Second Circuit Limits Reach of SLUSA Preclusion in State Law Variable Annuity Class Action

In O’Donnell v. AXA Equitable Life Insurance Co., No. 17-cv-1085, 2018 WL 1720808 (2d Cir. Apr. 10, 2018), the United States Court of Appeals for the Second Circuit reversed an order dismissing a variable annuity policyholder’s putative class action against AXA Equitable Life Insurance Company (“AXA”) as precluded by the Securities Litigation Uniform Standards Act of 1998 (“SLUSA”), 15 U.S.C. § 78bb(f). Plaintiff alleged that AXA breached its contractual duties by employing a new strategy for its variable annuity policies without obtaining proper approval from the New York State Department of Financial Services (“DFS”). AXA allegedly misled the regulator by failing to adequately inform and explain the significance of the changes to its insurance product in documentation submitted to DFS. The Court held that because the plaintiff and putative class members were unaware of the defendant’s alleged misrepresentation to DFS,…

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