rest i guess what might be considered a housekeeping measure there is a pending motion for conditional relief based on concerns regarding subject matter jurisdiction in the lower court you know if you're right sole tool and the policy it knew based on the actuaries that it has and its ability forecast the future there was very unlikely that too and was going to make a claim during that ten year period so the value of this policy is actually greater as the individual or the purchaser of the policy gets older so i don't think that she was receiving any material benefit during that ten year period at least one that would cause  right she had insurance but rather the benefit was income was going to increase after the expiration of the ten year rider so while she was receiving a benefit it was the benefit was intended to be collected on if at all or likely to be collected on if at all at the expiration of the ten year writer if you would agree that having health insurance is valuable even if you remain healthy during your crack to i'm not saying it has no value at the during that ten year time i'm just saying that it has greater value at the expiration little what do we make of the fact though that she paid extra to keep premiums you know essence either flat or more under control for those ten year years if that's an extra charge it i as a writer so that that tells us that that assurance is valuable right yes not so what would the natural inference be after that cap comes off the natural inference would be that the rates were then subject to change or they may be increased but and if you're what age was she when she bought the policy she was sixty years old so the question is what is a what are the appropriate premiums for somebody who's sixty eight and somebody who's seventy eight right yes or that is in that answer pretty obvious at least in general terms i think in general terms it may be obvious judge but i think what to and  time she purchased the policy was that she was going to have a set policy limit for the ten year period based on the rider but at the conclusion of that period she was given guidelines based that allowed her to assess the affordability of the policy  determining whether or not she'd be able to afford it now those are the regulatory disclosures the fifteen to twenty percent those disclosures were made pursuant to the illinois administrative code but there was also a notice to the applicant that provided her with specific guidelines those guidelines were supplied to her in accordance with the illinois administrative code as well that requires long term care insurers to supply suitability guidelines it's an indication of how important a stable lead believed that the affordability of these policies should be considered naturally put the onus on continental casualty to supply those guidelines what about the work she did she never had utilized as i understand it well it's not that she didn't utilize it it's just that she didn't put out elated right so she signed it in signing and returning it is a condition of issuing the policy so the work sheet was required by the code section that hamilton were referred to but what was included in there was a reference to a possible rate increase of for example twenty percent that information continental elected to include it wasn't required to be included in at the time that it elected do include that information we've alleged and believe that continental knew that that was erroneous it was not in accord with the truth of the matter and that was that at the expiration of the ten year period the rates were going to increase significantly so what was this what disclosure do you think would have been sufficient i think any disclosure the didn't reference rates that were so far a fall of what was actually going to go tell me what's not sufficient tell me what would have been sufficient at the conclusion of the writer period the made at the rates may double i think i think the disclosure depends on the evidence that we have yet to be able to ascertain is is it your contention that continental knew with one hundred percent certain that the rate increase more than twenty percent because he you know in the brief he seemed to say that in several places yes i think they knew with absolute certainty that the rate was going to increase far more than twenty percent did they know that it was going to increase seventy six and a half percent i don't know that to be true which if i had a viable  increase by twenty percent i don't believe so because i think that the information that she was provided at the time she purchased the policy reasonably advised her of a rate increase in the range of fifteen to twenty percent it could even increase beyond twenty percent there was no cap and there was plenty of doesn't make any allegations that there was a promise to cap rate increases at twenty percent but she was provided with information that she was instructed to use as a guideline to determine whether or not this policy was going to be affordable for her not only at the time that she purchased it but on into the future and it's those guidelines that misled her and constitute a fraudulent misrepresentation further do you happen to know if there are long term  disability insurance companies had this same issue in other words a sudden and drastic increase in premiums around the same time some have been some haven't those that haven't had significantly higher premiums at the time they were sold back in the same time period the tool and bought her the insurance companies as a whole had identified a marketplace for long term care insurance it was a significant portion of the population that was aging and was very concerned as as many of us  e our end of life situation who's go to afford long term care if and when it becomes necessary well let let let me ask you this if you can make a bare allegation that continental knew the increase would happen one hundred percent certainty can continental ask the court to take judicial notice of the fact that this was happening across the industry at that time number one i don't believe it was a bare assertion i think we've supported arc our claim the continental knew that this rate increase was inevitable based on the experience that they had in the industry the actuarial standards that existed at the time as well as their own internal empirical and historical data that suggested that the lab straits that had been traditionally utilized to price long term care policies were not appropriate because of the type of people that were buying on these are conservative long term planning folks that once locked into a ten year rate stabilizing writer are going to continue to make their payments i don't believe that the court can take judicial notice that other simply because other long term care insurers in the marketplace were also trying to grab market share by utilizing inappropriate actuarial data or simply charging lower premiums i don't think the court can take should ishall notice of that fact because there are  insurance companies out there that were selling long term care insurance policies that have not had to implement the significant rate increases jen wild for example has not had to increase their long term care insurance premium so i don't think it would be appropriate for the court to take traditional notice of them but again i do believe that we have supported our allegations of knowledge with sufficient facts that put continental in a position that they did know based on their assessment if we were the reverse what limits do you think we would have to suggest about what an insurance company must disclose about future rates know we're talking here about trying to predict more than ten years in advance right and were they happened to be ten years with pretty wild swings in capital markets right not to mention uncertainty about health care costs right so what would an insurance company have to disclose and not have to disclose in order to meet your standards well i think now based on what we've learned over the course of the last ten years i think that they would have to disclose that expressly disclose that rates could or may increase in any amount ok they have to be transparent about the fact rates can go up seventy six and a half percent rates may double in the future rates may cause this policy to go on affordable at the time that they issued this policy why not simply ask ok i mean at the time she bought this ok i'm i'm sixty eight what with the price before my cousin who's seventy eight presumably it was being priced and sold to such folks at the time right presumably judge i don't we don't know that we don't know who the precise target is it is it correct to that the plaintiff bought this from her husband her husband was the producer yes because that is that relevant here of the significance or in significance of him being the producer is unknown at this point because we don't know whether she was privy to any at additional information or he provided her with any additional information that would or would not have been provided to other purchasers of the policy at this point  was a misrepresentation regarding the likelihood of future rate increases they portrayed a known certainty as a mere possibility and whether that survives a fraud analysis shouldn't affect whether it affects wealth should be  consumers like tool and and it's under that act that this particular conduct meaning giving guidelines that were rendered meaningless by unknown future rate increase is unlawful sheet i think it's it's unusual i don't know if it had to do with the relationship between the agent her husband and her i think it's relevant that she did not fill up the sheet and yet is relying heavily on the worksheet as  point of her fraud claim you mean like honey don't worry about it i'm going to take good care of this i mean that could have happened i suppose but if you're going to base a fraud claim on a worksheet you have to allege that you re relied on the worksheet in the worksheet has to contain material misrepresentation of the actual fact that exists at the time and that's not what we're talking about here that does the safe harbor  protect the worksheet even if all of the statements in it are aren't set forth in in in the regulation i mean like what if everything came for ba and where can i but i think that in that case the safe harbor would give you a safe harbor for the statements that are compelled by the state or that were written by the state and in this case in within that the safe harbor for the consumer fraud but as important i mean the statements are either of facts that are indisputable true but they're not statements of facts and there isn't a misstatement of fact alleged anywhere in this complaint at best what is alleged is that there is an implied misstatement about the likelihood of a rate increase in the future in the scope of that rate increase but what if her well you have to read them in context then and if the statements that you were lying on are either cautionary statements that race can go up and that you need to be careful in your financial planning in the policy that you or the statement is these rates are subject to change or we may change these rates that are drawing an implication from that that therefore there's going to be a rate increase but it's to be small i think is is a fair stretch and i think the case law is pretty clear that where the claim is that you sensually misstated an opinion or you misstated a projection or you made a promise that you didn't intend to keep all of which generally is what one form or another is what the plaintiff is alleging here that none of those allegations are sufficient to state a fraud claim under illinois law and really if you could get around that by saying yes but the defendant knew that if pinion was untrue at the time it was implied then you wouldn't have a case law saying that projections are can't be based on fraud claim because it can't be the basis of a fraud claim because simply saying they knew here but the case law federal case law also says that there has to be some plausibility to the allegation sure how about the defense knew enough to fund a new enough how to price the policy out for ten years right well that it it knew enough to price the policy and sell it right or they guaranteed it right in the years obviously the pricing of policy did not work out as a defendant anticipated because there was a rating well is that why is that obvious that that's not expected i thought if i buy the ten year level premium term life insurance policy i would expect a pretty big increase in my if i want to continue in the eleventh year and i think that's fair why is this any different well i admit i did both sides can forsee this i think a policy holder clearly should expect from buying this policy and having a ten year lock and a policy saying it's subject to change or we may change the rates that there is a serious risk that the rates are going to be increased now from the defendant's perspective the defendant may believe that rates may have to increase as well question is did the defendant make a misrepresentation about an intention to actually raise the rates across fifty states and get fifty states to approve the rating crees ten years in advance and that's not a plausible allegation and even if it was a plausible allegation the question then is what how did that translate into a misrepresentation of fact to the plaintiff because if i don't if i'm making a promise to you i may raise your rates but i think i actually think that i probably will raise your rates or i may raise your rates but i think that if i do raise your rates it's going to be a big rating crease and i don't tell you that that's it we're not talking about a statement of fact we're talking about a promise that somebody in a contract and that doesn't form a basis for fraud but it would be fair to assume that the defendant continued to sell these policies and during those ten years well continental sold them from one thousand nine hundred eighty to two thousand and three zero and stopped yes and ok all right and i mean and this this issue has come up in case law and judge rover you asked about taking judicial notice of rate increases across the industry obviously we cite the rake's case which is the eighth circuit and that involves seventy five percent rating increase where the challenge was younger priced it knowing that you were going to raise the price and then you raise the price and that was fraud i'm going to conclude that it's not a basis for fraud claim because the possibility of a rate increase was memorialized in the contract and raising questions about whether or not the defendant priced policy correctly doesn't give rise to either an omission claim or misrepresentation play and then in the crypt and crichton case from the seventh circuit that doesn't involve long term care rakes involved actually long term care chrichton involved health insurance but the allegation again is the same under priced it you had bad underwriting standards or knowingly false underwriting standards and you failed to disclose them to the plaintiff and chri there was actually an underwriting standard that they focused on is that this particular practice you should have disclosed the plan if you didn't and that gives rise to a fraud claim and the seventh circuit said that on a motion to dismiss that does not sit right claim and i think those cases are on point for what we're talking about here because the factual scenario is basically the same could you address mr austin the plaintiff's hypothetical from the reply brief about let's say a drug manufacturer who knows about the side effects the is highly likely and but discloses simply that it's possible well a defective product is a product that either has a known defect or a you talking about a known fact that's alleged to be known by the defendant at the time the product is sold so likelihood right well that it's it's a likelihood of a product failure yes i mean in the case of a prescription drug if i'm selling prescription a prescription drug and there is and i have reason to believe that there's an eighty five percent chance that it will cause a heart attack and i represent to the buyers that it has already been then you're probably going to jail rent but but let's let's talk about serious side effects but the don't necessarily indicate a defect that's simply a side effect of the drug the there's a difference between a majority of patients experiencing it and the mere possibility that they would experience it that's correct but the could be the question here is does did the basis of the pricing of your part of your product was that basis accurate and could it was stand you know ten years worth of experience it was it's not a situation here where the plaintiffs allege conclusory in a conclusory fashion that what kind of rate increase would happen there's no representation at all about how the prices the policy was priced all that's disclosed is the truth which is that the part of the policy is subject to a rate and so here the disclosure of the defect if you want to call it a defect was disclosed the scope of the defect the scope of the rating raise was never discussed either in the contract or in the marketing materials and the allegation is that the defendant somehow knew the scope of it ten years ago when the product sold and failed to disclose it and what i would say is that that allegation was a that a defendant would have a scheme to do that when the rate increases have to be approved in fifty states and there was no duty no duty to warn in this case because it omissions case the duty to warn only arises if there's a fiduciary duty a special relationship that sort of thing and i don't think it's too lon is even contending that that sort of exists here so i think that's an important distinction i make a match because i'm running out of time i want to mention a subject matter jurisdiction and was the product of a great deal of filings leading up to this  i have two motions on file to supplement the record they were in response to two separate orders asking for further statements about jurisdiction they contain two affidavits that i think either one on its own shows that there is minimal diversity in this case together i think it's overwhelming overwhelmingly clear that there's subject matter jurisdiction and i'd asked the court to grant that motion and just by way of caution if there's any question about whether or not to grant that motion i think the question really is should the district court make a finding of fact about subject matter jurisdiction and i think that's necessary here but i think that's the most drastic result that should happen if there's any doubt left about the existence of minimal  three minutes yeah excellent really quickly on the issue of subject matter jurisdiction i think that the relief to the extent the court believes that plaintiff has not satisfied the minimal diversity requirement the only relief is  dismissal without prejudice and voiding the lower court's orders that being said are you telling us we don't have jurisdiction over the case you brought no i'm saying based on the court's concerns and depending on this court's reading of the plaintiff has failed to establish the minimal diversity requirement under cafe off then this court based on its indications and some of of its past orders may not have jurisdiction citizenship of fugitive class members that reside outside of the state of illinois potentially curing this court's concern with the stablish meant a minimal subject matter jurisdiction to him was not in a position had never been in a position of being able to identify those individuals or their states of citizenship the scope of the rate increase was known at the time c n a and  casualty are in the business of knowing what the future holds that's how they make their money they employ hundreds if not thousands of actuaries to determine that knowing that a significant rate increase was coming and would be  implemented at the end of the ten year period they provided guidelines and they can write it as a reference point of fifteen to twenty percent for insureds to determine the