A judge in the U.S. District Court in Honolulu says plaintiffs cannot bring a class-action suit against an indexed annuity manufacturer, in part, because the independent producers who sold the contracts used different sales presentations and different marketing materials.

U.S. District Judge J. Michael Seabright used that reasoning in an order rejecting a decision by a federal magistrate judge to certify a class action.

Seabright says he made the decision based solely on procedural grounds and not on the merits of the case, Yokoyama et al. vs. Midland National Life Insurance Company.

The lawyers representing the plaintiffs in the case alleged that the defendant, Midland National Life Insurance Company, Sioux Falls, S.D., a unit of Sammons Financial Group, Chicago, sold elderly Hawaiians inherently unsuitable, deceptive indexed annuity products that were designed to hide the true cost of an early contract cancellation.

Seabright gave the plaintiffs permission to present testimony from a witness who argued that the contracts caused potential class members to receive an investment value of only $70 to $80 for each $100 invested.

But Seabright writes in the order that consumers who believe they were deceived should complain to the company, file a complaint with insurance regulators, or file an individual civil suit.

The rules governing federal class-action suits require that plaintiffs’ common issues must predominate over individualized questions, Seabright writes.

In this case, each Midland National annuity sale appears to be a highly individualized transaction, Seabright writes.

“Independent brokers with different background and training give different sales presentations (based on the personal and financial circumstances of the client) and create different and unique written materials for their customers,” Seabright writes. “These unique communications result in highly individualized choices as to whether to purchase an [indexed annuity product], which IAP to purchase, which index or crediting method to select, how much to invest, how to allocate the investment premium, and the like.”

Some brokers did explain the annuities clearly and gave consumers written “worst case scenarios,” Seabright writes.

Because the circumstances are so varied, a court looking at Midland National annuity holders as a class would have to perform highly individualized, fact-specific calculations of each holder’s actual damages, and “it is not clear that a class action would conserve the resources of the judiciary or the parties,” Seabright writes.

Seabright also writes that the plaintiffs, in such a case in Hawaii, would have to show only that a transaction had left them worse off than they would be if they had not been deceived, not that they had actually lost principal.

Gerald Clay, a Honolulu lawyer who represents the plaintiffs in the case, was not immediately available to comment on the ruling.

Robert Phillips Jr., a lawyer who represents Midland National, issued a state welcoming the ruling.

“This ruling confirms that the determination of the appropriateness of the sales of Midland’s annuities must be made on an individualized basis,” Phillips says in the statement. “It is particularly significant because Judge Seabright rejected the primary arguments for class certification being advanced by plaintiffs’ counsel in other cases pending around the country.”