Class settlements have been reached in annuity disputes recently by American National, Conseco and American Equity. Interestingly, all three cases were pending in courts in the State of California. While none of the settlements include a claims process, some contain relief gradations based upon factors that may be viewed as a proxy for a claim process. For example, the American Equity settlement provides greater relief for class members who purchased through a particular agent while the American National settlement provides greater relief for those who purchased a particular product. These scenarios might be viewed as informal subclasses. The Conseco settlement requires that class members complete and return a claim form to receive a certain benefit. As an alternative to a formal claim process, these settlement structures may be used to obtain more relief for class members who may have suffered particular harm, while providing less relief to class members who suffered lesser or different injuries.
The level of relief in these settlements – most of which consists of credits to annuity values if an annuity is in force and modest payments where the annuities are no longer in force – has varied considerably perhaps due, in part, to the procedural posture of the cases. For example, the court in the American National case entered a partial summary judgment against the company and American Equity suffered an adverse verdict in the first stage of a trial.
Recently, there has been a noticeable intersection of class action lawsuits and regulatory examinations. Accordingly, a few class settlements have settled claims from both civil class actions and regulatory proceedings together, while several reported opinions have addressed the extent to which a civil settlement could essentially preclude regulators from pursuing individualized remediation or rescission claims on behalf of purchasers who participated in class settlements. Given an increase in the level of collaborative market conduct examinations by groups of states, we expect to see heightened interest in such issues.