Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-23-55821/USCOURTS-ca9-23-55821-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

LAWANDA D. SMALL, Individually, 

and on Behalf of the Class; Class 

Representative, 

Plaintiff-Appellee, 

 v. 

ALLIANZ LIFE INSURANCE 

COMPANY OF NORTH AMERICA, 

a Minnesota Corporation, 

Defendant-Appellant.

No. 23-55821 

D.C. No. 2:20-cv01944-TJH-KES 

OPINION

Appeal from the United States District Court

for the Central District of California

Terry J. Hatter, Jr., District Judge, Presiding

Argued and Submitted October 21, 2024

Pasadena, California

Filed December 10, 2024

Before: Richard C. Tallman, Ryan D. Nelson, and Daniel 

A. Bress, Circuit Judges.

Opinion by Judge Tallman

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2 SMALL V. ALLIANZ LIFE INSURANCE

SUMMARY*

Class Certification / California Insurance Law

The panel reversed the district court’s order certifying a 

class challenging loss of life insurance for failure to pay 

premiums where insurer Allianz Life Insurance failed to 

strictly comply with statutorily mandated notice provisions, 

vacated the district court’s summary judgment orders, and 

remanded.

Lawanda Small, a beneficiary and an additional insured 

of her deceased husband’s Allianz life insurance policy, 

purported to represent two subclasses: (1) the “Living 

Insured Subclass” seeking equitable relief to reinstate life 

insurance coverage; and (2) the “Beneficiary Subclass” 

seeking damages from death benefits where the insured was 

now deceased. She alleged that Allianz violated California 

Insurance Code sections 10113.71 and 10113.72 

(“Statutes”), which require that insurers abide by a series of 

notice procedures to prevent policies from inadvertently 

lapsing due to an insured’s nonpayment of premiums. 

The panel first addressed what a plaintiff must show to 

recover for alleged violations of the Statutes under 

California law, and held that the California Supreme Court 

would adopt a “causation” theory—a plaintiff must show an 

insurer’s violation and that the violation caused plaintiff 

harm.

* This summary constitutes no part of the opinion of the court. It has 

been prepared by court staff for the convenience of the reader.

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SMALL V. ALLIANZ LIFE INSURANCE 3

Applying the causation theory, the panel held that the 

district court erred in certifying Small’s subclasses under 

Federal Rule of Civil Procedure 23. Under Rule 23(a), 

Small was not an adequate representative with typical 

questions to represent both subclasses. In addition, neither 

subclass satisfied Rule 23(b). With respect to the 

beneficiary subclass, the predominance requirement—the 

requirement that the common question predominates over 

individualized questions—was not satisfied. The living 

insured subclass did not meet the standard for class-wide 

equitable relief.

COUNSEL

Benjamin I. Siminou (argued) and Jonna D. Lothyan, 

Singleton Schreiber LLP, San Diego, California; Sarah Ball 

and Jack B. Winters, Jr., Winters & Associates, La Mesa, 

California; Craig Nicholas and Alex Tomasevic, Nicholas & 

Tomasevic LLP, San Diego, California; for PlaintiffAppellee.

Aaron D. Van Oort (argued), Faegre Drinker Biddle & Reath 

LLP, Minneapolis, Minnesota; Stephen J. Jorden, Faegre 

Drinker Biddle & Reath LLP, Washington, D.C.; Mark D. 

Taticchi, Faegre Drinker Biddle & Reath LLP, Philadelphia, 

Pennsylvania; for Defendant-Appellant.

Thomas A. Evans, Alston & Bird LLP, San Francisco, 

California, for Amici Curiae American Council of Life 

Insurers and the Association of California Life and Health 

Insurance Companies.

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4 SMALL V. ALLIANZ LIFE INSURANCE

Deborah L. Stein, Bradley J. Hamburger, Jonathan N. 

Soleimani, and Timothy D. Biche, Gibson Dunn & Crutcher 

LLP, Los Angeles, California, for Amicus Curiae John 

Hancock Life Insurance Company (USA).

Brian J. Malloy, Brandi Law Firm, San Francisco, 

California; David M. Arbogast, Arbogast Law, San Carlos, 

California; for Amicus Curiae California Advocates for 

Nursing Home Reform.

OPINION

TALLMAN, Circuit Judge:

We are asked to decide whether the district court below 

erred in certifying a class challenging loss of life insurance

for failure to pay premiums where the Insurer failed to 

strictly comply with statutorily mandated notice provisions. 

The answer lies in determining whether a plaintiff alleging a 

violation of California Insurance Code sections 10113.71 

and 10113.72 (“Statutes”) need only show the insurance 

company violated the notice requirement(s), or, whether the 

plaintiff must also show that the violation caused them harm. 

We believe it to be the latter and reverse the class 

certification order.

Defendant-Appellant Allianz Life Insurance (“Allianz”) 

challenges the district court’s certification of a class brought 

by universal and term life insurance policyholders and 

beneficiaries alleging breach of contract by Allianz. 

Plaintiff-Appellee LaWanda Small is a beneficiary 

purporting to represent the two subclasses: (1) the “Living 

Insured Subclass” seeking equitable relief to reinstate 

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SMALL V. ALLIANZ LIFE INSURANCE 5

coverage and for whom the district court awarded a 

declaration stating the policies “were improperly lapsed by 

Allianz because it failed to strictly comply with the Statutes 

before it lapsed those policies”; and (2) the “Beneficiary

Subclass” seeking damages from death benefits where the 

Insured is now deceased. Small alleges that Allianz violated 

the Statutes, which require that Insurers abide by a series of 

notice procedures to prevent policies from inadvertently 

lapsing due to an Insured’s nonpayment of premiums. 

Allianz argues the district court erred in certifying the 

class under Federal Rule of Civil Procedure 23 because both 

Subclasses fail to meet the commonality, typicality, and 

adequacy requirements of Rule 23(a) and the predominance 

and appropriateness-of-relief provisions of Rule 23(b). 

Small responds that the district court correctly found all 

requirements are satisfied.

Allianz separately argues the class should be decertified 

because the district court issued summary judgment orders 

before opt-out notices were sent to the Beneficiary Subclass.

Allianz argues this violated the one-way intervention 

prohibition. For the reasons discussed below, we reverse the 

district court’s order certifying the class and vacate the 

orders on summary judgment, which renders the one-way 

intervention prohibition issue moot. 

I

A

In 2012, the California Legislature enacted Insurance 

Code sections 10113.71 and 10113.72 to prevent “people 

who hold life insurance policies from inadvertently losing 

them” due to non-payment of premiums. McHugh v. 

Protective Life Ins. Co., 494 P.3d 24, 45 (Cal. 2021)

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6 SMALL V. ALLIANZ LIFE INSURANCE

(McHugh II); see Cal. Ins. Code §§ 10113.71–.72. The 

Statutes took effect January 1, 2013, providing three primary

procedural safeguards against unintentional lapse. First, all 

life insurance policies must “contain a provision for a grace 

period of not less than 60 days from the premium due date.” 

§ 10113.71(a). Second, “[a] notice of pending lapse and 

termination of a life insurance policy shall not be effective 

unless mailed . . . at least 30 days prior to the effective date 

of termination if termination is for nonpayment of 

premium.” § 10113.71(b)(1). Third, all Insureds must “be[] 

given the right to designate at least one person, in addition 

to the applicant, to receive notice of lapse or termination of 

a policy for nonpayment of premium,” including “annual[] 

[notice] of the right to change the written designation or 

designate one or more persons.” § 10113.72(a)–(b). 

The Statutes do not explain whether these procedures 

apply retroactively to policies already in place, or whether 

they only apply to policies created after the Statutes went 

into effect. Many insurance companies adopted the latter 

interpretation and consequently did not fully comply with 

these notice requirements for policies issued before 2013. 

Their interpretation was based in part on guidance from the 

California Department of Insurance confirming as much, and 

the subsequent 2019 California Court of Appeal ruling in 

McHugh v. Protective Life Ins., 40 Cal. App. 5th 1166, 1177 

(2019) (McHugh I), holding the same. 

Then, in 2021, the California Supreme Court held that

the Statutes “apply to all life insurance policies in force when 

[the Statutes] went into effect, regardless of when the 

policies were originally issued.” McHugh II, 494 P.3d at 27. 

This means that the language of the Statutes is engrafted into 

all policies in force as of 2013 as terms of the contract. See 

id. at 45. Since McHugh II, policyholders and beneficiaries 

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SMALL V. ALLIANZ LIFE INSURANCE 7

(“Insureds”) have filed an onslaught of suits based on 

insurance companies’ (“Insurers”) non-compliance with the 

Statutes. These Insureds generally allege breach of contract 

and related claims against Insurers based on their failure to 

comply with one or more of the notice requirements in the 

Statutes. As a remedy, Insureds typically seek equitable 

relief in the form of reinstatement of the policy if the 

policyholder is still alive, or damages in the amount of the 

death benefit if the policyholder is deceased.

B

Plaintiff LaWanda Small is a Beneficiary and additional 

Insured of her deceased husband’s $75,000 universal life 

insurance policy purchased in 1990 from Allianz’s 

predecessor, LifeUSA Insurance Company. The Smalls paid 

the premiums due under the policy for 26 years until they 

missed a payment in August 2016 and the policy was 

thereafter terminated. In November 2018, Small, on behalf 

of herself as an additional Insured, applied for reinstatement 

of the policy and was denied. In December 2018, Small’s

husband died. Then, in January 2019, Small filed a death 

claim for the policy’s death benefit. Allianz denied the claim

because coverage had lapsed due to nonpayment of 

premiums.

It is undisputed that Allianz did not notify Small, or her 

late husband, of the right to designate a third party to receive 

notices of unpaid premiums or impending termination, as the 

Statutes require. In fact, Allianz originally took the position 

(before the California Supreme Court decided McHugh II)

that the Statutes did not apply to policies like Small’s that 

were issued before 2013.

Then, in 2020, Small sued Allianz in the Central District 

of California for declaratory relief, breach of contract, and 

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8 SMALL V. ALLIANZ LIFE INSURANCE

violations of California’s Unfair Competition Law (“UCL”) 

alleging that Allianz failed to comply with the Statutes’ 

notice requirements. Small moved to certify a class of

approximately 1,800 members consisting of “owners or 

beneficiaries of life insurance policies issued before 2013 

whose policies were terminated for nonpayment of 

premiums without receiving an opportunity to designate one 

or more persons to receive notices of unpaid premiums.” 

The class sought payment of any death benefits due under 

the policies, and a judicial declaration that the policies were 

wrongfully terminated and thus continue in full force despite 

non-payment. Allianz opposed certification, arguing the 

class did not satisfy the required provisions of Federal Rule 

of Civil Procedure 23(a) or 23(b).

On May 23, 2023, the district court granted class 

certification and sua sponte divided the class into two 

subclasses. The first is defined as “owners of policies with 

currently living Insureds” seeking “to have their policies 

reinstated” (“Living Insured Subclass”). The second is

defined as “beneficiaries of policies with deceased 

Insureds,” seeking “breach of contract money damages in 

the amount of the death benefit” (“Beneficiary Subclass”). 

The court found both Subclasses satisfied the numerosity, 

commonality, adequacy, and typicality requirements of Rule 

23(a). The court certified the Living Insured Subclass 

seeking equitable relief under Rule 23(b)(2), finding it 

satisfied the appropriateness-of-relief requirement. And it 

certified the Beneficiary Subclass under Rule 23(b)(3), 

finding it satisfied the predominance and superiority 

requirements.

The case schedule provided that the parties submit 

dispositive motions by June 15, 2023. Both parties filed 

motions for summary judgment by the deadline. But due to 

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SMALL V. ALLIANZ LIFE INSURANCE 9

delays in the proceedings, the opt-out period for potential 

class members had not yet ended and notices had not yet 

been sent out when both parties moved for summary 

judgment. Allianz raised the timing issue with the court on 

one-way intervention grounds in an objection to Small’s 

motion for summary judgment. Small raised the same 

objection in its opposition to Allianz’s motion for summary 

judgment. The district court denied the parties’ requests to 

extend the scheduling deadline and kept the dispositive 

motion deadline as previously set. In their replies, both 

parties requested that the court defer ruling on the merits of 

the summary judgment motions until after opt-out notices

had been sent.

Despite those requests, the district court issued its 

summary judgment rulings before class opt-out notices had 

been sent to potential Beneficiary Subclass members. The 

court granted summary judgment for Small and the class on 

their breach of contract and declaratory relief claims. The 

court ruled that Small and the Beneficiary Subclass “are

entitled to money damages . . . for their breach of contract 

claims,” and “are not entitled to equitable relief.” The court 

also ruled that Small and the Living Insured Subclass “are 

entitled to a declaration that their life insurance policies were 

improperly lapsed by Allianz because it failed to strictly 

comply with the Statutes before it lapsed those policies.” 

The court granted summary judgment for Allianz on statute

of limitations grounds, holding that class members whose 

policies were terminated before February 27, 2016, were 

time barred. The court also granted summary judgment to 

Allianz on Plaintiffs’ UCL claims.

Allianz now appeals the district court’s order certifying 

the class. We granted Allianz permission to appeal under 

Rule 23(f). In its appeal, Allianz alternatively challenges 

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10 SMALL V. ALLIANZ LIFE INSURANCE

class certification on the ground that the district court’s 

summary judgment orders issued during the opt-out period

for the Beneficiary Subclass violated the one-way 

intervention prohibition, arguing the proper remedy is class 

decertification.

We reverse the district court’s grant of class certification

and vacate the orders on summary judgment. On remand, 

the district court should reconsider the summary judgment 

orders in light of this decision. We do not decide whether 

those orders violated the one-way intervention prohibition, 

which is now moot.

II

The district court had jurisdiction to hear this case under

28 U.S.C. § 1332(d)(2) because the parties are diverse and 

the requested relief exceeds $5,000,000. We have appellate 

jurisdiction to hear this interlocutory appeal of a grant of 

class certification under 28 U.S.C. § 1292(e) as permitted by 

Federal Rule of Civil Procedure 23(f).

III

We “review the decision to certify a class and any 

particular underlying Rule 23 determination involving a 

discretionary determination for an abuse of 

discretion.” Olean Wholesale Grocery Coop., Inc. v. 

Bumble Bee Foods LLC, 31 F.4th 651, 663 (9th Cir. 2022) 

(en banc) (internal quotation marks and citation omitted). 

“[T]he district court abuses its discretion if it applie[s] an 

incorrect legal rule or if its application of the correct legal 

rule [i]s based on a factual finding that was illogical, 

implausible, or without support in inferences that may be 

drawn from the facts in the record.” White v. Symetra 

Assigned Benefits Serv. Co., 104 F.4th 1182, 1191 (9th Cir.

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SMALL V. ALLIANZ LIFE INSURANCE 11

2024) (alteration in original) (internal quotation marks and 

citation omitted). While we “review the district court’s 

decision granting class certification with more deference 

than [we] would a denial of class certification,” id. (citation 

omitted), “the district court never has discretion to get the 

law wrong,” Lara v. First Nat’l Ins. Co. of Am., 25 F.4th 

1134, 1138 (9th Cir. 2022) (citation omitted).

IV

To determine whether the class can be certified under 

federal law we must first determine what Plaintiffs must

show to recover for alleged violations of the Statutes under 

California law. See Erica P. John Fund, Inc. v. Halliburton 

Co., 563 U.S. 804, 809 (2011) (“Considering whether 

questions of law or fact common to class members 

predominate begins, of course, with the elements of the 

underlying cause of action.”); see also B.K. v. Snyder, 922 

F.3d 957, 968 (9th Cir. 2019); Parsons v. Ryan, 754 F.3d 

657, 676 (9th Cir. 2014). 

Critically, the Statutes do not authorize a private right of 

action and the California Insurance Code classifies an 

insurance policy as a contract. See Cal. Ins. Code §§ 380, 

10113.71–.72; McHugh II, 494 P.3d at 29. Thus, the cause 

of action is breach of contract. And for breach of contract, 

there must be damages caused by the breach. See, e.g., Troyk 

v. Farmers Grp., Inc., 171 Cal. App. 4th 1305, 1352–53

(2009). On the face of the legal claim that the Plaintiffs here 

are asserting, then, it would seem clear that Plaintiffs must 

show that the breach (in the form of a statutory violation) 

caused them to lose their policy coverage.

But in the district courts, this issue has led to 

disagreement. The key issue is whether, to make out a claim,

a plaintiff need only show the Statutes were violated, or, 

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12 SMALL V. ALLIANZ LIFE INSURANCE

whether a plaintiff must also show that the violation caused 

them harm. The theory of recovery is crucial. As the record 

here makes clear, and as other cases confirm, it is a life 

insurance industry norm that policyholders intentionally

cancel their policies (or intentionally allow the policies to 

lapse) before the Insured dies and the death benefit is 

payable. This is because, for term life insurance, premiums 

rise dramatically as the Insured ages, and so many Insureds

decide they no longer want or can afford the cost of 

continuing the policy. For universal life insurance, 

policyholders often terminate early to use their policy’s loan 

feature to fund expenditures, which is a method of 

withdrawing cash that can serve as an alternative to 

withdrawal by surrender or as funds to pay the higher 

premiums. And when policyholders cancel their policies, 

they commonly let the unwanted policieslapse by not paying 

premiums rather than informing Insurers of their intent to 

cancel.

Here, we face the problem of what to do with a class of 

Insureds that contains many of these people. How can they 

recover for procedural violations of Statutes meant to 

prevent unintentional lapse when the Insureds intended for

their policies to lapse? For example, “although the Statutes 

require Insurers to give Insureds an opportunity to designate 

a designee, if the Insured would never have designated a 

designee anyway, then the damages cannot be said to result 

from the Insurer’s failure to provide an opportunity to 

designate.” Steen v. Am. Nat’l Ins. Co., No. 2:20-cv-11226-

ODW (SKx), 2023 U.S. Dist. LEXIS 105592, at *37 (C.D. 

Cal. June 14, 2023). If “a significant number of policy lapses 

were likely intentional on the part of the class members” 

does “[a] class member who intentionally chose to let her 

policy lapse suffer[] no damages”? Nieves v. United of 

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SMALL V. ALLIANZ LIFE INSURANCE 13

Omaha Life Ins. Co., No. 21-cv-01415-H-KSC, 2023 U.S. 

Dist. LEXIS 53397, at *23–24 (S.D. Cal. Mar. 28, 2023).

District courts faced with this issue have split between 

two competing theories of recovery—the “violation-only” 

theory (sometimes called “strict compliance”) and what we 

now term the “causation” theory.1 For the reasons stated 

below, we believe that the California Supreme Court would 

adopt the “causation” theory. This means a plaintiff must 

not only show an Insurer’s violation, but that the violation

caused them harm. 

A

To understand our reasoning, we provide some 

background on the two theories. The “violation-only” 

theory stems in part from one provision of the Statutes that

states life insurance policies “shall” not lapse due to nonpayment unless the Insurer has sent one of the required 

notices. Cal. Ins. Code § 10113.72(c). As the theory goes,

an Insurer’s noncompliance with the Statutes keeps the 

policy in perpetual force even after nonpayment of 

premiums. District courts that adopt this theory2 thus find 

1 The “causation” theory has also been referred to as the “subjective 

intent approach.” See, e.g., Lee v. Great Am. Life Ins. Co., No. 5:20-cv01133-SPG-SHK, 2024 U.S. Dist. LEXIS 149997, at *22 (C.D. Cal. 

Aug. 20, 2024).

2 See, e.g., Grundstrom v. Wilco Life Ins. Co., No. 20-cv-03445-MMC, 

2023 U.S. Dist. LEXIS 156972, *3 (N.D. Cal. Sep. 5, 2023) (“[T]he 

Court finds unpersuasive [the Insurer’s] argument that [the Insured] has 

failed to show a triable issue as to causation, namely, that ‘any failure of 

[the Insurer] to provide [the Insured] written notice of the annual right to 

designate,’ ‘caused the [p]olicy to lapse.’ Rather, the Court finds 

persuasive the authority, cited by [the Insured], holding a defendant 

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14 SMALL V. ALLIANZ LIFE INSURANCE

that causation and damages are “immaterial for the simple 

reason that the policy did not lapse.” See Moriarty, 686 F. 

Supp. 3d at 1032–33. 

Without any authoritative appellate decisions to guide 

them, district courts have supported the “violation-only” 

theory with two main sources: (1) the reasoning and law 

behind California state court opinions endorsing a 

“violation-only” theory for non-compliance with noticeInsurer’s failure to comply with the above-referenced third-partydesignee requirement sufficient to support a breach of contract claim, 

irrespective of the plaintiff’s ability to show a causal relationship 

between the lack of statutorily required notice and the lapse”) (alterations 

in original); Farley v. Lincoln Ben. Life Co., No. 2:20-cv-02485-KJMDB, 2023 U.S. Dist. LEXIS 68482, at *11–12 (E.D. Cal. Apr. 18, 2023) 

(Farley I) (finding “[q]uestions of causation, i.e., whether the policy 

would have lapsed even if defendant had complied with the statutes, are 

not relevant to whether there was a violation of a procedural right”), 

reconsideration denied, No. 2:20-cv-02485-KJM-DB, 2023 U.S. Dist. 

LEXIS 149067, at *11 (E.D. Cal. Aug. 24, 2023) (Farley II) (reiterating 

“[a]lthough the Ninth Circuit has not formally decided whether any 

procedural violation of the statutes prevents a policy from lapsing, in a 

memorandum decision, a Circuit panel has suggested it does”); Larone 

v. Metro. Life Ins. Co., No. 2:21-cv-00995-AB (AGRX), 2022 U.S. Dist. 

LEXIS 29749, at *19 (C.D. Cal. Feb. 9, 2022) (“Because [the Insurer]

failed to comply with this requirement, the Policy could not lapse. 

Accordingly, Plaintiff has alleged that [the Insurer] was in breach by 

refusing to accept the [late payment] and terminating the Policy.”); Poe 

v. Nw. Mut. Life Ins. Co., No. 8:21-cv-02065-SPG-E, 2023 U.S. Dist. 

LEXIS 145642, at *21 (C.D. Cal. Aug. 14, 2023) (Poe I) (agreeing that 

“while the Statutes do not provide a private right of action, they 

nonetheless confer strict liability if an Insurer fails to provide the 

Designation Notices”); Moriarty v. Am. Gen. Life Ins. Co., 686 F. Supp. 

3d 1027, 1032 (S.D. Cal. 2023) (“By refusing to pay the benefits of [the 

Insured’s] life insurance policy—another undisputed fact—Defendant 

breached the contract, entitling Plaintiff to summary judgment on this 

claim.”). 

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SMALL V. ALLIANZ LIFE INSURANCE 15

before-lapse statutes for short-term policies like auto and 

homeowner insurance; and (2) the unpublished 

memorandum disposition in Thomas v. State Farm Life 

Insurance Co., No. 20-55231, 2021 U.S. App. LEXIS 30035 

(9th Cir. Oct. 6, 2021), that with minimal discussion adopted 

the “violation-only” theory in affirming summary judgment 

for a plaintiff alleging breach of contract for violation of the 

Statutes. 

In contrast, the “causation” theory prescribes that the

plaintiff must not only allege a violation of the Statutes, but 

must also show that the violation caused them harm. In other 

words, a plaintiff must demonstrate that they did not 

knowingly or intentionally let the policy lapse such that the 

Insurer’s compliance with the Statutes would have caused 

the plaintiff to pay their premiums and retain the policy.

District courts adopting this theory3 generally cite the 

3 See, e.g., Wollam v. Transamerica Life Ins. Co., No. 21-cv-09134-JST, 

2024 U.S. Dist. LEXIS 44575, at *13 (N.D. Cal. Mar. 13, 2024) 

(agreeing that “California law requires plaintiffs to demonstrate 

causation of damages to establish a claim for breach of contract” for 

recovering under the Statutes); Poe I, 2023 U.S. Dist. LEXIS 145642, at 

*16–17 (denying motion for class certification because class contained 

Insureds that intended policies to lapse without suffering injury, and so 

individual questions predominate over common ones), reconsideration 

denied, No. 8:21-cv-02065-SPGE, 2023 U.S. Dist. LEXIS 188287, at *7 

(C.D. Cal. Sept. 27, 2023) (Poe II) (“It is because of this legal framework 

requiring a showing of harm (rather than strict liability), in conjunction 

with Plaintiff’s broad proposed class definition, that led the Court to find 

that individualized inquiries would predominate whether the class 

members had actually been harmed by the Defendant’s violation of the 

Statutes.”); Steen, 2023 U.S. Dist. LEXIS 105592, at *36–37 (“[B]reach 

of contract claims require a causal link between the breach and the 

damages.”) citing Oasis W. Realty, LLC v. Goldman, 250 P.3d 1115, 

1121 (Cal. 2011)); Nieves, 2023 U.S. Dist. LEXIS 53397, at *23–24 

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16 SMALL V. ALLIANZ LIFE INSURANCE

California appellate and Supreme Court decisions in 

McHugh I–III, and argue this theory is the only logical way 

to recover for a breach of contract action.

We now examine the policy and case law supporting 

these two competing theories in an effort to explain why we 

think the California Supreme Court would likely adopt the 

“causation” theory. Given the lack of a private cause of 

action in the Statutes, nothing in California law convinces us 

that a breach of contract claim in this context should operate 

any differently than it usually would: by requiring a breach 

that caused the plaintiff’s injury.

1

Small and the district courts adopting the “violationonly” theory nonetheless rely on California state court 

opinions interpreting statutory notice requirements for shortterm, often mandatory, insurance policies like auto or home. 

These cases hold that because the auto or home insurance 

company failed to comply with statutory notice obligations, 

the Insurer’s termination of a policy due to the Insured’s 

nonpayment is ineffective—the policy remains in perpetual 

force even after nonpayment because the Insurer never sent 

the required notices after nonpayment occurred. See, e.g., 

Mackey v. Bristol W. Ins. Servs. of Cal., Inc., 105 Cal. App. 

(“Plaintiff must prove damages resulting from the defendant’s breach to 

establish liability for breach of contract. . . . A class member who 

intentionally chose to let her policy lapse suffers no damages.”); Pitt v. 

Metro. Tower Life Ins. Co., No. 20-CV-694-RSH-DEB, 2022 U.S. Dist. 

LEXIS 233896, at *21 (S.D. Cal. Dec. 1, 2022) (explaining that a 

“violation of one of the several requirements contained in the Statutes 

does not by itself establish all the elements of a claim for breach of 

contract” because, for example, “the termination of the policy might be 

due to the policyholder’s request rather than to nonpayment of 

premiums”).

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SMALL V. ALLIANZ LIFE INSURANCE 17

4th 1247, 1254–55, 1259, 1266 (2003) (concluding that 

Insurer’s notice was “invalid and unenforceable” where auto 

Insurer attempted to cancel policy but failed to provide 

requisite notice to Insured even though Insured admittedly 

did not pay the premium on time); Kotlar v. Hartford Fire 

Ins. Co., 83 Cal. App. 4th 1116, 1121 (2000) (holding “[i]f 

a cancellation is defective, the policy remains in effect even 

if the premiums are not paid” for one-year commercial 

general insurance where non-payment of the premium 

resulted in premature termination).

Relying on this case law, one of the most recent federal 

district court cases to interpret the Statutes held that “under 

longstanding principles of California insurance law, the 

strict compliance approach governs,” citing Mackey and 

Kotlar among others. Lee, 2024 U.S. Dist. LEXIS 149997, 

at *22–25; see also Siino v. Foresters Life Ins. & Annuity 

Co., No. 20-cv-02904-JST, 2023 U.S. Dist. LEXIS 117071, 

at *15, 18–19 (N.D. Cal. July 7, 2023) (Siino II) (relying on 

Mackey and Kotlar in support of “violation-only” theory for 

declaratory relief claims without ruling on breach of 

contract). The district court below also relied in part on 

Mackey and similar cases for adopting the “violation-only” 

theory in its orders on summary judgment.

We believe these California short-term insurance cases 

have distinguishable facts that make the reasoning behind 

these rulings less persuasive in the life insurance context. 

Because life insurance policies are voluntary and long-term, 

deliberate termination by the Insured is common. And as we 

explained above, it is an industry norm that Insureds

intentionally cancel unwanted policies by not paying

premiums. If policies never lapse and remain perpetually in 

force even after non-payment simply because the Insurer did 

not send required notices, policies can accrue for years—

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18 SMALL V. ALLIANZ LIFE INSURANCE

potentially until the Insured is deceased—even if an Insured

intended to cancel the policy in the first place by declining 

to pay higher premiums. We do not think that the Statutes 

were designed to protect this class of Insureds.4

2

Next, we examine our unpublished decision in Thomas 

v. State Farm Life Insurance Co., which district courts have 

also cited to support the “violation-only” theory. It affirmed

summary judgment for a plaintiff alleging breach of contract 

for violation of the Statutes based on the “violation-only” 

theory. Thomas, 2021 U.S. App. LEXIS 30035, at *3. As 

an unpublished disposition, Thomas is not a binding

interpretation of the theory of recovery under the Statutes. 

And its truncated reasoning did not fully analyze the issues 

raised above. 

The Thomas panel concluded that “[a]n Insurer’s failure 

to comply with these statutory requirements means that the 

policy cannot lapse.” Id. Thus, because the Insurer “failed 

to comply with sections 10113.71 and 10113.72, which 

prevented the policies from lapsing,” it “breached its 

contractual obligations by failing to pay benefits to [the 

Beneficiary] under the policies after [the Insured’s] death.”

Id. at *3–4. Many district courts have relied on this language 

4 Nonetheless, Small argues that if the California legislature had intended 

a causation requirement in the Statutes, it would have included one. In 

support, Small asks that we take judicial notice of an unenacted 

amendment to the Statutes, SB 1320, that did not make it to a vote and 

was withdrawn. But an “unenacted bill” provides “little clarity,” Lara, 

25 F.4th at 1140, “because we do not know why a specific bill was not 

passed,” Herrera v. Zumiez, Inc., 953 F.3d 1063, 1075 (9th Cir. 2020). 

While we granted Small’s motion to take judicial notice of this evidence 

(ECF No. 70), we afford the evidence little weight.

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SMALL V. ALLIANZ LIFE INSURANCE 19

to support adopting the “violation-only” theory, including 

the district court below. See, e.g., Grundstrom, 2023 U.S. 

Dist. LEXIS 156972, at *3; Farley I, 2023 U.S. Dist. LEXIS 

68482, at *11–12; Farley II, 2023 U.S. Dist. LEXIS 149067, 

at *11; Larone, 2022 U.S. Dist. LEXIS 29749, at *19; Poe 

I, 2023 U.S. Dist. LEXIS 145642, at *21; Moriarity, 686 F. 

Supp. 3d at 1032. Because Thomas is non-precedential and 

did not fully analyze the issues raised above, we respectfully 

decline to adhere to it here.

3

Finally, we turn to the California Court of Appeal and 

Supreme Court McHugh cases interpreting the Statutes at 

issue, which we think suggest the California Supreme Court 

would adopt the “causation” theory. At the very least, 

nothing in the McHugh decisions causes us to conclude that 

California courts would not apply the usual requirements for 

a breach of contract claim in cases based on claimed 

violations of the Statutes.

McHugh I was an appeal from the California Superior 

Court where Beneficiaries sued a life insurance company for 

breach of contract alleging the Insurer violated the Statutes. 

McHugh I, 40 Cal. App. 5th at 1170. The Insurer denied the

Beneficiaries’ claim to pay out a death benefit because the 

policy had terminated due to nonpayment of premiums 

before the Policyholder’s death. Id. While the Insurer

argued that the Statutes did not apply to the policy because 

it was issued before the Statutes took effect in 2013, the trial 

court disagreed and ruled the Statutes did apply. Id. 

Through a special verdict framed around breach of contract 

elements, the jury found that, although the Insurer “did 

something the contract prohibited,” the plaintiffs were not 

harmed by the Insurer’s failure, and found for the Insurer. 

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20 SMALL V. ALLIANZ LIFE INSURANCE

McHugh II, 494 P.3d at 28. The Beneficiaries appealed on 

various grounds, but the Court of Appeal in McHugh I 

affirmed the judgment on other grounds: the verdict could 

not be overturned because the Statutes did not apply to 

policies issued after the Statutes became effective. McHugh 

I, 40 Cal. App. 5th at 1169–71.

Next, the California Supreme Court in McHugh II

granted review solely to resolve whether the Statutes applied 

to policies in force when the Statutes became effective in 

2013. McHugh II, 494 P.3d at 29. Reversing the Court of 

Appeal in McHugh I, the California Supreme Court found 

the Statutes do apply to policies in force as of 2013. Id. at 

46. Thus, the statutorily mandated terms are incorporated 

into the existing contracts. See id. at 27. Without addressing 

whether the jury verdict was correct, the court remanded the 

proceedings consistent with its decision that the Statutes 

applied to the policy. Id. at 45 n.10, 46.

On remand, the California Court of Appeal reversed and 

remanded for a new trial based on an inconsistent verdict in 

an unpublished decision. McHugh v. Protective Life Ins., 

2022 Cal. App. Unpub. LEXIS 6109, at *6 (Oct. 10, 2022) 

(McHugh III). Without explicitly declaring what is required 

to recover, the Court of Appeal affirmed the trial court in 

declining to instruct the jury with “the plaintiffs’ special 

instructions on ‘strict compliance,’” reasoning that it was 

correct to simply instruct based on the language of the 

Statutes (which do not contain “strict compliance” 

language). Id. at *23. The court then rejected the plaintiffs’ 

reliance on California case law like Mackey and Kotlar, 

explaining that “this is an action for breach of contract that 

must be decided on its own particular facts” and that these 

cases are “factually distinguishable from the present case 

and therefore have no applicability.” Id. at *23–24. The 

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SMALL V. ALLIANZ LIFE INSURANCE 21

court found no error in the trial court’s instruction because it 

“instructed the jury on the plaintiffs’ burden of proof to 

prevail in an action for breach of contract.” Id. at *24. 

Notably, “in addition to proving [the Insurer] breached the 

contract, plaintiffs had the burden of proving they were 

harmed by the breach.” Id. (emphasis added).

No other California appellate or Supreme Court cases 

have since weighed in on what is required for recovery for 

violations of the Statutes.

B

Now, we turn to the case before us. Because the 

California Supreme Court has not declared what is required 

to recover for violations of the Statutes, we “must predict 

how the highest state court would decide the issue using 

intermediate appellate court decisions, decisions from other 

jurisdictions, statutes, treatises, and restatements as 

guidance.” In re Kirkland, 915 F.2d 1236, 1239 (9th Cir. 

1990). Considering the case law and reasoning discussed 

above, we think the California Supreme Court would adopt 

the “causation” theory and reject the “violation-only” theory.

We think it significant that the California Supreme Court 

in McHugh II had the opportunity to rectify the formulation 

of the plaintiffs’ claim and clarify that only a violation is 

required to recover, but it did not. We also think it

significant that on remand, the California Court of Appeal in 

McHugh III proceeded under a breach of contract analysis.

The court notably affirmed the trial court in declining to 

instruct the jury on strict compliance and rejected plaintiffs’ 

reliance on Mackey and Kotlar. McHugh III, 2022 Cal. App. 

Unpub. LEXIS 6109, at *24. Then, it clearly stated that “[i]n 

addition to proving [the Insurer] breached the contract,

plaintiffs had the burden of proving they were harmed by the 

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22 SMALL V. ALLIANZ LIFE INSURANCE

breach.” Id. This statement supports the “causation” theory 

because “[i]mplicit in the element of damages is that the 

defendant’s breach caused the plaintiff’s damage.” Troyk, 

171 Cal. App. 4th at 1352 (emphasis added). And 

“[c]ausation of damages in contract cases” requires the 

“causal occurrence” between damages and the defendant’s 

breach “be at least reasonably certain.” Vu v. Cal. Com.

Club, Inc., 58 Cal. App. 4th 229, 233 (1997).

In sum, considering that (1) the Statutes contain no 

private cause of action and thus require a breach of contract 

theory for which causation is a key element; (2) McHugh I–

III suggest that California favors the “causation” theory; 

(3) there are no California Supreme Court or Court of 

Appeal cases adopting the “violation-only” theory for the 

Statutes; (4) several federal district courts have adopted the 

“causation” theory for the same reasons we do; (5) district 

courts that have adopted the “violation-only” theory 

predominantly rely on non-precedential Thomas; and 

(6) public policy favors the “causation” theory and weighs 

against the “violation-only” theory given the realities of the 

life insurance industry, we think that the California Supreme 

Court would similarly adopt a “causation” theory to recover 

for violations of the Statutes.

C

With “the elements of the underlying cause of action” in 

hand—now including causation—we can determine whether

the district court erred in certifying Small’s Subclasses. See 

Erica P. John Fund, Inc., 563 U.S. at 809. “The class action 

is an exception to the usual rule that litigation is conducted 

by and on behalf of the individual named parties only.” WalMart Stores, Inc. v. Dukes, 564 U.S. 338, 348 (2011) 

(internal quotation marks and citation omitted). To certify a 

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SMALL V. ALLIANZ LIFE INSURANCE 23

class, plaintiffs bear the burden of satisfying each of the four 

requirements of Federal Rule of Civil Procedure 23(a)—

numerosity, commonality, typicality, and adequacy—and at 

least one requirement of Rule 23(b). Olean Wholesale 

Grocery Coop., Inc., 31 F.4th at 663. 

Rule 23 is more than “a mere pleading standard; 

plaintiffs cannot plead their way to class certification 

through just allegations and assertions.” Black Lives Matter 

L.A. v. City of L.A., 113 F.4th 1249, 1258 (9th Cir. 2024)

(citing Wal-Mart, 564 U.S. at 350, 359). Instead, plaintiffs 

“must actually prove—not simply plead—that their 

proposed class satisfies each requirement of Rule 23” by a 

preponderance of the evidence. Id. (citations omitted). 

Certification is then only appropriate if the district court is 

“satisfied, after a rigorous analysis” that Rule 23 is met. 

Olean Wholesale Grocery Coop., Inc., 31 F.4th at 664 

(quoting Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 161 

(1982)); see also Black Lives Matter L.A., 113 F.4th at 1258

(“Class certification is thus not to be granted lightly.”). 

“Frequently that ‘rigorous analysis’ will entail some overlap 

with the merits of the plaintiff’s underlying claim.” WalMart, 564 U.S. at 351. “[A] district court must consider the 

merits if they overlap with the Rule 23(a) requirements.”

Ellis v. Costco Wholesale Corp., 657 F.3d 970, 981 (9th Cir. 

2011) (citing Wal-Mart, 564 U.S. at 351).

Here, Allianz challenges the district court’s certification 

of Small’s class, arguing that it lacks the commonality, 

typicality, and adequacy requirements of Rule 23(a),5 and 

that the class does not meet the requirements of Rule 

5 Allianz does not dispute numerosity, which requires the class be “so 

numerous that joinder of all members is impracticable.” Fed. R. Civ. P. 

23(a)(1).

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24 SMALL V. ALLIANZ LIFE INSURANCE

23(b)(2) or 23(b)(3). We hold that Small is an inadequate 

representative and her claim is atypical of both Subclasses.

Further, we hold the class cannot survive because, under the 

“causation” theory, neither Subclass satisfies Rule 23(b).

1

We first assess whether the requirements of 

commonality and predominance are met. JustFilm, Inc. v. 

Buono, 847 F.3d 1108, 1120 (9th Cir. 2017) (addressing 

those two requirements in tandem). Commonality mandates

there be a common question of law or fact among the class 

members “where the same evidence will suffice for each 

member to make a prima facie showing [or] the issue is 

susceptible to generalized, class-wide proof.” Lara, 25 F.4th 

at 1138 (alteration in original) (internal quotation marks and 

citation omitted). To satisfy commonality, “[e]ven a single 

[common] question” is enough. Wal-Mart, 564 U.S. at 359 

(internal quotation marks and citation omitted). 

Besides commonality, a class seeking damages—here, 

the Beneficiary Subclass—must satisfy Rule 23(b)(3), which 

requires the common question(s) “predominate over any 

questions affecting only individual members.” Fed. R. Civ. 

P. 23(b)(3). While common questions must be capable of 

class-wide adjudication, “[a]n individual question is one 

where ‘members of a proposed class will need to present 

evidence that varies from member to member.’” Lara, 25 

F.4th at 1138 (quoting Tyson Foods, Inc. v. Bouaphakeo, 577 

U.S. 442, 453 (2016)). In short, “Rule 23(a)(2) asks whether 

there are issues common to the class, and Rule 23(b)(3) asks 

whether these common questions predominate.” Abdullah 

v. U.S. Sec. Assocs., Inc., 731 F.3d 952, 957 (9th Cir. 2013). 

“Showing predominance is difficult, and it regularly 

presents the greatest obstacle to class certification.” Black 

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SMALL V. ALLIANZ LIFE INSURANCE 25

Lives Matter L.A., 113 F.4th at 1258 (internal quotation 

marks and citation omitted).

a

Examining commonality, the district court certified the 

class based on the common question of “[w]hether all class 

members were harmed by Allianz’s alleged failure to 

comply with the Statutes.” It later characterized as common

the question of “whether Allianz had a corporate policy to 

terminate life insurance policies for non-payment of 

premiums without first complying with the Statutes.” But 

the first question cannot be adjudicated on a class-wide 

basis. For the reasons discussed below, establishing that 

Allianz’s alleged conduct caused each class member an 

injury requires “present[ing] evidence that varies from 

member to member.” Tyson Foods, Inc., 577 U.S. at 453. 

The district court’s first question is not an appropriate 

question to satisfy commonality. 

But the second question—whether Allianz had a 

corporate policy to terminate life insurance policies for nonpayment of premiums without first complying with the 

Statutes—does satisfy commonality. We have held that 

whether an insurance company violated a statute giving rise 

to the action can be a common question to the class. See 

Lara, 25 F.4th at 1138 (“Whether [the Insurer’s] condition 

adjustment violates the Washington state regulations is a 

common question.”). Further, our district courts interpreting 

the Statutes in class actions “have repeatedly found that 

putative class claims concerning Insurers’ compliance with 

the Statutes’ notice provisions meet Rule 23(a)(2)’s 

commonality requirement.” Lee, 2024 U.S. Dist. LEXIS 

149997, at *8–10. And numerous district courts have so 

interpreted these Statutes. See, e.g., id.; Poe I, 2023 U.S. 

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26 SMALL V. ALLIANZ LIFE INSURANCE

Dist. LEXIS 145642, at *11; Wollam, 2024 U.S. Dist. 

LEXIS 44575, at *9; Farley I, 2023 U.S. Dist. LEXIS 68482, 

at *10; Nieves, 2023 U.S. Dist. LEXIS 53397, at *11; Siino 

I, 340 F.R.D. at 163; Bentley v. United of Omaha Life Ins. 

Co., No. CV 15-7870-DMG (AJWx), 2018 U.S. Dist. 

LEXIS 117107, at *22, 26 (C.D. Cal., May 1, 2018).

Allianz nonetheless argues that this is not a common 

question because Plaintiffs allege different provisions of the 

Statutes have been violated. But where the circumstances of 

class members “vary but retain a common core of factual or 

legal issues with the rest of the class, commonality exists.” 

Parsons, 754 F.3d at 675 (citation omitted). This is a 

common question here because it is capable of class-wide 

adjudication, and was, in fact, adjudicated at summary 

judgment. See Wal-Mart, 564 U.S. at 350 (“What matters to 

class certification is not the raising of common questions but 

rather, the capacity of a class-wide proceeding to generate 

common answers apt to drive the resolution of the 

litigation.”) internal quotation marks and citations omitted)).

Commonality is thus satisfied because case law shows

that whether a violation of the Statutes occurred is an 

appropriate common question, and the record here shows 

that this question can be adjudicated on a class-wide basis.

b

We now turn to predominance because the Beneficiary

Subclass seeking damages must show that the common 

question predominates over individualized questions as 

required by Rule 23(b)(3). Predominance “asks whether the 

common, aggregation-enabling, issues in the case are more 

prevalent or important than the non-common, aggregationdefeating, individual issues.” Tyson Foods, Inc., 577 U.S. at 

453. Because “[c]onsidering whether questions of law or 

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SMALL V. ALLIANZ LIFE INSURANCE 27

fact common to class members predominate begins, of 

course, with the elements of the underlying causes of 

action,” Erica P. John Fund, Inc., 563 U.S. at 809 (internal 

quotation marks and citation omitted), the theory of recovery 

for violations of the statutes dictates whether the class can 

be certified.

Since we reject the district court’s “violation-only” 

theory and adopt the “causation” theory, we must reconsider 

the predominance requirement in light of the latter. We hold

that, because Plaintiffs must not only establish a violation

but that the violation caused them harm, common questions 

do not predominate because causation cannot be determined 

on a class-wide basis. 

The record here is clear that determining whether 

policyholders knowingly let their policies lapse due to

nonpayment is an individualized inquiry. Allianz’s expert 

witness conducted a random sampling of 100 class member 

policies, finding at least 43 had evidence that the 

policyholder knew the policy would lapse due to

nonpayment. The expert stated that Allianz’s electronic 

policy administration system does not distinguish voluntary 

from involuntary lapses or other specific circumstances 

surrounding termination. Thus, as Allianz’s expert 

explained, determining the reason for a lapse generally 

requires an individual review of a policy file that can take 

hours. The expert explained that it took approximately 3.5 

hours to review an individual policy file to determine 

whether there was evidence that the policyholder knowingly 

let their policy lapse due to nonpayment.

It is clear to us that determining whether a policyholder 

intentionally lapsed their policy is an individual inquiry that 

cannot be determined at a class-wide level. Numerous 

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28 SMALL V. ALLIANZ LIFE INSURANCE

district courts following the “causation” theory agree. 

Holland-Hewitt v. Allstate Life Ins. Co., No. 1:20-cv-00652-

KES-SAB, 2024 U.S. Dist. LEXIS 55178, at *37, 45–46; 

Wollam, 2024 U.S. Dist. LEXIS 44575, at *13; Poe I, 2023 

U.S. Dist. LEXIS 145642, at *24; Nieves, 2023 U.S. Dist. 

LEXIS 53397, at *22–24; Steen, 2023 U.S. Dist. LEXIS 

105592, at *43. We thus hold that individual questions of 

causation and injury predominate over the common question

of whether Allianz violated the Statutes. 

Finally, Rule 23(b)(3) also requires the class action be 

“superior” to an individual action by weighing “(A) the class 

members’ interests in individually controlling the 

prosecution or defense of separate actions; (B) the extent and 

nature of any litigation concerning the controversy already 

begun by or against class members; (C) the desirability or 

undesirability of concentrating the litigation of the claims in 

the particular forum; and (D) the likely difficulties in 

managing a class action.” Fed. R. Civ. P. 23(b)(3)(A)–(D). 

These factors weigh against Small’s class action being 

superior for the same reasons that individual questions 

predominate over common ones. Further, as Allianz argues, 

class members are not barred from bringing individual 

causes of action—just as Small did—as long as they show 

not only a violation, but that the violation caused them harm.

While individual actions may not be feasible for every class 

member, that does not weigh against the fundamental 

problems discussed above with certifying the class. Thus, a 

class action is not the “superior” means to adjudicate these 

claims.

For these reasons, the “causation” theory leads to the 

conclusion that individual questions predominate over 

common ones. The predominance requirement therefore is 

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SMALL V. ALLIANZ LIFE INSURANCE 29

not satisfied, and the Beneficiary Subclass cannot be 

certified.

2

The district court erred when it certified the Living 

Insured Subclass by holding that it was entitled to class-wide 

equitable relief as provided in Rule 23(b)(2). The provision 

applies when “the party opposing the class has acted or 

refused to act on grounds that apply generally to the class, so 

that final injunctive relief or corresponding declaratory relief 

is appropriate respecting the class as a whole.” Fed. R. Civ. 

P. 23(b)(2). “These requirements are unquestionably 

satisfied when members of a putative class seek uniform 

injunctive or declaratory relief from policies or practices that 

are generally applicable to the class as a whole.” Parsons, 

754 F.3d at 688; see also Wal-Mart, 564 U.S. at 362–63.

Here, the district court found the Living Insured Subclass 

seeking to have their policies reinstated satisfied Rule 

23(b)(2) based on a two-sentence explanation. But this was 

far from the “rigorous analysis” that certification requires. 

See Wal-Mart, 564 U.S. at 351 (citations omitted). Once 

again, the problem is that Allianz presented evidence that 

many members of the class knowingly let their policies lapse 

as a means of termination. This prevents the Living Insured

Subclass from satisfying Rule 23(b)(2) for two reasons.

First, the injunctive relief of reinstating policies is not 

“appropriate” under Rule 23(b)(2). Because members of a 

class certified under Rule 23(b)(2) cannot opt-out, id. at 362, 

forced reinstatement of policies means reinstating policies 

for Insureds who intentionally cancelled and who cannot 

show that the inadvertent policy lapse caused harm. Further, 

reinstatement would mean that all members of the Subclass 

must pay back lost premiums for the policies to be reinstated, 

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30 SMALL V. ALLIANZ LIFE INSURANCE

and perhaps at much higher rates. See, e.g., Holland-Hewitt, 

2024 U.S. Dist. LEXIS 55178 at *42 (stating its living 

insured subclass “would be required to bring premiums 

current to reinstate their policies which could require these 

class members to pay thousands of dollars in back 

premiums”); Siino II, 2023 U.S. Dist. LEXIS 117071, at *22 

(granting in part plaintiff’s individual claim for declaratory 

relief and holding plaintiff “must tender back premiums to 

[the Insurer] within a reasonable time to reinstate her 

policy”). We agree with the observation that this is because 

“[a]ny other interpretation would be inconsistent with 

McHugh [II]’s finding that the Statutes were retroactive 

because they did not substantially impair the insurance 

company’s rights under the existing policy. Requiring an 

insurance company to waive premiums, potentially for 

almost a decade, would clearly impair the company’s rights 

under the policy.” Holland-Hewitt, 2024 U.S. Dist. LEXIS 

55178, at *42 n.11 (citation omitted).

Second, at summary judgment, the district court here 

ordered that Small and the Living Insured Subclass “are 

entitled to a declaration that their life insurance policies were 

improperly lapsed by Allianz because it failed to strictly 

comply with the Statutes before it lapsed those policies.” 

But declaratory relief for this Subclass is only appropriate 

“(1) when the judgment will serve a useful purpose in 

clarifying and settling the legal relations in issue, and 

(2) when it will terminate and afford relief from the 

uncertainty, insecurity, and controversy giving rise to the 

proceeding.” Guerra v. Sutton, 783 F.2d 1371, 1376 (9th 

Cir. 1986).

The district court’s declaration does not meet this 

standard. The declaration improperly adjudicates the breach 

of contract claim before Plaintiffs established causation and 

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SMALL V. ALLIANZ LIFE INSURANCE 31

damages by declaring that the policies “improperly lapsed” 

because Allianz failed to comply with the Statutes. But

without evidence of causation, we agree that “declaratory 

relief will serve no useful purpose” in resolving Plaintiffs’ 

breach of contract claim. See Holland-Hewitt, 2024 U.S. 

Dist. LEXIS 55178, at *15.

For these reasons, neither an injunction forcing specific 

performance, nor the district court’s declaration constitute

“indivisible” relief that “benefits all its members at once.”

See Wal-Mart, 564 U.S. at 362. The Living Insured Subclass 

does not meet the standard for class-wide equitable relief

under Rule 23(b)(2) and that Subclass cannot be certified.

3

Having determined neither Subclass meets the 

requirements of Rule 23(b), we also find the district court 

erred in certifying the class based on adequacy and typicality

under Rule 23(a). While commonality and the requirements 

under Rule 23(b) relate to the action itself, adequacy and 

typicality relate to the class representative—here, LaWanda 

Small. We hold that Small is not an adequate representative 

with typical questions to represent both Subclasses. 

Rule 23(a)(3) requires the class representative’s claims 

or defenses be “typical of the claims or defenses of the 

class.” Fed. R. Civ. P. 23(a)(3). “Typicality focuses on the 

class representative’s claim—but not the specific facts from 

which the claim arose—and ensures that the interest of the 

class representative aligns with the interests of the class.”

Just Film, Inc., 847 F.3d at 1116 (internal quotation marks 

and citation omitted). “Measures of typicality include 

whether other members have the same or similar injury, 

whether the action is based on conduct which is not unique 

to the named plaintiffs, and whether other class members 

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32 SMALL V. ALLIANZ LIFE INSURANCE

have been injured by the same course of conduct.” Torres v. 

Mercer Canyons, Inc., 835 F.3d 1125, 1141 (9th Cir. 2016)

(internal quotation marks and citation omitted).

Rule 23(a) also mandates the representative be able to 

“fairly and adequately protect the interests of the class.”

Fed. R. Civ. P. 23(a)(4). “The adequacy inquiry is addressed 

by answering two questions: (1) do the named plaintiffs and 

their counsel have any conflicts of interest with other class 

members and (2) will the named plaintiffs and their counsel 

prosecute the action vigorously on behalf of the class?” Kim 

v. Allison, 87 F.4th 994, 1000 (9th Cir. 2023) (internal 

quotation marks and citation omitted). If either answer is no, 

the representative is inadequate. Hesse v. Sprint Corp., 598 

F.3d 581, 589 (9th Cir. 2010).

On appeal, Allianz makes several arguments that Small 

is not an adequate representative and her questions are 

atypical.6 Allianz first argues Small is not adequate to 

represent the Living Insured Subclass because she is only a 

member of the Beneficiary Subclass and is therefore only 

eligible for damages and not equitable relief.7

6 The parties dispute whether Allianz waived adequacy. We will 

consider adequacy because it goes to the legal question of whether the 

district court abused its discretion in finding Rules 23’s adequacy 

requirement satisfied. See Yokoyama v. Midland Nat’l Life Ins. Co., 594 

F.3d 1087, 1091 (9th Cir. 2010) (“[T]his court has oft repeated that an 

error of law [in certifying a class] is an abuse of discretion.”). 

Regardless, we do not think the issue was waived.

7 Small disputes that she is a member of only the Beneficiary Subclass, 

arguing that she was insured on her family policy as an “other Insured”

and was therefore a co–owner with her now deceased husband. But the 

policy application lists Small’s husband as the sole owner and provides 

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SMALL V. ALLIANZ LIFE INSURANCE 33

We agree that this argument defeats adequacy as to the 

Living Insured Subclass. Numerous district courts 

interpreting these Statutes and considering this same 

argument have found a representative of only one Subclass

(whether Living Insured or Beneficiary) cannot adequately 

represent the Subclass to which they do not belong. See, e.g., 

Lee, 2024 U.S. Dist. LEXIS 149997, at *35 (holding 

representatives of living insured subclass “are not the correct 

parties to represent the proposed damages class” and that “if 

[p]laintiffs wish to continue to seek certification of a 

damages class” they must “move to add a new class 

representative who can adequately represent” that class);

Pitt, 2022 U.S. Dist. LEXIS 233896, at *13 (plaintiff was 

not typical because she was a beneficiary seeking damages 

and 97% of the class were living insureds seeking 

reinstatement of their policies); Holland-Hewitt, 2024 U.S. 

Dist. LEXIS 55178, at *41 (finding no adequacy because

“[p]laintiff is seeking damages in this action, and ninetyeight percent of the putative class will be seeking declaratory 

and injunctive relief to which [p]laintiff is not entitled”). We 

agree that Small cannot adequately represent a Subclass to 

which she does not belong. See Amchem Prod., Inc. v. 

Windsor, 521 U.S. 591 625–26 (1997). Nor does she 

“possess the same interest” or “suffer the same injury” as the 

Living Insured Subclass. Id. 

Allianz argues Small lacks typicality because her 

questions are atypical of members whose policies were 

that the “owner is solely entitled to exercise all policy rights.” The fact 

that Plaintiff’s life was insured with term coverage under the policy does 

not confer ownership rights on her. Further, once her husband died, that 

policy terminated. Thus, she is no longer an Insured on her own policy, 

and, as the district court recognized, she is not a member of the Living 

Insured Subclass.

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34 SMALL V. ALLIANZ LIFE INSURANCE

intentionally terminated because Small alleges hers lapsed 

inadvertently. We agree that adopting the “causation”

theory leads to the conclusion that Small, who alleges her 

policy lapsed inadvertently, does not have typical questions 

of members whose policies lapsed intentionally because they 

do not “have the same or similar injury,” the action is “based 

on conduct which is [] unique to the named plaintiff[],” and 

“other class members have [not] been injured by the same 

course of conduct.” See Torres, 835 F.3d at 1141 (internal 

quotation marks and citation omitted). Numerous district 

courts adopting the “causation” theory also agree. See, e.g.,

Poe I, 2023 U.S. Dist. LEXIS 145642, at *17; Wollam, 2024 

U.S. Dist. LEXIS 44575, at *16–17; Pitt, 2022 U.S. Dist. 

LEXIS 233896, at *11; Steen, 2023 U.S. Dist. LEXIS 

105592, at *14; Nieves, 2023 U.S. Dist. LEXIS 53397, at 

*13.

For these reasons, we find that Small is not an adequate 

representative with typical questions to represent both 

Subclasses. 

V

We conclude the district court erred in granting class 

certification because Small has not shown that either 

Subclass meets the requirements of Rule 23(a) and (b). 

Because we vacate the summary judgment orders, whether 

the district court violated the one-way intervention 

prohibition is moot. The district court’s order certifying the 

class is REVERSED. The orders on summary judgment are 

VACATED and the matter is REMANDED for further 

proceedings.

Case: 23-55821, 12/10/2024, ID: 12916718, DktEntry: 72-1, Page 34 of 34