United States District Court, D. Massachusetts
KAREN L. BACCHI, Plaintiff,
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, Defendant.
ORDER ON REPORT AND RECOMMENDATIONS
J. CASPER, Judge.
reviewed Karen L. Bacchi's ("Plaintiff")
objections, D. 196, to the Report and Recommendation
("R&R"), D. 193, and Massachusetts Mutual Life
Insurance Company's ("Defendant") response to
the same, D. 199, the Court rules as follows. The R&R
recommends that the motion to amend be denied in substantial
part and allowed only to the extent that it narrows the class
period. In reaching this conclusion, after full briefing and
oral argument by the parties, the Court (Cabell, M.J.) found
that two of the claims in the amended complaint were new
claims. The Court further concluded that there had been undue
delay in seeking this amendment because the basis for the
amendment was previously known to Plaintiff and there was no
justification for the delay. The Court further found that
there was prejudice to Defendant where such new claims were
proposed after factual discovery had closed.
Plaintiff objects to both findings. Upon de novo
review of Plaintiff's objections, the Court rejects these
objections as the conclusions in the R&R were not erroneous
and are supported by the relevant facts and applicable law.
The two new claims concern the Defendant's safety fund
calculations: namely, that the Defendant should net its
unrealized gains and that the Defendant should lower its MVM
adjustment by a hypothetical tax rate. Plaintiff did not
assert eeither claim in the operative complaint and they were
not part of the factual discovery that is now concluded.
Moreover, these claims are proposed three years after
litigation and several months after fact discovery has
closed, presumably long after Defendant decided its theory of
defense and discovery plan. There was also no suggestion that
Plaintiff was justified in its delay to seek such amendment
where earlier produced discovery put Plaintiff on notice of
the factual basis for such claims. Given this context, the
magistrate judge also did not err in finding that Defendant
would be prejudiced.
of these reasons, the Court ACCEPTS and ADOPTS the R&R, D.
193, and DENIES IN PART the motion to amend, D. 159. The
motion to amend is ALLOWED only to the extent that it narrows
the class period. (Hourihan, Lisa). (Entered: 05/20/2016)
AND RECOMMENDATION REGARDING PLAINTIFF'S MOTION FOR LEAVE
TO FILE FIRST AMENDED COMPLAINT (#159)
L. CABELL, Magistrate Judge.
before the Court is the plaintiff's motion for leave to
file its first amended complaint. For the reasons discussed
below, it is recommended that the motion be granted in part
and denied in part.
law limits the "surplus" funds that a mutual life
insurance company may retain from its "participating
business" to "an amount not in excess of twelve
percent of its reserve for such business... and a margin of
the market value of its securities over their book
value...." M.G.L. c. 175, Â§ 141. The amount that a
mutual life insurance company is permitted to retain is
referred to as a "safety fund." Id. On
July 12, 2012, the plaintiff, Karen Bacchi, filed a four
count complaint alleging that the defendant, Massachusetts
Mutual Life Insurance Company, since 1999, has manipulated
its safety fund calculation in order to improperly retain
funds that it otherwise would have been obligated to
distribute to policyholders. (Dkt. No. 1).
December 24, 2015, the plaintiff moved to amend her
complaint. (Dkt. No. 159). The proposed amendments in the
aggregate relate to three aspects of the safety fund
calculation. First, the plaintiff in her complaint alleges
that the defendant may not take a market value over book
value (MVM) adjustment as part of the safety fund
calculation. The proposed amended complaint recognizes that
such an adjustment may be taken, but alleges that the
adjustment may not include interest rate or currency
derivatives, stock in wholly-owned subsidiaries, long-term
invested assets ("BA Assets"), or FX gains. Second,
the complaint does not make any allegations regarding the
treatment of unrealized gains but the proposed amended
complaint contends that the defendant should "net"
its unrealized gains. Third, the original complaint does not
make any allegations regarding hypothetical taxes but the
proposed amended complaint contends that the defendant should
lower its MVM adjustment by a hypothetical tax rate of
35%. (Dkt. No. 160-1 at Â¶Â¶ 41-43).
plaintiff avers that the proposed amendments do not add any
new parties or claims for relief or otherwise substantively
amend the complaint. She contends that they instead reflect
"a more detailed understanding of MassMutual's
accounting methodologies and Safety Fund practices, "
which in turn allowed her to refine "her theories as to
the precise nature and extent of MassMutual's challenged
miscalculations." The plaintiff asserts that its
"fundamental" challenges to the way the defendant
calculated the safety fund has not changed, and that she has
moved to amend only to "preclude any argument that those
challenges are somehow not encompassed by the operative
complaint." (Dkt. No. 159).
plaintiff asserts at the same time, however, that she
suspected all along that there were issues with these three
areas of the safety fund calculation. The plaintiff contends
that she was not able to amend the complaint, however, until
after she received supplemental discovery responses in
September and October 2015, and then honed her theory through
defendant argues that the proposed amendments substantively
amend the core allegation in the original complaint. It
contends that the principal thrust of the original complaint
is that the defendant improperly calculated the safety fund
because it included a market value over book value
adjustment, something the plaintiff contended should not be
included, at all. The defendant argues that the proposed
amended complaint jettisons this theory (because it lacks
merit), and now, differently, alleges that the defendant
improperly calculated the safety fund because of the three
factors noted above. The defendant points as proof to
Interrogatory No. 1, which asked the plaintiff to provide her
"specific calculation" of the safety fund for each
year in the class period. The plaintiff had responded that
the safety fund should have been limited to "twelve
percent of reserves, " that is, it should have been
calculated without inclusion of an MVM adjustment. (Dkt. No.
129 at pp. 3-11). The defendant argues that the failure of
the Interrogatory response to mention the specific safety
fund calculation criticisms set out in the proposed amended
complaint demonstrates that the proposed amended complaint
does indeed introduces new claims. The defendant argues that
the proposed amendments are untimely because the plaintiff
has been aware of the factual basis for the proposed
amendments since at least 2013, when the defendant produced
documents explaining how it ...