Former policyholders of mutual life insurance company brought this action against the Metropolitan Life Insurance Company or MetLife, Inc. (defendant) to recover for securities fraud in connection with demutualization and conversion to stock company.
In 2000 MetLife changed from a mutual life insurance company to a stock life insurance company. This demutualization took place with the unanimous approval of the Board of Directors, the imprimatur of the New York State Insurance Commission and the permission of 93% of MetLife's 2,800,000 policyholders that voted (according to the complaint the total number of MetLife's policyholders surpasses 10,000,000).
This transaction converted MetLife's policy holdings into over 700,000,000 shares of stock valued at $14.25 per share, worth over $10 billion at the time. MetLife compensated each former policyholder with ten shares of MetLife stock in return for the policyholders' relinquishing of, inter alia, their voting membership interests in MetLife. Those termed "participating" policyholders, who also possessed interests in MetLife's then $14 billion surplus, received further shares of stock claimed to be commensurate with their policies' contributions to the surplus.
The Second Consolidated Amended and Supplemental Class Action Complaint (the complaint) alleges that the PIB, which set forth the details of the demutualization prior to the vote that approved the transaction, contained material misrepresentations, made through misstatements and omissions, and that MetLife made such misrepresentations with the relevant scienter. More specifically, in the complaint, plaintiffs allege four misrepresentations in the PIB: (i) omitting to state that the actuarial method used to calculate policyholders' contributions to MetLife's surplus arrived at a value of $15.3 billion, far higher than the $8.4 billion in stock that these policyholders received as compensation; (ii) omitting to state that MetLife's method of reorganization, an exchange of policies for stock with the right to elect cash, as opposed to an exchange of policies for cash with the right to elect stock, was chosen for the benefit of MetLife and not the policyholders, because plaintiffs would allegedly have received double the compensation under the latter method; (iii) omitting to state that policyholders would surrender their right to annual dividends from their contributions to MetLife's surplus; and (iv) misstating that reasonable dividends would "continue to be paid as declared," when in plaintiffs' view the assets allocated to pay dividends had been limited. In conclusion, plaintiffs allege that PIB did not explain that policyholders received only 54¢ on the dollar for their policies, that dividends were reduced, and that MetLife engaged in fraud by not stating this in the PIB.
NOTE: Plaintiffs are current MetLife shareholders and former MetLife participating policyholders.
On July 31, 2001, the Court entered the Memorandum and Order signed by U.S. District Judge Thomas C. Platt denying the defendant’s motion for an order dismissing the complaints and the action pursuant to FRCP 12(b)(1) or (6) for lack of subject matter jurisdiction and further denying the motion to stay the action pending the completion of related state-court proceedings. On February 12, 2003, the plaintiffs filed a Consolidated Amended and Supplemental Class Action Complaint, and, on April 26, 2004, the plaintiffs amended the complaint again by filing a Second Consolidated Amended and Supplemental Class Action Complaint. In 2004 the defendant moved to dismiss the second claim for relief, of securities fraud, from the class action second amended complaint. On June 22, 2004, the Judge signed an Order denying defendant’s motion to dismiss the second consolidated and amended class action complaint. The court stated that plaintiffs allege particular misstatements and omissions in the Policyholder Information Booklet (PIB), and attempt to demonstrate MetLife's scienter through strong circumstantial evidence of recklessness. In the Order the court "accepted plaintiffs allegations as true and drawing reasonable inferences in their favor," and declared that "plaintiffs may be entitled to the relief they seek, and discovery in this case may therefore continue."
On July 20, 2005, the Judge issued an order granting Motion to Certify Class. According to the Order, “all of the named Plaintiffs are appropriate and adequate class representatives, except Mr. Darrell Murray” given the reasons stated in the order.
According to the docket from the U.S. Court of Appeals for the Second Circuit, on August 3, 2005, Petitioner Metropolitan Life and Petitioner Metlife, Inc. filed a motion for Leave to Appeal pursuant to 23 (f). On March 29, 2006, the Court entered the Order. According to the Order, Petitioners move pursuant to Fed. R. Civ. P. 23(f) for an interlocutory appeal of the district court`s order certifying the putative class. Upon due consideration, it is ordered that the petition is denied, because an immediate appeal is not warranted.
On December 29, 2005, the Court signed an Order to Show Cause as to why an Injunction should not issue barring the Fiala litigation in State court. On August 11, 2006, the Court entered the Memorandum and Order denying the Federal Plaintiffs' Motion to Enjoin a State Action. Further, on August 30, 2006, the Court entered the Amended Memorandum and Order denying the Federal Plaintiffs' Motion to Enjoin a State Action. According to the Order, the Federal Plaintiffs’ arguments fail and Section78bb(f)(3)(A)(ii)(II) excludes the Fiala action from Securities Litigation Uniform Standards Act (SLUSA).
On March 30, 2007, the Court entered the Order denying the plaintiffs’ June 21, 2006 motion to compel production of documents, denying the plaintiffs’ July 10, 2006 discovery motion to compel, and granting in part and denying in part the plaintiffs’ August 2, 2006 motion to compel production of tax documents. On April 16, 2007, the plaintiffs filed an Appeal of Magistrate Judge Decision to the District Court regarding the Order denying the motions to compel.
On May 9, 2007, the Court issued the Memorandum and Order denying MetLife's motion to vacate this Court's July 19, 2005 Order certifying a class in this action.
On June 18, 2007, the Court entered the Memorandum and Order as to the April 16, 2007 and May 14, 2007 Appeals of the Magistrate Judge Decision. According to the Order by Judge Thomas C. Platt, plaintiffs may seek from MetLife documents relevant to plaintiffs' allegation that MetLife misstated or omitted from the public disclosures information that its senior executives and board considered in approving the demutualization.
On December 13, 2007, the Court entered the U.S. Court of Appeals Mandate. According to the mandate, Petitioner [Metropolitan Life Insurance Co. and Metlife, Inc.], through counsel has filed a petition for a writ of mandamus. Upon due consideration, it is hereby ordered that the mandamus petition is denied because Petitioner has not demonstrated that exceptional circumstances warrant the requested relief.
On February 14, 2008, the plaintiffs filed a motion for discovery. On August 2, 2008, Senior Judge Thomas C. Platt issued a modified order approving the class action notice plan. On August 25, 2008, the plaintiffs filed a motion for partial summary judgment. That day, the defendants also filed a fully briefed motion for summary judgment. On September 18, 2008, the plaintiffs’ motion for discovery was denied. On March 30, 2009, Judge Thomas C. Platt denied both the plaintiffs’ motion for partial summary judgment and the defendants’ motion for summary judgment. The accompanying Memorandum and Order was entered on May 27, 2009.
On April 27, 2009, Senior Judge Thomas C. Platt issued the Order to Show Cause ordering the defendants to show cause why an order should not be issued permitting notice of the pendency of this action by publication to class members who are "Industrial" policyholders, other than those Industrial policyholders whose names and addresses can be updated by the notice administrator. The defendants responded on May 21, 2009.
On June 8, 2009, Magistrate Judge A. Kathleen Tomlinson issued the Joint Pre-Trial Order. According to the Order, the Joint Pre-Trial Order is accepted for filing and the action is deemed ready for trial. The action will be tried in accordance with the discretion and trial calendar of District Judge Thomas C. Platt.
On August 4, 2009, Senior Judge Thomas C. Platt issued the Order to Show Cause. According to the Order, the defendants in this action, Metropolitan Life Insurance Company and MetLife, Inc., and Debevoise & Plimpton LLP, shall show cause why an order should not be issued disqualifying Debevoise & Plimpton LLP and all attorneys at that firm from representing defendants at the trial of this action.
On August 6, 2009, Senior Judge Thomas C. Platt ordered that the the Court reopens discovery in this matter for the limited purpose of resolving questions related to the alleged conflict of interest concerning MetLife's counsel, Debevoise & Plimpton.
On September 1, 2009, Senior Judge Thomas C. Platt ordered that the Plaintiffs motion to disqualify Debevoise & Plimpton from representing MetLife in the above-captioned action is hereby granted. The Court hereby certifies the following question for appeal: Should Debevoise & Plimpton be disqualified from representing MetLife in this case based on a conflict of interest.
On September 24, 2009, the Court entered the Mandate from the U.S. Court of Appeals, reversing the order of United States District Court, Eastern District of New York, disqualifying Debevoise & Plimpton from representing defendant, MetLife. It is further ordered that the stay of the USCA, Second Circuit, remain in effect.
According to an Order signed by Senior Judge Jack B. Weinstein on October 14, 2009, pursuant to the request of the parties, the court has made inquiry about available persons to act as special settlement master. Once the parties agree, they should inform the court so that an order appointing a special settlement master can be entered.
On November 13, 2009, the parties in the instant class action and a related class action have agreed on a settlement of both actions, subject to the approval of this court and the federal court.
On December 22, 2009, three separate settlement agreements were filed with the court.
On February 12, 2010, a memorandum order and judgment on final approval of settlement, fees, expenses and compensation awards was approved as fair and reasonable. The case was dismissed on the merits.
On March 03, 2010, a final judgment in this action, including all individual claims and class claims presented by this action and all actions consolidated in this action, were dismissed on the merits, with prejudice, and without costs. All plaintiffs' counsel associated with the Federal Action and the State Action have agreed on a division of fees and expenses in this case.
On March 15, 2010, a Notice was filed by the plaintiffs in this action to appeal the District Court's Memorandum, Order, and judgment of Final Approval of Settlement, Fees, Expenses, and Compensation Awards.