MetLife 2005 Annual Report Download - page 109

METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
property during Hurricane Katrina. In 2006, MPC was sued in two additional Hurricane Katrina-related actions, one in Louisiana and one in Mississippi
and it is reasonably possible other actions will be filed. The Company intends to vigorously defend these matters.
Demutualization Actions
Several lawsuits were brought in 2000 challenging the fairness of Metropolitan Life’s plan of reorganization, as amended (the ‘‘plan’’) and the
adequacy and accuracy of Metropolitan Life’s disclosure to policyholders regarding the plan. These actions named as defendants some or all of
Metropolitan Life, the Holding Company, the individual directors, the New York Superintendent of Insurance (the ‘‘Superintendent’’) and the underwriters
for MetLife, Inc.’s initial public offering, Goldman Sachs & Company and Credit Suisse First Boston. In 2003, a trial court within the commercial part of the
New York State court granted the defendants’ motions to dismiss two purported class actions. In 2004, the appellate court modified the trial court’s order
by reinstating certain claims against Metropolitan Life, the Holding Company and the individual directors. Plaintiffs in these actions have filed a
consolidated amended complaint. Plaintiffs’ motion to certify a litigation class is pending. Another purported class action filed in New York State court in
Kings County has been consolidated with this action. The plaintiffs in the state court class actions seek compensatory relief and punitive damages. Five
persons brought a proceeding under Article 78 of New York’s Civil Practice Law and Rules challenging the Opinion and Decision of the Superintendent
who approved the plan. In this proceeding, petitioners sought to vacate the Superintendent’s Opinion and Decision and enjoin him from granting final
approval of the plan. On November 10, 2005, the trial court granted respondents’ motions to dismiss this proceeding. Petitioners have filed a notice of
appeal. In a class action against Metropolitan Life and the Holding Company pending in the United States District Court for the Eastern District of New
York, plaintiffs served a second consolidated amended complaint in 2004. In this action, plaintiffs assert violations of the Securities Act of 1933 and the
Securities Exchange Act of 1934 in connection with the plan, claiming that the Policyholder Information Booklets failed to disclose certain material facts
and contained certain material misstatements. They seek rescission and compensatory damages. On June 22, 2004, the court denied the defendants’
motion to dismiss the claim of violation of the Securities Exchange Act of 1934. The court had previously denied defendants’ motion to dismiss the claim
for violation of the Securities Act of 1933. In 2004, the court reaffirmed its earlier decision denying defendants’ motion for summary judgment as
premature. On July 19, 2005, this federal trial court certified a class action against Metropolitan Life and the Holding Company. Metropolitan Life and the
Holding Company have filed a petition seeking permission for an interlocutory appeal from this order. Metropolitan Life, the Holding Company and the
individual defendants believe they have meritorious defenses to the plaintiffs’ claims and are contesting vigorously all of the plaintiffs’ claims in these
actions.
In 2001, a lawsuit was filed in the Superior Court of Justice, Ontario, Canada on behalf of a proposed class of certain former Canadian policyholders
against the Holding Company, Metropolitan Life, and Metropolitan Life Insurance Company of Canada. Plaintiffs’ allegations concern the way that their
policies were treated in connection with the demutualization of Metropolitan Life; they seek damages, declarations, and other non-pecuniary relief. The
defendants believe they have meritorious defenses to the plaintiffs’ claims and will contest vigorously all of plaintiffs’ claims in this matter.
On April 30, 2004, a lawsuit was filed in New York state court in New York County against the Holding Company and Metropolitan Life on behalf of a
proposed class comprised of the settlement class in the Metropolitan Life sales practices class action settlement approved in December 1999 by the
United States District Court for the Western District of Pennsylvania. In their amended complaint, plaintiffs challenged the treatment of the cost of the
sales practices settlement in the demutualization of Metropolitan Life and asserted claims of breach of fiduciary duty, common law fraud, and unjust
enrichment. In an order dated July 13, 2005, the court granted the defendants’ motion to dismiss the action and the plaintiffs have filed a notice of
appeal.
Other
A putative class action lawsuit which commenced in October 2000 is pending in the United States District Court for the District of Columbia, in
which plaintiffs allege that they were denied certain ad hoc pension increases awarded to retirees under the Metropolitan Life retirement plan. The ad hoc
pension increases were awarded only to retirees (i.e., individuals who were entitled to an immediate retirement benefit upon their termination of
employment) and not available to individuals like these plaintiffs whose employment, or whose spouses’ employment, had terminated before they
became eligible for an immediate retirement benefit. The plaintiffs seek to represent a class consisting of former Metropolitan Life employees, or their
surviving spouses, who are receiving deferred vested annuity payments under the retirement plan and who were allegedly eligible to receive the ad hoc
pension increases. In September 2005, Metropolitan Life’s motion for summary judgment was granted. Plaintiffs have moved for reconsideration.
On February 21, 2006, the SEC and New England Securities Corporation (‘‘NES’’), a subsidiary of NELICO, resolved a formal investigation of NES
that arose in response to NES informing the SEC that certain systems and controls relating to one NES advisory program were not operating effectively.
NES previously provided restitution to the affected clients and the settlement includes additional client payments to be made by NES in the total amount
of approximately $2,615,000. No penalties were imposed.
In May 2003, the American Dental Association and three individual providers sued MetLife and Cigna in a purported class action lawsuit brought in a
Florida federal district court. The plaintiffs purport to represent a nationwide class of in-network providers who allege that their claims are being wrongfully
reduced by downcoding, bundling, and the improper use and programming of software. The complaint alleges federal racketeering and various state law
theories of liability. MetLife is vigorously defending the matter. The district court has granted in part and denied in part MetLife’s motion to dismiss. MetLife
has filed another motion to dismiss. The court has issued a tag-along order, related to a medical managed care trial, which will stay the lawsuit indefinitely.
In a lawsuit commenced in June 1998, a New York state court granted in 2004 plaintiffs’ motion to certify a litigation class of owners of certain
participating life insurance policies and a sub-class of New York owners of such policies in an action asserting that Metropolitan Life breached their
policies and violated New York’s General Business Law in the manner in which it allocated investment income across lines of business during a period
ending with the 2000 demutualization. Plaintiffs sought compensatory damages. In January 2006, the appellate court reversed the class certification
order. On November 23, 2005, the trial court issued a Memorandum Decision granting Metropolitan Life’s motion for summary judgment. The plaintiffs’
time to appeal the trial court’s decision has not yet expired.
Regulatory bodies have contacted the Company and have requested information relating to market timing and late trading of mutual funds and
variable insurance products and, generally, the marketing of products. The Company believes that many of these inquiries are similar to those made to
many financial services companies as part of industry-wide investigations by various regulatory agencies. The SEC has commenced an investigation with
respect to market timing and late trading in a limited number of privately-placed variable insurance contracts that were sold through General American. As
previously reported, in May 2004, General American received a Wells Notice stating that the SEC staff is considering recommending that the SEC bring a
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