## Facts

- Purchasers of PaineWebber’s “Provider” universal life insurance policy alleged PaineWebber marketed the product as an IRA or IRA substitute to replace declining IRA business.
- Plaintiffs claimed PaineWebber implemented a centralized marketing plan using standardized materials, broker training, and scripts designed to emphasize investment and retirement aspects while obscuring the product’s insurance nature and related costs.
- Evidence included company-prepared brochures and information pieces, training sessions, directives for managers to use prepared presentations, and standardized telephone scripts.
- The record reflected variation in what individual brokers told customers, including whether life insurance was mentioned and how fees and expected returns were described.
- Plaintiffs sought class certification under Rule 23(b)(3) for RICO and common-law fraud claims based on a common scheme executed through brokers.
- The district court denied certification, finding individualized issues concerning oral misrepresentations predominated.

## Issues

1. Whether the district court abused its discretion under Rule 23(b)(3) by denying class certification based on variations in brokers’ oral sales presentations.
2. Whether fraud-based claims resting on oral misrepresentations may be certified when plaintiffs offer evidence that the material content of the misrepresentations was uniform due to centralized scripts, training, and marketing materials.

## Decision

- The Second Circuit vacated the order denying class certification and remanded.
- The court held that fraud claims based on oral misrepresentations may be certified only when the misrepresentations are materially uniform so they can be shown with generalized proof rather than individualized testimony.
- The court concluded the district court applied an overly restrictive predominance analysis by treating variations in broker communications as dispositive and by discounting evidence of centralized, standardized messaging.
- The court instructed the district court to reconsider certification under the correct standard and without resolving disputed merits questions at the certification stage.

## Legal Principles

- Rule 23(b)(3) predominance is satisfied when common questions are a significant part of the case, even if some individualized issues (including reliance or damages) remain.
- Fraud and RICO claims premised on oral statements are not categorically barred from class treatment; certification turns on whether the alleged misrepresentations are materially uniform.
- Material uniformity may be shown through common proof such as standardized scripts, uniform marketing documents, and centralized training and directives.
- At class certification, courts must conduct a rigorous Rule 23 analysis but should not decide contested merits issues by weighing conflicting evidence about the existence or scope of the alleged scheme.

## Conclusion

The Second Circuit required the district court to reassess class certification using a material-uniformity framework, recognizing that centrally directed and standardized sales practices can support predominance in fraud and RICO claims even when individual broker statements vary in form.


Moore v. PaineWebber, Inc., 306 F.3d 1247 (2d Cir. 2002)