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Ohio National, Foes Seek Halt to Trailing-Commissions Case

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In the midst of multiple lawsuits accusing Ohio National Life Insurance of improperly cutting off trail commissions to brokers and agents selling its variable annuities, a Texas brokerage and the insurer have asked a federal judge to put a halt to litigation there until a parallel lawsuit in Ohio can proceed.

The filing comes after U.S. District Judge Susan Dlott of the Southern District of Ohio tossed out two related lawsuits last month. An appeal has already been filed in one of those lawsuits.

But Dlott allowed another suit, Veritas Independent Partners v. Ohio National Life Insurance, to proceed to discovery.

Given the unsettled nature of the litigation playing out nationally between broker-dealers and Ohio National and its affiliates, lawyers in the Texas litigation said it would be prudent to wait until Veritas is resolved “or at least until discovery is coordinated among the multiple cases filed around the country regarding this dispute.”

The cases stem from Ohio National’s decision to discontinue payment of trail commissions to brokers and agents who serviced its variable annuities from 2012 through 2018, and which it stopped selling last year.

Thousands of brokers were impacted by the decision to end the payments, which were offered to them in lieu of accepting lump-sum commissions when they sold the annuities.

Dlott dismissed two of the cases in October, writing the plaintiffs — third-party agents who were not signatories to the selling agreements — lacked standing to sue.

But she left alive the claims in Veritas, writing that the two relevant sections of the agreement “are ambiguous and possibly contradictory on the issue of whether [Ohio National] had to pay trail commissions after terminating the selling agreement without cause.”

“Extrinsic evidence might shed light on the intent of the parties,” Dlott wrote in allowing the case to proceed to discovery.

On Nov. 12, Ohio National and plaintiff NEXT Financial Group filed a joint motion in the U.S. District Court for the Southern District of Texas to put that case on the back burner for now.

“This case is one of 12 suits brought by broker-dealers such as NEXT and Ohio National and/or its affiliates seeking … declaratory judgments with respect to the obligation of Ohio National under identical or similar selling agreements to pay trail commissions to its broker-dealers,” the motion said.

The move will “save this court’s judicial resources and save the parties substantial resources and time in litigating on separate fronts until the Veritas case is resolved or until further order of this court,” it said.

The motion said both parties will keep the court apprised of the Veritas litigation status and “whether discovery in various actions are coordinated.”

The motion was filed by NEXT attorney Andrew Harvin of Houston’s Doyle Restrepo Harvin & Robbins, and Ohio National counsel Bill Davidoff of Dallas’ Figari + Davenport and Marion Little of Zeiger, Tigges & Little in Columbus, Ohio. They did not respond to a request for comment.

Other litigation related to the trail commissions is at various stages.

In Massachusetts, Ohio National continues to fight an April ruling ordering a case into Financial Industry Regulatory Authority arbitration.

In the Central District of California, a judge has scheduled a settlement conference for later this month.

Another case in Texas’ Northern District is moving forward, as are suits in Alabama, Illinois and New Jersey.

In Minnesota, a June 17, 2020, trial date has been set.

In another Ohio case, Ohio National is suing several broker-dealers who are also seeking FINRA arbitration.


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