Variable Annuities

Olmsted v. Pruco Life Insurance Co., 134 F. Supp. 2d 508 (E.D.N.Y. 2000), aff’d, 283 F.3d 429 (2d Cir. 2002)
We represented The Prudential Insurance Company of America and Pruco Life Insurance Company of New Jersey in a putative class action brought by holders of variable annuity contracts issued by defendants. Plaintiffs alleged that the mortality, expense-risk, and administrative charges assessed by defendants on those contracts were unreasonable in violation of Sections 26(e) and 27(i) of the 1940 Act. In a case of first impression, the Court held that no private right of action exists under either of those sections and dismissed plaintiffs’ claims. On appeal, the Second Circuit agreed and affirmed the dismissal.

Donovan v. American Skandia Life Assurance Corp., 2003 WL 21757260 (S.D.N.Y.), motion to amend denied by 217 F.R.D. 325 (S.D.N.Y. 2003), aff’d, 2004 WL 1088946 (2d Cir. 2004)
We also represented American Skandia Life Assurance Corporation in a putative class action on behalf of persons who invested in variable annuity products for the purpose of funding a qualified (i.e., tax-deferred) retirement account. Plaintiffs alleged that it is never appropriate to use a variable annuity as a funding vehicle for qualified funds and claimed that the omission of language to that effect in the prospectuses for the variable annuity products constituted violations of Sections 11 and 12(a)(2) of the 1933 Act, Section 10(b) of the 1934 Act, and Section 34(b) of the 1940 Act. The court granted defendants’ motion to dismiss the complaint in its entirety with prejudice because there was no material omission and plaintiffs’ claims were time-barred. The Second Circuit affirmed the dismissal.