Prewitt v. Gerber Life Insurance Company
MEMORANDUM OPINION & ORDER 27 MOTION to Dismiss for failure to state a claim by Gerber Life Insurance Company : the Court GRANTS DE 27. The Amended Complaint is dismissed, in full, with prejudice. The Court will issue a separate Judgment. Signed by Judge Robert E. Wier on 2/17/21.(SYD)cc: COR
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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
GERBER LIFE INSURANCE COMPANY,
OPINION & ORDER
*** *** *** ***
The Court weighs alleged violations of a Kentucky insurance statute and fraud with respect
to children’s whole life insurance policies. Plaintiff Beulah Prewitt purchased, through the years,
three children’s whole life insurance policies from Defendant Gerber Life Insurance Company
(Gerber Life). Prewitt, targeting the policies, now seeks to hold Gerber Life liable for violating
Kentucky’s fair-advertising insurance statutes (by way of Kentucky’s negligence per se statute)
and for committing common-law fraud in the inducement. Defendant has moved to dismiss the
Amended Complaint in its entirety. DE 27. Prewitt responded and Defendant replied. DE 32
(Response); DE 42 (Reply). Defendant requests oral argument. DE 27 at 1. The Court DENIES
the hearing request and considers the motion fully briefed and ripe for review. For the reasons
discussed below, Prewitt’s Amended Complaint, among other deficiencies, fails to properly state
an actionable claim, necessitating dismissal. The Court thus GRANTS DE 27.
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In 1967, Gerber Products Company, a company not party to this suit, began selling life
insurance products under the name Gerber Life Insurance Company. DE 23 at ¶ 8. In September
2018, Gerber Products’ parent company sold Gerber Life to Western & Southern Financial Group,
also not party to this suit. Id. Gerber Products licenses its trademark to Gerber Life.2 Id.
Gerber Life sells a variety of financial products. Id. at ¶ 9. One such product is the Gerber
Life Grow-Up Plan, which the company markets as an opportunity for adults of young children to
provide a “head start” to their financial well-being with policies that grow cash value over time.
Id. at ¶ 10. As the Amended Complaint describes, the policy is “not a savings plan; it is actually a
life insurance policy.” Id. at ¶ 11.
Sometime before February 2007,3 Prewitt saw advertising for a Gerber Life product. In
February 2007, she applied for whole life insurance for one of her grandchildren. Id. at ¶ 41. She
bought additional policies for her other grandchildren in 2013 and 2016. Id. Each policy was a
Grow-Up Plan offering. Prewitt points to three advertisements, all dated in 2019, that she claims
are “like” the advertisements that induced her to purchase the particular Gerber Life products. Id.
at ¶ 30, 31, 36, 42. She also generally references Facebook messages and mailings from Gerber,
which contributed in some way to her decisions. Id. at 42-43.
The Court, as it must in the Rule 12 context, largely takes these allegations from the Amended
Complaint. See Bower v. Federal Express Corp., 96 F.3d 200, 203 (6th Cir. 1996) (“We must treat
as true all of the well-pleaded allegations of the complaint.” (emphasis added)); see also DE 23
As the Amended Complaint states “this Complaint does not concern the Gerber Products
Company’s iconic baby food, whose quality Plaintiff has no reason to doubt.” DE 23 at ¶ 1.
Prewitt does not allege when she first became aware of Gerber Life’s products, nor does she
allege when she first (in fact ever, specifically) saw a Gerber Life advertisement. The Amended
Complaint is bereft of most temporal details.
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Prewitt filed suit against Gerber Life in Laurel County Circuit Court on January 6, 2020.
DE 1-1. Gerber Life removed the complaint on February 3, 2020. DE 1. Prewitt filed an Amended
Complaint on March 11, 2020. DE 23. Prewitt’s Amended Complaint alleges, for herself and the
putative class, two claims: a statutory claim under KRS 446.070 for violation of Kentucky’s unfair
or deceptive insurance practices statutes and a common law claim for fraud in the inducement. Id.
She centers these claims on advertisements for two Gerber Life Insurance products: the “Gerber
Life Grow-Up Plan” and the “Gerber Life College Plan.” Id. at ¶ 2.4 Gerber Life moves, pursuant
to Rule 12(b)(6), to dismiss the complaint in its entirety. DE 27.
The Court, noting that the pleading at issue is Prewitt’s second go at a complaint, stakes
out some core observations about the record and the chronology:
First, the Court will assess the precise language presented. The post-purchase e-mail ads
Prewitt tenders, all from 2019, are quoted or duplicated in ¶¶ 30, 31, and 36. Those ads
unequivocally and repeatedly describe the product advertised as “whole life insurance,” which
includes as a feature that it “builds cash value.” The ads use the metaphor “nest egg” and tout other
components of the policy—the unvarying premium, the permanency of coverage, and an automatic
doubling of coverage when the child reaches maturity. The Facebook and mailing content alleges
similar statements, regarding the cash value feature. The latter two media are so non-specific and
general, as to circumstances, timing, and content, that they make a full analysis nearly impossible.
Second, Plaintiff, the case pursuer, asks the Court to navigate a challenging chronology.
Prewitt made purchases in 2007, 2013, and 2016. DE 23 at ¶ 41. She provides nary a date relating
to the Gerber advertisements and any purchasing decision. Thus, Plaintiff forwards 2019 ad
content as exemplifying (“like”) what she saw pre-purchase. As vague as that idea is, Prewitt
Plaintiff is not a policyholder under the Gerber Life College Plan.
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purchased not once but thrice. She bought and held policy 1; she then, years later, bought and held
policy 2, then, more years hence, bought policy 3. Is she claiming that one ad cluster from prior to
2007 led to all three decisions to buy? Is she claiming that she saw and relied on homogeneous ads
sprinkled over the full period? The Amended Complaint does not reveal, with any precision, what
ad at what point prompted what policy choice. Further, Prewitt had policy 1 before buying 2 and
held 1 and 2 before buying 3. The Court, nay logic, cannot ignore Prewitt’s fund of information,
evident over time, in judging the Amended Complaint.
a. Rule 12(b)(6)
To survive a motion to dismiss, “a complaint must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 129 S.
Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1974 (2007)). “A
claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the misconduct alleged.” Id. However, “a
formulaic recitation of a cause of action’s elements will not do.” Twombly, 127 S. Ct. at 1965.
Courts “must construe the complaint in the light most favorable to the plaintiff and accept all
allegations as true.” Keys v. Humana, Inc., 684 F.3d 605, 608 (6th Cir. 2012). Yet, courts need not
accept “legal conclusion[s] couched as  factual allegation[s].” Papasan v. Allain, 106 S. Ct. 2932,
Generally, “matters outside of the pleadings are not to be considered by a court in ruling
on a . . . motion to dismiss.” Weiner v. Klais & Co., 108 F.3d 86, 88 (6th Cir. 1997). However, the
Court may “consider other materials that are integral to the complaint, are public records, or are
otherwise appropriate for the taking of judicial notice.” Ashland, Inc. v. Oppenheimer & Co., 648
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F.3d 461, 467 (6th Cir. 2011) (internal quotation marks and citation omitted). The Court may also
consider “exhibits attached to defendant’s motion to dismiss so long as they are referred to in the
Complaint and are central to the claims contained therein.” Bassett v. National Collegiate Athletic
Ass’n, 528 F.3d 426, 430 (6th Cir. 2008) (citing Amini v. Oberlin Coll., 259 F.3d 493, 502 (6th
Hinging on Rule 8’s minimal standards, Twombly and Iqbal require a plaintiff to “plead
facts sufficient to show that her claim has substantive plausibility.” Johnson v. City of Shelby, 135
S. Ct. 346, 347 (2014). Where plaintiffs state “simply, concisely, and directly events that . . .
entitle them to damages,” the rules require “no more to stave off threshold dismissal for want of
an adequate statement.” Id.; El-Hallani v. Huntington Nat. Bank, 623 F. App’x 730, 739 (6th Cir.
2015) (“Although Twombly and Iqbal have raised the bar for pleading, it is still low.).
a. Preliminary Matters
Defendant argues three preliminary matters that attempt to narrow the field: 1) many of
Prewitt’s claims are barred by the requisite statute of limitations, 2) Prewitt does not have standing
to challenge or make a claim regarding the College Plan, and 3) Prewitt’s statutory claim fails for
lack of a recognized private right of action. The Court examines each threshold argument, in turn.
i. Statute of Limitations
To determine whether any claims are time barred, the Court first asks when the claims
accrued. Per KRS 413.130, a fraud claim does not accrue “until the discovery of the fraud or
mistake.” See Bowden v. City of Franklin, Kentucky, 13 F. App’x 266, 274 (6th Cir. 2001) (“[T]he
Court must look to state law to determine when the claim for relief accrues when that claim is
before a federal court on diversity or supplemental jurisdiction.”). More specifically, “a cause of
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action accrues, and the limitations period begins to run, when ‘the plaintiff discovers or in the
exercise of reasonable diligence should have discovered not only that he has been injured but also
that his injury may have been caused by the defendant’s conduct.’” Cantrell v. Ashland Oil, Inc.,
Nos. 2006-SC-000763-DG, 2007-SC000818-DG, 2010 WL 1006391, at *10 (Ky. Mar. 18, 2010)
(quoting Louisville Tr. Co. v. Johns-Manville Prods. Corp., 580 S.W.2d 497, 501 (Ky. 1979)); see
also Daugherty v. American Express Co., 2010 WL 4683758, *7 (W.D. Ky. Nov. 12, 2010)
(noting, in a Kentucky misrepresentation of insurance claim, that discovery of injury should have
occurred “at the time [plaintiff] received the Plan documents which contained the definitions and
terms of the policy”).
Turning to particular limitations, three are applicable. First, the limitation for a claim under
KRS 446.070 is five years. KRS 413.120(2) (“The following actions shall be commenced within
five (5) years after the cause of action accrued: . . . An action upon a liability created by statute,
when no other time is fixed by the statute creating the liability.”). Second, the limitation for a
Kentucky fraud claim is five years. KRS 413.120(11) (“An action for relief or damages on the
ground of fraud or mistake.”). Finally, the statute of repose for a Kentucky fraud claim is ten years.
KRS 413.130(3) (“In an action for relief or damages for fraud or mistake . . . the action shall be
commenced within ten (10) years after the time of making the contract or the perpetration of the
fraud”). Defendant claims that the statute of repose bars any claim on the 2007 policy, and that the
statute of limitations blocks any claim on the 2013 policy. DE 27 at 19–20. Plaintiff filed her suit
in Laurel Circuit Court on January 6, 2019. See DE 1-1. Plaintiff essentially concedes that
Defendant’s postural description “is generally true,” but argues that Defendant’s continued
fraudulent advertisements constitute equitable tolling or, curiously, equitable estoppel. DE 32 at
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The Court looks to the Amended Complaint to resolve the dispute. Prewitt “purchased the
first policy in March 2007[,]” “bought a second policy in September 2013[,]” and “[i]n December
2016, she bought a third policy[.]” DE 23 at ¶ 41. The statute of repose would clearly apply to all
actions taken by Gerber before January 6, 2009. For the remaining claims, Prewitt does not allege
precisely when she received the policies.5 Because the Amended Complaint alleges no facts that
would place her claims outside the statute of limitations and because none of the documents
definitively resolves when Prewitt received the policies, ruling on the statute of limitations is
premature in the 12(b)(6) context. See Pike Cty. Fiscal Court v. RCC Big Shoal, LLC, No. 7:20CV-75-REW, 2020 WL 6937444, at *4 (E.D. Ky. Nov. 24, 2020) (“Nothing in the pleading hints
at discovery of any alleged misrepresentations more than five years before Plaintiffs filed suit.”).
The policy 1 claim stands barred. The same fate is likely as to policy 2. 6 The claims on the third
policy are timely. Because of the procedural posture, the Court does not dismiss the full Amended
Complaint (insofar as it addresses policy 2 and/or 3) on the basis of limitations.
Gerber Life argues that Prewitt does not have standing to pursue any claims against it
founded on the Gerber Life College Plan. DE 27 at 13, 18. Specifically, “Prewitt’s statutory and
common law claims fail because she has not alleged she suffered any injury stemming from Gerber
She does state, in a separate context, that she received the policies “after she signed them.” DE
32 at 22 (emphasis in original). She does not, however, provide a date certain in this context either.
She does not contest that she did timely receive each policy; the Court presumes receipt a
reasonable mailing interval after issuance.
Certainly, Plaintiff would have the burden on an avoidance theory like equitable tolling. See
Moorman v. Commonwealth, 484 S.W.3d 751, 757 (Ky. 2016) (noting that “a litigant seeking
equitable tolling bears the burden of establishing” the elements). Simply relying on the facts of the
claim is inadequate to demonstrate the elements, particularly where Prewitt did receive each
policy, but the Court does not resolve the timeliness on policy 2. Given that the policy 3 basis
survives the limitations test, the Court elects against running the argument to the ground in this
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Life’s alleged misrepresentations regarding the Gerber Life College Plan.” Id. at 18. Prewitt claims
that her allegations are sufficient to sustain the claim on the Gerber Life College Plan because it is
too early to determine whether she is an adequate representative for the putative class. DE 32 at
26. Prewitt claims that, even if it were not too early, she should still be allowed to maintain the
claim on behalf of the putative class because “the same misconduct . . . applies to both” plans. Id.
To satisfy the standing requirements of Article III of the Constitution, plaintiffs must meet
three requirements. First, plaintiffs must demonstrate that they have suffered “an ‘injury in fact’
that is both concrete and particularized and actual or imminent.” Friends of the Earth, Inc. v.
Laidlaw Envtl. Servs. (TOC), Inc., 120 S. Ct. 693, 704 (2000) (citing Lujan v. Defenders of
Wildlife, 112 S. Ct. 2130, 2136 (1992)). Second, the injury must be “fairly traceable to the
challenged action of the defendant[.]” Id. Finally, plaintiffs must show that “it is likely, as opposed
to merely speculative, that the injury will be redressed by a favorable decision.” Id.
“The Article III standing requirements apply equally to class actions. The class
representative must allege an individual, personal injury in order to seek relief on behalf of himself
or any other member of the class.” Sutton v. St. Jude Medical S.C., Inc., 419 F.3d 568, 570 (6th
Cir. 2005) (citing O’Shea v. Littleton, 94 S. Ct. 669, 675 (1974)). “That a suit may be a class action
. . . adds nothing to the question of standing, for even named plaintiffs who represent a class ‘must
allege and show that they personally have been injured, not that injury has been suffered by other,
unidentified members of the class to which they belong and which they purport to represent.’”
Simon v. Eastern Ky. Welfare Rts. Org., 96 S. Ct. 1917, 1925 n.20 (1976) (emphasis added)
(quoting Warth v. Seldin, 95 S. Ct. 2197, 2207 (1975) (emphasis added)). Prewitt’s claims
targeting the Gerber Life College Plan do not survive the Rule 12 hurdle because she makes no
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allegation that she even purchased, let alone suffered a harm based upon, that product. In her haste
to plate a class entree sampling both plans, Prewitt has only alleged one flavor of actual injury.
Nor is the conduct alleged the same. The plans are different, as is the cited marketing
pertaining to the plans. Plaintiff is a stranger to the College Plan; she relied on no advertising,
made no decision to subscribe, and has utterly no harm from any alleged relevant action by Gerber
Life. She has no more basis to make the claim than a random person on the street. Although the
Amended Complaint suggests a personal stake, its factual allegations fail to state a claim under the
College Plan. The Court agrees with Gerber Life and thus dismisses that part of the Amended
iii. Private Cause of Action
Finally, Defendant denies the existence of a private right of action under Kentucky’s KRS
446.070 rubric. DE 27 at 20–22. The Court agrees with Prewitt: Per the cases, KRS 446.070
provides a private remedy for a violation of KRS 304.12-010 and KRS 304.12-020. See State Farm
Mut. Auto. Ins. Co. v. Reeder, 763 S.W.2d 116, 117 (Ky. 1988) (holding that the Kentucky
insurance statutes do not preclude a private right of action under KRS 446.070); Int’l Res., Inc. v.
New York Life Ins. Co., 950 F.2d 294, 300 (6th Cir. 1991) (noting that, in analyzing whether ERISA
supersedes KRS 446.070, “[t]he remedy for violation of [KRS § 304.12-010, 020] is created by
KRS § 446.070”); Cook v. State Farm Mut. Auto. Ins. Co., No. 2002-CA-000801-MR, 2004 WL
2011375, at *6 (Ky. Ct. App. Sept 10, 2004) (holding that, despite KRS 304.12-010’s status as “an
introductory section to Subtitle 12 of the Insurance Code,” plaintiff regardless had a proper cause
of action under KRS 304.12-020 because “[t]he remedy for violation of KRS 304.12-020 is created
by KRS 446.070”); Helton v. Am. Gen. Life Ins. Co., 946 F.Supp.2d 695, 703–04 (W.D. Ky. 2013)
(analyzing a KRS 304.12-020 claim under KRS 446.070 through the lens of negligence per se).
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Gerber Life demurs by criticizing the cases, but on this matter of Kentucky law, validated by the
Sixth Circuit, this Court will toe the established line.
With these preliminary matters resolved, the Court turns to both Amended Complaint
claims and examines the advertisements related to the Gerber Life Grow-Up Plan.
b. Claim 1 – KRS 446.070
The parties disagree about the standards to be applied to Claim 1. Defendant argues that it
should be evaluated part and parcel with Claim 2 and is simply a statutory claim for fraud. See DE
27 at 8. Prewitt argues that the claim is a “species of negligence” and should not be held to the
same exacting standards, specifically the particularity requirement of Rule 9(b) See DE 32 at 6–8.
KRS 446.070 is simply the codification of a negligence per se claim. Helton, 946 F.
Supp.2d at 704. Essentially, KRS 446.070 “is merely a negligence claim with a statutory standard
of care substituted for the common law standard of care.” Real Est. Mktg., Inc. v. Franz, 885
S.W.2d 921, 926-27 (Ky. 1994)). Thus, the elements needed to satisfy Claim 1 are duty (created
and defined by KRS 304.12-010 and KRS 304.12-020), breach (by doing one of the acts described
in KRS 304.12-010 and KRS 304.12-020), causation, and damages. The remedy, per the statute,
extends in this way: “A person injured by the violation of any statute may recover from the
offender such damages as he sustained by reason of the violation[.]” KRS 446.070.
Where the parties diverge is on the effect of the type of the negligence claim in the 12(b)(6)
context. Defendant argues that because the statutory standard of care is one that “sounds in fraud,”
then the pleading must meet the rigorous gating of Rule 9(b).7 See DE 42 at 2–3. Prewitt disagrees,
stating that she “need only show that the advertisements be untrue, deceptive or misleading in fact,
not that they are necessarily fraudulent.” DE 32 at 7. Certainly, Republic Bank & Tr. Co. v. Bear
Described infra Part III.c.
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Stearns & Co., 683 F.3d 239, 253 (6th Cir. 2012) indicates that the Rule 9(b) sweep can extend
beyond titular fraud to actions sounding in or founded on fraudulent or duplicitous conduct. Per
that case, Kentucky law (which controls) would bring within the purposes of Rule 9(b) an action
resting on or requiring an “allegation of duplicity.” Id. at 248. In Republic Bank, the analog was
negligent misrepresentation. The Court sees little light between that concept, with only a
negligence mens rea, and the “untrue, deceptive, or misleading” modifiers imported via KRS
446.070 and 304.12-020(4).
Nevertheless, the Court need not resolve this pleading standard feud because, as described
below, even under a more relaxed standard, Plaintiff has failed to plausibly allege an “untrue,
deceptive, or misleading” statement or other matter violative of the Kentucky insurance statutes.
The content Prewitt describes as transgressing the Insurance Code simply is not a policy benefit
misrepresentation, unfair misnomer, or representation that, fairly read, is untrue, deceptive, or
misleading.8 In this context, Prewitt’s Amended Complaint has failed to adequately plead a
statutory violation. Accordingly, the Court dismisses Claim 1 of the Amended Complaint.
c. Claim 2 – Fraud in the Inducement
A Kentucky fraud claim has six elements:
a) material representation b) which is false c) known to be false or made recklessly d) made
with inducement to be acted upon e) acted in reliance thereon and f) causing injury.
Prewitt spent little time on the underlying advertising regulation. The Court has carefully
reviewed both the statute and 806 KAR 12:010, et seq., in evaluating whether Prewitt’s claim
crosses into the plausible. The “[w]ords, phrases, or illustrations” Prewitt complaints of were not
used in misleading ways as they accurately represented the whole life insurance Prewitt received.
See 806 KAR 12:010-3(2). The disclosure of the product as whole life insurance was also “set out
conspicuously and in close conjunction with the statements” Gerber made. See 806 KAR 12:0105. Ultimately, because the statements and content from Gerber Life are accurate, suggest no
underlying factual foundation that is untrue or misleading, and appear in the inarguable context of
whole life insurance, the Court rejects the premise that Defendant engaged in any unfair or
deceptive act or practice.
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United Parcel Serv. Co. v. Rickert, 996 S.W.2d 464, 468 (Ky. 1999). Per Civil Rule 9(b), “a party
must state with particularity the circumstances constituting fraud[.]” Fed. R. Civ. P. 9(b). “The
Sixth Circuit interprets” Rule 9(b)’s heightened pleading requirement “as requiring plaintiffs to
allege the time, place, and content of the alleged misrepresentation on which he or she relied; the
fraudulent scheme; the fraudulent intent of the defendants; and the injury resulting from the fraud.”
Yuhasz v. Brush Wellman, Inc., 341 F.3d 559, 563 (6th Cir. 2003) (quotation marks omitted). The
absence of assertions anchoring the purported misrepresentations to a discrete time and place
dooms a fraud claim as pleaded. United States ex rel. Roycroft v. Geo Grp., Inc., 722 F. App’x
404, 406 (6th Cir. 2018) (“Rule 9(b) requires a plaintiff to state with particularity the circumstances
constituting fraud—i.e, the who, what, when, where, and how of the alleged fraud.”); CNH Am.
LLC v. Int’l Union, United Auto., Aerospace & Agr. Implement Workers of Am. (UAW), 645 F.3d
785, 795 (6th Cir. 2011) (“Nowhere in its complaint does it say when and where the [defendant]
made an intentional misrepresentation about its purported authority to negotiate on behalf of the
retirees.”); see also Republic Bank, 683 F.3d at 253 (“Specifically, the plaintiff must: (1) point to
a particular allegedly fraudulent statement; (2) identify who made the statement; (3) plead when
and where the statement was made; and (4) explain what made the statement fraudulent. . . .
Republic does no such thing. Nowhere does it indicate when, where, or to whom the alleged
misstatement was made. This defect is fatal. The claim may not proceed because Republic's
complaint does not pass muster under Rule 9(b).” (citation omitted)).
Defendant attacks (mostly) the second and fifth elements. First, Gerber Life claims that
none of the advertisements or the complained of language Plaintiff points to are false material
representations. See DE 27 at 9–11. Second, Defendant argues that Plaintiff has failed to meet the
Rule 9(b) pleading standard by not pointing to which advertisements she specifically relied on. Id.
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at 11– 13. The Court finds that Prewitt failed to adequately allege that Gerber Life made false
material representations in the marketing, labeling or advertising at issue. The deficit is fatal to the
Prewitt’s main theory, under both claims, is that Gerber Life’s advertisements deceptively
hide the true purpose or operation of the Grow-Up Plan. Prewitt points to statements made in
advertisements as effectuating the ruse. The plan “automatically builds cash value each time you
make a payment, building a nest egg for your child’s future. The longer you own the policy, the
more cash value the policy accumulates.” DE 23 at ¶ 30. Gerber Life touts the plan as a “nest egg
that grows and grows[.]” Id. at ¶ 31. The policy “[b]uilds cash value – a nest egg that grows and
grows[.]” Id. at ¶ 36. Prewitt also points to Facebook ads referring to the “nest egg” metaphor and
The other particularity arguments are close calls. Prewitt argues that the Rule 9(b) requirements
should be relaxed because she pleads a fraud scheme that encompasses a “common message”
throughout Gerber’s marketing materials and because Gerber has control over the specific
advertisements that induced Prewitt. DE 32 at 8–14. The specificity requirements of Rule 9(b)
“will be applied less stringently” in cases where discovery has yet to occur and where “the alleged
fraud occurred over an extended period of time, is within the knowledge and control of [the
defendant], and consisted of numerous acts[.]” Whalen v. Stryker Corp., 783 F. Supp.2d 977, 982
(E.D. Ky. 2011) (citing U.S. ex rel. Bledsoe v. Community Health Systems, Inc., 501 F.3d 493,
509–10 (6th Cir. 2007). “Specifically, . . . the examples that a [plaintiff] provides will support
more generalized allegations of fraud only to the extent that the [plaintiff’s] examples are
representative samples of the broader class of claims.” U.S. ex rel. Bledsoe, 501 F.3d at 510
(emphasis in original). “[T]o satisfy Rule 9(b)’s particularity requirement [in this context] . . .
[plaintiff] must provide some representative examples of their alleged fraudulent conduct,
specifying the time, place, and content of their acts and the identity of the actors.” U.S. ex rel.
Joshi v. St. Luke’s Hosp., Inc., 441 F.3d 552, 557 (8th Cir. 2006). Prewitt does not say when she
saw any advertisement and does not draw a specific link between an ad or ads and her decision to
buy a particular product. This is especially problematic given the three temporally unrelated
purchases. However, given the Court’s treatment of the claims and the specific assertion that ads
of like content led Prewitt to enroll, the Court will treat the Amended Complaint as adequate,
barely, under Rule 9(b). The representative exemplars of Gerber advertisements and the limitations
in the Amended Complaint identify the relevant (pre-purchase) time, place, content, and actors
involved in the alleged fraud. That Gerber would know its own (highly regulated) ad history is
part of this calculus.
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“builds cash value” description. She complains of mailed literature depicting the policy as a “head
start” for the child and a source of “ready cash” in the future.
Prewitt’s theory follows that, by describing the policies as a “nest egg” that “grows and
grows” and that “builds cash value,” Gerber Life falsely described its whole life insurance product
as an “investment vehicle” or a “savings vehicle[.]” DE 32 at 5. Prewitt claims this comparison is
fraudulent because the plan, in fact, and relative to premiums paid compared to cash value,
“operate[s] at a substantial loss[.]” DE 32 at 4. Thus, by masquerading a life insurance policy as
an advisable savings vehicle, Gerber Life materially misrepresented its investment structure and
committed fraud. Id. The Court rejects this implausible argument at the 12(b)(6) stage.
“[A] misrepresentation to support an allegation of fraud must be made concerning a present
or pre-existing fact, and not in respect to a promise to perform in the future.” Filbeck v. Coomer,
182 S.W.2d 641, 643 (Ky. 1944). Kentucky has well-defined boundaries on what is and is not an
actionable representation. The Supreme Court’s Flegles, Inc. v. TruServ Corp., 289 S.W.3d 544,
548–51 (Ky. 2009) provides the map. Thus,
The misrepresentation, moreover, must relate to a past or present material fact. “A
mere statement of opinion or prediction may not be the basis of an
action.” [McHargue v. Fayette Coal & Feed Company, 283 S.W.2d 170, 172 (Ky.
1955)]. This means, as the Court of Appeals held, that forward-looking opinions
about investment prospects or future sales performance such as those involved in
this case generally cannot be the basis for a fraud claim.
Id. at 549. A speaker making otherwise immune statements can still edge into fraud if he suggests
(false) foundational facts behind the statement or describes what in fact is a complete sham. See
id. (“There are, of course, recognized ‘deception’ exceptions to this general rule where the opinion
either incorporates falsified past or present facts or is so contrary to the true current state of affairs
that the purported prediction is an obvious sham.”). Importantly, then, normal sales predictions,
opinions, or puffing cannot be fraud. Yung v. Grant Thornton, LLP, 563 S.W.3d 22, 53 (Ky. 2018)
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(“While reliance on an opinion or prediction ordinarily is unreasonable as a matter of law, an
opinion or prediction may be actionable if it falsely implies that the speaker has facts that form the
basis of it or knows of no facts to the contrary.”). There must be a false objective premise
undergirding or propping an opinion to move the representation into an actionable category. See
Flegles, 289 S.W.3d at 549 (discussing exceptions: “[A]bsent misrepresentation of objective
data, ‘forward-looking recommendations and opinions are not actionable . . .merely because they
are misguided, imprudent or overly optimistic.’” (quoting In re Salomon Analyst AT&T
Litigation, 350 F.Supp.2d 455, 467 (S.D.N.Y.2004) (citing Stevelman v. Alias Research Inc., 174
F.3d 79, 85 (2nd Cir.1999)))).
Here, for starters, all three advertisements Prewitt points to unambiguously describe the
policies as “life insurance” no less than three times and “whole life insurance” at least once. See
DE 32 at ¶¶ 30, 31, 36. “Whole Life Insurance” is defined as “[l]ife insurance that covers an insured
for life, during which the insured pays fixed premiums, accumulates savings from an invested
portion of the premiums, and receives a guaranteed benefit upon death, to be paid to a named
beneficiary.”10 “Nest egg,” as relevant here, is defined as “a fund of money accumulated as a
reserve[.]”11 Surely, a policy that “accumulates savings from an invested portion of the premiums”
is inclusive of “a fund of money accumulated as a reserve.” There is little if any conceptual room
between these ideas. To then call the use of these terms in the same advertisement materially false
representations ignores their plain meaning.
And, where is the falsity in the ads or materials? The policies are in the record. DE 30-1
contains all three. Each policy has a defined and objectively obvious cash or surrender value. Each
Life Insurance, Black’s Law Dictionary (11th ed. 2019) (emphasis added).
Nest egg, merriam-webster.com, https://www.merriam-webster.com/dictionary/nest%20egg
(last visited Feb. 8, 2021).
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policy reflects the fixed premium, doubled benefit at majority, and cash value over time. See, e.g.,
DE 30-1 at 12, 21, 52. The policies tabulate the cash value over time. Objectively, the cash value
does build over time, just as the ads promise. Is the result a “nest egg”? Surely that gauzy metaphor
carries subjective freight. It is not false or misleading to say that, as premiums come in, the diverted
cash value portion accrues, forms a reserve, that is a growing resource for the policyholder and
beneficiary. Other contributory language—that the product is a “head start” or provides “ready
cash” is a) sales talk that b) is not objectively false.
The Court sees important analytical cracks in Prewitt’s overall theory. Whatever led
Prewitt to buy policy 1 (in 2007), she 12 had that policy in hand long before buying policy 2 and
policy 3. Thus, she knew (that is, had the exact documents showing) the precise manner by which
the Grow-Up Plan operated. Perhaps the rates and specific terms changed slightly through the
years, but the structure across the policies is the same. Thus, if Prewitt knew what the Grow-Up
Plan signified after the first round and she ventured forth, the Court has difficulty seeing plausible
reliance for the later purchases.
Even more importantly, Prewitt’s case hinges on the comparative wisdom of buying whole
life insurance in this scenario. Though a series of paternalistic arguments, Prewitt contends that no
right-thinking Kentuckian could view these purchases as rational or prudent ways to spend money.
The arguments completely ignore that Prewitt’s premiums bought more than the cash value
component of the policy—they bought whole life insurance, at a flat rate, with permanent effect
and automatic coverage doubling or other additional insurance access. Maybe Dave Ramsey or the
Prewitt concedes that she received the issued policies. DE 32 at 23 (referencing “her receipt of
the policy documents”). Policy 1 issued March 15, 2007. DE 30-1 at 2. Policy 2 issued September
16, 2013. See id. at 18. Policy 3 issued September 12, 2016. See id. at 49. The record does not
demonstrate precise receipt timing, but given that Prewitt admits that she “has,” DE 23 at ¶ 6, the
policies and confirms receipt, she surely received each one a short mailing interval after issuance.
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investment intelligentsia would not recommend this vehicle to consumers.13 Maybe Prewitt now
does not view these advantages as a head start or an investment in a grandchild’s future.
Formulating debate over comparative investment wisdom is a far cry from a plausible allegation
that the ads were false, fraudulent, or misleading.14 The products here might be inferior, on
evaluation of a full range of financial options. That does not make their marketing fraudulent.
Gerber Life did not describe them inaccurately, did not make future or predictive claims with a
specious factual footing, and did not mislead the audience receiving its marketing materials.
The record shows no misstatements or misrepresentations of fact by Gerber Life. The
advertisements repeatedly call the product whole life insurance. The ads accurately claim a cash
value benefit that grows over time. Nothing in the ads promises anything at all concerning the
scope, growth range, or course of the “nest egg,” other than, accurately, accrual over time. This is
not, like the Flegles examples, a company promising dividends when it knew it could not pay or a
company promising to list a stock when it knew it would not do so. See 289 S.W.3d at 549. Here,
Gerber Life stuck to sales talk, told it like it really was, and engaged in no fraud. This sinks Claim
d. Fraud by Omission
Prewitt further claims that she has “adequately alleged that Defendant committed fraud by
omission in her Amended Complaint.” DE 32 at 14. A plain reading of the Amended Complaint
In fact, the Amended Complaint includes numerous excerpts from the investment intelligentsia,
dated before Prewitt bought policies 2 and 3, describing Gerber’s products. See DE 23 at ¶¶ 8, 38.
It interests the Court that Prewitt did not talk about the results under policy 1 or policy 2. Under
policy 1, after 20 years, the cash value would exceed the premiums paid ($1529.60/$1335.20);
under policy 2, after 20 years, the cash value and paid premiums are near equivalents
($748.85/$774.40). See DE 30-1 at 12, 21. This weakens the force of Prewitt’s overall arguments
about policy operation. And, again, Prewitt ignores the other things bought with a whole life
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reveals no such claim. Prewitt argues in her brief that Claim 1 is clearly a negligence claim. DE
32 at 6. She also titles her second claim “Fraud in the Inducement” and specifically tracks her
allegations to the elements for the claim. DE 23 at ¶¶ 109–15. “Fraud by omission is not the same,
at law, as fraud by misrepresentation, and has substantially different elements.” Republic, 683 F.3d
at 254. Although the Amended Complaint references certain omissions at various places in the
pleading (e.g., heading I.C, II.B, ¶¶ 15, 17, 21, 40), the pleaded Claim is not one of fraud by
Prewitt may not “amend [her] complaint in an opposition brief or ask the court to consider
new allegations . . . not contained in the complaint.” Bates v. Green Farms Condo Ass’n, 958 F.3d
470, 483–84 (6th Cir. 2020). “If a complaint fails to state a claim even under the liberal
requirements of the federal rules, the plaintiff cannot cure the deficiency by inserting the missing
allegations in a document that is not either a complaint or an amendment to a complaint.” Id.
(quoting Harrell v. United States, 13 F.3d 232, 236 (7th Cir. 1993)). Accordingly, the Court rejects
Prewitt’s attempt to amend the complaint and inject new allegations with a response brief.
Even if the Court were to weigh Prewitt’s fraud by omission argument at the 12(b)(6) stage,
the pleading would yet fail. According to Prewitt, “Defendant failed to disclose, inter alia, the true
nature of its ‘nest eggs’ and further failed to disclose that what it offered was quantifiably inferior
to nearly every other investment opportunity out there, including putting cash directly into
consumers’ piggy banks and/or under their mattresses.” DE 32 at 16. As previously discussed,
Gerber Life’s advertisements never failed to tell customers that it was selling whole life insurance,
and it did not inaccurately or misleadingly describe policy content or operation. Prewitt had
immediate access to the policy, upon purchase, with a full right to rescind. She has continued to
buy and hold the policies over many years. Furthermore, Plaintiff’s Amended Complaint never
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sources a duty on Gerber Life to disclose to possible customers alternative options for their use of
their money. It would be rare to require a market participant to make a sales pitch for its
competitors. The Court rejects Plaintiff’s attempt, via injection of a late amendment, to salt the
bland complaint after it has already reached the table.
In conclusion, Prewitt’s Amended Complaint does not pass the 12(b)(6) standard.
Accordingly, the Court GRANTS DE 27. The Amended Complaint is dismissed, in full, with
prejudice. The Court will issue a separate Judgment.
This the 17th day of February, 2021.
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