Jonathan Hutson, TLPJ, 202-797-8600 x 246
F. Paul Bland, Jr., 202-797-8600
Arthur H. Bryant, 510-622-8150 x 202

TLPJ CHALLENGES PROPOSED NATIONAL CLASS ACTION SETTLEMENT OF CONSUMER PROTECTION CLAIMS AGAINST MASSMUTUAL INSURANCE

Company Would Pay Class Members Zero, Two Class Reps $350,000, and Class Counsel $5 Million Cash, $3 Million in Insurance, and $250,000 Annually for Life

Trial Lawyers for Public Justice (TLPJ) has formally challenged a proposed national class action settlement of consumer protection claims by the Massachusetts Mutual Life Insurance Company as an abuse of both the class action device and class members. The proposed settlement in Wilson v. Massachusetts Mutual Life Insurance Company, currently pending in the First Judicial District Court of New Mexico in Santa Fe County, would pay nothing to the 6.5 million class members.  The two class representatives, however, would receive a total of $350,000 and class counsel would get $5 million in cash, a $3 million life insurance policy, and annual payments of $250,000 for life.

"This is an outrageous example of class action abuse," said TLPJ Executive Director Arthur Bryant, co-counsel for the objectors.  "Settlements like these, while few and far between, cast a pale over our entire system of justice.  Our Class Action Abuse Prevention Project is dedicated to preserving class actions and their vitality by making sure that deals like this do not go through."

The class action lawsuit charges that MassMutual failed to disclose adequately the fees that its life and disability policyholders would incur if they chose to pay their premiums on a monthly, quarterly, or semiannual basis, instead of in a yearly lump sum.  The complaint in the case, filed in 1998 on behalf of approximately 6.5 million MassMutual policyholders, sought both damages and injunctive relief, i.e., a court order requiring appropriate disclosures in the future.

Under the terms of the proposed settlement, the Springfield, Massachusetts-based insurer would provide better disclosures in the future, but it would pay no damages to the class.  Even the improved disclosures, moreover, would not benefit most of the class members - approximately 5 million of the class members are no longer MassMutual policyholders.  All of the class members, however, would release their potential claims against the insurer.

For helping obtain this deal for the class, the two named class representatives would receive one-time "incentive payments" of $250,000 and $100,000, respectively.  Class counsel George Gary Duncan of Santa Fe would receive an immediate payment of $5 million in cash, plus a $3 million guaranteed life insurance policy, and annuity payments of $250,000 annually for life.

TLPJ's objections, filed yesterday in New Mexico, charge that the proposed settlement is blatantly unfair and urge the court to reject the proposed deal, the incentive payments, and class counsel's requested fee. The objections were filed on behalf of class members from California, Connecticut, Kansas, Massachusetts, Pennsylvania, Texas, and West Virginia. TLPJ also provided formal notice that it intends to appear and oppose approval at the hearing on the fairness of the proposed settlement, currently scheduled for February 26, 2000, in Santa Fe.

"The proposed Mass Mutual settlement is simply beyond the pale," said TLPJ Staff Attorney F. Paul Bland, Jr., who will appear at the hearing for the TLPJ objectors.  "It violates class members' rights, pays the attorney and class representatives unreasonable sums, and lets the defendant off the hook for failing to adequately notify its policyholders of unfair, hidden fees. The court should reject it out of hand."

In addition to challenging the amounts to be paid under the settlement, TLPJ objected both to the notice sent to class members and to the secrecy surrounding parts of the deal.  The Class Notice states in capital letters that "THE CLASS WILL NOT HAVE TO PAY ANY ATTORNEYS' FEES OR EXPENSES."  But MassMutual is a mutual insurance company - that is, a company owned by its policyholders - and the 1 million class members still holding policies would, therefore, inevitably bear the cost of the fees indirectly, in the form of reduced dividends.

The settlement agreement also refers to a "Supplemental Agreement" between the named plaintiffs and MassMutual, but gives no hint of the contents of that secret agreement. Similarly,  it requires MassMutual to provide class counsel with a record of how many policyholders change their payment practices as a result of the new improved disclosures - but provides that all such records be kept secret from the public.

"The notice and the secrecy in this deal are no more acceptable than MassMutual's willingness to pay everyone but the 6.5 million class members," said Bland.  "Most class actions do enormous good, but this proposed settlement is a poster child for the problem of class action abuse."

TLPJ's objections to the settlement in Wilson were filed as part of its Class Action Abuse Prevention Project, a nationwide campaign dedicated to monitoring, exposing, and fighting class action abuse nationwide.  In addition to Bland and Bryant, TLPJ's legal team includes William E. Snead of the Law Office of William E. Snead in Santa Fe, TLPJ Staff Attorney Leslie A. Brueckner, and Consumer Rights Fellow Michael Quirk.

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Trial Lawyers for Public Justice is the only national public interest law firm dedicated to using trial lawyers' skills and resources to advance the public good.  Founded in 1982, TLPJ utilizes a nationwide network of more than 2,400 outstanding trial lawyers to pursue precedent-setting and socially significant litigation.  It has a wide-ranging litigation docket in the areas of consumer rights, environmental protection, toxic torts, worker safety, civil rights and liberties, and access to the courts.  TLPJ is the principal project of The TLPJ Foundation, a not-for-profit membership organization.  It has offices in Washington, DC, and Oakland, CA. TLPJ's State Coordinator for New Mexico is Daymon B. Ely, 505-248-0370.