This panel offered a history of class action litigation involving life insurance and annuity products. According to the panelists, the class actions in the life insurance context (with the exception of ERISA suits) were virtually unheard of prior to 1993. Throughout the mid to late 1990’s there were in the area of 300 class actions involving sales practices and misrepresentations. Many of those suits were settled before the class certification process. Of those that progressed to the certification stage, defendants were highly successful in defeating class certification. After the suits against life insurance companies began to die down, there were many suits involving annuities, which had more success in being certified as class actions because of their use of consumer fraud statutes to overcome one of the major barriers to class certification – reliance.
Some of the highlights included a discussion of considerations involved in determining whether to settle or proceed to trial, how to plan, prepare and conduct the trial, and issues to consider when negotiating a settlement. Interestingly, the panel--both defense counsel and plaintiff’s counsel--agreed on many nuances regarding the planning and preparation for trial. They explained that regardless of whether one plans to proceed to trial or to eventually settle the case, the goal is to proceed with discovery and motion practice in a way that puts your client in the best possible position for settlement, a motion for summary judgment, or trial.
A central point was the issue of discovery or depositions of absent class members (i.e., members of the class other than the class representatives). The ability to obtain this discovery can be key to defendants in defeating class certification and for rebutting the class-wide inference on loss causation. Although the panelists acknowledged that access to these absent class members may be difficult to obtain from the judge, especially in the face of arguments by plaintiffs’ counsel that the class representatives provide a representative sample of the class. Although judges may allow depositions of these class members, they may limit the number of depositions.
The defense counsel panelists explained that their ability to depose a small number of absent class members in a recent annuity class action was instrumental to receiving a favorable jury verdict because those depositions showed that many of the class members were unlike the class representatives because those absent members deposed were fully educated on the purchase of the annuity products.
The second half of the session focused on the Aviva class action suit (a suit filed against Aviva’s predecessor) for allegations involving deferred annuity sales to seniors. That suit involved allegations that deferred annuity sales to seniors. Plaintiffs alleged that the products were unsuitable, that key terms were not disclosed and that the living trusts were used as “door openers.” The suit was ultimately settled. The panelists perspectives on this suit, which focused in large part on settlement of the suit and the considerations involved therein, were especially interesting because the panel consisted of counsel for the defendants, counsel for the plaintiffs and an in house representatives from the defendants.