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LISA MACOMBER ET AL. v. TRAVELERS PROPERTY AND CASUALTY CORPORATION ET AL. (SC 17440)
Borden, Norcott, Katz, Palmer and Vertefeuille, Js. Argued December 1, 2005--officially released April 4, 2006

Thomas J. Groark, Jr., and John A. Neuwirth, pro hac vice, with whom were Michael Shea, James K. Robertson, Jr., and, on the brief, Jonathan Margolis, pro hac vice, and Adam Schloss, pro hac vice, for the appellants (defendants). Ralph M. Stone, pro hac vice, with whom were John C. Matulis, Jr., and Thomas G. Ciarlone, Jr., pro hac vice, for the appellee (named plaintiff). Katherine A. Scanlon and Peter J. Vodola filed a brief for the Connecticut Business and Industry Association, Inc., et al. as amici curiae.

Opinion

BORDEN, J. The defendants, Travelers Group, Inc., Travelers Property and Casualty Corporation (Travelers Casualty), Travelers Equity Sales, Inc., Travelers Life and Annuity Company, and Solomon Smith Barney Holdings, Inc. (Smith Barney), appeal from the ruling of the trial court, certifying the claims alleged in four counts of the complaint as a class action and certifying the named plaintiff, Lisa Macomber, as the representative of the class.1 The defendants claim that the trial court abused its discretion in: (1) certifying the case as a class action because individual issues of law and fact overwhelm any issues common to the class; (2) certifying the plaintiff's claims as typical of absent class members and certifying her as an adequate class representative; and (3) ruling that a class action is superior to other methods of adjudication. We agree with certain parts of the defendants' first and second claims, and, accordingly, we reverse the class certification ruling.2 In 1999, Macomber and Kathryn Huaman sued the defendants in an initial complaint consisting of ten substantive counts. After the trial court, Aurigemma, J., struck the entire complaint for failure to allege a legally cognizable injury, the plaintiff appealed to this court. We reversed as to six of the ten counts. See Macomber v. Travelers Property & Casualty Corp., 261 Conn. 620, 653, 804 A.2d 180 (2002). Upon the remand, the plaintiff moved for class certification. After limited discovery and an evidentiary hearing, the trial court, Peck, J., granted class certification as to four of the remaining counts, namely, count three (breach of contract), counts four (CUTPA)3 and five (Connecticut Unfair Insurance Practices Act [CUIPA]),4 which were merged into one count, count eight (civil conspiracy), and count ten (unjust enrichment). It is undisputed, however, that the factual allegations underlying all of the counts are inextricably intertwined and, with certain minor exceptions, are essentially the same. This appeal followed. As noted previously, this is the second time that this court has considered this case. In the first case, the plaintiffs included Macomber and Huaman. Id., 622. In general terms, the complaint alleged that the defendants, in utilizing structured settlements to resolve various types of personal injury claims, had engaged routinely in two types of wrongdoing: a rebating scheme; and a shortchanging scheme. Id., 625. The rebating scheme was based on the fact that, when the annuities underlying the structured settlements were purchased by Travelers Casualty through brokers, the brokers would rebate a portion of their commissions to Travelers Casualty. The shortchanging scheme was based on the fact that Travelers Casualty, by virtue of the rebating and other arrangements, would spend less on the annuities than the amounts called for in its agreements with the claimants. Id.

Macomber alleged that she had entered a structured settlement in 1990 with Travelers Casualty that was part of the rebating scheme based on undisclosed rebates paid in connection with the annuity used to fund the structured settlement. Huaman alleged that in 1994 she had entered a structured settlement with Travelers Casualty that was part of the shortchanging scheme based on an annuity purchased through the defendant Smith Barney. With specific reference to Smith Barney, the complaint alleged that in January, 1994, Travelers Casualty had entered into an exclusive arrangement with Smith Barney, whereby Travelers Casualty would purchase all annuities through a subsidiary of Smith Barney, and whereby commissions on the annuities would be rebated to Travelers Casualty. Subsequently, the complaint alleged, Smith Barney merged with and became a subsidiary of Travelers Group, Inc. In that case, we considered whether the plaintiffs had alleged any legally cognizable damages, in the face of the defendants' contentions that the plaintiffs, who had entered into structured settlements, had received the precise income stream for which they had bargained. See id., 628. We held that, broadly construed, the plaintiffs' complaint alleged legally cognizable damages because it would permit proof that the defendants had represented to the plaintiffs the costs of their annuities, that the true costs were less than had been represented, and ``that, had the true facts been as the defendants represented them to be, the plaintiffs would have been able to negotiate structured settlements that: (1) cost and were therefore worth, more than were in fact negotiated; and (2) would have produced income streams greater than were in fact negotiated. In addition, the complaint would also permit proof that, as a result of the defendants' alleged misrepresentation of both the cost and value of the structured settlements, the plaintiffs paid their attorneys more than they would have, had they known the true cost and value of their annuities.'' (Emphasis in original.) Id., 629

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