Miller v. Metropolitan Life Insurance Co.
979 F.3d 118
2d Cir.2020Background
- In 2000 Miller and Barton (airline pilots) were moved into a MetLife Group Variable Universal Life (GVUL) policy; an enrollment form required selecting a status-change option for smoker/non-smoker, which they left blank.
- MetLife nevertheless designated them as smokers and charged higher smoker-rate premiums beginning in 2000.
- Miller paid the higher premiums for ~16 years, discovered the designation in 2016, and both plaintiffs sued MetLife (complaint filed 2019) alleging breach of contract and tort claims to recover overpaid premiums.
- The District Court dismissed all claims as time-barred under New York law; plaintiffs appealed.
- The Second Circuit affirmed: it held the breach-of-contract claim was barred by New York's six-year statute of limitations because MetLife’s initial misdesignation in 2000 was a single breach and subsequent premium charges were continuing damages, not new breaches.
- Judge Menashi concurred in the judgment but would have affirmed on the separate ground that SLUSA precludes federal jurisdiction because the GVUL is a covered security and the complaint, in substance, alleges securities-style deception.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does New York’s continuing-violation doctrine toll the 6‑year contract limitations period for ongoing overcharges? | Miller: each premium charge was a new breach that restarts the limitations period. | MetLife: initial 2000 designation was the single wrongful act; later charges are only continuing damages. | Held: Tolling not allowed — the initial misdesignation was the sole breach; subsequent charges were effects (continuing damages), so claim is time‑barred. |
| Is the GVUL policy a "covered security" under SLUSA such that SLUSA precludes the suit in federal court? | Plaintiffs: GVUL is not a covered security for them (argue selection of fixed account option) and they lacked opportunity to present contrary evidence. | MetLife: GVUL is a variable/covered security regardless of whether a policyholder selects a fixed option. | Majority: Court avoided resolving SLUSA jurisdictional question and decided on limitations ground; concurrence: would hold SLUSA bars jurisdiction because GVUL is a covered security. |
| Can plaintiffs avoid SLUSA by pleading breach of contract rather than fraud (i.e., is their claim substance-over-form not really securities fraud)? | Plaintiffs: claim is contract-based (failure to use a “reasonable method”), not a securities fraud claim. | MetLife: the underlying allegations amount to deception/misrepresentation about enrollment that is central to the claim, so SLUSA applies. | Held: Substance controls; the alleged deceptive enrollment device makes the claim functionally a securities‑fraud type claim — the concurrence relied on this to conclude SLUSA precluded the action. |
Key Cases Cited
- WC Capital Mgmt., LLC v. UBS Sec., LLC, 711 F.3d 322 (2d Cir. 2013) (standard for considering documents integral to the complaint on a Rule 12 dismissal)
- Dolan v. Connolly, 794 F.3d 290 (2d Cir. 2015) (de novo review standard for Rule 12(b)(6) dismissals)
- Lehman XS Tr., Series 2006‑GP2 v. GreenPoint Mortg. Funding, Inc., 916 F.3d 116 (2d Cir. 2019) (statute of limitations rule for contract actions in New York)
- Rayner v. E*TRADE Fin. Corp., 899 F.3d 117 (2d Cir. 2018) (SLUSA: emphasize substance over form; allegations that effectively rely on misrepresentation fall within SLUSA)
- In re Kingate Mgmt. Ltd. Litig., 784 F.3d 128 (2d Cir. 2015) (limits on SLUSA preclusion where misrepresentation is not essential to the non‑fraud claim)
- Hampton v. Pac. Inv. Mgmt. Co., 869 F.3d 844 (9th Cir. 2017) (SLUSA dismissal is jurisdictional; covered securities bar federal/state class actions)
- Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83 (1998) (federal courts may not assume hypothetical jurisdiction; jurisdictional questions must be resolved prior to merits)