Regulatory

Class Actions

• Legal Cases – Index
• Legal Cases – Multidistrict Litigation – MDL   
• Class Action Fairness Act of 2005
  • scholarship.law.upenn.edu/penn_law_review/vol156/iss6/
    • 2008 – LR – The Class Action Fairness Act in Perspective: The Old and the New in Federal Jurisdictional Reform, by Edward A. Purcell, Jr. – 105p
    • 2008 – LR – The Class Action Fairness Act of 2005 In Historical Context: A Preliminary View, by Stephen B. Burbank – 113p
    • 2008 – LR – Cafa Judicata: A Tale of Waste and Politics, by Kevin M. Clermont and Theodore Eisenberg – 40p

• The actual versus expected performance for some Universal Life policies led to class-action lawsuits that have caused a substantial amount of negative attention to be focused on cash-value life insurance in the illustration of projected values. 

—  Deanne Osgood, Milliman & Robertson

1999 – SOA – The Next Generation Universal Life, Society of Actuaries – 30p

• 2003-1, NAIC Proceedings – 2022 1216 – Legal Times – Class Actions to Raid Insurance Coffers Recklessly Undermine Expert Decisions of State Regulators, By Lawrence H. Mirel (Larry Mirel) – District of Columbia Insurance Commissioner – Attachment Four-B – 

• 1997 1024 – WSJ – MONY Wins Dismissal of Suit Over ‘Vanishing Premium’ Policies, by Leslie Scism – [link]
  • The company, popularly known as MONY, won a dismissal this week of a national class-action lawsuit that is similar to more than 30 suits pending against major life insurers.
  • … in the MONY case, New York state judge Beatrice Shainswit found that..
    • while thousands of consumers nationally “have been deeply aggrieved by what they perceive to be a grave injustice perpetrated upon them by the numerous insurance companies who contrived, and profited, from the “vanishing premium” concept,” this “ill-conceived product” doesn’t necessarily “equate to fraud, or any other actionable wrongdoing, which can be compensated for in a court of law.”
    • Her 29-page decision debunks key arguments in almost all of the suits. – <WishList = “29-page decision”>
      • She said insurance agents don’t have a fiduciary relationship with their clients, as plaintiffs’ lawyers contend.
      • She also maintained that sales documents stating that dividends aren’t guaranteed at high levels were sufficient warning to consumers that they couldn’t rely on other promotional literature showing rosy dividend scenarios.
  • [ACLI] – “This case, being typical of many other baseless class actions, will be cited as authority in other jurisdictions for dismissing those frivolous cases,” predicted Phillip Stano, senior counsel for the American Council of Life Insurance, a trade group in Washington. “And we congratulate MONY for standing up to those who sought to intimidate them into a frivolous settlement.”

• 1998 – SOA – Corporate Governance of Investments: Avoiding the Next Class-Action Suit?, Society of Actuaries – 20p
• 1998 0305 – GOV (House) – Mass Torts and Class Action Lawsuits, Howard Coble (R-NC) – [link]
  • Barney Frank (D-MA)
  • House – Committee on the Judiciary – Subcommittee on Courts and Intellectual Property
• 1999 0914 – GOV (House-Report) – Interstate Class Action Jurisdiction Act of 1999  —  [BonkNote]  —  47p
  • The Committee on the Judiciary, to whom was referred the bill (H.R. 1875) to amend title 28, United States Code, to allow the application of the principles of Federal diversity jurisdiction to interstate class actions, having considered the same, reports favorably thereon with an amendment and recommends that the bill as amended do pass.
  •  
• 2018  08 – DRI For the Defense – As Universal Life Insurance Premiums Increase, So Does Class Action Litigation”, p12-19 – [92p]

• (p37) – AARP – Cristina Martin Firvida, Director, Financial Security and Consumer Affairs – There are two additional things that I would just like to add briefly, because we have talked a lot about the litigation risk in this rule. And I would like to make sure that we say today, reminding everyone that the litigation that is permitted in the rule is class-action litigation. And there are two things about that we need to remember.
  • ⇒  First, there has to be a systemic problem before a class-action cause of action can be brought, and I think that we can all agree that if there is a systemic issue in advice that is being provided, we would want to address that. So this is not about individual rights of action. This is about a systemic problem that affects a class.
  • And second, it is extremely difficult to certify a class, extremely difficult and more so in recent years after certain Supreme Court cases have been decided. So I really just wanted to make sure that we were all clear on what is the scope of the litigation risk.

2017 0713 – GOV (House) – Impact of the DOL Fiduciary Rule on the Capital Markets, Bill Huizenga (R-MI)  —  [BonkNote]

• 2005 0209 – GOV (Senate) – Senate Session
  • Class Actions, KB Toys (Deceptive Pricing Practices – 05:28:00 – Hatch), Coca Cola (Apple Juice – 05:29:00 – Hatch)
  • 2005 0209 – Congressional Record – [PDF-70p]
    • [VIDEO-CSPAN]
  • 05:17:00 (pS1178) – Orrin Hatch (R-UT) – Abuse of the class action system has even become the inspiration for popular literature.
    • In 2003, the author, John Grisham, released a book entitled ”The King of Torts.” Grisham’s novel takes its reader into the world of the mass tort/class action lawyer where clients are treated like chattel and bargaining chips.
    • The value of a potential action is not measured by the merit of the claim but on the number of class members that can be rounded up.
    • The end game is not the pursuit of justice for the class members and clients, but in the pursuit of a hefty attorney’s fee.
    • Although Grisham’s book is intended as fiction, it is hard to distinguish it from the facts of our broken class action system. Let me read a few passages: 
    • 05:46:00 – Settlements, Verdict Money – Big, even if unjust, This doesn’t take away consumer rights, important cases should be in important courts. Less Jackpot Justice, Forum Shopping. Madison County Illinois, It’s a disgrace what has gone on. Disgrace in the Law in this country.
  • 04:55:00 – pS1176 – Senator Patrick Leahy (D-VT) – I have been in the Senate for 31years. I came at a time when there was a real effort for Republicans and Democrats to work together, and for White Houses to do so.
    • 05:00:00 – Senator Patrick Leahy (D-VT) – Attack on Senator Reid.  We should be working together.
    • 05:04:00 – Senator Patrick Leahy (D-VT) – They might stir up some of the true believers this way. They do nothing for the country. They do nothing for the Nation. All they do is deepen the divides instead of healing them. It would be nice if we could have leaders.
      • class actions – 

• Commissioner Mirel distributed a proposed outline for a white paper on class action lawsuits (Attachment Three A).
  • He announced that the outline was a draft and he welcomed input from everyone on it.
  • He observed that the civil justice system is very different from the regulatory system in that the courts are asked to decide justice between or among the parties while the regulatory system is asked to determine the best public policy for all citizens.
  • The two systems can become conflicted when the civil justice system goes beyond its usual realm and renders judgments that have profound impact on persons not represented in the courtroom, and on the public in general.
  • Insurance regulators and the courts both rely on state laws to guide their efforts.
    • Often, however, there is little awareness by courts and trial lawyers of the regulatory system and its purpose.
    • This is of concern to regulators and legislators as they try to draft laws that are clear and convey the public policy decisions that they wish to make. (p336)

2003-2, NAIC Proceedings – Class Action Insurance Litigation (C) Working Group, Property and Casualty Insurance Committee

• Equitable Life Insurance was accused of misleading and cheating customers.
• This was a situation of the so-called vanishing premium cases in the 1980s.
  • They sold policies when interest rates were high.
  • They told customers as soon as the interest rates went down their premiums would be lower.
    • That was not true.
  • Class action lawsuits were filed in Pennsylvania and Arizona state courts, and Equitable settled the suits for $20 million helping over 130,000 people.
  • However, because the insurance company was based in another state, under this legislation, the case would have been removed to federal court and these people harmed between 1984-1996 would still be waiting for justice.  (S1150)

—  Harry Reid (D-NV) 

• 2005 0209 – GOV (Senate) – Senate Session
  • Class Actions, KB Toys (Deceptive Pricing Practices – 05:28:00 – Hatch), Coca Cola (Apple Juice – 05:29:00)
  • 2005 0209 – Congressional Record – [PDF-70p]
  • [VIDEO-CSPAN]

• Plaintiffs wrongly accuse the court of speculating about agent disclosures.
  • What the court concluded was that the non-uniform sales process inherently defeats Plaintiffs’ class-wide omission theory. ER791 49:11-50:3.
  • The trial record supports that conclusion, and is dispositive. See Kaldenbach v. Mutual of Omaha Life Ins., 178 Cal. App. 4th 830, 847-848 (2009)

– LC – Walker et al v. Life Insurance Company of the Southwest Settlement, Case No. CV-10-9198-JVS-JDE  —  [BonkNote]

http://lswclassaction.com/docs/download/SANFRAN-%238165194-v1-2016_02_08_042_Appellees_Answering_Brief.pdf

• 2002 0731 – GOV (Senate) – Class Action Litigation, Patrick Leahy (D-VT)  —  [BonkNote]  
  • (p55) – AEGON – Patrick Baird
    • The life insurance industry has experienced over a decade of abusive class actions.
    • In one of the more recent examples of such class action abuses.
    • State courts in New Mexico are certifying nationwide classes of plaintiffs for the manner in which their premiums are disclosed in their policies.
    • These cases are being certified even though State Commissioners of Insurance reviewed and approved these policy disclosures.
    • These class action cases have steadily weakened the very fabric of State regulation of insurance as the State judges’ decisions have had national implications for insurers in other states.
    • The result of nationwide regulation through targeted class action litigation has indirectly usurped the role and authority of the State Commissioners of Insurance.
  • Senate – Committee on the Judiciary

• 1996 – SOA – Legal Issues Affecting Nontraditional Products, Society of Actuaries – 14p
  • Metlife – Florida – Nurses
  • Prudential – Multi-State Task Force
  • Media

• p11 – Philip A. Loomis, SEC Commissioner, Securities and Exchange Commission – …and the Superintendent of Insurance case, has considerably expanded the scope of private litigation for violations of the securities laws, as compared with what existed before.
  • And this, of course, has encouraged private plaintiffs to bring actions.
  • Class actions have also become more common than they used to be.
  • And class actions are frequently used in securities cases where you will have a person who has defrauded each of 10,000 people out of a $100, and no one of them can effectively sue, but if you have got a class action for all 10,000, it is an action worth bringing and may be brought. 

1975 – GOV (Senate) – The Bankruptcy Reform Act, Quentin N. Burdick (D-ND)

⇒  Part 2 – APRIL 29, 30; JUNE 4; JULY 31; SEPTEMBER 24, 25; OCTOBER 1 , 8, 30; NOVEMBER 5, 6, 11, 12, AND 18 –  [PDF-717p-GooglePlay]

• Civil Rule 23 – Working Papers of the Advisory Committee – on Civil Rules on Proposed Amendments to Civil Rule 23 – Volume Two, Compiled by the Rules Committee Support Office, Leonidas Ralph Mecham, Director Administrative Office of the United States Courts
  • uscourts.gov/sites/default/files/workingpapers-vol2.pdf

• It has an impact on other insurance companies, too.
  • A few years ago, I found I had been made a plaintiff in a case brought in Santa Fe, New Mexico, against Massachusetts Mutual Life Insurance Company.
• What was it alleged Massachusetts Mutual had done wrong?
  • Well, when you get your premium, your bill, from Massachusetts Mutual, you can pay it on a monthly, quarterly, or annual basis.
    • If you pay it on a monthly basis, you pay a little more than on a quarterly basis, and that is a little bit more than on an annual basis.
    • Why? Because if you pay on an annual basis, it costs them a lot less money to send out one bill than to send out 12 bills a year, and they have the opportunity to get that money sooner invested.
    • So it is a little less expensive to them, and they pass that savings along to the consumer.
  • The plaintiff in this case and their attorney said they should have to spell out exactly what the difference in savings is rather than simply look at the bill and see that these payments are 12 times what there is and that that is a little more.
    • They said they had to make a disclosure under laws that are not even supposed to apply to insurance companies.
  • Well, they went ahead and settled that case.
    • Why? I asked them.
      • They said because they did not want to get in the same situation that State Farm Insurance Company found itself in with a $1.3 million lawsuit.
  • What was the agreed-upon settlement they sent to the judge in that Santa Fe, New Mexico, court?
    • Well, it provided for $13 million in attorneys’ fees, $5 million up front, $5 million over a period of time, and a nice $3 million universal life insurance policy for the plaintiffs’ attorneys. Is that not nice?
  • Now, what did the plaintiffs get?
    • The plaintiffs, all the plaintiffs got a promise that Massachusetts Mutual would not do this again.
  • Now there is a new settlement proposed because that one actually was withdrawn when they realized how embarrassing it was for the plaintiffs’ attorneys to get $13 million in fees and the plaintiffs would simply get a promise for nothing.
• Now they have changed it so the plaintiffs might get as much as $50 off on their policy.
• The plaintiffs’ attorneys would still get the massive 8-digit settlement amount in the multimillions of dollars.  (p55 / H687)

—  Congressman Bob Goodlatte (R-VA)

2002 0216 – Congressional Record – 255p

• That is wrong.
  • And it is just one more clear example of evidence why this is an extortion racket.
• Here are some more of what we call the class action wheel of fortune.
  • If you are a company, or if you work for a company that gets caught up in the class action wheel of fortune, watch out, because it can affect your job, it can affect the success of your company and get you tied up in these multimillion dollar cases where there really is little or no damage; or, even if there is, like there was in the Thompson Electronics case, where the television sets were not working, the attorneys got $22 million and the plaintiffs got a coupon, a $50 coupon or a $25 coupon to buy more of the same thing they were not happy about in the first place. (p55 / H687)

— Congressman Bob Goodlatte (R-VA)

2002 0216 – Congressional Record – 255p