Sean Turnbow et al. v. Life Partners Inc. et al.

Class certification was denied in Sean Turnbow et al. v. Life Partners Inc. et al., a securities-related matter in which a putative class of about 13,000 investors alleged violations of federal and local law relating to the sale or transfer of ownership of life insurance policies. The case was heard in the U.S. District Court for the Northern District of Texas (Dallas Division).

Waco, Texas-based Life Partners Inc. serves as an intermediary for sellers and purchasers in life insurance settlement transactions. These transactions involve the sale of a previously issued life insurance policy to a purchaser, who takes an ownership interest in the policy, assumes the obligation to pay premiums, and receives payment of the policy's death benefit when the policy matures; that is, when the insured dies. Among other claims, the plaintiffs alleged that Life Partners breached its fiduciary duty and its implied contractual duty by providing grossly inaccurate life-expectancy assessments -- a key factor for determining policy costs and expected rates of return on investments.

An Analysis Group team led by Vice President Bruce Blacker was retained by Baker & McKenzie on behalf of the defendants to address issues related to class certification and potential damages. Mr. Blacker provided expert testimony, concluding that a classwide formula could not be utilized to reasonably estimate the actual damages allegedly suffered by individual purchasers in the purported class. Without a single formula, the computation of damages would be a highly individualized task, he said.

District Court Judge Barbara M.G. Lynn denied certification to the putative class, noting in her decision that the plaintiffs had failed to demonstrate that issues pertaining to liability and damages are susceptible to resolution using classwide proof. "The common questions, to the extent they exist, do not predominate, making a class action an inferior method of adjudicating the case," she wrote. In particular, she cited reliance as a barrier to certification. "The case would require approximately 13,000 mini-trials to prove whether class members would have made purchases, and for what amount, had they received more information."

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