The fate of a potential $2.5-billion class-action lawsuit against Toronto-based Sun Life Assurance Co. of Canada will be decided in the next few weeks, as plaintiffs seek to get the case certified in a hearing now underway at the Ontario Superior Court of Justice.
The case relates to life insurance policies that Sun Life inherited through an acquisition more than a decade ago, and the outcome could affect as many as 230,000 individuals.
Toronto-based law firm Kim Orr Barristers PC is prosecuting the proposed class-action lawsuit against Sun Life, related to the marketing, sale and administration of certain life insurance policies sold by the Canadian operations of New York-based Metropolitan Life Insurance Co. (MetLife) between 1985 and 1998. Sun Life acquired the policies through its 2002 acquisition of Clarica Life Insurance Co. (formerly known as Mutual Life Assurance Company of Canada), which had acquired most of MetLife’s Canadian business in 1998.
A Sun Life spokesperson says the company has set up programs for clients to address their concerns over the years. Sun Life declined to comment further, given that the matter is currently before the courts.
The case has not yet been certified as a class action. The certification motion for a class proceeding is currently before the court, in a hearing that began on Sept. 28 and is scheduled to last for eight days.
The affected policies include four universal life (UL) products created and sold by MetLife: Interest Plus, Universal Plus, Universal Flexiplus and Universal Optimet. The proposed class action alleges that these policies were sold on the basis of misrepresentations, and that the marketing materials, descriptions and illustrations used in the sale of the products differed from how the policies worked in practice.
In the case of Interest Plus, for example, the plaintiffs allege that policyholders were sold coverage on the basis that their policies provided permanent lifetime coverage, when in fact the coverage terminates on the policy anniversary following the insured’s 90th birthday.
Other alleged misrepresentations include policies having been sold on the basis that premiums would remain level once the policy has been in force for a certain number of years, when in fact premiums on some policies have increased subsequent to that defined period.
The proposed class action is seeking a total of $2.5 billion in damages for reckless or negligent misrepresentation, breach of contract, breach of the duty of utmost good faith and fair dealing, deceit and civil fraud.
The proposed lawsuit includes all current and former owners of the affected policy types, as well as any beneficiaries or trustees of the policies. That adds up to at least 230,000 individuals, according to Megan McPhee, principal at Kim Orr.
McPhee says she considers it “extremely likely” that the case will be certified as a class action, considering the high degree of commonality in the case.
“We think it’s a case that’s very amenable to certification,” she says.
The proposed class action was initiated in September 2010. In 2011, a judge struck out certain portions of the plaintiffs’ allegations, following a motion brought by Sun Life. However, the Court of Appeal for Ontario reversed that decision in 2013, restoring the plaintiffs’ claims.
Prior to the proposed class action, Sun Life had filed a lawsuit against MetLife — which has continued to operate in the U.S. since exiting the Canadian market — in relation to “market conduct claims” around some of the UL policies in question in 2006. In a 2010 decision, the court found that since Sun Life had not yet incurred an indemnifiable loss, the action was premature.