In re: AXA Equitable Life Insurance Company
OPINION AND ORDER re: (269 in 1:18-cv-02111-JMF) MOTION for Reconsideration re; (268) Memorandum & Opinion, for (I) Reconsideration of Wells Fargo's Article III Standing to Pursue Illustration Claims, (II) Decertification of the Illu stration Classes, and (III) Discovery of Ab filed by AXA Equitable Life Insurance Company, (608 in 1:16-cv-00740-JMF) MOTION for Reconsideration re; (596) Memorandum & Opinion, for (I) Reconsideration of Wells Fargo's Article III Standing to Pursue Illustration Claims, (II) Decertification of the Illustration Classes, and (III) Discov filed by AXA Equitable Life Insurance Company. AXA's motion for reconsideration on the question of whether Wells Fargo has standing, as securities intermediary, to bring illustration-based claims is GRANTED. The Court reserves judgment on the question of whether to decertify or modify the class. Unless and until the Court orders otherwise, Class Plaintiffs shall file a memorandum of law, not to exceed ten pages, by August 17, 2022, addressing the implications of the Court's ruling on Wells Fargos standing, including whether decertification or modification of the class is warranted. AXA shall file any response, not to e xceed ten pages, by August 31, 2022. That said, the parties should promptly confer and, if they believe that there is a better way to proceed in light of the Court's ruling, seek appropriate relief by letter motion. The Clerk of Court is directed to terminate Docket No. 16-CV-740, ECF No. 608 and Docket No. 18-CV-2111, ECF No. 269. SO ORDERED., ( Responses due by 8/31/2022) (Signed by Judge Jesse M. Furman on 7/29/22) (yv)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
AXA EQUITABLE LIFE INSURANCE COMPANY
This Document Also Relates to 18-CV-2111
OPINION AND ORDER
JESSE M. FURMAN, United States District Judge:
In this litigation, familiarity with which is presumed, life insurance policyholders bring
claims against Defendant AXA Equitable Life Insurance Company (“AXA”) 1 arising from an
increase in the “cost of insurance” or “COI” — a monthly charge deducted from the value of a
policyholder’s account — on a subset of universal life insurance policies. Plaintiffs principally
allege that the increase in COI violated the terms of their insurance policies and that AXA issued
policy illustrations, or documents depicting the performance of a given policy under various
assumptions, that were false or misleading. Two years ago, the Court granted Plaintiffs’ motion
for class certification and certified (1) a nationwide Policy-Based Claims Class consisting of “all
individuals who, on or after March 8, 2016, owned AUL II policies that were issued by AXA and
subjected to the COI rate increase announced by AXA on or about October 1, 2015”; (2) a
nationwide Illustration-Based Claims Class based on New York Insurance Law Section 4226
(“Section 4226”), consisting of “all individuals who, on or after March 8, 2016, owned an AUL
In January 2020, AXA rebranded itself as “Equitable.” See Equitable, Announcing
Equitable, https://equitable.com/news/2020/announcing-equitable-a-new-day-for-160-year-oldfinancial-services-company. Because the conduct at issue occurred before the rebranding, and
for consistency with this Court’s prior opinions in this action, the Court will continue to refer to
the company as “AXA.”
II policy unaccompanied by a Lapse Protection Rider that was issued by AXA and subjected to
the COI rate increase announced by AXA on or about October 1, 2015”; and (3) a New York
Illustration-Based Claims Sub-Class, based on New York’s General Business Law Section 349
(“Section 349”), consisting of “all members of the Illustration-Based Claims Class who reside in
New York.” See In re AXA Equitable Life Ins. Co. COI Litig., No. 16-CV-740 (JMF), 2020 WL
4694172, at *8, *15-16 (S.D.N.Y. Aug. 13, 2020) (ECF No. 403) (“Class Cert. Op.”). 2 In a
lengthy opinion filed a few months ago, the Court resolved cross-motions for summary judgment
and related motions to preclude the testimony of certain experts, largely (although not entirely)
denying them all. See In re AXA Equitable Life Ins. Co. COI Litig., No. 16-CV-740 (JMF), 2022
WL 976266 (S.D.N.Y. Mar. 31, 2022) (ECF No. 596) (“SJ Op.”).
AXA now seeks to revisit several of the Court’s rulings. Most significantly, AXA moves
for reconsideration of the Court’s holding in its recent opinion that Wells Fargo, the Registered
Owner of many of the life insurance policies at issue, has standing to pursue the illustrationbased claims. See SJ Op., 2022 WL 976266, at *17. In particular, AXA argues that the Court
erred in concluding that Wells Fargo has standing to pursue illustration-based claims because
there has been no valid assignment of the beneficial owners’ illustration-based claims and Wells
Fargo, acting as a securities intermediary, was not itself injured by the illustrations. See ECF No.
609 (“Def.’s Mem.”); ECF No. 630 (“Def.’s Reply”). Class Plaintiffs and Individual Plaintiffs
LSH Co. and Wells Fargo, N.A. (together, the “LSH Plaintiffs”) oppose AXA’s motion. See
ECF No. 629 (“Pls.’ Opp’n”). Upon reflection, the Court concludes that AXA is correct and that
Wells Fargo lacks standing to bring the illustration-based claims. See Henslee v. Union Planters
Nat. Bank & Tr. Co., 335 U.S. 595, 600 (1949) (Frankfurter, J., dissenting) (“Wisdom too often
Unless otherwise stated, all citations are to Docket No. 16-CV-740.
never comes, and so one ought not to reject it merely because it comes late.”). Accordingly, and
for the reasons discussed below, AXA’s motion for reconsideration on that score is GRANTED,
and the illustration-based claims brought by Wells Fargo as securities intermediary are dismissed
for lack of Article III standing.
AXA also seeks to revisit several aspects of the Court’s class certification opinion and
related rulings. First and foremost, AXA argues that because Wells Fargo lacks standing and is
the Registered Owner of a substantial number of policies in the certified Illustration-Based
Claims Class, the class should be decertified. Def.’s Mem. 12. Second, AXA independently
argues that the New York Illustration-Based Claims Sub-Class must be decertified because it
fails to meet the numerosity requirement of Rule 23(a)(1) of the Federal Rules of Civil Procedure
— whether or not Wells Fargo remains a class member. Id. at 22. Finally, AXA moves for
leave to pursue discovery of absent class members concerning the individual issues raised by
their illustration-based claims. Id. at 23. The Court shares some views on these requests, but
ultimately reserves judgment pending further briefing in light of the Court’s new decision on
A. Motion for Reconsideration
The Court begins with the core issue: AXA’s motion for reconsideration of the Court’s
decision regarding Wells Fargo’s standing. “The decision to grant or deny a motion for
reconsideration is within the sound discretion of the district court.” In re Optimal U.S. Litig.,
813 F. Supp. 2d 383, 387 n.6 (S.D.N.Y. 2011). The standards governing motions for
reconsideration under Rule 59(e) of the Federal Rules of Civil Procedure and Local Civil Rule
6.3 are the same and are meant to “ensure the finality of decisions and to prevent the practice of a
losing party examining a decision and then plugging the gaps of a lost motion with additional
matters.” Medisim Ltd. v. BestMed LLC, No. 10-CV-2463 (SAS), 2012 WL 1450420, at *1
(S.D.N.Y. Apr. 23, 2012). The primary grounds justifying reconsideration are an “intervening
change in controlling law, the availability of new evidence, or the need to correct a clear error or
prevent manifest injustice.” Terra Sec. ASA Konkursbo v. Citigroup, Inc., 820 F. Supp. 2d 558,
560 (S.D.N.Y. 2011) (quoting Virgin Atl. Airways, Ltd. v. Nat’l Mediation Bd., 956 F.2d 1245,
1255 (2d Cir. 1992)). That is, reconsideration will generally be denied unless “the moving party
can point to controlling decisions or data that the court overlooked — matters, in other words,
that might reasonably be expected to alter the conclusion reached by the court.” Medisim, 2012
WL 1450420, at *1. Ultimately, however, “[a] district court has broad discretion in determining
whether to grant a motion [for reconsideration].” Baker v. Dorfman, 239 F.3d 415, 427 (2d Cir.
2000); accord Yang v. An Ju Home, Inc., No. 19-CV-5616 (JPO), 2021 WL 1044160, at *1
(S.D.N.Y. Feb. 2, 2021).
AXA seeks reconsideration on the ground that the Court erred in concluding that Wells
Fargo has standing to pursue the illustration-based claims because (1) Plaintiffs have not shown a
valid assignment of any claims to Wells Fargo and (2) Wells Fargo cannot demonstrate its own
injury traceable to the illustrations. Def.’s Mem. 2. Admittedly, it is questionable whether AXA
meets the “strict” standard for reconsideration because it does not really identify any “controlling
decisions or data that the court overlooked.” Cho v. Blackberry Ltd., 991 F.3d 155, 170 (2d Cir.
2021). That said, the Court will revisit the merits of the issue for two reasons. First, “Article III
standing is jurisdictional, so it is not subject to waiver and may be challenged at any stage in the
litigation.” City of Providence, R.I. v. Bats Glob. Markets, Inc., No. 14-CV-2811 (JMF), 2022
WL 902402, at *15 (S.D.N.Y. Mar. 28, 2022) (internal quotation marks and citations omitted).
Indeed, it is well established that a court has an obligation to inquire, if need be sua sponte,
“whenever a doubt arises as to the existence of federal jurisdiction.” Mt. Healthy City Sch. Dist.
Bd. of Educ. v. Doyle, 429 U.S. 274, 278 (1977). Second, the issue of Wells Fargo’s standing to
pursue the illustration-based claims was addressed only cursorily in the parties’ summary
judgment briefing. In fact, although AXA now argues that Wells Fargo’s lack of standing is a
critical issue that requires decertification of the entire Illustration-Based Claims Class, it devoted
just two pages to the issue in its fifty-nine-page motion for summary judgment on the class
claims. See ECF No. 463, at 34-35. The issue received even less attention in AXA’s fifty-page
motion for summary judgment as to LSH Plaintiffs’ claims — a mere paragraph. See ECF No.
467, at 30-31. For these reasons, the Court concludes that revisiting the issue of Wells Fargo’s
standing is appropriate.
Turning to the merits of the issue, the Court concludes that Wells Fargo lacks standing to
sue for the illustration-based claims. As an initial matter, Plaintiffs do not, and cannot, contend
that Wells Fargo has standing based on an assignment of the beneficial owners’ claims. See Pls.’
Opp’n 9 (LSH Plaintiffs conceding that “the operative agreements do not contain an explicit
claim assignment”); id. at 14-15 (Class Plaintiffs explaining that “Wells Fargo, as the policy
owner and securities intermediary, does not require an ‘assignment’ to bring claims related to
overcharges on the policies it owns”); id. at 20 (“[T]he standing of Wells Fargo, and similar
owners, does not depend on an ‘assignment.’”). Instead, Class Plaintiffs and the LSH Plaintiffs
argue that Wells Fargo has standing for another reason — although, notably, the two sets of
Plaintiffs do not seem to agree as to what that reason is. On the one hand, Class Plaintiffs assert
that Wells Fargo suffered its own injury that is sufficient to confer standing. See id. at 13. On
the other hand, the LSH Plaintiffs insist that Wells Fargo has standing because it may rely on the
injuries of LSH Co. and other beneficial owners. See id. at 7-8. Neither theory withstands close
The Court begins with Class Plaintiffs’ theory that Wells Fargo was itself injured. Class
Plaintiffs base that theory, in the first instance, on the fact that Wells Fargo was “the holder of
the policy account” from which the excess fees were allegedly deducted. Id. at 13 (emphasis
omitted). But “while ownership and possession generally may provide evidence of standing, it is
the injury to the party seeking standing that remains the ultimate focus.” United States v.
Cambio Exacto, S.A., 166 F.3d 522, 527 (2d Cir. 1999). Applying that principle, courts have
“denied standing to ‘straw’ owners who do indeed ‘own’ the property, but hold title to it for
somebody else,” because “[s]uch owners do not themselves suffer an injury when the property is
taken.” Id.; see also Calvo v. City of New York, No. 14-CV-7246 (VEC), 2017 WL 4231431, at
*4 (S.D.N.Y. Sept. 21, 2017) (denying certification for lack of standing where class definition
included “registered owners” who “lack[ed] a true ownership interest in the vehicles that were
seized”). At bottom, that is the situation here: Wells Fargo holds each policy account in a purely
ministerial capacity; it is the beneficial owner who actually incurred the financial harm, if any.
See N.Y. U.C.C. Law § 8-102(14) (ii) (“‘Securities intermediary’ means . . . a person, including
a bank or broker, that in the ordinary course of its business maintains securities accounts for
others and is acting in that capacity.”); id. § 8-503(a) (“[A]ll interests in that financial asset held
by the securities intermediary . . . are not property of the securities intermediary, and are not
subject to claims of creditors of the securities intermediary.”); ECF No. 460-113, at 5 (LSH
Co.’s agreement with Wells Fargo, providing that it is “the only part[y] entitled to exercise the
rights that comprise any cash, financial asset or proceeds thereof,” including the insurance
policies, held in the securities intermediary account). Indeed, Plaintiffs concede that Wells Fargo
did not suffer any financial loss as a result of the alleged overcharges. See ECF No. 495 ¶ 102
(undisputed that Wells Fargo’s fees as securities intermediary were not affected by the COI
Increase); ECF No. 496-17, at 349-50 (“[O]bviously LSH [Co.] was the one with the economic
stake in the policies.”). That dooms Class Plaintiffs’ argument based on Wells Fargo’s title to
the accounts from which the relevant fees were deducted. See, e.g., In re Vivendi Universal, S.A.
Sec. Litig., 605 F. Supp. 2d 570, 576 (S.D.N.Y. 2009) (noting that there is an “importan[t] . . .
distinction between having title to the claim at issue and having title to the [property] from which
the claims derive”).
Contrary to Plaintiffs’ suggestions, see, e.g., Pls.’ Opp’n 15, the fact that Wells Fargo has
standing to assert contract-based claims does not suggest otherwise. It is well established that “a
plaintiff must demonstrate standing for each claim [it] seeks to press.” DaimlerChrysler Corp. v.
Cuno, 547 U.S. 332, 335 (2006). And here, there is a fundamental difference in the nature of the
claims and the injuries for which relief is being sought. As AXA itself puts it, “Wells Fargo has
Article III standing to sue for breach because it is the counterparty to whom [AXA] promised
contract performance, and in a contract case, the failure to perform is itself an injury-in-fact,
regardless of any economic loss.” Def.’s Reply 2; see also, e.g., Culwick v. Wood, 384 F. Supp.
3d 328, 339 (E.D.N.Y. 2019) (holding that breach of contract alone is an injury sufficient to
confer standing); Vogt v. State Farm Life Ins. Co., 963 F.3d 753, 766 (8th Cir. 2020) (“A party to
a breached contract has a judicially cognizable interest for standing purposes, regardless of the
merits of the breach alleged.”), cert. denied, 141 S. Ct. 2551 (2021). 3 Thus it is that other courts
In the wake of Spokeo, Inc. v. Robins, 578 U.S. 330 (2016), some courts have concluded
that breach of contract, in the absence of some other injury, does not give rise to standing. See,
e.g., Patel v. Univ. of Vermont & State Agric. Coll., No. 20-CV-61, 2021 WL 4523683, at *5 (D.
Vt. Oct. 1, 2021); Svenson v. Google Inc., No. 13-CV-04080 (BLF), 2016 WL 8943301, at *10
(N.D. Cal. Dec. 21, 2016). But the weight of authority supports the parties’ position here. See,
have found securities intermediaries have standing to bring breach of contract claims where, as
here, they were party to the contract at issue. See, e.g., Advance Tr. & Life Escrow Servs., LTA
v. Reliastar Life Ins. Co., No. 18-CV-2863 (DWF) (BRT), 2022 WL 911739 at *6 (D. Minn.
Mar. 29, 2022). By contrast, the illustration claims are not based on a contract — much less a
contract to which Wells Fargo is a party.
Next, Class Plaintiffs argue that Wells Fargo has standing because it “was, at least
indirectly, exposed to misleading illustrations that failed to divulge AXA’s pre-planned COI
increase.” Pls.’ Opp’n 13. Indeed, Class Plaintiffs suggest that the Court already blessed this
theory in its class certification ruling when it held that a plaintiff could prevail on a claim under
Section 4226 even if it learned of the misrepresentation only “indirectly” and stated that this
conclusion was “not inconsistent with the injury-in-fact requirement for Article III standing.” Id.
at 10-11; see Class Cert. Op., 2020 WL 4694172, at *10-11. But these arguments misapprehend
the nature of the issue and the gravamen of the Court’s prior discussion. At the class
certification stage, the Court’s focus was on the elements of a Section 4226 claim; it did not
address whether Plaintiffs in this case generally, or Wells Fargo specifically, could prove injury
sufficient to support standing. Underscoring the point that indirect exposure and injury are
distinct concepts, the Court summarized that, “to establish a claim under Section 4226,”
Plaintiffs had to prove both that “the claimants [had] received” a document containing an
actionable misrepresentation “or learned of the misrepresentation, directly or indirectly” and that
e.g., Culwick, 384 F. Supp. 3d at 339 (“Breach of contract is surely . . . [a concrete harm]”
because it “ha[s] a close relationship to a harm that has traditionally been regarded as providing a
basis for a lawsuit in English or American courts.” (internal quotation marks omitted)); Amrhein
v. eClinical Works, LLC, 954 F.3d 328, 331 (1st Cir. 2020); Dinerstein v. Google, LLC, 484 F.
Supp. 3d 561, 571 (N.D. Ill. 2020); In re Google Referrer Header Priv. Litig., 465 F. Supp. 3d
999, 1011 (N.D. Cal. 2020).
“the claimants were . . . injured” by AXA’s failure to abide by its representation. Class Cert.
Op., 2020 WL 4694172, at *12; see also Sept. 22, 2020 Transcript (ECF No. 438), at 13
(discussing the elements of a Section 4226 claim in the context of Plaintiffs’ proposed
redefinition of the Illustration-Based Claims Class); ECF No. 440 (same); ECF No. 443 (same).
Put simply, whether or not Wells Fargo was exposed, directly or indirectly, to the illustrations
does not speak to whether it has standing; indeed, Wells Fargo would lack standing to sue even if
it had been directly exposed to the illustrations if it has no “concrete stake in this lawsuit.” Thole
v. U. S. Bank N.A, 140 S. Ct. 1615, 1619 (2020); cf. Robainas v. Metro. Life Ins. Co., No. 14CV-9926 (DLC), 2015 WL 5918200, at *6 (S.D.N.Y. Oct. 9, 2015) (holding that whether or not
the plaintiffs had a cause of action under Section 4426, they lacked an injury sufficient to satisfy
Article III), aff’d sub nom. Ross v. AXA Equitable Life Ins. Co., 680 F. App’x 41, 45 (2d Cir.
2017) (summary order) (“[Plaintiffs] cannot rely solely on a violation of New York Insurance
Law Sections 4226(a)(4) and (d) in order to satisfy Article III’s injury-in-fact requirement.”).
Finally, Class Plaintiffs rely on Fund Liquidation Holdings LLC v. Bank of Am. Corp.,
991 F.3d 370 (2d Cir. 2021), which held that “the prohibition on raising another’s legal rights is
a prudential rule of standing and distinct from the requirements found within Article III itself,”
id. at 381-82; see Pls.’ Opp’n 12. In fairness, the Court itself relied on Fund Liquidation
Holdings in its summary judgment decision. See SJ Op., 2022 WL 976266, at *17 (citing Fund
Liquidation Holdings for the proposition that “pre-suit assignments of a claim do not raise
constitutional standing issues, but should be analyzed instead as an issue of capacity to sue”).
The Second Circuit’s language, however, does not mean that the issue of an assignee’s standing
is itself prudential. Instead, the issue of third-party standing is “distinct from the requirements
found within Article III,” which still must be met. Fund Liquidation Holdings, 991 F.3d at 380-
81. In Fund Liquidation Holdings, the dissolved funds were plainly asserting their own injuries
based on the defendants’ manipulation of benchmark interest rates. Id. at 375. The question was
whether Fund Liquidation Holdings, to which the funds had assigned their claims prior to the
suit, could pursue the claims given that, when the suit was filed, the funds no longer existed. The
Court determined that that question, not the threshold question of Article III standing, was a
prudential one. That holding does not help Wells Fargo because Wells Fargo has not established
its own injury sufficient to confer standing.
As noted, the LSH Plaintiffs do not join the Class Plaintiffs in arguing that Wells Fargo
has standing based on its own injuries; instead, the LSH Plaintiffs contend that Wells Fargo has a
form of derivative standing. Pl.’s Opp’n 7-9. But their arguments fare no better. The LSH
Plaintiffs point to the Second Circuit’s statement in W.R. Huff Asset Mgmt. Co., LLC v. Deloitte
& Touche LLP, 549 F.3d 100 (2d Cir. 2008), that “courts historically have permitted trustees to
bring suits to benefit their trusts; guardians ad litem to bring suits to benefit their wards;
receivers to bring suit to benefit their receiverships; assignees in bankruptcy to bring suit to
benefit bankrupt estates; and executors to bring suit to benefit testator estates,” id. at 109-10
(cleaned up) (quoting Sprint Comm’cns Co. L.P. v. APCC Servs. Inc., 554 U.S. 269, 287-88
(2008). “These circumstances,” LSH Plaintiffs contend, “do not involve ‘assignments.’” Pls.’
Opp’n 7. That much is true, but it does not aid Plaintiffs because the relationship between Wells
Fargo and the beneficial owners of the policies does not fall within any of the categories
recognized in W.R. Huff. Moreover, Wells Fargo satisfies neither of the prerequisites for thirdparty standing: “(1) a close relationship to the injured party and (2) a barrier to the injured
party’s ability to assert its own interests.” W.R. Huff, 549 F.3d at 109; see also In re Vivendi
Universal, S.A. Sec. Litig., 605 F. Supp. 2d at 576. The W.R. Huff Court held that an “investment
advisor-client relationship is not the type of close relationship courts” require for third-party
standing, 549 F.3d at 110, and it is difficult to see why a securities intermediary-beneficial owner
relationship would be different. And the beneficial owners “are relatively sophisticated parties
with a demonstrated capacity to protect their own interests in the absence of [Wells Fargo’s]
intervention.” Id. Indeed, LSH Co. itself is a plaintiff alongside Wells Fargo in LSH Plaintiffs’
Complaint. See LSH Co. v. AXA Equitable Life Ins. Co., 18-CV-2111, ECF No. 58 ¶ 5.
Finally, the LSH Plaintiffs argue that Wells Fargo’s agreement with LSH Co., which
“envisions Wells Fargo bringing suit on behalf of LSH,” and transfers ownership of the policies
to Wells Fargo, is sufficient to confer standing. Pls.’ Opp’n 8-9; see ECF No. 460-113. Not so.
The Second Circuit has made plain that “[a] provision by which one person grants another the
power to sue on and collect on a claim . . . is not the equivalent of an assignment of ownership”
of the claim. Advanced Magnetics, Inc. v. Bayfront Partners, Inc., 106 F.3d 11, 17-18 (2d Cir.
1997). Therefore, “[a]n assignor’s grant of . . . the power to commence and prosecute to final
consummation or compromise any suits, actions or proceedings may validly create a power of
attorney, but that language would not validly assign a claim,” and would not confer standing to
sue, “because it does not purport to transfer title or ownership” of the claim. Cortlandt St.
Recovery Corp. v. Hellas Telecomms., S.a.r.l, 790 F.3d 411, 418 (2d Cir. 2015) (internal
quotation marks and citations omitted). For similar reasons, the LSH Plaintiffs’ reliance on
Natixis Real Est. Cap. Tr. 2007-HE2 v. Natixis Real Est. Holdings, LLC, 149 A.D.3d 127 (1st
Dep’t 2017), falls short. The securities administrator there had standing because the trusts’
pooling services agreement assigned it the power to enforce the sales contracts. Id. at 133. That
decision is consistent with Wells Fargo’s undisputed standing to bring contract claims here, but it
does not speak to whether Wells Fargo has standing to bring the illustration-based claims.
(Moreover, the case was brought in state court, where Article III’s requirements do not apply.
And in any event, the decision is an isolated decision by a lower state court — hardly a firm
foundation for Plaintiffs’ arguments.)
In sum, upon further reflection and with the benefit of more thorough briefing on the
issue, the Court concludes that Wells Fargo, as securities intermediary for the beneficial owners
of the policies, lacks constitutional standing to pursue the illustration-based claims.
B. Motion for Class Decertification
Having concluded that Wells Fargo lacks standing to pursue the illustration-based claims,
the Court must consider the effect, if any, of that conclusion on class certification. AXA argues
the Court must decertify the Illustration-Based Claims Class because Wells Fargo and other
securities intermediaries hold title to a significant percentage of the policies in the class, Def.’s
Mem. 14, and because individual questions are likely to predominate the standing inquiry as to
the remaining members, id. at 16-17. Modification of the class, AXA argues, would be improper
because defining the class to include only “injured” Registered Owners would impermissibly
create a “fail-safe class,” id. at 20-21, defined such that “either the class members win or, by
virtue of losing, they are not in the class, and therefore not bound by the judgment,” Mazzei v.
Money Store, 288 F.R.D. 45, 55 (S.D.N.Y. 2012). Finally, AXA argues that the Named
Plaintiffs, who are not securities intermediaries, would not be typical of any redefined class.
Def.’s Mem. 21-22.
Under Rule 23, “[a]n order that grants or denies class certification may be altered or
amended before final judgment.” Fed. R. Civ. P. 23(c)(1)(C). More specifically, a court “must
ensure that a certified class satisfies Rule 23 throughout the litigation, and possess[es] the
authority to alter or decertify the class if that is no longer the case.” Jin v. Shanghai Original,
Inc., 990 F.3d 251, 262 (2d Cir. 2021) (internal quotation marks and citations omitted).
“Indeed, because the results of class proceedings are binding on absent class members, the
district court has the affirmative duty of monitoring its class decisions in light of the evidentiary
development of the case.” Mazzei v. Money Store, 829 F.3d 260, 266 (2d Cir. 2016) (internal
quotation marks and citations omitted). Notably, and contrary to Plaintiffs’ assertion, Pls.’
Opp’n 17, a “significant intervening event” is not a prerequisite for decertification or
modification of a class. See Jin, 990 F.3d at 262. Instead, a plaintiff retains “the burden to
demonstrate that [the Rule 23] requirements [a]re satisfied.” Mazzei, 829 F.3d at 270. At the
same time, a court must proceed cautiously and consider “possible prejudice to members of a
class who failed or were unable to take independent steps to protect their rights precisely because
they were members of the class.” Woe by Woe v. Cuomo, 729 F.2d 96, 107 (2d Cir. 1984). “[I]t
is an extreme step to dismiss a suit simply by decertifying a class,” especially “where a
potentially proper class exists and can easily be created” through the less drastic measure of
modification. Id. (internal quotation marks omitted).
Measured against these standards, and mindful that “no class may be certified” — or,
presumably, remain certified — “that contains members lacking Article III standing,” Denney v.
Deutsche Bank AG, 443 F.3d 253, 264 (2d Cir. 2006), AXA makes a forceful argument for
decertification of the Illustration-Based Claims Class. After all, Wells Fargo and similarly
situated securities intermediaries are the Registered Owners of as much as sixty-nine percent of
the policies at issue. Def.’s Mem. 14. Moreover, AXA is probably right that redefining the class
to include only “injured” Registered Owners would not solve the problem. Id. at 20-21.
Modifying the class in that manner might not be a traditional “fail-safe” class because even
injured Registered Owners might lose on the merits of their Section 4226 claims and be bound
by an adverse decision. See In re Initial Pub. Offering Sec. Litig., 671 F. Supp. 2d 467, 491-93
(S.D.N.Y. 2009) (certifying a class defined to include only “investors who were damaged”);
Royal Park Invs. SA/NV v. Wells Fargo Bank, N.A., No. 14-CV-09764 (KPF) (SN), 2018 WL
739580, at *8 (S.D.N.Y. Jan. 10, 2018) (rejecting the argument that a class defined to include on
“injured” members was a fail-safe class). Nevertheless, a class defined by injury would likely
“require an adjudication of the merits of each individual’s claim to determine whether they are
within the class, squandering whatever efficiency gains might be had from mass litigation.” Ruiz
v. Citibank, N.A., No. 10-CV-5950 (KPF) (RLE), 2015 WL 4629444, at *7 (S.D.N.Y. Aug. 4,
2015), aff’d, 687 F. App’x 39 (2d Cir. 2017) (summary order). That is, if the class was redefined
to include only injured Registered Owners, “the fact-finder would have to look at every class
member’s transaction documents to determine who did and who did not have a valid claim,”
which would defeat the purposes of class certification. In re Petrobras Sec., 862 F.3d 250, 274
(2d Cir. 2017) (cleaned up) (vacating class certification for failure to satisfy the predominance
Conspicuously, Plaintiffs fail to offer much in the way of a rejoinder to these arguments,
choosing instead to put all of their eggs in the standing basket. See Pls.’ Opp’n 19-20. Under
these circumstances, the Court would be on firm ground deeming Plaintiffs to have forfeited any
opposing arguments and, on that basis alone, decertifying the class. See AT&T Corp. v.
Syniverse Techs., Inc., No. 12-CV-1812 (NRB), 2014 WL 4412392, at *7 (S.D.N.Y. Sept. 8,
2014) (finding that plaintiff’s “silence concede[d] the point” where it failed to discuss
opponent’s argument in its opposition brief). But given the Court’s responsibility to safeguard
the rights of absent class members and the fact that decertification is “an extreme step,”
especially if “a potentially proper class exists and can easily be created,” Woe by Woe, 729 F.2d
at 107, the Court will not take that step here. Instead, the Court will proceed with caution and
give the parties an opportunity to reflect on the implications of its new ruling about Wells
Fargo’s standing and address the questions of decertification and modification further.
Finally, AXA separately argues that the New York Illustration-Based Claims Sub-Class
must be decertified because it does not meet the numerosity requirement. Def.’s Mem. 22-23.
As this issue could be affected by the fate of the class as a whole, the Court reserves judgment on
it too. That said, the Court is not presently persuaded that decertification of the New York SubClass is necessary. The numerosity inquiry focuses on whether the class is so large “that joinder
of all members is impracticable.” Fed. R. Civ. P. 23(a)(1). In the Second Circuit, “numerosity is
presumed at a level of 40 members,” Consol. Rail Corp. v. Town of Hyde Park, 47 F.3d 473, 483
(2d Cir. 1995), a threshold the New York Sub-Class fails to cross, Def.’s Mem. 23; see also Pls.’
Opp’n 22-23. . But there is “no magic minimum number” to establish numerosity, Gortat v.
Capala Bros., 949 F. Supp. 2d 374, 383 (E.D.N.Y. 2013), aff’d, 568 F. App’x 78 (2d Cir. 2014)
(summary order), and “[d]etermination of practicability depends on all the circumstances
surrounding a case,” Robidoux v. Celani, 987 F.2d 931, 936 (2d Cir. 1993). “Relevant
considerations include,” among others, “judicial economy arising from the avoidance of a
multiplicity of actions.” Id. Here, given the overlap in the elements of the New York Sub-Class’
Section 349 claims, and the Section 4226 claims of the nationwide class, judicial economy may
well be served by class adjudication. See also, e.g., Hoeffner v. D'Amato, No. 09-CV-3160
(PKC) (CLP), 2019 WL 1428367, at *5-7 (E.D.N.Y. Mar. 29, 2019) (certifying a subclass of
For the foregoing reasons, AXA’s motion for reconsideration on the question of whether
Wells Fargo has standing, as securities intermediary, to bring illustration-based claims is
GRANTED. The Court reserves judgment on the question of whether to decertify or modify the
class. 4 Unless and until the Court orders otherwise, Class Plaintiffs shall file a memorandum of
law, not to exceed ten pages, by August 17, 2022, addressing the implications of the Court’s
ruling on Wells Fargo’s standing, including whether decertification or modification of the class
is warranted. AXA shall file any response, not to exceed ten pages, by August 31, 2022. That
said, the parties should promptly confer and, if they believe that there is a better way to proceed
in light of the Court’s ruling, seek appropriate relief by letter motion.
The Clerk of Court is directed to terminate Docket No. 16-CV-740, ECF No. 608 and
Docket No. 18-CV-2111, ECF No. 269.
Dated: July 29, 2022
New York, New York
JESSE M. FURMAN
United States District Judge
The Court also reserves judgment on AXA’s request for discovery from absent class
members, see Def.’s Mem. 23-25, as that request may be affected, if not mooted, by resolution of
the decertification motion. AXA shall file any renewed motion for absent class member
discovery within one week of the Court’s resolution of the decertification motion.
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