Sales Practice Litigation

Sonnenschein is a national leader in defending sales practices litigation and responding to governmental investigations of sales practices.  We provide coast-to-coast experience, sophistication and exceptional depth in handling the full gamut of sales practices litigation, from defending bet-the-company class actions and multi-state regulatory inquiries to defending individual sales practices claims.  Additionally, our litigators have had great success arbitrating matters with the National Association of Securities Dealers (now FINRA arbitration), and other organizations.  Our team brings significant industry experience litigating fraud, unsuitability, securities fraud, consumer protection acts, Racketeer Influenced and Corrupt Organizations Act (RICO), civil conspiracy and breach of fiduciary duty claims, among others.  We offer experience with sales practices litigation involving a wide range of insurance products including annuities, life insurance and long term care insurance.  We provide here a small sampling of our experience:

• Since 1995, Sonnenschein has served as national coordinating and lead trial counsel to Prudential Financial in one of the most complex litigated and regulatory matters in American corporate history.  Sonnenschein worked hand-in-hand with Prudential’s in-house team to counsel the company’s board of directors and senior management in navigating more than two dozen putative nationwide class actions, a federal multi-district litigation in New Jersey, multiple state regulatory investigations, including a 35-state task force effort plus individual investigations by several other state departments of insurance and attorneys general, an inquiry by the U.S. Attorney’s Office for the Southern District of New York, a formal NASD probe and multi-year negotiation, more than 1,300 individual federal and state court actions, and dozens of NASD agent arbitrations.  Sonnenschein constructed a strategic and tactical defense for Prudential that included (i) navigating the New Jersey Department of Insurance to form a multi-state task force to consolidate and lead dozens of incipient independent state investigations, (ii) working with the multi-state task force to craft a strong settlement, (iii) using the multi-state settlement to leverage the private class plaintiffs’ bar into a national class settlement, (iv) leveraging the impending class settlement approval to achieve settlement with “hold-out” aggressive states and, later, thousands of individual plaintiffs, (v) defeating class certification of three separate putative “opt-out” litigation classes, and (vi) prevailing at trial in the opt-out cases that were tried to verdict.
• A major annuities issuer engaged Sonnenschein in 2007 to advise it regarding a California Department of Insurance market conduct examination and to defend it when the Department commenced an enforcement proceeding alleging that the company made unsuitable sales of deferred annuities to seniors, among other claims.  The Department's allegations rest in complex regulatory law, as well as in the specific application of general legal parameters to highly technical elements of the insurer's deferred annuity insurance products.  Sonnenschein represents this major international insurer in responding to allegations from multiple  state insurance departments, class action suits based on the same alleged practices, and an administrative litigation proceeding.
• Sonnenschein represented the Federal Home Life Insurance Company in a putative class action alleging improper sales of tax-deferred annuities into qualified retirement plans.  The central assertion was that deferred annuity contracts are inappropriate investments for tax-favored arrangements and qualified plans, and should not be sold for that purpose.  Using a third-party equitable estoppel theory, we successfully moved to compel the named plaintiff into individual case arbitration and for dismissal of the class litigation. 
• Sonnenschein defeated class certification of a putative nationwide class action against Genworth Financial brought in the U.S. District Court for the Middle District of Florida charging improper life insurance sales, and for the same client defeated class certification and obtained summary judgment on virtually all counts in a New York state court class action alleging deceptive sales practices and breach of contract in the sale of long-term care policies.
• Sonnenschein represented Capital Brokerage Corporation, a broker/dealer, and other affiliates of Genworth Financial (previously GE Financial), in dozens of NASD (now FINRA) arbitrations.  Utilizing the ability to compel NASD arbitration, Sonnenschein successfully resolved two major lines of lawsuits against the company.  The first was a wave of “selling away” actions across the Eastern United States, and the second involved claims of alleged unsuitability in sales of variable annuities to the elderly.
• Sonnenschein represented American Express Financial and affiliated insurance companies as coordinating counsel in connection with some 20,000 mass opt-out claims made following the nationwide class settlement of life insurance and annuity sales practices claims.  Quick and highly favorable settlements were negotiated.

These are just some of our representations in the sales practices arena.  Numerous other carriers have turned to Sonnenschein as chief trial counsel and national coordinating counsel for consumer fraud and life sales practices class actions, individual suits, and regulatory and compliance matters, including Ohio National Life Insurance Company, the Horace Mann Companies, Country Life Insurance Companies and Ameriprise Financial.  We have been engaged to defend or counsel additional companies on similar life sales practices litigations, including Fireman’s Fund Insurance Company, Allianz, Lincoln Benefit Life, Phoenix Home Life, American General Life Insurance Company and Unitrin/United Insurance Company of America.  The breadth and depth of our experience in this area is unparalleled.