SUMMER 2007 NEWSLETTER - CLASS ACTION UPDATE

By Dean Foster

• Stonebridge Life Ins. Co. v. Pitts, No. 13-05-131-CV, 2006 Tex. App. Lexis 4364 (Tex. App. - Corpus Christi May 18, 2006).

Stonebridge marketed and sold accidental death and dismemberment ("ADD") insurance policies to individual consumers over the telephone. Stonebridge purchased consumer information, including names, telephone numbers, credit card account numbers, and bank account information from other businesses, primarily issuers of credit cards. Stonebridge then called the consumers whose information they had acquired and, using a standardized telemarketing script, offered ADD insurance policies on a free sixty-day or ninety-day trial basis. Consumers were told that, if they do not cancel their policies after the expiration of the trial period, their enrollment will continue and they will be billed for the premiums. However, the consumers alleged they were never informed that their credit card information was already known to Stonebridge and that their pre-existing credit card accounts would be billed automatically if they did not affirmatively act to cancel the policy.

A group of consumers, who purchased these ADD policies by consenting to the free trial enrollment, filed a class action petition against appellants alleging that appellants improperly charged appellees' credit card accounts for the insurance premiums after the expiration of the trial period. After limiting their case to a single cause of action for money had and received, the trial court certified the case as a class action. Stonebridge appealed the certification.

Stonebridge argued that the trial court did not conduct the rigorous analysis required in drafting a certification order pursuant to TRCP 42(c) (1). Specifically, Stonebridge argued that the level of discovery established by the trial order was inadequate and the certification order was therefore defective. Stonebridge stated that it needed individual responses from each class member in order "to decide who did, and who did not, give permission" to be enrolled in the insurance program, as well as which class members knew about the charge on their monthly statement and gave their approval. The court of appeals disagreed given that sole cause of action asserted by the plaintiffs, money had and received, is a purely equitable remedy and does not require plaintiffs to establish the elements of consent or reliance. The court noted that the question presented by this litigation was not whether appellants received permission to enroll the class members in their insurance program, appellants presumed consumers' consent in order to begin billing. The liability question presented is whether this permission could equitably be used to begin automatically billing those members using previously-received but undisclosed personal credit and banking information. What the individual consumer intended or thought when answering "yes" to the enrollment questions is irrelevant because the sole cause of action simply asks what equity would allow.

The trial court's certification of the class was affirmed.

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