Cynthia Pittman v. Unum Group, 20-5710

Unum Group issued long-term-care (LTC) policies that later produced large losses due to faulty pricing assumptions (longevity, lapse rates, lower interest rates).
Unum stopped new LTC sales by 2012 but managed a large closed block (≈1M lives; >$600M annual premiums) and maintained a reserve fund for future liabilities.
In 2014 Unum increased LTC reserves by $698M, adopted an interest-adjusted loss-ratio metric, and told investors that a sustained loss ratio over 90% would trigger reserve reassessment.
From 2016–2018 the LTC loss ratio exceeded 90% in multiple quarters; after disclosing a reassessment in May 2018 Unum’s stock fell and it later increased reserves by $750M.
Investors filed a consolidated securities-fraud class action (class period Oct 27, 2016–May 1, 2018) alleging misstatements/omissions about rate-approval progress, policy composition, loss ratios, and accounting; the district court dismissed for failure to plead material misstatement and scienter.
The Sixth Circuit affirmed dismissal, holding plaintiffs failed to plead scienter adequately and therefore affirmed without reaching the district court’s materiality conclusion.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Adequacy of alleged material misstatements/omissions under §10(b)/Rule 10b-5	Unum misled investors about rate-approval success, policy types, loss-ratio relevance, and accounting, making public statements misleading	Disclosed statistics and warnings (e.g., percent of rate approvals outstanding; 85–90% loss-ratio benchmark); statements were factual or corporate optimism	Appellate court affirmed dismissal on scienter ground and did not resolve materiality; district court found materiality allegations inadequate
Scienter (strong inference of intent or recklessness)	Executives had access/knowledge, internal metrics diverged from public statements, timing of disclosures, prior California suit settlement, and executive bonuses tied to LTC performance support scienter	Facts show risk-monitoring and disclosed warnings, reserve increases reflect catch-up and corrective action, not fraud; incentives not tied to a single fraudulent metric	Scienter not adequately pleaded—the inference of fraud was not as cogent and compelling as nonfraudulent explanations; dismissal affirmed
Controlling-person liability under §20(a)	Officers are liable as controlling persons if primary §10(b) violation shown	Controlling-person claim depends on primary violation; no independent defense argued	Court declined independent §20(a) analysis because plaintiffs’ §10(b) claim failed

Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (scienter inference must be cogent and at least as compelling as nonfraudulent inference)
Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27 (elements of a §10(b) claim)
Helwig v. Vencor, Inc., 251 F.3d 540 (6th Cir. 2001) (Helwig factors for pleading scienter)
Doshi v. General Cable Corp., 823 F.3d 1032 (6th Cir. 2016) (procedural standards for scienter pleading)
Frank v. Dana Corp., 646 F.3d 954 (6th Cir. 2011) (bonus tied to specific fraudulent metric can bolster scienter)
Dougherty v. Esperion Therapeutics, Inc., 905 F.3d 971 (6th Cir. 2018) (temporal proximity of disclosure gives minimal weight for scienter if close in weeks)
City of Monroe Emps. Ret. Sys. v. Bridgestone Corp., 399 F.3d 651 (6th Cir. 2005) (consideration of competing inferences; remoteness of prior statements)
SEC v. Steadman, 967 F.2d 636 (D.C. Cir. 1992) (corrective actions and disclosures inconsistent with fraudulent scheme)