MIAMI – The U.S. District Court for the Southern District of Florida denied a motion by an insurance company to stay a case accusing the company of racketeering until similar litigation in Kansas proceeds, because the Kansas outcome could influence the Florida case.
"The Tenth Circuit (Kansas) could, for example, limit the scope of the relief sought,” the opinion brief read. “If that occurs, the defendant’s entire argument as to the similarities of the issues and the proposed classes could deteriorate while this (Florida) case could have been litigated in the interim. The most prudent course is for this case to proceed and to grant the defendant leave to renew its motion to stay if the dismissal order in the Olges (Kansas) action is vacated or reversed.”
In the Florida lawsuit, the plaintiff Ella Clinton filed a class action in November of 2019 against Security Benefit life Insurance Co., based in Kansas.
Both the Florida and Kansas cases are alleging violations of RICO, the Racketeer Influenced and Corrupt Organizations Act.
According to Investment News, the class-action lawsuit claimed that Security Benefit allegedly defrauded its indexed annuity clients by dishonestly marketing proprietary index performances.
The company was sued over the same issue in the U.S. District Court for the District of Kansas two years ago and it appears the lawsuits could be consolidated.
“Contrary to Security Benefits’ misleading marketing materials, its annuities linked to the synthetic indices would – by design – produce near-zero returns due to misrepresented and undisclosed features, risks, charges and attributes,” plaintiffs told the Investment News.
Albert Ogles is the named plaintiff in the class action Kansas lawsuit.
His complaint accuses the insurance company of fraud and unjust enrichments under the laws of RICO.
“After Security Benefit filed a motion to dismiss, the (Kansas) District Court granted that motion and dismissed the case with prejudice on July 12, 2019," the brief explained. "The court found that Mr. Ogles’s RICO claim was preempted under the McCarran-Ferguson Act and that Ogles had failed to state a claim.”
Ogles filed an appeal. An additional plaintiff filed a complaint in the Kansas litigation alleging fraud, RICO violations and unjust enrichment in November of 2019.
The new Kansas plaintiff then filed an amended complaint in January naming eight additional plaintiffs.
Security Benefit moved to stay the Florida litigation based on the outcome of the first-filed Kansas case.
The Florida District Court disagreed.
“The defendant maintains that the interests of mutual benefit and judicial economy support a temporary stay,” the court opinion explained. "The defendant's argument is not compelling because unlike most cases, where there are two pending district court cases, there is uncertainty as to how the Olges (Kansas) action if it survives at all will proceed if the Tenth Circuit Court reverses the District Court’s dismissal order.”
The U.S. District Florida Court denied Security Benefit’s motion to grant a stay.