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"[C]lass claims for breach of contract and breach of the duty of good faith and fair dealing [are] not precluded by SLUSA, even if such claims related to the purchase or sale of a covered security, because these contract claims did not rest on misrepresentation or fraudulent omission."

Plaintiffs brought a federal class action against Pacific Life Insurance Company after purchasing variable universal life insurance policies, regulated as securities by federal law, for which plaintiffs assumed the investment risks. They alleged multiple state action claims and accused Pacific of “levying excessive cost of insurance charges.” Pacific moved to dismiss and argued that the suit was precluded by the Securities Litigation Uniform Standards Act (“SLUSA”) because claims were brought under state law. The district court granted the motion after giving Plaintiffs two leaves for amendment. The issue was whether “SLUSA displace[d] class actions alleging breach of a variable universal life insurance contract.” The Court noted that Plaintiffs raised “a dispute about the meaning of a key contract term,” an issue for the factfinder upon remand, and alleged a “straightforward contract claim that doesn’t rest on misrepresentation or fraudulent omission.” Thus, the breach of contract and breach of duty of good faith and fair dealing survived SLUSA. Plaintiffs' fraudulent claim, however, was precluded by SLUSA, because “[e]very time Pacific collected the allegedly inflated cost of insurance charge, it sold securities to generate the funds,” and the “in connection with” standard was met. Regarding Plaintiffs' argument that the “district court erred in dismissing their complaint with prejudice because, even if SLUSA prevents them from proceeding as a class, they should be free to pursue their claims as individuals,” the Court gave leave for Plaintiffs to amend the complaint “to pursue their claims as individuals," because there would be amendments on other grounds upon remand. The Court held that “the class claims for breach of contract and breach of the duty of good faith and fair dealing are not precluded by SLUSA, even if such claims relate to the purchase or sale of a covered security.” AFFIRMED in part, REVERSED in part and REMANDED.