In Zarrella v. Pacific Life Insurance, plaintiffs brought a class action against the insurer alleging that it misrepresented the suitability and tax benefits of life insurance policies sold for use in employer-sponsored 412(i) retirement plans, which the IRS later classified as abusive tax shelters, resulting in audits, lost deductions, and penalties for plaintiffs. The second amended complaint asserted claims including breach of contract, multiple fraud-based counts, negligence, violation of California’s Unfair Competition Law, and an alternative ERISA claim. On Pacific Life’s motion to dismiss under Rules 12(b)(6) and 9(b), the court applied the plausibility standard from Twombly and Iqbal along with heightened pleading for fraud claims and granted the motion in part by dismissing the fraud-based claims for failure to plead justifiable reliance while denying dismissal in part as to non-fraud UCL claims based on false advertising predicates and certain other counts.
business & regulatoryproceduretaxestorts & liability
This case involved a motion for sanctions after the defendant's insurance representative failed to attend a court-ordered mediation in a civil lawsuit against AvMed, Inc. The court had previously directed that parties or their representatives with full settlement authority, including an insurance adjuster if applicable, must participate in mediation pursuant to a standing order and Local Rule 16.2(e). Plaintiff sought various sanctions under Federal Rule of Civil Procedure 16(f), including denial of the defendant's summary judgment motion and payment of mediation and attorney fees. The court granted monetary sanctions of $1,000 against defendants to cover mediation costs and preparation time but denied the request to strike the summary judgment motion, finding that while noncompliance warranted fees, more severe penalties were not justified. The parties were ordered to complete mediation by a new deadline.
The case involved a breach of contract claim brought by Marseilles Capital LLC against Gerova Financial Group, Ltd. after the parties entered a share repurchase agreement requiring Gerova to pay $900,000 in twelve monthly installments in exchange for the return of shares. Marseilles alleged that Gerova paid only the first seven installments totaling $525,000 and sought summary judgment for the remaining $375,000. The court granted the motion for final summary judgment, finding no genuine dispute of material fact on any element of the claim under Florida law. The core reasoning was that undisputed evidence established the existence of a valid contract, Gerova's failure to pay after Marseilles delivered the required stock power, and resulting damages of $375,000.
In Jovine v. Abbott Laboratories, Inc., the plaintiff brought a class action in Florida state court against the manufacturer of Similac infant formula after a 2010 recall of millions of cans due to possible beetle contamination discovered during quality review, alleging his infant became ill and asserting eight claims including negligence, misrepresentation, breach of express and implied warranties, breach of contract, unjust enrichment, and violation of the Florida Deceptive and Unfair Trade Practices Act. The case was removed to federal court. The district court granted the defendant's motion to dismiss the amended complaint with leave to amend, primarily because it constituted an improper shotgun pleading that incorporated all general allegations by reference into each count without adequately linking facts to specific causes of action, and secondarily because claims such as breach of warranty lacked privity of contract while fraud-based claims failed to satisfy the heightened pleading requirements of Federal Rule of Civil Procedure 9(b).
The case involved plaintiffs who purchased life insurance policies from Pacific Life to fund a 412(i) retirement plan, which was later audited and disallowed by the IRS as an abusive tax shelter. Plaintiffs sued for breach of contract, fraud, negligence, and unfair business practices, alleging the policies were marketed with features that violated IRS rules. The court granted the motion to dismiss, reasoning that the policy documents contained clear disclaimers against relying on Pacific Life for tax or legal advice, making any reliance unreasonable. The court also noted that the negligence claim would be barred by the economic loss rule if tied to the contract claim.
business & regulatorytaxesproceduretorts & liability
In Moss v. Walgreen Co., plaintiff Howard Moss filed a putative class action alleging that Walgreen Co. made unsubstantiated and misleading claims on its Full Action mouth rinse labeling, such as fighting plaque above the gum line, in violation of the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) and as a breach of express warranty, causing consumers to pay a price premium. Walgreen moved to dismiss under Rules 12(b)(1) and 12(b)(6), arguing that the claims were preempted by the federal Food, Drug, and Cosmetic Act (FDCA) and that the complaint failed to allege sufficient facts, including reliance under FDUTPA. The court denied the motion, holding that the FDCA does not preempt the state-law claims because they do not rely solely on FDCA violations, that the pleadings met plausibility standards under Twombly and Iqbal, and that FDUTPA damages can arise from a price premium even without individual consumer reliance on the deceptive statements. The decision allowed the case to proceed on both counts.