We previously reported how life insurers were successful in winning dismissal of two putative class actions filed in the Southern District of New York.
Both cases challenged the use of certain Regulation XXX/AXXX reinsurance transactions issued to life insurers by life insurer-owned captive insurance companies. Both of those cases were dismissed under Rule 12(b)(6), for a lack of standing, because the plaintiffs failed to articulate any personal injury or actual harm in their allegations against the life insurer defendants.
Robainas has been appealed by the plaintiffs to the Second Circuit Court of Appeals. In a related case, Yale v. AXA Equitable Life Insurance Co. (No. 15-2665, 2d Cir.), the Plaintiffs-Appellants have moved to consolidate their case with Robainas v. Metropolitan Life Ins. Co. No. 15-3504 andYarbrough v. AXA Equitable Life Ins. Co., No. 15-3553.
The motion was unopposed, so it is expected that the motion to consolidate and adopt a uniform briefing schedule will be granted.
The motion to consolidate also notes that "the dispositive legal issue in all three cases may be significantly shaped by the pending decision in Spokeo, Inc. v. Robins, No. 13-1339, 2014 WL 1802228 (U.S.) cert. granted, 135 S.Ct. 1892 (2015), which involves the scope of Congressional authority to create Article III standing by virtue of a federal statute authorizing a private right of action." Spokeo was just argued on November 2, 2015 so it is unlikely that we will see an opinion issued by the end of the year.
Each of these putative class actions alleged that the life insurer defendants violated New York Insurance Law Section 4226, which entitles policyholders of life insurance or annuities to recover a statutory penalty if the life insurer makes any "misleading representation" or "misrepresentation" concerning its financial condition or reserves. The plaintiffs allegations - closely following theShining a Light on Shadow Insurance report published by the New York State Department of Financial Services - that certain life insurers used captive reinsurance transactions under Regulations XXX/AXXX to artificially inflate their financial position. What the Plaintiffs did not - and could not - allege was any concrete and personal harm or injury-in-fact which they had suffered.