Plaintiff’s attorneys are going to have a tougher time seeking class action status in alleging the improper sale of an annuity.
Plaintiff’s attorneys are going to have a tougher time seeking class action status for cases alleging the improper sale of an annuity — especially if older individuals are involved, defense lawyers said at the NAVA 2008 Compliance and Regulatory Affairs conference in Washington today. NAVA Inc. is a retirement industry trade group based in Reston, Va.
“Very few cases are in class action status,” said Enrique D. Arana, a partner in Jorden Burt LLP Miami.
“The notion that the products aren’t suitable for seniors is something that the plaintiff’s bar is having trouble gaining traction on.”
Mr. Arana spoke on a panel covering litigation trends lawyers are seeing when it comes to annuity sales.
Many claims of improper sales and unsuitability have focused on annuity sales to senior citizens, a trend that’s concerned the defense attorneys, as these plaintiffs make “sympathetic” subjects, he said.
However, age is neither an indication of a client’s ability to read and comprehend an annuity contract nor an indication of that person’s health and vulnerability.
“Clients understand the products, and they bristle at the allegation that they don’t,” said Brett J. Preston, a in Hill Ward Henderson of Tampa, Fla.. “Anytime you take claims and attribute deficiencies to a whole population of people, it falls apart when you shine a bright light on it.”
In one suit that Mr. Preston cited, a husband and wife claimed that they were vulnerable adults who were improperly sold an annuity.
The husband, who claimed he had macular degeneration, asserted that he couldn’t read the fine print on the annuity contract but, when asked to do so in court, read aloud the small print on the page. The case fell apart.
Claims that apply “lack of suitability” to an entire group of people can also falter because the suitability standard is an individual one, attorneys said.
