but instead requires individualized determinations as to each

member. As a result, American Bankers argues, identification of

the class will require "a prolonged and individualized analytical

struggle." Carrier and Whitman disagree, contending that the

proposed class definition provides clear objective criteria for

membership.

"'The proposed class must be precisely defined and its

members must be ascertainable through the application of stable

and objective factors so that a court can decide, among other

things, who will receive notice, who will share in any recovery,

and who will be bound by the judgment.1" In re Lupron Mktq. &

Sales Practices Litiq..

(D. Mass. 2005)

(quoting Van West v. Midland N a t '1 Life Ins. Co..

,

10 451 (D.R.I. 2001)). The class definition must be based on

objective criteria so that class members may be identified

without individualized fact finding. Crosby v. Social Sec.

Admin.,

, 579-80 (1st Cir. 1986). A class definition

that is based on non-specific matters, such as "wrongful

conduct," or subjective factors, such as "a reasonable time," is

not objectively ascertainable. I d . at 580. In addition, a class

definition cannot be based on the merits of the claim, which

would require a finding on liability to identify class members.

See Eversole v. EMC Mortgage Corp..

at *5 (E.D.

K y . May 29, 2007); Kavu, Inc. v. Omnipak Corp..

(W.D. Wash. 2007); Noble v. 93 Univ. Place Corp..

(S .D .N .Y . 2004) .

Carrier and Whitman define the class to include those who

purchased American Bankers1s single premium credit insurance in

specified states, prepaid their loans during the limitations

period, and did not receive their premium refunds. Although they

also propose to exclude certain potential class members based on

a list of eight factors, they do not define the class with the

exclusion factors. To be sufficiently specific, the class must

be defined by both the stated definition and the eight exclusion

factors, which it does not do at present.

American Bankers challenges that part of the proposed

11 definition which identifies members as those "who paid off their

credit-insured loans prior to the coverage expiration date . .

.," on the ground that applying the definition would require a

determination of liability. American Bankers reasons that under

the plaintiffs' breach of contract theory, American Bankers

promised to refund unearned premiums so that it is liable if it

failed to refund after prepayment. "Thus, identifying class

members under the proposed class definition i_s unquestionably

dependent on a determination of liability . . . ." O b j . at 13.

The court disagrees. The challenged part of the definition

requires that a class member have prepaid his or her loan. That

requirement does not depend on proof that American Bankers

breached the terms of the insurance policy. In contrast, if the

class were defined as insureds whose policies American Bankers

had breached by failing to refund unearned premiums, such a

definition would depend on the merits of the claim, that is, a

determination of whether American Bankers had breached the

policies. See, e.g.. Eversole.

at *5 (listing

cases where definition required a liability determination).

American Bankers also argues that the proposed class

definition requires too many individualized, fact-based findings.

In particular, American Bankers contends that findings will be

necessary as to whether each potential class member was charged a

premium, prepaid the loan, received a refund, had the loan

12 collateral repossessed, received a discharge in bankruptcy, was

bound by a mandatory arbitration clause, and had a claim paid

under the policy. American Bankers asserts that the date each

potential class member paid the loan will require thousands of

individualized determinations.

In cases where courts have found that the class definition

was defective because it required individualized findings, the

definition included indefinite terms that would necessarily be

different as applied to each potential member. For example, a

class defined as those who paid undisclosed compensation through

inflated brokerage commissions required individualized

determinations of the subjective intent of each of the

purchasers. In re I.P.O. Sec. Litiq..

.

Nicotine addiction was held to require a "highly individualistic

inquiry," which precluded class certification. Barnes v. Am.

Tobacco C o .,

, 144 (3d Cir. 1998). In Crosby, the

class was defined as those who did not receive a social security

claim hearing within a reasonable amount of time, which the court

found required individual determinations of what would be

reasonable in each circumstance. 796 F.2d at 580.

The issues American Bankers raises do not require individual

determinations of the kind that courts have found would interfere

with identifying class members. The cited parts of the proposed

class definition are readily ascertainable factors that would not

13 require considering indefinite criteria such as the insured's

subjective state of mind or the surrounding circumstances of each

loan.2 The proposed class definition, if it included the listed

exclusions, would not be indefinite or otherwise defective. As

proposed, however, the definition is incomplete.

IV. Prerequisites of Rule 23(a)

"All class actions certified under Rule 23 must meet certain

prerequisites listed in subsection (a): there must be numerosity

of class members, common questions of law or fact, the

representative must be typical of the class, and his or her

representation of the class must be adequate." Tardiff v. Knox

County.

(1st Cir. 2004); accord Berenson v. N a t '1

Fin. Servs. LLC.

(1st Cir. 2007). A class may be

certified only "if the trial court is satisfied, after a rigorous

analysis, that the prerequisites of Rule 23(a) have been

satisfied." Gen. Tel. Co. of Southwest v. Falcon.

,

2Carrier and Whitman assert that the proposed class definition is comprised of only three factors: those who bought credit insurance produced by a motor vehicle dealership in the listed states, paid off the loan before their insurance coverage expired, and did not receive a refund.

14 161 (1982)

A. Numerosity

To satisfy the numerosity requirement, the class

representatives must show that joinder of the potential class

members would be impracticable. Fed. R. Civ. P. 23(a). Whether

joinder is impracticable depends on the particular facts and

circumstances of the case, not merely on the number of potential

class members. Andrews v. Bechtel Power Corp..

(1st Cir. 1985). As is noted above, the class representatives

must provide sufficient evidence of numerosity to satisfy a

rigorous analysis.

Based on Aaron Goulette1s declaration. Carrier and Whitman

assert that New Hampshire has at least 101 potential class

members. Goulette calculated the number based on American

Bankers1s policies with major creditors who are defendants in

other cases brought by the plaintiffs' counsel. As is discussed

above, American Bankers disputes that number on a variety of

grounds. Crediting American Bankers1s challenges, but not

subtracting those who bought credit life insurance, there would

still be around forty-four potential class members in New

Hampshire.

Carrier and Whitman also point to a chart they obtained from

15 American Bankers in discovery that shows the number of people who

had active disability credit insurance coverage from American

Bankers within three years of the date this suit was commenced

and who purchased vehicles from American Bankers1s largest

dealership agents. The chart lists the purchasers by year of

purchase and by state. Carrier and Whitman represent that the

total number of open policies shown in the chart is 16, 000 .3 No

information is provided, however, as to how many of the 16,000

prepaid their loans but did not receive refunds.

American Bankers asserts, through the affidavit of Marilyn

Wycoff, that its relationship is with automobile dealers, not

with the lenders who finance the vehicles. Because of that

arrangement, American Bankers asserts that it does not know when

its insureds prepay their loans and, therefore, does not know

when or if a refund is due unless the insured requests a refund.

As a result, American Bankers can only identify which insureds

have been paid refunds, not how many may be owed refunds.

Carrier and Whitman submitted copies of cases where courts

certified class actions for similar claims. In Reller v. Union

Security Life Ins.. File No. C3-04-012202 (Minn. 2d Dist. Feb.

3The chart only includes those who bought disability credit insurance, although the class is defined also to include those who bought life credit insurance or both types. Therefore, the number of policyholders would be much larger if all of the policyholders were included.

16 28, 2007) and Lee v. Life Investors Ins. Co., File No. 03-15180

(Minn. 4th Distr. Apr. 27, 2005), the state courts applied

Minnesota law and concluded that the plaintiffs' estimates of

class members provided "some evidence" beyond mere speculation of

the number, which satisfied the numerosity requirement. In Toole

v. J.M.I.C. Life Ins. Co.. Civil No. SU 2003 CV 246 (Ga. Super.

C t . Aug. 11, 2005), the Georgia court, applying Georgia law,

found numerosity based on the plaintiff's exhibit and analysis

that showed more than 60,000 former J.M.I.C. policy holders who

appeared to be entitled to a refund. In Colev v. Guarantee Trust

Life Ins. C o ., No. 99 L 6880 (Cook County, 111., 3d Circuit, Oct.

2, 2000), the plaintiff individually identified 703 potential

class members, which satisfied the numerosity requirement. In

Murray v. GMAC Mtq. Corp.

(N.D. 111.

2007), the court accepted the plaintiff's "admittedly coarse

calculation" for showing numerosity, and retained the right to

decertify the class if the number could not be ascertained. On

reconsideration, the court vacated class certification. I d . at

(N.D. 111. July 23, 2007).

The evidence of numerosity in this case is less persuasive

and the standard is more demanding than that considered in the

cited cases. Although there are apparently at least 16,000

people who purchased American Bankers disability credit insurance

within three years of the date this case commenced. Carrier and

17 Whitman provide no evidence of how many prepaid their loans and

did not receive refunds. The only evidence of likely class

members is that approximately forty-four people in New Hampshire

prepaid their loans and did not receive refunds, but Goulette

stated in his declaration that even 101 was too small a number to

support a class action.

Although common sense might suggest that the likely number

of American Bankers1s policyholders within the class definition

would be too numerous to practicably join in the lawsuit, the

present record is not sufficient to permit a finding that the

defined class would meet the numerosity requirement. Among the

unknowns are how many policyholders prepaid their loans and how

many would be excluded by the terms of the definition. For

example. Carrier and Whitman provide no information about how

many American Bankers1s policies include an arbitration

provision.

Better evidence of number appears to be available. The

dealerships, which provided information used to compose the chart

of policyholders, presumably could provide information about the

lenders used by the American Bankers1s policyholders. The

lenders presumably have records of who repaid their loans before

the due dates. Then, because American Bankers knows how many

refunds it has provided within the relevant time period, a

18 reasonably accurate estimate of potential class members could be

calculated from that information. That number could be adjusted

based on the number of policies with arbitration clauses and

further adjusted based on the other exclusion factors. Of

course, using the same information, American Bankers could

provide refunds, thereby reducing or even eliminating the class.

At present. Carrier and Whitman have not demonstrated that the

proposed class would be sufficiently numerous to meet the Rule

23(a)(1) requirement.

B. Commonality

The class must share common questions of law or fact. Fed.

R. Civ. P. 23(a)(2). "All questions of fact and law need not be

common to satisfy the rule." In re Neurontin Mkq. & Sale

Practices Litiq..

(D. Mass. 2007).

Commonality can be satisfied by a single common legal or factual

issue, making it an easily satisfied prerequisite. In re Sonus

Networks. Inc. Sec. Litiq..

(D. Mass. Sept.

25, 2007).

Carrier and Whitman assert that the class shares the common

issue of American Bankers1s form contract and American Bankers1s

failure to refund their unearned premiums. American Bankers

responds that complex and individualized issues will have to be

decided about each member's claim, such as the dates of

19 prepayment. It also asserts that because the class members would

be residents of different states, different laws will control

their claims. Even if individual issues exist, the proposed

class would nevertheless share the issue of the form contract and

the fact that American Bankers did not refund unearned premiums.

Therefore, the requirement of Rule 23(a)(2) is met.

C. Typicality

The class representatives' claims must be typical of the

class's claims. Fed. R. Civ. P. 23(a)(3). Class members need

not share identical claims. In re Neurontin.

.

Instead, typicality is determined by considering the defendant's

actions toward class members and the evidence necessary to prove

the representative's claim when compared to class members'

claims. I d . at 106-07.

Carrier and Whitman contend that they, along with all class

members, were subjected to the same conduct by American Bankers.

That is, each of them bought credit insurance from American

Bankers based on a form contract. The insurance contracts

provided that coverage would terminate if the loan were paid

before the due date and that American Bankers would refund the

unearned portion of the premium paid. American Bankers has not

refunded the unearned premiums. American Bankers asserts that

20 its insurance contracts have different refund provisions for each

state, which will determine whether a breach occurred, making

Carrier's and Whitman's claims not typical of the class. It also

argues that material differences in state law will affect the

proposed class members' claims.

The form contracts from the states listed in the class

definition all promise refunds of unearned premiums but use

slightly different language in the refund provisions.

Specifically, the contracts provide different methods of

computing refunds with variations dependent on the state and the

type of credit insurance. American Bankers's conduct toward the

class representatives, however, is the same. Proof of the claim,

other than proof of damages, would also be similar, given the

same refund promise in each contract. Therefore, the

representatives' claims are likely to be typical of the class.

D. Adequacy of Representation

The class representatives must be able to fairly and

adequately protect the interests of the class. Berenson v. N a t '1

Fin. Servs. LLC.

(1st Cir. 2007). The

representatives must share the interests of the class as a whole.

Andrews,

. In addition, part of the adequacy

inquiry is to consider the "competency and conflicts of class

21 counsel." Amchem Prods.. Inc. v. Windsor.

, 626 n.20

(1997). "An essential ingredient of this requirement is that the

class representative's attorneys be qualified to vigorously and

adequately prosecute the interests of the class." Key v .

Gillette C o .,

(1st Cir. 1986).

Carrier and Whitman have demonstrated that their counsel is

experienced in consumer class action litigation, including cases

involving the same or similar claims as the claims brought here.

They submitted their declarations in which each explained the

factual basis of her claim, stated that counsel, Edward K.

O'Brien, informed her of the duties of a class representative,

stated that each is willing to serve, and declared that they have

no conflicts of interest that would interfere with

representation.

American Bankers, relying on the standard established in the

Fifth Circuit under the Private Securities Litigation Reform Act,

argues that to be adequate representatives. Carrier and Whitman

must show their willingness and ability to actively participate

in and control the case. See Berger v. Compaq Computer Corp..

(5th Cir. 2001); accord Feder v. Elec. Data

Svs. Corp.,

, 130-31 (5th Cir. 2005). American

Bankers contends that neither Carrier nor Whitman is able to take

an active role in or control the litigation in this case.

American Bankers points to their deposition testimony to show

22 that neither Carrier nor Whitman has sufficient understanding or

involvement in the case to serve as a class representative.

The First Circuit, however, has not adopted the Fifth

Circuit standard, even in the context of securities class action

litigation. See In re Organogenesis Secs. Litiq..

(D. Mass. 2007). In this district, the court has held

that class representatives need not have expert knowledge of the

subject matter of the suit, may rely on class counsel for

guidance, and need not be subjectively interested in the case, as

long as the representatives have not virtually abdicated control

of the case to counsel. In re Tyco Int'l, Ltd..

at *2 (D.N.H. Aug. 15, 2006). A class representative is expected

to maintain sufficient involvement in the case to protect the

class against counsel's possibly competing or conflicting

interests.

The declarations submitted by Carrier and Whitman do not

address their understanding of their role in protecting the class

from counsel's possibly conflicting interests. Carrier testified

in her deposition that she would represent the class by giving

her deposition, being prepared to go to court, and by "keeping

close track of what the attorneys are doing, as close as I can."

Mot. Ex. 28 at 94. She explained that she would keep track of

the attorneys through email and would trust the attorney's

judgment when a course of action was recommended to her.

23 When asked what she would do if a conflict arose between the

interests of the class and counsel. Carrier answered, "I'm not

technically sure how I would decide on that. I might have to ask

somebody else." I d . at 96. She listed her duties as being

honest, telling the truth, "to be there if it's needed," and "to

make sure that information submitted is as proper as I can tell."

I d . at 98. In response to additional questioning. Carrier did

not know what the time limits of the class claims would be or

what states were included in the action. She also indicated

limited contact with her attorneys.

Whitman testified that her duties as class representative

would be "to do things like a deposition and to really just be

that representative if there is, you know, a trial or whatever it

would involve to get to that end result for, again, what's fair

and otherwise owed to the class." Mot. Ex. 29 at 120. She would

fulfill her responsibilities " [w]ith help from counsel advising

me what that, the best thing is to do for them, which to me would

be representing them."

She further stated that if she

disagreed with counsel, she would let him know. At the time of

the deposition, she had had one meeting with counsel, six

telephone conversations, and email communications.

Based on Carrier's and Whitman's deposition testimony, they

have little if any understanding of their role, independent of

counsel, as class representatives. Their limited contact with

24 counsel, other than by email, may be evidence of insufficient

communication to support their role because of their dependence

on guidance from counsel. They emphasize their enthusiasm for

serving as class representatives, but neither Carrier nor Whitman

has demonstrated she understands how to fulfill her duty to

protect the interests of the class. Therefore, the requirements

of Rule 23(a)(4) also appear to be insufficiently addressed to

support a finding of adequacy.

V. Rule 2 3 (b)(3)

Carrier and Whitman propose a class that would proceed under

Rule 23(b)(3). Rule 23(b)(3) is satisfied "if . . . the court

finds that the questions of law or fact common to the members of

the class predominate over any questions affecting only

individual members, and that a class action is superior to other

available methods for the fair and efficient adjudication of the

controversy." In making that determination, the court is to

consider, among other things, the interest of members in

controlling separate actions, whether other litigation of the

same claim is pending, the desirability of the forum, and the

difficulties of proceeding as a class action.

A. Predominance

25 Carrier and Whitman assert that because the class members'

breach of contract claims are based on a form contract issued by

American Bankers, which promised refunds for unearned premiums,

their shared question of liability predominates over any

individual issues.4 Specifically, Carrier and Whitman contend

that the class shares the following legal issue: "Did American

Bankers breach its contracts with the Plaintiffs and class

members by failing to refund their unearned premiums to them when

coverage stopped because of early loan payoffs?" Mot. at 26.

American Bankers argues that the question of liability is not

shared because different laws govern the claims, which arose in

different states. It also argues that individual determinations

about whether a class member is entitled to a refund and the

amount would make class treatment inappropriate.

1. Governing Law

Carrier and Whitman contend that the law of New Hampshire,

the forum state, applies because New Hampshire law governing

insurance contracts is not materially different from the law in

the other states implicated in the proposed class members'

4Carrier and Whitman do not address their separately alleged claims of breach of the implied covenant of good faith and fair dealing and for a declaratory judgment. Therefore, those claims are not considered in the class certification analysis.

26 claims. American Bankers argues that the court must engage in a

complex choice of law analysis for the states of residence of the

potential class members, which, it argues, would require many

individualized determinations. Alternatively, American Bankers

contends that the laws of the states named in the class

definition conflict with New Hampshire law and require a choice

of law analysis as to each state.

In a diversity jurisdiction case, the forum state's choice

of law rules apply. Klaxon Co. v. Stentor Elec. Mfg. Co..

(1941); Reicher v. Berkshire Life Ins. Co. of A m . .

(1st Cir. 2004). When the outcome would be the

same under the substantive law of any of the interested states,

however, no choice of law analysis is necessary. Lambert v.

Kvsar,

(1st Cir. 1993); Patrick v. Mass. Port

A u t h .,

, 187 n.6 (D.N.H. 2001). Instead, the

forum state's law governs. Lambert,

; Patrick,

n.6.

None of the pertinent policies or certificates of insurance

has a choice of law clause. The first issue in dispute is

whether the states of residence of potential class members or the

states where the insurance certificates were issued provide the

applicable law. American Bankers assumes, without analysis, that

the states of the individual class members' residence provide the

27 applicable law.5 Carrier and Whitman, however, contend that

because the insurance issued to the potential class members was

through a group policy, the states where the insurance was issued

provide the governing law.

It appears to be undisputed that American Bankers provided

credit insurance through dealerships that issued American

Bankers1s insurance certificates to customers who paid for

coverage. As such, the insurance in question was issued through

group plans not through individual insurance policies.

In general, the law that governs the group plan holder or the

master policy also governs the individual certificates issued

under the plan. See Hamilton v. Standard Ins. Co..

(8th Cir. 2007); Restatement (Second) of Conflicts of

Law § 192 c m t . h (group life insurance). Because American

Bankers has made no developed argument that the states of

residence of the potential class members, rather than states

where the policies were issued, should provide the governing law,

the court will assume that the states listed in the proposed

class definition are those having an interest in the matters

raised in this case.

5Despite that assumption, American Bankers refers to the thirteen states listed in the plaintiffs' proposed class definition, which are the states where the insurance was issued.

28 Carrier and Whitman have provided charts of the law

governing a breach of contract claim for New Hampshire and the

other twelve states listed in the proposed class definition to

show that no material differences exist. They contend no

material differences exist between the laws of New Hampshire and

the other states. As a result, they assert, the court may apply

the law of New Hampshire, the forum state.

American Bankers argues that the states have different rules

for considering ambiguous provisions in insurance contracts. The

differences cited, however, appear to be minor. In addition,

neither side has identified an ambiguous provision at issue in

this case. Because of the nature of the insurance contracts,

which are form contracts that were not subject to bargaining,

issues of extrinsic evidence and other means for interpreting

ambiguities or intent are not likely to arise here.

American Bankers also argues that Carrier and Whitman have

overlooked conflicts in the states' statutes pertaining to

refunding unearned premiums. It contends that the different

statutory requirements are material to the legal standard because

each state has a rule that relevant statutes are to be read into

insurance contracts. Specifically, American Bankers points to

statutes in Idaho that they represent require the creditor, not

the insurer, to make refunds of unearned premiums. American

Bankers admits, however, that its insurance certificates used in

29 Idaho do not specify the creditor as the party required to make

the refund.

Carrier and Whitman agree that statutorily mandated

provisions are deemed to be part of an insurance contract but

argue that contract provisions which are more favorable to the

insured than the statutory requirements are enforced. See Couch

on Insurance 3d ed. § 19:2 (2007). The Idaho statute requiring a

creditor to repay unearned premiums would not conflict with a

provision in American Bankers1s policy in which American Bankers

promised to refund the unearned portion of the premium. Even if

a conflict were found, however, American Bankers1s promise would

add a source for repayment which is more favorable to the

insureds. Carrier and Whitman have demonstrated that the laws of

the affected states are similar to New Hampshire law, in all

material respects. American Bankers has not undermined Carrier's

and Whitman's showing. Therefore, common legal issues

predominate.

2. Uniform Contracts

In addition, American Bankers contends that contrary to the

plaintiffs' argument, the refund provisions in the form contracts

used in the listed states are different and would require

separate analyses for purposes of deciding the breach of contract

claims. Specifically, American Bankers notes that some refund

30 provisions state affirmatively that "we" will refund the unearned

part of the premium while others promise a refund in the passive

voice, stating that a refund will be paid, without identifying

the party responsible for making the refund. The contracts also

include different means for providing the refund and only some

promise a prompt refund.

Because American Bankers is the insurer that made the

promise of a refund, it is the responsible party (vis a vis the

insured) regardless of whether the policy language uses the

active or passive voice. Therefore, the differences in the

various policies in wording the promise to refund are not

material. Because the plaintiffs in this case claim that

American Bankers failed to refund the unearned part of premiums

but make no claim about whether the refunds were properly

credited or the timeliness of refunds, differences in those

provisions are immaterial.

3. Individual Proof Issues

American Bankers asserts that individualized issues will

arise as to whether it was notified of each prepayment as

required under a constructive notice requirement it argues should

be interpreted to be part of its insurance policies. No such

constructive notice requirement, however, has been interpreted to

31 exist in the policies in question.6

American Bankers also raises a concern about individual

issues for calculating damages and refunds. Although individual

refunds will have to be calculated, that would be necessary

whether the claims were brought individually or as a class. The

calculation of damages in this case appears to be relatively

simple, involving a percentage of the premium paid. The damages

calculations are not likely to be sufficiently problematic to

preclude class certification.

Carrier and Whitman have shown that at present common issues

of both fact and law predominate over individual issues among the

class for purposes of this suit. In the event the actual class,

once identified, presents unexpected individual issues, the

question of class certification can be reconsidered. See

Tardiff,

.

B. Superiority

To satisfy the superiority requirement. Carrier and Whitman

must show that proceeding as a class action is a superior means

of adjudicating the issues raised over other available methods.

Fed. R. Civ. P. 23(b)(3). Class actions are particularly

6The cases cited by American Bankers to support its constructive notice theory are inapposite to the circumstances at issue in this case.

32 appropriate to address small claims when individual recoveries

would not support separate litigation. Amchem Prods.,

; Tardiff,

.

Carrier and Whitman contend that the minimal recoveries

sought by each individual insured in this case are insufficient

to support separate actions. They also argue that consumer class

actions are favored. In response, American Bankers cites the

individual issues it asserts will arise in litigating the claims

as a class action. As is discussed above, however, the

individual issues are not so serious as to preclude

certification.

C. Manageability

The manageability aspect of class certification "encompasses

the whole range of practical problems that may render the class

action format inappropriate for a particular suit." Eisen v.

Carlisle & Jacguelin.

(1974). Carrier and

Whitman contend that the case is manageable as a class action

even if the court had to apply the laws of thirteen different

states to the issues raised. American Bankers argues that the

differences in the contracts and the applicable law will make the

case unmanageable.

At present, it appears that in the absence of a true

conflict among the laws of the interested states, the court will

33 apply the law of the forum. New Hampshire. A consistent body of

law will greatly simplify adjudication of the issues in this

case. No other issues have been presented that would suggest the

class would present insurmountable management problems.

Conclusion

For the foregoing reasons, the plaintiffs* motion for class

certification (document no. 39) is denied without prejudice to

refile with additional support to address the factors that were

not sufficiently demonstrated in the present motion. The

plaintiffs* motion for oral argument (document no. 62) is also

denied.

SO ORDERED.

jCiWu>.fli \^JJos%ph A. DrClerico, JiV. United States District Judge

February 1, 2008

cc: Dustin T. Brown, Esquire Frank Burt, Esquire James E. Butler, Jr., Esquire Kate S. Cook, Esquire Jason Lance Crawford, Esquire J. Clay Fuller, Esquire Wilbur A. Glahn, III, Esquire Farrokh Jhabvala, Esquire Edward K. 0*Brien, Esquire Joel 0. Wooten, Jr., Esquire

34