N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT
JOYC E WALKER ; KIM B R UC E HOW LETT; M UR IEL SPOONER , on be ha lf of the m se lve s a

nd a ll othe rs sim ila rly situa te d, Pla i ntiffs-Appe lla

nts,
v. LIFE INSUR

ANC E C OM PANY OF THE SOUTHW EST, a

Te xa s c o rporat ion, De fe nda n t-Appe l le e . No. 15-55809 D.C . No. 2:10-c v-09198-JVS-R

NB
M EM O R ANDUM *

Appe a l from

the Unite d

Stat e s Distric t C ourt for the C e ntra l Distric t of C a lifornia Jam e s V. Se lna , Distric t

Judge , Pre siding Argue d a nd Subm itte d Fe brua

ry 7, 2017 Pa sa de n a , C a l ifornia B e fore : SC HR OEDER , PREGER SON, a nd M UR GUIA, C irc uit Judge s. This is a n a ppe a l from a judgm e nt a ga i nst the Pla intiffs se e king to rep re se nt
a c la ss of m ore tha

n 40,000 purc ha se rs of inde xe d unive rsa l life insura nc e polic i e s 

# FIL ED MAR 03 2017 M OLLY C. DW Y ER, CLERK U
. S
. CO URT O F APPEALS

* This disposition is not a ppropria te for public at ion a

nd is not pre c e de nt e xc e pt a s provide d

by Ninth C irc uit R

ule 36-3.issue d by

the De fe nda

nt Life Insura

n c e C om p any of the Southwe st (“ LSW ” ). Pla i ntiffs a lle ge d m

ultiplec la im s of fra

ud a s we l l a s m isre p re se ntat ion a nd viola tions of C a l ifornia

sta tute s. The c o urt rule d a s a m atte r of la

w tha t Pla intiffs
c ould not pre dic ate C a lifornia Unfa ir C om

pe t ition La

w (“ UC L” ) c l a im s on C a lifornia ’ s Illustra

tion sta tute , § 10509.950, et se q., be c a use the sta

tute la c ks a priva te c a use of a c tion. Thedistric t judge trie d the c om m on la w c la im s to a

jury , whic h re sulte d in a de fe nse ve rdic t, a n d trie d the UC L c la im s to thec ourt, re sulting in a ruling in fa

vor of LSW
. W e c onc lude tha t the distric t c ourt e rre d in its inte rpre tation of C a lifornia la w with re spe c t to theUC L c l a im s ba se d on viola tions of the Illustra

tion sta tute , but a ffirm

with re spe c t to a ll othe r issue s ra i se d on
a ppe a l. 1. It is true tha

t the Illustra

tion sta tute la c k s a

n e xpre ss priva

te c a use of
a c tion, but in C a lifornia , UC L c la im s are not ba rre d in thec irc um sta

nc e s be fore us. The C a lifornia Supre m e C ourt ha s he ld tha t priva te UC L c la im s a

re ba rre d only whe n the unde rly ing sta

tute e ithe r a c tua lly ba

rs priva te rights of a c tion or provide s a “ sa fe ha rbor” tha t re nde rs the a lle ge d c onduc t la wful. C e l-Te c h C ommc ’ns, Inc
. v . Los Ange le

s C e llular Te l. C

o , 973 P.2d 527, 542 (C a l. 1999); se e also Rose v . Bank of Am., N

.A. , 304 P.3d 181, 186 (C a l. 2013) (holding tha t e ve n the a

b olition of a priva te right of a c t ion in a

n unde rly ing sta

tute “ doe s not a

m ount to a

ba r
2a ga inst UC L c la i m s” pre m ise d on tha t sta tute ). The Illustra

tion sta tute c onta ins no
sa fe ha rbor, nor doe s it c onta i n a ny ba r to a ll priva

te rights of a c tion. Furthe r, the Illustra tion sta tute ’ s re fe re nc e to C a lifornia Insura nc e C ode § 790.06 is not suffic i e nt to de m onstra

te tha t the C a lifornia

le gisla ture inte nde d to ba

r a priva te right of a c tion. Ac c ordingly , the distric t c ourt’ s judgm e nt on those c la im s m ust be
re ve rse d. 2. Pla intiffs a lso brought a num be r of “ ba i t a

nd switc h” c l a im s on the ba sis of diffe re nc e s be twe e n the illustra tions a n d the a c t ua l insura nc e polic ie s. Afte r the be nc h tria l , the distric t c ourt rule d tha t the illustra

tions we re ne ithe r de c e ptive nor unfa ir in dep ic ting polic y c ha rge s, inte re st c a lc ulation m e thods or,
re duc t ion of a dm i nistra

tive c h a rge s. Although the

e vide nc e showe d the pre sa le illustra tions did not inc lude inform ation a bout thepolic y c ha

rge s and inte re st
c a lc ulat ion m e thods, it al so showe d tha t this inform at ion wa s provide d in the polic ie s the m se lve s. Furthe r, whe n Pla intiffs re c e i ve d the polic ie s the y we re provide d with a te n-da

y gra c e pe riod a llowing them to c anc e l the polic y

for any re a s on. The re c o rd furthe r re fle c ts tha t the re we re individual pre se ntations to e a c h of the Pla intiffs in which c ha rge s we re disc u sse d. The e vide nc e supports the distric t c o urt’ s finding tha t the illustra

tions of thepolic y

c ha rge s a nd inte re st rate s we re not unfa ir or de c e ptive
. 3W ith re spe c t to a dm inistra tive c ha rge s, Pla intiffs foc us on the illustra tions’ de pic tion of them onthly

c ha rge be ing re d

uc e d or disa

ppe aring a fte r te n y e ars. Although LSW

m ay not ha ve m a de any

e xpre ss disc la im e r or gua rante e of the
c ha rge s’ re duc tion or disa

ppe a ranc e , the re is no indic ation tha t this de pic tion wa s a

“ substa n tia l fa c tor” that influe nc e d the Pla intiffs’ de c ision to purc h a s e the i r polic ie s. Se e In re10 Tobac c o II C a se s , 207 P.3d 20, 39 (C a l . 2009). The distric t c ourt’ s c la ss de c e rtific ation orde r with re spe c t to theba it a nd switc h c la im s m

ust a l so be a ffirm e d . This is be c a u se the c la im s ha

ve no m e rit. Any c la im e d ina c c ura c y

in the distric t c o urt’ s ana ly sis is im m ate ria l. 3. Pla intiffs a lso brought a num be r of c la im s in re lation to alle ge d de fe c ts in theillustra

tions’ tre atm e nt of the e ffe c ts of stoc k m arke t vola t ility and
e xpe c te d tax be ne fits. Pla intiffs fa i le d to show tha t the illustra

tions we re de fe c tive in re ga rd to the pote ntia l for la

p se a s a re sult of m a

rke t vola tility , e spe c ia lly
c onside ring the illustra

tions’ c le ar disc la im e rs tha t Pla intiffs should not e

xpe c t
c onsiste n t m arke t pe rform an c e . Furthe r, the distric t c ourt did not a buse its disc re tion in e xc luding thre e pie c e s of e v ide nc e Pla intiffs’ proffe re d in support of the s e c la im s. Pla intiffs a lso a

rgue tha t LSW viola te d the UC L by fa iling to disc l ose the
re sults of its “ stoc ha s tic ” sim u lations (a .k.a . M onte C arlo sim ulations),
4m athe m atic a l a na ly se s use d to pre dic t future polic y pe rform anc e suc h a s the like lihood of la

pse . The distric t c ourt m a y we ll ha ve be e n inc orre c t in holding tha t the Illustra

tion sta tute a bsolute ly ba rs insure rs from

disc losing stoc ha stic sim ulation re sults. Thesta

tute a ppe ars to ba

r only illustra

tions lim ite d to a b ove ave ra ge de pic tions a

nd doe s not a

ppe ar to ba

r the de pic tions of a

ve ra g e pe rform a nc e that inc orporat e a

bove - and be low-a

ve ra ge dat a

points, a s portra

y e d in stoc ha s tic sim

ulations. The c ritic a l point is, howe ve r, tha t e ve n though LSW
c ould ha v e shown suc h sim

ulations in its illustra

tions, it wa s not re quire d to do so,
and he nc e the re wa s no viola t ion of theUC L in LSW ’ s c hoic e not to show such sim ulations. W e the re fore a ffirm

the distric t c ourt’ s judgm e nt on a ll c la im s othe r tha n the UC L c la i m s pre m ise d on the Illustra tion sta tute . As to those

c la im s, we re ve rse the judgm e nt a

nd re m a nd for furthe r proc e e dings, inc luding c onside ration of whe the r any c la ss a c tion m ay

be m a inta ine d with re s pe c t to thosec la i m s. AFFIRM E D in pa

rt, RE V E RSE D in pa

rt, a nd RE M ANDE D . Pla intiffs’
re que s t for judic ia l notic e is G RANT E D . Ea c h pa rty is to be ar its own c osts.

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