Opinion ID: 6933495
Heading Depth: 2
Heading Rank: 3

Heading: New Jersey State Class Actions

Text: On July 17, 1991, one day after the state court placed Mutual Benefit in rehabilitation, the first of six state class actions was filed. The other five class actions were filed within the week, and the state court eventually consolidated all six into one action. The state class action complaints are similar to the Commissioner’s complaint. They allege excessive investment in high-risk, nonperforming' real estate ventures and leveraged buy-outs, as well as public misrepresentations concerning Mutual Benefit’s financial condition. They assert claims for fraud, negligent misrepresentation, breach of fiduciary duty, and negligence. The various plaintiffs in the state class actions moved for class certification. The Commissioner opposed class certification and sought dismissal of the action on the ground that the Commissioner had standing to bring the claims asserted therein and that continuation of the class action suits would impede the rehabilitation effort. The state court denied the plaintiffs’ motion for class certification in the state actions without prejudice holding that the Commissioner had a prior right to pursue these claims and satisfy them out of the $20 million D & 0 Policy. The state court stayed the class actions and ruled that after the Commissioner’s action was concluded, a Rehabilitation Plan approved, and all appeals exhausted, it would decide whether plaintiffs had been made whole and whether their actions should proceed as a class action, if at all. In re Mutual Benefit Life Policyholders Action Litigation, No. L-91-5318, slip op. at 2 (N.J.Super.Ct. Jan. 5, 1993). The state court permitted discovery to proceed only to the extent plaintiffs’ efforts “[did] not require any input from the rehabilitation estate and [did] not interfere with the prior orders of the Court in the rehabilitation action.” Id. at 3. In orders dated January 25, 1993, and June 8, 1993, respectively, the Superior Court of New Jersey, Appellate Division and the New Jersey Supreme Court denied the plaintiffs’ motions for leave to appeal the lower court’s decision.