Brokers Buffer Insurer Against Class-Action Suit

“Independent brokers with different background and training give different sales presentations (based on the personal and financial circumstances of the client) and create different and unique written materials for their customers,” Seabright writes. “These unique communications result in highly individualized choices as to whether to purchase an [indexed annuity product], which IAP to purchase, which index or crediting method to select, how much to invest, how to allocate the investment premium, and the like.”

Some brokers did explain the annuities clearly and gave consumers written “worst case scenarios,” Seabright writes.

Because the circumstances are so varied, a court looking at Midland National annuity holders as a class would have to perform highly individualized, fact-specific calculations of each holder’s actual damages, and “it is not clear that a class action would conserve the resources of the judiciary or the parties,” Seabright writes.

Seabright also writes that the plaintiffs, in such a case in Hawaii, would have to show only that a transaction had left them worse off than they would be if they had not been deceived, not that they had actually lost principal.

Gerald Clay, a Honolulu lawyer who represents the plaintiffs in the case, was not immediately available to comment on the ruling.

Robert Phillips Jr., a lawyer who represents Midland National, issued a state welcoming the ruling.

“This ruling confirms that the determination of the appropriateness of the sales of Midland’s annuities must be made on an individualized basis,” Phillips says in the statement. “It is particularly significant because Judge Seabright rejected the primary arguments for class certification being advanced by plaintiffs’ counsel in other cases pending around the country.”