The article, "MassMutual Didn’t Stiff Policyholder Class, Jury Finds," by Daniel Siegal originally appeared on Law360.com on February 28, 2018.
MassMutual did not improperly withhold dividends from a class of hundreds of term life insurance policyholders, a California jury found Tuesday, siding with the insurer and finding the policies in question never generated enough profit to warrant dividends under the policy agreements.
After deliberating for roughly two days following a 12-day trial, the jury returned with a verdict in favor of Massachusetts Mutual Life Insurance Co., rejecting named plaintiff Christina Chavez’s claims that the insurer had breached its contracts with hundreds of people who had purchased participating 20-year term life insurance, or T20G policies, from 2000 to 2004 in the Los Angeles area.
As a mutual insurance company owned by its policyholders, MassMutual pays out its excess profits to “participating” policyholders each year in the form of dividends, but during Friday’s closing arguments, class attorney Timothy Morris of Gianelli & Morris told the jury that the company had shirked its duties by refusing to actually do the math and determine if the T20G policies were entitled to dividends each year. Morris said that MassMutual actually owed the class a total of $717,000 in dividends.
On Tuesday, the jury found that MassMutual had failed to make the annual determination of whether the T20G policies had generated sufficient profits to warrant dividends, but sided with the insurer in holding the plaintiffs had failed to prove that the policies actually did generate such profits.
MassMutual spokesperson Michael McNamara said in a statement Wednesday that the company was very pleased with the verdict.
“After close to a decade of protracted litigation, a California jury confirmed what MassMutual has always known: that these policies never earned, and were therefore never entitled to receive, dividends,” he said.
An attorney for the class did not immediately respond to a request for comment on Wednesday.
Chavez filed suit in April 2010, and in her trial brief filed last month contends that as part of the language of the participating life insurance policies, the insurer was mandated to annually determine those policies’ contributions to the company’s excess profits, or “divisible surplus,” and return their fair share in a dividend.
California Fellow Jennifer Keller of Keller Anderle LLP, representing MassMutual, defended the company during closing arguments by focusing on Chavez’s actuarial expert Tom Bakos, telling the jury that he had manipulated the financial numbers to show a profit on the T20G policies, which actually had not come close to surpassing a 5 percent profit, the threshold over which dividends were payable, she said.
“The Tom Bakoses of the world can probably find any mutual life insurance policy anywhere in the world and pick it apart … and can find somewhere in there some numbers to manipulate,” she said.
For additional coverage of this trial, visit Courtroom View Network.
Chavez and the class are represented by Timothy J. Morris and Mary T. Rahmes of Gianelli & Morris.
MassMutual is represented by Jennifer L. Keller and Jesse A. Gessin of Keller Anderle LLP and Joel S. Feldman, Sean A. Commons and Melissa O. Evidente of Sidley Austin LLP.
The case is Christina Chavez v. Massachusetts Mutual Life Insurance Co., case number BC435321, in the Superior Court of the State of California.
LCA Senior Fellow Jennifer Keller is one of California’s premier trial lawyers. She has tried over 150 cases to jury verdict, ranging from complex civil matters — including business and intellectual property cases— to white collar to murder. She has received innumerable awards for excellence as a trial lawyer and excels at “bet the company” litigation. Ms. Keller is a Fellow of the American College of Trial Lawyers. She is listed annually in “The Best Lawyers in America®,” is among the Lawdragon 500 Leading Lawyers in America, and has been selected for the Benchmark Litigation “Top 100 Trial Lawyers in America” and the “Benchmark Top 250 Women in Litigation.” She appears routinely in the Los Angeles Daily Journal as one of California’s Top 100 Lawyers and has been selected to the list of Top 10 Southern California Super Lawyers. Ms. Keller is also active in the community. She is the former President of the Orange County Bar Association and serves as a Trustee of Chapman University. She counts as present and former clients a number of judges, public officials, law enforcement officers, CEOs, CFOs, lawyers, physicians, professional athletes, venture capitalists and entrepreneurs. Ms. Keller is a Senior Fellow of the Litigation Counsel of America.