by Structured Settlement Watchdog®
The AIG Structured Settlement Class Action was dismissed on September 27, 2018. Download Ezell v AIG Order of Dismissal 9-27-2018.
The Ezell lawsuit, a/k/a AIG Structured Settlement Class Action, was filed on January 3, 2017 against Lexington Insurance Company and various other AIG entities, including various casualty insurers, American General, AIG's primary life insurance company underwriting structured settlement annuities, its qualified assignment company and the upstream life insurance holding company. NORMA EZELL, LEONARD WHITLEY, and ERICA BIDDINGS, on behalf of themselves and all others similarly situated, Plaintiffs v LEXINGTON INSURANCE COMPANY; AMERICAN INTERNATIONAL GROUP, INC.; AIG ASSURANCE COMPANY; AIG INSURANCE COMPANY; AIG PROPERTY CASUALTY COMPANY; AIG SPECIALTY INSURANCE COMPANY; AMERICAN GENERAL LIFE INSURANCE COMPANY; NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA; AGC LIFE INSURANCE COMPANY; AMERICAN GENERAL ANNUITY SERVICE CORPORATION; and AIG DOMESTIC CLAIMS, INC., Defendants United States District Court District of Massachusetts Civil Action 17-10007-NMG
I never thought the AIG Structured Settlement Class Action had any merit. In AIG Structured Settlement Class Action | Old Dick Attempts to Swing " Big Stick" I delivered the suitably derisory response that the poorly pleaded lawsuit deserved on January 7, 2017. Also see AIG Structured Settlement Class Action | To Gun Jumpers' Dismay Plaintiff HAD Own Broker | Two Factored April 13, 2017, and Structured Settlement Market Spotlight On the Think Advisor "House of Funkenstunk" May 11, 2017. Dick Risk, a disgruntled former Oklahoma structured settlement broker who became a lawyer, but in my opinion is 15 years or so off the pace on current day to day structured settlement affairs, led the failed charge on this one. Part of that charge included a publication in The Hill, an attempt to drum up support for the poorly pleaded suit before it was even adjudicated. The representative plaintiffs made no sense given the sophistication of the leading plaintiff law firms who represented them in the underlying settlements when their structured settlements were established.
AIG Structured Settlement Class Action Was Actually Dismissed for the first time in December 2017
The judge actually dismissed the case without prejudice in December 2017, but gave the Plaintiffs a limited amount of time to file an amended complaint which they did earlier this year. The Court then warned that if the amended complaint is deficient it will be dismissed with prejudice. After 7 months deliberation, the Court has granted the Defendants motion and dismissed the amended complaint, with prejudice.
Highlights from Judge Gorton's Memorandum and Order dated September 27, 2018
A. Plaintiffs failed to prove a Civil RICO conspiracy in AIG Structured Settlement Class Action lawsuit
"The plaintiffs have again failed to plead adequately that the defendants and non-party brokers associated together for a common illegal purpose as opposed to merely conducting their business in parallel. Although plaintiffs’ amended complaint may purport to show that the AIG-Approved Brokers have similar goals and methods, it “does not suffice to show that an enterprise exists. Because plaintiffs have not remedied the deficiencies of the original complaint with respect to the civil RICO claim, Count I of the amended complaint will be dismissed with prejudice against all defendants"
B. Plaintiffs failed to prove fraudulent misrepresentation claim in AIG Structured Settlement Class Action Lawsuit
"Plaintiffs fail to allege how their decisions would have been affected had they known of the 4% broker’s commission.
They concede that charging such a fee was an industry-wide practice for annuities and they do not claim that they would
have declined the structured settlement had they known of the broker’s fee. To the contrary, they assert that, had they known of the broker’s fee, they would have employed their own brokers who would have acted in their interests rather than the interests of defendants. That claim, however, addresses only the separate issue of who hired the brokers, not the issue of saving the 4% broker’s fee. Had plaintiffs hired their own brokers, presumably they would have still paid the industry standard 4% commission to enter into the structured settlement agreements". Dismissed with prejudice.
What Should Plaintiff or Plaintiffs’ Lawyers Know About the AIG Structured Settlement Class Action?
- As most of you know, it is common for there to be representatives on both sides of the structured settlement equation.
- As many of you already observe, in general, there is (and has been) a high level of civility and professionalism in the settlement industry. I have no doubt that it will continue.
- No matter which label the representative chooses, when in the act of placing structured settlement annuities, settlement consultants must be and are acting as licensed agents appointed by the life insurer, or a licensed broker, and are compensated by commission or share of commissions. The commission is paid by the structured settlement annuity issuer.
- While there have been few exceptions (e.g. structured settlement annuities purchased to fund claims of compensation from the 9/11 VCF and the 1980s Beirut barracks attacks), agents and brokers are not legally allowed to rebate commissions.
- As I raised in my first blog post on this topic, and the Ezell Court subsequently found, there is no difference in compensation paid (by the annuity issuer) for placing any structured settlement annuity, between the placement being done by one broker or two. Dick Risk and Steve Berman, the lawyers in Ezell, picked lead plaintiffs who were represented by some of the nation's premier law firms, law firms that have obtained hundreds of millions in recoveries for their clients. These sophisticated and highly successful law firms regularly engage structured settlement experts. That these law firms in representing their clients would not have knowledge about the compensation is simply a non starter when it comes to the credibility of the unproven allegations.
On October 29, 2018, Plaintiffs filed a notice of appeal with the First Circuit Court of Appeals. The Appeal lists a demand of $5 million.