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Yokoyama v. Midland National Life Insurance Co.

February 8, 2010

GARY YOKOYAMA, ATTORNEY IN FACT FOR LEATRICE C. YOKOYAMA, INDIVIDUALLY AND ON BEHALF OF A CLASS OF SIMILARLY SITUATED PERSONS, CATHERINE THORSON; EDNA YAMANE, PLAINTIFFS-APPELLANTS,
v.
MIDLAND NATIONAL LIFE INSURANCE COMPANY, DEFENDANT-APPELLEE.



Appeal from the United States District Court for the District of Hawaii, J. Michael Seabright, District Judge, Presiding, D.C. No. CV-05-00303-JMS.

The opinion of the court was delivered by: Schroeder, Circuit Judge

FOR PUBLICATION

ORDER AND OPINION

Argued and Submitted November 20, 2008 -- Honolulu, Hawaii.

Before: Mary M. Schroeder, Richard A. Paez and N. Randy Smith, Circuit Judges.

ORDER

The opinion filed on August 28, 2009, is hereby withdrawn. The petition for rehearing is denied. An opinion is being filed concurrently with this order.

OPINION

Defendant Midland National Life Insurance Company marketed annuities to senior citizens in Hawaii. At issue in this case are Midland annuities that were sold by independent brokers between 2001 and 2005. Plaintiff Gary Yokoyama purchased one of those annuities through an independent broker and filed this class action claiming that Midland marketed the annuities through deceptive practices, in violation of Hawaii's Deceptive Practices Act. See Haw. Rev. Stat. § 480-2. The complaint specifically targets representations made in Midland's brochures, which promoted the annuities as appropriate for seniors. This action has been exempted from multi-district litigation against Midland pending in the Central District of California, because this action has been narrowly tailored to rely only on Hawaii law.

The district court denied class certification, holding that in order to succeed under the Hawaii Act, each plaintiff would have to show subjective, individualized reliance on deceptive practices within the circumstances of each plaintiff's purchase of the annuity. See Yokoyama v. Midland Nat'l Life Ins. Co., 243 F.R.D. 400 (D. Haw. 2007). Principally for that reason, the district court held that the plaintiffs could not satisfy Federal Rule of Civil Procedure 23(b)(3)'s requirements that common issues predominate over individual issues and that a class action is a superior method of adjudication. The dispositive issue is thus an issue of Hawaii state law, namely whether Hawaii's Deceptive Practices Act requires a showing of individualized reliance.

The Hawaii Supreme Court has considered the issue of whether the statute requires actual, i.e., subjective reliance. It has said that the dispositive issue is whether the allegedly deceptive practice is "likely to mislead consumers acting reasonably under the circumstances." Courbat v. Dahana Ranch, Inc., 141 P.3d 427, 435 (Haw. 2006). "[A]ctual deception need not be shown, the capacity to deceive is sufficient." State of Bronster v. U.S. Steel Corp., 919 P.2d 294, 313 (Haw. 1996) (citation omitted). This is an objective test, and therefore actual reliance need not be established. Accordingly, there is no reason to look at the circumstances of each individual purchase in this case, because the allegations of the complaint are narrowly focused on allegedly deceptive provisions of Midland's own marketing brochures, and the fact-finder need only determine whether those brochures were capable of misleading a reasonable consumer.

In the event the plaintiffs succeed under this standard in establishing liability under the Hawaii Act, there will then, in all likelihood, be individualized issues of damages. The potential existence of individualized damage assessments, however, does not detract from the action's suitability for class certification. Our court long ago observed that "[t]he amount of damages is invariably an individual question and does not defeat class action treatment." Blackie v. Barrack, 524 F.2d 891, 905 (9th Cir. 1975) (citations omitted); accord Smilow v. SW. Bell Mobile Sys, Inc., 323 F.3d 32, 40 (1st Cir. 2003). Because there are no individualized issues of subjective reliance under Hawaii law, we hold that the district court erred when it denied class certification.

BACKGROUND

Three consumer senior citizens, all residents of Hawaii, initiated this action. Each purchased Midland's annuities from an independent broker. Each signed Midland's sales and disclosure forms. Midland obligates its brokers, with respect to each sale, to provide certain documentation to consumers, to obtain consumers' signatures on various forms, and to certify that nothing was said that is inconsistent with Midland's ...


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