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After Dismissal Of Class Action Involving Fraud In Marketing of Deferred Annuities, Plaintiffs Have Filed Amended Complaint And Are Seeking Class Certification

Annuities, Blogs

The pending lawsuit of Samuel Rowe v. Bankers Life and Casualty Company, No. 09-CV-00491, U.S. District Court, Northern District of Illinois, involves a class action complaint that seeks relief under seven different counts: count one for violations of RICO, 18 U.S.C. § 1962, count two for breach of fiduciary duty, count three for aiding and abetting breach of fiduciary duty, count four for unjust enrichment, count five for elder abuse under California Welfare & Institutions Code § 15600 et seq., and counts six and seven for violations of California Business & Profession Code §§ 17200 et seq., and 17500 et seq.

The original complaint was filed in January, 2009, and alleged improper and misleading sales and marketing practices aimed at senior citizens, whereby the defendant was said to have failed to disclose material facts to consumers of deferred annuities, and also that the defendant misused those consumers’ confidential financial information, used misleading sales and marketing materials, and failed to adequately disclose principal risks that include information about maturity dates, surrender penalties, and other restrictions which limit access to annuity proceeds to dates beyond the consumers’ actuarial life expectancies.

The defendant has disclosed in financial forms that it considers the action to be without merit and had moved to dismiss count one, alleging RICO violations.

The court agreed that count one should be dismissed. The court said that, under the heightened pleading requirements for such allegations, the plaintiffs’ “thin description of the ‘who’ and ‘when’ of the alleged fraud, without more specificity as to its content, is fatally defective . . . .” For example, the plaintiffs had alleged that the marketing materials were “designed to appeal to consumers” and to “downplay the risks of deferred annuities” and further that they were “drafted so that the average person cannot readily understand the terms.” Yet, the court said, “the complaint fails to provide any specific facts as to the contents of any of the allegedly fraudulent materials or the dates on which such transmissions were made or received.

The court also said that the plaintiff had failed to properly plead in a manner sufficient to meet the enterprise element of a RICO complaint.

The court’s opinion was issued on September 13, 2010, and gave the plaintiffs some time to “file an amended complaint if they believe that they can cure the pleading deficiencies . . . .” On November 8, 2010, the plaintiffs filed their second amended complaint, with additional allegations. The plaintiffs’ motion for class certification is now in the briefing stages.