On August 12, 2010, the U. S. Court of Appeals for the Eighth Circuit affirmed the denial of class certification in Avritt v. Reliastar Life Ins. Co., No. 09-2843 (8th Cir. Aug. 12, 2010), a case in which Plaintiffs challenged the manner in which interest was credited to fixed annuities. (Please click here for opinion).
In Avritt, the annuity contracts in question provided for a guaranteed minimum interest crediting rate, with discretion for the insurer to credit additional interest. Plaintiffs alleged that the insurer’s practice of paying lower interest rates on “old money” and higher rates on “new money” (i.e., banding) violated various duties of good faith, loyalty, and fair dealing. They further alleged misrepresentations and omissions in statements about the interest rate crediting practices. Plaintiffs alleged that these practices resulted in a breach of contract, a violation of the Washington Consumer Protection Act (WCPA), and a violation of the California Unfair Competition Law (California UCL).
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