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Cowden v. Parker & Associates, Inc.

United States District Court, Sixth Circuit

May 22, 2013

HAROLD DAVID COWDEN, et al., Plaintiff,
PARKER & ASSOCIATES, INC., et al., Defendant.


KAREN K. CALDWELL, District Judge.

This matter is before the Court on the Motion for Class Certification (DE 55) filed by the Plaintiffs. For the following reasons, the motion will be denied.

I. Facts

Defendant Parker & Associates, Inc. is an insurance agency that, through independent agents, sells insurance policies offered by various insurers. (DE 55, Mem. at 2; DE 61, Response at 9.) Defendant Dalvin Kendall Parker owns a majority of Parker & Associates and oversees its operations. (DE 55, Mem. at 3.) Plaintiffs Cowden and Biddle are insurance agents who sold Medicare Advantage Plans for Parker & Associates and affiliated companies. (DE 55, Mem. at 1.) Medicare Advantage is a type of health plan offered by a private insurance companies that provides insureds with Medicare Part C and Part D coverage. (DE 55, Mem. at 3.) The insured typically pays nothing for the insurance. (DE 55, Mem. at 3.)

The Plaintiffs assert that Parker & Associates agreed to pay them certain commissions on the MA plans they sold but that Parker & Associates has refused to pay them and has, instead, kept the commissions received for itself. (DE 1-3, Complaint ยงยง 4-5; DE 55, Mem. at 1). The Plaintiffs assert claims of fraud, negligent misrepresentation, breach of contract, unjust enrichment, conversion, and promissory estoppel against the Defendants.

The issue currently before the Court is whether the Plaintiffs should be able to bring this action as a class action. The Plaintiff seeks to represent a class consisting of:

all persons who entered into agreements with Defendant Parker & Associates and/or other companies affiliated with Parker & Associates (collectively the "Parker Companies") to act as agents for the purpose of placing policies of Medicare Advantage Plans, Parts C & D ("MA Plans") with eligible insureds in return for monetary commissions and renewal fees in the Commonwealth of Kentucky and elsewhere in the United States, for the period beginning in or around 2004 through the present (the "Class Period").

(DE 55, Mem. at 1.)

The Plaintiffs estimate that the class would be between 1800 and 3, 000 members. (DE 55, Mem. at 20; DE 70, Hearing Tr. at 6.) The Defendants estimate the class size would be 6, 500 members. (DE 70, Hearing Tr. at 6.) The Defendants further estimate that class members would likely be located in every state. (DE 70, Hearing Tr. at 27.)

II. Rule 23 Requirements

It is first important to note that a class action is "an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only." Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2550 (2011) (quoting Califano v. Yamasaki, 442 U.S. 682, 700-01 (1979)). The party moving to certify the class has the burden of proving that class certification is appropriate. In re American Medical Systems, Inc., 75 F.3d 1069, 1079 (6th Cir.1996). The Court must conduct a "rigorous analysis" of the elements of Rule 23 before certifying a class. Gen. Tel. Co. v. Falcon, 457 U.S. 147, 161 (1982). See also Fed.R.Civ.P. 23. "A party seeking class certification must affirmatively demonstrate his compliance with the Rule." Dukes, 131 S.Ct. at 2551.

Rule 23(a), sets forth four requirements for a class action: (1) the class must be so numerous that joinder of all members is impracticable, (2) there must be questions of law or fact common to the class, (3) the claims or defenses of the representative parties must be typical of the claims or defenses of the class, and (4) the representative parties must fairly and adequately protect the interests of the class.

The Defendants do not contest that the Plaintiffs meet all of these requirements. In addition to meeting all the prerequisites of Rule 23(a), however, the plaintiff must also show that the action satisfies at least one of the subsections of Rule 23(b). Here, the Plaintiffs seek certification under subsection (3) of Rule 23(b) which provides that the Court can certify a class if 1) "questions of law or fact common to class members predominate over any questions affecting only individual members, " and 2) a class action is superior to other available methods for the fair and efficient adjudication of the controversy. Fed.R.Civ.P. 23(b)(3).

The Defendants argue that neither of these requirements are met in this action.

A. Predominance

"To satisfy the predominance requirement in Rule 23(b)(3), a plaintiff must establish that the issues in the class action that are subject to generalized proof, and thus applicable to the class as a whole, ... predominate over those issues that are subject only to individualized proof." Beattie v. CenturyTel, Inc., 511 F.3d 554, 564 (6th Cir. 2007) (quotations and citation omitted).

The Plaintiffs' allege that Parker & Associates has failed to pay the agents commissions as Parker & Associates promised to do. The Defendants, on the other hand, argue that they have not wrongfully withheld any commissions at all. Instead, the Defendants argue, they have withheld commissions only from those agents who actually owe Parker & Associates money either because Parker & Associates advanced commissions to the agent that the agent did not ultimately earn or because Parker & Associates has paid various expenses on the agent's behalf that that agent has not yet paid back. (DE 61, Response at 1).

The first issue to resolve in determining whether Parker & Associates breached any obligation to pay the agents money is to determine what precisely Parker & Associates promised to pay the agents. For class certification purposes, the critical issue is whether the amount Parker & Associates promised to ...

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