A federal appeals court has affirmed an Ohio judge's dismissal of a putative class action against Ohio National Insurance over the company's decision to stop paying certain kinds of commissions on variable annuities.

The Tuesday opinion agreed that the named plaintiff, a representative for a broker-dealer who sold the annuities, was not a party to the contract between Ohio National and the brokerage firm, and thus had no standing to sue.

The case is one of several in various stages of litigation against Ohio National and related entities over its decision to discontinue payment of trail commissions to brokers and agents who serviced its variable annuities from 2012 through 2018, when it stopped selling them and discontinued the payments.

Thousands of brokers were affected by the decision to end the payments, which were offered to them in lieu of accepting lump-sum commissions when they sold the annuities.

Complaints have been filed around the country asserting that Ohio National breached agreements under which the brokers were guaranteed to receive the commissions until the annuities were surrendered or annuitized—which is when they are converted into fixed, regular payments by the purchaser.

Three such suits were filed in Ohio's Southern District. U.S. District Senior Judge Susan Dlott dismissed two of them in October, and the plaintiffs appealed in both cases.

Tuesday's ruling comes in the case of Stephen Cook, a Texas-based securities representative employed by broker-dealer Triad Advisors.

Triad had a contract with Ohio National under which the insurer would pay annuities to Triad, which in turn paid its representative under a separate agreement.

After Ohio National stopped paying the commissions, Cook filed a class action against the insurer for breach of contract, arguing that he was a "third-party beneficiary" to its agreement with Triad. He also filed a claim for unjust enrichment.

A magistrate judge's report and recommendation agreed that Cook was an "intended" third-party beneficiary but Dlott found otherwise, writing that the selling agreement was solely between Ohio National and Triad. She also found that there was no basis for the unjust enrichment claim.

The appellate opinion affirming Dlott's dismissal was written by Senior Judge Gilbert Merritt with the concurrence of Judges Richard Suhrheinrich and Jeffrey Sutton.

The selling agreement explicitly stated that the commissions were to be paid to Triad, Merritt wrote, and "provided that any compensation paid to the representatives such as plaintiff will be Triad's responsibility.

"The requirement to have a separate contract cuts against any suggestion that the selling agreement was intended to directly benefit representatives like plaintiff," he said.

Because the agreement "unambiguously directs Ohio National to pay commissions to Triad," the opinion said, Cook's claim for unjust enrichment is also without basis under Ohio law.

The second case Dlott dismissed, Browning v. Ohio National Life Insurance, was scheduled for video arguments at the Sixth Circuit next week, but they have been canceled and the case will be decided solely on briefs, according to the appellate docket.

The Ohio National defendants are represented by Marion Little Jr. and Christopher Hogan of Columbus' Zeiger, Tigges & Little. They did not respond to a request for comment Wednesday.

Cook is represented by B. Nathaniel Garrett, James Helmer Jr. and Robert Rice of Helmer, Martins, Rice & Popham in Cincinnati.

In an email Garrett said the ruling was unfortunate.

"The fact remains that advisors earned commissions by selling Ohio National's variable annuities, and Ohio National decided to unilaterally stop paying those earned commissions," Garrett said. "At a time when many are struggling financially, this ruling forecloses court access and compounds the ongoing harm suffered by affected advisors."

"Advisors were necessary to sell and service the annuities, but are now forced to sit on the sidelines while their entitlement to commissions for all of their hard work is litigated between Ohio National and broker-dealers," he said.

Garrett said his firm is monitoring two related appeals and the third broker-dealer class action in Ohio's Southern District, Veritas Independent Partners LLC v. Ohio National Life Insurance, which remains pending.

"Should the broker-dealers' class action be resolved in their favor, financial advisors should still be entitled to their promised compensation," Garrett said.

A similar case in the Southern District of Texas has been stayed pending the outcome of the Veritas litigation.

Meanwhile, Ohio National settled another case in Texas' Western District and one in Illinois; the insurer continues to fight a Massachusetts judge's order directing a trail commission case there to FINRA arbitration.