Murray v. Metropolitan Life Insurance Co.

The law firm Debevoise & Plimpton LLP (Debevoise) represented Metropolitan Life Insurance Company (MetLife) (defendant) during a month-long demutualization process (converting from mutually-owned by its policyholders to owned by stockholders) completed April 7, 2000. Eleven days later, MetLife’s policyholders (plaintiffs) brought a class action asserting that Metlife violated federal securities law by misrepresenting or omitting certain information from materials provided to policyholders during the demutualization. Debevoise acted as MetLife’s lead counsel in that class action. Seven years into litigation, MetLife requested a protective order to prevent discovery of communications between MetLife and its in-house and outside counsel based on attorney-client privilege. Reasoning that the policyholders were Debevoise’s clients during the demutualization because the policyholders owned the mutual company, the trial court denied the protective order. On July 31, 2009—more than nine years into the litigation and just five weeks before trial—the policyholders moved to disqualify Debevoise on the ground that Debevoise could not change sides and be adverse to the policyholders in the class action after representing those policyholders as owners of the mutual company during the demutualization. MetLife raised three arguments in response. First, the doctrine of laches foreclosed the policyholders’ raising the issue nine years into litigation and just before trial. Second, MetLife argued that a mutual company’s policyholders are not its corporate counsel’s clients. Third, MetLife asserted that the policyholders had moved to disqualify Debevoise for improper tactical purposes. Again reasoning that Debevoise was counsel to the policyholders as well as MetLife during the demutualization, the trial court disqualified Debevoise. MetLife appealed.