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Patsy Chambers v. North American Company For Life and Health Insurance

November 18, 2011


The opinion of the court was delivered by: Marvin E. Aspen, District Judge:


Plaintiff Patsy Chambers has filed a three-count putative class action against Defendant North American Company for Life and Health Insurance ("NACOLAH"). On June 30, 2011, NACOLAH filed the present Motion to Transfer Case to the Southern District of Iowa. For the reasons discussed below, we grant the motion.


Plaintiff Patsy Chambers ("Plaintiff") is a resident of Iowa. (Compl. ¶ 14.) She is suing NACOLAH on behalf of herself "and all purchasers of indexed annuities from [NACOLAH] nationwide."*fn1 (Id. at 1.) NACOLAH was an Illinois corporation from May 13, 1886 until September 27, 2007, when it redomesticated to Iowa. (Id. ¶ 15.) NACOLAH is member of the Sammons Financial Group, Inc. ("SFG"), whose member companies provide investment services. (Id.)

At issue in this case is NACOLAH's sale and marketing of indexed annuities. (Id. ¶ 1.) As the complaint sets out, an indexed annuity is a deferred annuity that "permits the policyholder to allocate premium to a fixed account . . . and/or to one or more 'indexed accounts.'" (Id. ¶¶ 1, 20.) In essence, indexed annuities are "retirement savings and spending financial vehicles." (Id. ¶ 1.) Plaintiff alleges that NACOLAH induces customers to buy its indexed annuity plans without disclosing that sales commissions for NACOLAH's agents are paid from customers' assets. (Id. ¶¶ 99--100.) According to Plaintiff, "the first thing that happens when [policyholders] purchase NACOLAH's asset accumulation vehicle is that their assets are reduced by 10% to 15% or more." (Id. ¶ 3.) In addition, Plaintiff asserts, NACOLAH induces customers by claiming to pay them a premium bonus percentage, but in reality, customers pay for the so-called bonus themselves. (Id. ¶¶ 4--5.) Plaintiff contends that NACOLAH's scheme "targets the elderly . . . [but] injures everyone who purchases an indexed annuity." (Id. ¶ 2.)

Based on these allegations, the complaint enumerates three causes of action. The first cause of action alleges violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962©. Plaintiff accuses NACOLAH of "unlawfully selling indexed products to the general public." (Compl. ¶ 99.) According to the complaint, the RICO "enterprises," consisting of NACOLAH and its licensed agents, engaged in a "pattern of racketeering activity," including mail and wire fraud. (Id. ¶¶ 97, 107.) Plaintiff asserts that NACOLAH intentionally designed and sold indexed annuities that did not have the benefits NACOLAH advertised. (Id. ¶ 107.) As a result, NACOLAH profited from this "scheme" by receiving payments from Plaintiff and class members via hidden premiums and other charges. (Id.)

The second cause of action is for breach of Plaintiff's annuity contract with NACOLAH. Plaintiff contends that NACOLAH's contracts offend consumer protection statutes and do not provide the minimum benefits they say they provide. (Id. ¶ 7.) Specifically, Plaintiff explains, NACOLAH's contracts "do not guarantee the minimum nonforfeiture values . . . required by the prospective test of the SNFLIDA [Standard Nonforfeiture Law for Individual Deferred Annuities] for optional maturity date contracts issued to those ages sixty and older." (Id. ¶ 122.) Finally, Count Three alleges that NACOLAH has been and continues to be unjustly enriched because of its "unlawful and/or wrongful collection of . . . premiums, penalties and surrender charges for its indexed annuity products." (Id. ¶ 128.)


Pursuant to 28 U.S.C. § 1404(a), a court may, for the convenience of the parties and witnesses and in the interest of justice, transfer any civil matter to another district where venue is proper. A court may transfer a case if a moving party shows that: (1) venue is proper in the district where the action was originally filed; (2) venue would be proper in the transferee court; and (3) the transfer will serve the convenience of the parties and witnesses as well as the interests of justice. See Morton Grove Pharm., Inc. v. Nat'l Pediculosis Ass'n, 525 F. Supp. 2d 1039, 1044 (N.D. Ill. 2007).

The parties do not dispute that venue is proper in either the Northern District of Illinois or the Southern District of Iowa. (Compl. ¶ 4; Mem. at 6, n.4.) In determining where a defendant resides for venue purposes, 28 U.S.C. § 1391© provides that "a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced." The sole defendant here is a corporation that was subject to personal jurisdiction in both the Northern District of Illinois and the Southern District of Iowa at the time this case was brought. In addition, both courts have subject matter jurisdiction under 28 U.S.C. § 1331 because this case arises under federal law, RICO, 18 U.S.C. §§ 1961--1968. Neither party disputes these points.

The main concern here, then, is whether transfer to the Southern District of Iowa will serve the convenience of the parties and witnesses and the interests of justice. As the Seventh Circuit has recognized, deciding whether to transfer a case requires "flexible and individualized analysis" based on the circumstances of a particular case. Research Automation, Inc. v. Schrader-Bridgeport Int'l, Inc., 626 F.3d 973, 978 (7th Cir. 2010) (internal citations omitted). The district court determines the weight given to each factor and has wide discretion in deciding whether transfer is appropriate. Tice v. American Airlines, Inc., 162 F.3d 966, 974 (7th Cir. 1988); Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219 (7th Cir. 1986). The plaintiff's choice of forum is usually favored "unless the balance is strongly in favor of the defendant." In re Nat'l Presto Indus., Inc., 347 F.3d 662, 664 (7th Cir. 2003). As the party seeking transfer, NACOLAH has the burden to show that "the transferee forum is clearly more convenient" than the transferor forum. Heller Fin., Inc. v. Midwhey Powder Co., Inc., 883 F.2d 1286, 1293 (7th Cir. 1989) (internal citations omitted).

In deciding whether transfer would promote convenience, courts consider such factors as "the availability of and access to witnesses, [] each party's access to and distance from resources in each forum[,] . . . the location of material events and the relative ease of access to sources of proof." Research Automation, 626 F.3d at 978 (internal citations omitted). Relevant interest of justice factors under the transfer statute include: "docket congestion and likely speed to trial in the transferor and potential transferee forums, . . . each court's relative familiarity with the relevant law, . . . the respective desirability of resolving controversies in each locale, . . . and the relationship of each community to the controversy[.]" Id. With these principles in mind, we turn to the present motion.

A. Plaintiff's Choice of Forum

A plaintiff's choice of forum is generally given great deference. Vandeveld, 877 F. Supp. at 1167. In this case, however, because Plaintiff represents a putative class and opted to litigate outside of her home forum, we afford Plaintiff's choice of forum little weight. Plaintiff's choice deserves less weight than it otherwise would for three reasons: the chosen forum is not Plaintiff's home forum, Plaintiff represents a ...

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