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A federal judge has refused to dismiss a putative class action charging that Metropolitan Life Insurance Company discriminated for decades against blacks and other minorities in the selling of insurance policies. Judge Harold Baer Jr. of the U.S. District Court for the Southern District of New York rejected a motion for summary judgment brought by the company based on the statute of limitations, ruling that plaintiffs had presented several material issues of fact on company practices, including the allegation that Metropolitan Life concealed its discriminatory practices. “Specifically, plaintiffs have put forward several ways in which they claim the defendant purposefully acted to conceal its conduct,” Baer said in Thompson v. Metropolitan Insurance Company, 00 Civ. 5071. The suit focuses on Metropolitan Life’s sales of industrial or “burial” insurance policies from the late 1800s through the 1970s. The plaintiffs are people who bought such policies, beginning in the 1940s or 1950s, with the goal of affording a decent burial. Premiums for the policies were small, and were collected, door-to-door, by MetLife “debit agents” on a weekly or monthly basis. Ostensibly, the company based the frequent collection system on the inability of poorer policy owners to make larger payments. “However, in practice, the policies appear to have been less than advantageous for the policyholders,” Baer said. “In fact, although the payments appeared modest to the policyholder, when the payments were aggregated over a lifetime, it turned out that the industrial life policies were substantially more expensive than other policies sold by MetLife.” And the polices afforded less flexibility, and fewer benefits, than other MetLife policies, the plaintiffs charged — and policyholders were forced to continue making payments even after the premiums exceeded the face value of the policies. The heart of the plaintiffs’ complaint, however, was that MetLife targeted blacks for “substandard” policies that were more expensive, in some cases through the practice of weekly collections. They charged that MetLife limited agent commissions on all policies sold to nonwhites — except on the sale of weekly burial policies. “A MetLife document submitted by the plaintiffs shows that the practice of limiting or eliminating commissions was quite successful and prevented African Americans from purchasing any policy but the weekly industrial policy,” Baer said. Moreover, the plaintiffs charged that MetLife, through its commission practices, steered blacks to substandard or weekly policies by the use of “occupational underwriting” — that based on the racial composition of workers in a particular industry — and “area underwriting” — the targeting of particular neighborhoods. One MetLife memo, Baer said, “suggests that MetLife was not merely concerned about the economic circumstances of the individuals living in the targeted areas but was also interested in their race.” QUESTIONING MORALS Another allegation was that MetLife used “mercantile reports” that were designed to disqualify blacks from purchasing any policy except those offering the lowest returns. Agents would file reports in which they attempted to detail an applicant’s habits and morals. Agents were instructed to learn the answers to such questions as: “Have the applicant’s or the premium-payer’s drinking habits been criticized?”; or, “Is there any other criticism of the applicant’s or premium-payer’s habits or reputation?” Finally, the plaintiffs provided an internal MetLife report that seemed to show that MetLife had strategies designed to reduce the “volume and quality” of policies held by blacks. The company, while denying these allegations, said nonetheless that the time had long passed for suit to be brought. The plaintiffs countered with three arguments. First, that their cases fell under an exception to the federal rule that an action accrues at the time of injury, because they did not have the information needed to make a case. Second, the plaintiffs said that, because the company concealed its practices, the statute of limitations should be tolled for reasons of equity. Third, they argued, the statute of limitations is irrelevant because MetLife is involved in continuing violations. MetLife claimed that disparate treatment in the insurance industry had been cited in 24 different news articles over a 60-year period and was the subject of scholarly publications and government reports. A reasonable person, MetLife argued, would have been on notice about the company’s practices. PUBLIC AWARENESS But Judge Baer said the question of notice could not be resolved at this stage of the case. “While these 24 articles, published over a 60-year period, could be construed as reflecting general public awareness of the inequities of industrial life insurance, the defendant’s evidence is a far cry from what is necessary to determine, as a matter of law, that these plaintiffs should have known of their injuries,” he said. Baer then addressed the issue of equitable tolling, saying “assuming that a hypothetical plaintiff did have knowledge, or constructive knowledge, of injury, the defendant failed to show, as a matter of law, that the statute of limitations is not tolled on this ground as well.” “Specifically, plaintiffs have put forth several ways in which they claim the defendant purposefully acted to conceal its conduct,” he said. “Although defendant disputes plaintiffs’ claims, and contends that the knowledge of the cause of action was so out in the open that plaintiffs cannot rely on this argument, I am unable to find as a matter of law that plaintiffs’ arguments do not have merit.” Lastly, Baer concluded that the plaintiffs should survive summary judgment on their “continuing violation” theory. Plaintiffs said MetLife “never ceased discriminating” because fewer shares of stock were issued to nonwhite policyholders when MetLife demutualized last year; dividends distributed by the company were less favorable to nonwhites; and the company continued to collect discriminatory premiums and pay lower benefits. “While perhaps the weakest string in [the plaintiffs'] bow, given the fact that discovery is apparently far from completed, it is inappropriate now to decide this issue,” the judge said. Among several law firms representing the plaintiffs is Milberg Weiss Bershad Hynes & Lerach. Debevoise & Plimpton represents MetLife.

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