Latest Case: Burkhart v. Genworth Financial, Inc. (Business Law)

Discrimination and the “Leveling Down” Puzzle

MICHAEL C. DORF

Cornell law professor Michael C. Dorf considers how much freedom the government has to “level down” in response to a finding of impermissible discrimination. Dorf discusses several of the U.S. Supreme Court’s precedents on leveling down and points out that these decisions are difficult to reconcile with each other and leave unresolved the questions whether and when leveling down is permissible.

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Burkhart v. Genworth Financial, Inc.

Docket: C.A. No. 2018-0691-JRS

Opinion Date: January 31, 2020

Judge: Slights

Areas of Law: Business Law, Class Action

In this class action complaint brought under the Delaware Uniform Fraudulent Transfer Act (DUFTA) alleging that Genworth Life Insurance Company (GLIC) engaged in both actual and constructive fraudulent transfers the Court of Chancery granted in part and denied in part GLIC's motion to dismiss, holding that Plaintiffs' attempts to reverse some of GLIC's dividends were time barred. Plaintiffs, a class of insureds who held long-term care insurance policies and insurance agents who alleged that they were entitled to commission payments for selling such payments, alleged that on the brink of its failure, GLIC's owners engaged in an intentional plan to syphon off GLIC's assets. In their class action complaint Plaintiffs asked the Court of Chancery to restore to GLIC the value of the assets that were syphoned away from 2012 to 2014. In response, Defendants filed a motion to dismiss. The Court of Chancery granted the motion in part and denied it in part, holding (1) any challenge to the $395 million in dividends GLIC paid from 2012 to 2014 was untimely under 6 Del. C. 1309; and (2) Plaintiffs had standing to bring this lawsuit.