Summary Judgment Granted for Defendant in Certified Deferred Annuity Class Action


In a substantial victory for deferred annuity issuers, Judge Claudia Wilken of the U.S. District Court for the Northern District of California on October 6, 2010, granted Defendant's motion for summary judgment in Kennedy v. Jackson Nat'l Life Ins. Co., No. C 07-0371 CW (N.D. Cal. Oct. 6, 2010). As previously reported here, on June 23, 2010, Plaintiff obtained certification of a nationwide senior citizen RICO class and a California-only senior citizen subclass asserting state law elder abuse, Unfair Competition Law (UCL), and False Advertising Law (FAL) claims arising out of Defendant’s allegedly unlawful annuity sales practices. In this week’s ruling, Judge Wilken dismissed both the class claims and Plaintiff’s individual fraud-based common law claims. (Please click here for the opinion.)

The majority of the court’s decision focused on Plaintiff Janice Kennedy’s failure to establish a triable issue as to whether Defendant engaged in a pattern of racketeering activity, a necessary element of a RICO cause of action. In particular, the court found no evidence to suggest that Defendant engaged in a scheme to defraud senior citizen purchasers when it (1) failed to disclose to them the amounts and effects of commissions it paid to agents who sold its products, (2) failed to explain the effect of the purported “bias” in its market value adjustment/excess interest adjustment (MVA/EIA), and (3) used the term “bonus” to describe the higher first-year credited rate offered to purchasers of its “Bonus Max Two” product.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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