In re: Life Investors Insurance v. ( 2009 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 09a0428p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
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In re: LIFE INVESTORS INSURANCE COMPANY -
No. 09-5598
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OF AMERICA; AEGON USA, INC.,
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Petitioners. -
Nos. 09-5598/5868/6357
_____________________________________ ,>
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-
Nos. 09-5868/6357
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ANTHONY E. GOOCH,
Plaintiff-Appellee, -
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-
v.
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LIFE INVESTORS INSURANCE COMPANY OF -
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Defendants-Appellants. -
AMERICA and AEGON, INC.,
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N
Appeal from the United States District Court
for the Middle District of Tennessee at Columbia.
No. 07-00016—William J. Haynes, Jr., District Judge.
Argued: November 19, 2009
Decided and Filed: December 17, 2009
Before: MARTIN, BOGGS, and COLE, Circuit Judges.
_________________
COUNSEL
ARGUED: Markham R. Leventhal, JORDEN BURT LLP, Miami, Florida, for Appellants.
Thomas O. Sinclair, LEITMAN SIEGAL PAYNE & CAMPBELL, P.C., Birmingham,
Alabama, for Appellee. ON BRIEF: Markham R. Leventhal, Julianna Thomas McCabe,
Richard J. Ovelmen, JORDEN BURT LLP, Miami, Florida, Thomas H. Dundon, A. Scott
Ross, NEAL AND HARWELL, PLC, Nashville, Tennessee, for Appellants. Thomas O.
Sinclair, Miles Clayborn Williams, LEITMAN SIEGAL PAYNE & CAMPBELL, P.C.,
Birmingham, Alabama, Eric L. Buchanan, ERIC BUCHANAN & ASSOCIATES,
Chattanooga, Tennessee, for Appellee.
1
Nos. 09-5598/5868/6357 Gooch v. Life Investors Ins. Co., et al. Page 2
_________________
OPINION
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BOYCE F. MARTIN, JR., Circuit Judge. In Case Number 09-5598, defendants-
petitioners Life Investors Insurance Company of America and its parent company AEGON
1
USA, Inc. seek various forms of mandamus relief from the district court’s orders and
general case management approach. In Case Number 09-5868, the Company appeals the
order of the district court enjoining the Company from continuing with the settlement
process in a parallel class action in Arkansas state court. Finally, seven days prior to
oral argument on Case Numbers 09-5598 and 09-5868, the Company filed a third appeal,
Case Number 09-6357, this time taking issue with the district court’s denial without
prejudice of the Company’s motion to dissolve a preliminary injunction. For the reasons
set forth below, we DENY mandamus relief in No. 09-5598, REVERSE and VACATE
the injunction in No. 09-5868, and AFFIRM in No. 09-6357.
I.
Because this case comes before us on interlocutory review, the facts do not
provide the fixed target that we prefer when setting forth the factual and procedural
history of a case on appeal. Thus, we provide only a brief summary of the allegations
and an overview of where the litigation stands and then incorporate additional facts
where necessary in the analysis.
The substance of this case revolves around how the Company administers
supplemental “cancer only” insurance policies that it has sold to individuals, such as
plaintiff Anthony Gooch, and specifically how it calculates reimbursement for certain
costs. Although some of the reimbursements provided under the policy are in fixed
amounts, other reimbursements are keyed to the “actual charges”2 incurred by the
1
Life Investors Insurance Company of America now trades as Transamerica Life Insurance
Company. For purposes of this opinion, we refer to this entity and AEGON collectively as the Company.
2
The term “actual charges” comes directly from the insurance policy, and it is the meaning of this
term that is the heart of this case.
Nos. 09-5598/5868/6357 Gooch v. Life Investors Ins. Co., et al. Page 3
insured for certain services, such as radiation, chemotherapy, or ambulance
transportation.
The Company contends that for several years it accepted, as proof of “actual
charges,” statements from hospitals and doctors that set forth “list prices” for a given
treatment or service. The Company further contends that these “list prices” are pure
fiction because they are not actually billed to anyone, and no one actually pays those
prices. Instead, the Company contends, hospitals and doctors routinely agree to accept
a lesser amount from the patient’s primary insurer, similar to the difference between the
sticker price for a car and the price that people actually pay for that car. Thus, the
Company claims that it was erroneously providing windfalls to its customers by
reimbursing them based on the list price when they actually only incurred costs based
on the amount the doctor or hospital agreed to accept. The Company alleges that, after
it realized this error during the course of an investigation into why premiums were
rising, it changed its practice to require a showing of actual proof of loss for
reimbursement. Now, the Company claims that instead of reimbursing the insured based
on the list price, the Company reimburses based on whatever the medical provider
agreed to accept as payment in full. The Company asserts that this is in complete accord
with the terms of the insurance policies.
Gooch disagrees. In short, he contends that the policies require that the
Company reimburse policyholders for the amount the medical provider says it is owed,
regardless of whether the provider subsequently agrees to accept less from the insured’s
primary insurer. He further contends that, even if the provider agrees to accept less than
its full price from an insurance company, the individual still remains liable for the
difference. Thus, Gooch asserts that the Company breached its policy when it began
refusing to reimburse for whatever amount the provider initially says that it is owed.
Gooch therefore brought this suit seeking declaratory, injunctive, and monetary
relief from the Company’s alleged breach of the insurance contract. He also seeks to
pursue these claims on behalf of a nationwide class of individuals that had purchased
identical policies from the Company. Gooch filed his complaint on March 30, 2007.
Nos. 09-5598/5868/6357 Gooch v. Life Investors Ins. Co., et al. Page 4
The early months of the case saw a flurry of activity, including a motion to dismiss from
the Company and motions for partial summary judgment on the meaning of the policy,
a preliminary injunction, and class certification from Gooch. However, the case has
languished for more than two years, with numerous partial or complete stays punctuated
by random bursts of rulings, orders, and discovery. From our review of the docket sheet,
it appears that a substantial amount of discovery and pretrial filings remains before this
matter is ready for trial.
II.
A. Case Number 09-5598 - Petition for Writ of Mandamus
In May of 2009, the Company petitioned this Court for a writ of mandamus. The
issues for which the Company seeks mandamus relief may be broken up into three
general categories: (1) the district court’s ruling granting partial summary judgment to
Gooch on the interpretation of the policy, and its treatment of that ruling as “law of the
case”; (2) the district court’s decision to defer ruling on the Company’s motion to
dissolve a preliminary injunction, requiring the Company to continue reimbursing Gooch
according to the old method, until a hearing on class certification and permanent class-
wide injunctive relief; and (3) the district court’s various discovery rulings, which the
Company describes as one-sided. Before we address these three issues, however, we
review the general standards concerning the availability of mandamus relief, taken from
our recent decision in In re Professionals Direct Insurance Co., 578 F.3d 432 (6th Cir.
2009):
This Court has authority to issue a writ of mandamus under 28 U.S.C.
§ 1651 and Federal Rule of Appellate Procedure 21. However, a writ of
mandamus is an extraordinary remedy that we will not issue absent a
compelling justification. Traditionally, writs of mandamus were used
“only to confine an inferior court to a lawful exercise of its prescribed
jurisdiction or to compel it to exercise its authority when it is its duty to
do so.” Kerr v. U.S. Dist. Court for the N. Dist. of Cal., 426 U.S. 394,
402 (1976). Accordingly, “[t]he writ of mandamus is not to be used
when the most that could be claimed is that the district courts have erred
in ruling on matters within their jurisdiction.” Schlagenhauf v. Holder,
379 U.S. 104, 112 (1964). Rather, “only exceptional circumstances
Nos. 09-5598/5868/6357 Gooch v. Life Investors Ins. Co., et al. Page 5
amounting to a judicial usurpation of power will justify the invocation of
this extraordinary remedy.” Will v. United States, 389 U.S. 90, 95
(1967). And, because mandamus is a discretionary remedy, a Court may
decline to issue the writ if it finds that it would not be “appropriate under
the circumstances” even if the petitioner has shown he is “clear[ly] and
indisputabl[y]” entitled to it. Cheney v. U.S. Dist. Court, 542 U.S. 367,
381(2004).
In evaluating whether to issue a writ of mandamus, we consider five factors:
(1) whether the party seeking the writ has no other
adequate means, such as direct appeal, to attain the relief
desired; (2) whether the petitioner will be damaged or
prejudiced in a way not correctable on appeal after a final
judgment; (3) whether the district court’s order is clearly
erroneous as a matter of law; (4) whether the district
court’s order contains an oft-repeated error, or manifests
a persistent disregard of the federal rules; (5) whether the
district court’s order raises new and important problems,
or legal issues of first impression.
John B. v. Goetz, 531 F.3d 448, 457 (6th Cir. 2008). Not every factor
need apply (four and five tend to point in opposite directions, for
example), but together they must present extraordinary circumstances to
justify issuance of the writ. In re Perrigo, 128 F.3d 430, 435 (6th Cir.
1997).
With narrow exceptions, a party has no right of appeal until after a final
judgment on the merits, and mandamus is not intended to substitute for
appeal after a final judgment. Thus, a court may only exercise its
mandamus jurisdiction when a party is in danger of harm that cannot be
adequately corrected on appeal and has no other adequate means of
relief. The first two factors in the five-factor test are aimed at preventing
the end-run around the final judgment rule that might otherwise occur.
And, as a result, courts generally ask whether the first two prongs of the
test have been satisfied before addressing the merits of the errors alleged
in the petition. See, e.g., In re Gregory Lott, 424 F.3d 446, 449-52 (6th
Cir. 2005).
578 F.3d at 437-38.
Nos. 09-5598/5868/6357 Gooch v. Life Investors Ins. Co., et al. Page 6
1. Rulings Regarding Interpretation of the Insurance Policy
The central issue in this case is whether the Company’s new approach to
reimbursements is permissible under the language of the policy. It is not surprising,
then, that this issue is the primary motivator for the Company’s request for mandamus
relief. The Company complains about the manner in which the district court has gone
about interpreting the policy. We set forth the facts relevant to this issue below.
The Company responded to Gooch’s complaint by moving to dismiss3 on the
basis that the four corners of the insurance policy precluded Gooch’s claim. Gooch
responded and also cross-moved for partial summary judgment on the interpretation of
the policy, for a preliminary injunction requiring the Company to continue reimbursing
him under the old process, and for class certification. Gooch submitted a significant
amount of evidence in support of these motions.
The Company argued that Gooch’s motions were premature, and the district
court agreed. It stayed discovery for the most part, subject to reopening if the court
found that it needed evidence to rule on the meaning of the policy. The court further
ordered that, if it denied the motion to dismiss, the Company’s responses to Gooch’s
motions would be due 150 days after the court ruled on the motion to dismiss. We
presume that this 150-day window was to allow the parties to conduct the discovery
necessary to complete the briefing on Gooch’s motions.
Relatively little occurred over the next seven months while the district court
considered the Company’s motion to dismiss. Then, on March 6, 2008, the court issued
a ruling on several of the outstanding motions, including Gooch’s class certification,
partial summary judgment, and preliminary injunction motions that it had previously
indicated were stayed. The upshot of this combined ruling was that the district court
3
The Company captioned its motion as a “Motion to Dismiss or, in the Alternative, for Summary
Judgment.” The Company submitted documents and affidavits along with its motion, but only in support
of a choice of law issue. Its argument on the interpretation of the insurance policy relied solely upon the
text of the contract. The Company also indicated in its motion that it would not oppose the conversion of
its motion into a motion under Rule 56 for summary judgment provided that it have the opportunity to
supplement its motion with evidence.
Nos. 09-5598/5868/6357 Gooch v. Life Investors Ins. Co., et al. Page 7
agreed with Gooch’s interpretation of the insurance policy. Importantly, the court
partially relied upon matters outside of the pleadings and the four corners of the
policy—the evidence submitted by Gooch—in coming to its conclusions, without having
permitted the Company an opportunity to take discovery or offer any contradictory
evidence.4 The court therefore denied the Company’s motion to dismiss, granted partial
summary judgment in favor of Gooch, and entered a preliminary injunction requiring the
Company to reimburse Gooch under its prior procedures. The court also certified the
class that Gooch sought to represent.
The Company reacted defensively. It quickly moved, on March 18th, to set aside
the class certification5 and, on March 20th, to set aside the partial summary judgment.
Approximately one month later, on April 11th, the court held a status conference.
During that conference, the court, for reasons that are not apparent from the record,
stayed all discovery indefinitely and vacated all pending deadlines.
In February 2009, approximately ten months after the April 11, 2008 status
conference, the court entered an order vacating the partial summary judgment that it had
entered for Gooch approximately one year earlier and that the Company had sought to
vacate eleven months earlier. Nevertheless, approximately one month later, during a
March 2009 status conference, the court announced that, although it had vacated the
partial summary judgment to Gooch on the interpretation of the policy (which it had
arrived at by relying, at least in part, on evidence submitted by Gooch without the
Company having had the opportunity to submit rebutting evidence), it intended to treat
its interpretation of the policy as the “law of the case.”
4
In its order denying the motion to dismiss, granting Gooch partial summary judgment, entering
a preliminary injunction, and certifying the class, the court indicated that briefing on the summary
judgment, injunction, and class certification motions was complete and that the issues were therefore ripe
for decision. This was incorrect as the court had previously ordered that the Company’s responses to
Gooch’s motions were not due until 150 days after it ruled on the motion to dismiss.
5
The court set aside its prematurely issued class certification the next day, March 19th. However,
the court only gave the Company forty-five days to respond to the motion to certify the class, as opposed
to the 150 days originally provided. The Company complains that forty-five days was insufficient to
conduct class discovery and respond to the motion. However, it appears that, as of today, the court still
has not ruled on the class certification motion, more than one and one half years after it set aside its
certification order, and class certification is not one of the issues about which the Company seeks
mandamus relief.
Nos. 09-5598/5868/6357 Gooch v. Life Investors Ins. Co., et al. Page 8
It is in light of this fact pattern that the Company makes its first and most
vehement request for mandamus relief. It is clear from the Company’s submissions on
appeal that it is highly frustrated with the manner in which the district court has managed
this case. We do not find the Company’s frustration altogether unreasonable, although
our review of the record from the district court leads us to believe that the Company
itself is not completely innocent with regard to the disjointed manner in which this case
has progressed.
But, in any event, frustration with the manner in which a district court is
managing a case is not grounds for mandamus relief. Essentially, we are presented with
(1) a premature entry of summary judgment that has now been mooted by a subsequent
vacation of that summary judgment and (2) a court that indicates that it nevertheless
intends to treat the substance of that mooted order, i.e. its reading of the insurance
policy, as “law of the case.” As to the first situation, the entry of partial summary
judgment, mandamus relief is clearly inappropriate as the district court corrected its own
error. Thus, we are left with the question whether the court’s indication that it intends
to treat its interpretation of the insurance policy as “law of the case” amounts to the
wholesale “judicial usurpation of power” necessary to invoke our mandamus
jurisdiction. In re Prof’ls Direct Ins. Co., 578 F.3d at 437 (citing Will v. United States,
389 U.S. 90, 95 (1967)).
Based on our review of the record, we do not interpret the district court’s
statement as invoking the formal “law of the case” doctrine.6 Instead, we interpret it as
being a sort of shorthand legal slang to signal that the court simply does not intend to
revisit the issue of contract interpretation. When viewed in this light, we do not believe
that mandamus relief is warranted. Even accepting the Company’s position that the
court’s interpretation of the policy is incorrect (a matter on which we offer no opinion),
all we would have before us is an incorrect interlocutory ruling by the district court.
6
The Company is indisputably correct that the formal “law of the case” doctrine does not apply
to this situation, as a district court may always reconsider and revise its interlocutory orders while it retains
jurisdiction over the case. Rodriguez v. Tenn. Laborers Health & Welfare Fund, 89 F. App’x 949, 959 (6th
Cir. 2004); Mallory v. Eyrich, 922 F.2d 1272, 1282 (6th Cir. 1991). Thus, it is not true that the court is
bound to its interpretation of the contract in any legally preclusive sense.
Nos. 09-5598/5868/6357 Gooch v. Life Investors Ins. Co., et al. Page 9
Stated differently, “the most that could be claimed” is that the district court erred on a
matter within its jurisdiction, In re Prof’ls Direct Ins. Co., 578 F.3d at 437 (citing
Schlagenhauf v. Holder, 379 U.S. 104, 112 (1964)), which is not a sufficient predicate
for mandamus relief.
Turning to the five mandamus factors set forth by our prior cases, allegedly
incorrect interlocutory rulings are common on direct appeal in civil cases—e.g., the
court denies a motion to dismiss, the case goes to trial and results in a verdict, then we
determine on direct appeal that the complaint indeed failed to state a claim and thus the
district court incorrectly denied the motion to dismiss. Thus, under the first and second
of the five mandamus factors, the relief sought by the Company is clearly available on
direct appeal. Even more compelling, however, is the third mandamus factor, which
asks whether the district court’s order is clearly incorrect as a matter of law. First, there
is currently no incorrect order to speak of, as the court vacated the partial summary
judgment. Instead, the most we have is an allegedly incorrect interpretation of the
policy, set forth in a now mooted order, and an indication that the court is not inclined
to change its mind. And second, given the unsettled state of the pleadings and discovery,
we cannot determine whether the district court’s interpretation of the policy is correct
or incorrect. It therefore follows that it is not currently clear that the court’s
interpretation is incorrect as a matter of law.
In sum, because the first three mandamus factors all cut strongly against issuing
mandamus relief on the issue of policy interpretation, we decline the Company’s request.
2. Deferring Ruling on the Motion to Dissolve Preliminary Injunction
The second matter for which the Company seeks mandamus relief is a
preliminary injunction that the court entered at the same time that it denied the
Company’s motion to dismiss and prematurely entered summary judgment and class
certification for Gooch. The injunction essentially requires that the Company continue
reimbursing Gooch under its old method pending the outcome of the litigation. The
court issued this injunction in March of 2008, but the Company did not seek immediate
interlocutory appeal.
Nos. 09-5598/5868/6357 Gooch v. Life Investors Ins. Co., et al. Page 10
Almost one year later, the Company moved to dissolve the preliminary
injunction.7 Gooch did not immediately respond to the merits of the Company’s motion.
Instead, he moved to combine briefing and ruling on the motion to dissolve with the
already pending motions for class certification and for class-wide injunctive relief. The
basis for Gooch’s motion was as cavalier as it was candid: ruling on the motion to
dissolve “may have the undesired effect of” allowing the Company to bring an
interlocutory appeal under 28 U.S.C. § 1292. (Docket No. 244.)8 In other words, Gooch
was asking the court to delay ruling on the motion to dissolve in order to prevent the
Company from having an immediate basis for appellate jurisdiction. The Company
predictably responded that forestalling an appeal is not a proper basis for a court to defer
ruling on a motion in due course. Nevertheless, the court granted Gooch’s motion in
July of 2009, thereby combining the motion to dissolve with Gooch’s motions for class
certification and class-wide injunctive relief. As of this writing, the court has not ruled
on any of these motions, so the injunction remains in place.
Importantly, however, the court did not base its decision to defer ruling on the
motion to dissolve on Gooch’s rationale of staving off an appeal. Instead, the court
stated “this motion is granted to the extent that the Defendants’ motion to dissolve will
be heard with the motion on class certification as these motions possess related issues.”
(Docket No. 308 (emphasis added).) Though the order does not indicate what these
related issues are, we do not find it unreasonable to accept that such issues exist. Thus,
it is apparent that the court did not grant the motion for the allegedly improper reason
of preventing the Company from seeking interlocutory appellate review; it granted the
motion for the wholly proper purpose of conserving judicial resources by considering
7
Gooch makes much of the fact that the Company did not initially appeal the preliminary
injunction and tries to characterize the later motion to dissolve as merely an attempt to revive its right to
appeal the initial grant of injunctive relief. However the Company’s motion to dissolve is not premised
upon the argument that the initial ruling was incorrect. Instead, the motion purports to be based on “newly
discovered evidence” that would tend to show that Gooch is not facing financial hardship and has
submitted false and fraudulent insurance claims.
8
Citations to the docket refer to the docket entries in Gooch v. Life Investors Insurance Co. of
America, Case No. 1:07-cv-16 (E.D Tenn.).
Nos. 09-5598/5868/6357 Gooch v. Life Investors Ins. Co., et al. Page 11
related issues together. Because the district court did nothing improper in this respect,
we have no basis to exercise our mandamus jurisdiction.9
3. Mandamus Relief as to Discovery Issues
The final matter for which the Company seeks mandamus relief is a generalized
grievance that the district court is ruling on discovery issues in a one-sided manner in
favor of Gooch. As evidence of this general observation, the Company points to several
discrete instances, such as when the Court partially lifted a discovery stay for Gooch but
not for the Company or when the Court ruled on Gooch’s discovery motions within days
and failed to rule on the Company’s motions for months. Gooch contends that the
Company is mischaracterizing the proceedings in the district court and that the Company
has earned any discovery adversity that it may face by virtue of its supposedly abusive
approach to discovery.
But this is of little import because the Company has made no request for any
particularized discovery relief amenable to our mandamus authority. In the context of
discovery, mandamus is typically only available in those most extreme situations in
which the district court has ordered a party to disclose something that it absolutely
should not have to disclose. See, e.g., In re Prof’ls Direct Ins. Co., 578 F.3d at 443
(denying mandamus relief where party sought review of order requiring disclosure of
information the party believed was protected by the work product doctrine); John B., 531
9
After the Company petitioned this Court for a writ of mandamus and appealed regarding the
injunction of the action in Arkansas state court, the district court entered an order indicating that it would
not entertain certain pending motions until we rule on the mandamus petition and the appeal of the Runyan
injunction. The court thus denied those motions without prejudice and placed the entire case on its
administrative docket.
One of those motions was the Company’s motion to dissolve the preliminary injunction.
Apparently construing this denial without prejudice as a ruling giving rise to a right to seek immediate
interlocutory review under 28 U.S.C. § 1292, the Company filed a third appeal, which the Clerk docketed
on November 16, 2009 as Case Number 09-6357. As of this writing, Gooch has moved to dismiss for lack
of appellate jurisdiction and the Company has responded, but no merits briefs have been filed.
Nevertheless, the basis for the Company’s appeal is the denial without prejudice of the motion
to dissolve, which the district court has expressly indicated that it will take back up upon the issuance of
this opinion. Thus, there is no ruling on the merits of the motion to dissolve that we may review for an
abuse of discretion, and we find no abuse of discretion in the court’s decision to deny the motion to
dissolve without prejudice pending the outcome of the Company’s two previous appeals. We therefore
assume jurisdiction and affirm the district court’s order in Case Number 09-6357 to the extent that it does
not prejudice the Company’s right to a timely decision on the merits of its motion.
Nos. 09-5598/5868/6357 Gooch v. Life Investors Ins. Co., et al. Page 12
F.3d at 457 (granting mandamus relief when an erroneous discovery order likely would
have required disclosure of confidential state information or private personal information
unrelated to the lawsuit, and observing that “[t]his court has recognized that mandamus
may be used as a means of immediate appellate review of orders compelling the
disclosure of documents and information claimed to be protected from disclosure by
privilege or other interests in confidentiality”) (citations and internal quotations omitted).
In other words, there typically must be a discrete discovery ruling that we can look to
and find to be so incorrect and prejudicial as to justify exercising our mandamus
jurisdiction.
Here, the Company does not point to any instances in which the district court has
ordered it to produce information that is privileged or otherwise immune from
disclosure. Nor does the Company point to any order denying it access to certain
information. At most, the Company complains that the district court has thus far
restricted its access to certain information, but there is no indication that the court has
denied access to this information permanently, much less that this information is of such
great magnitude to justify mandamus relief. Because we are not inclined to move into
the practice of issuing generalized mandamus orders directing district courts to go forth
and manage discovery correctly, we decline to grant the Company mandamus relief in
this case.
B. Case No. 09-5868 - Injunction of Settlement Proceedings in Arkansas State
Court
1. Background Relevant to the Injunction
Gooch’s case is not the only case in which the Company is being sued over its
new approach to reimbursement under the policy. In fact, there are several cases
pending in various state and federal courts across the country that advance the same
general allegations and claims, some initiated before Gooch filed his complaint and some
initiated after Gooch filed his complaint. One such case was filed in the Circuit Court
of Pulaski County, Arkansas under the caption Runyan v. Transamerica Life Insurance
Co., No. CV-09-2066-3.
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The Runyan action was filed well after Gooch filed his complaint and
encompasses class action allegations materially identical to those set forth in Gooch’s
complaint. In May of 2009, the Company notified Gooch and the district court that it
had reached a settlement in the Runyan action that would encompass all of the members
of Gooch’s putative class as well as Gooch himself. The Arkansas state court had
already granted preliminary approval of the settlement and had scheduled a final fairness
hearing to take place in July of 2009. The Company therefore moved the district court
to stay the class action aspect of Gooch’s claim. Gooch and his counsel responded with
a flurry of pleadings opposing the Company’s motion to stay the class-related claims,
culminating in a June 23, 2009 “emergency” motion seeking injunctive relief under the
All Writs Act, 28 U.S.C. § 1651(a), preventing the Company from going forward with
the Runyan settlement.
The common theme of these various filings is Gooch’s theory that the Runyan
case is a sham engineered by the Company to gut the district court’s unfavorable
interpretation of the insurance policy. Gooch maintains that the settlement “is nothing
more than the result of a ‘fire sale’ by certain plaintiffs’ lawyers who are looking more
for a fee[—purportedly more than $3.5 million (Docket No. 265 ¶ 4)—]than they are for
real relief to people dying of cancer while their insurance company commits fraud
against them.” (Docket No. 265 ¶ 8.) He theorizes that the Company recruited
unscrupulous plaintiffs’ attorneys in Arkansas by offering them a windfall in terms of
attorneys’ fees in return for filing the Runyan action in state court. Under Gooch’s
theory, immediately upon Runyan filing suit, the Company would consent to class
certification and then join with Runyan in seeking approval of a class-wide settlement.
Gooch’s counsel portray the settlement as “an abuse of the judicial system and an
egregious compromise of putative class members’ due process rights” and as being
“intended solely to divest this Court of its authority to preside over this national class
action— particularly where it ratifies the Defendants’ breach in contravention of this
Court’s March 6, 2008 Order—and that the settlement is manifestly improper.” (Docket
No. 265 at 1-2.) Gooch therefore vigorously opposed the Company’s motion to stay the
Nos. 09-5598/5868/6357 Gooch v. Life Investors Ins. Co., et al. Page 14
class proceedings in the district court and later moved to enjoin the Company from
proceeding with the Runyan settlement.
In his motion for injunctive relief under the All Writs Act, Gooch asked the
district court to enjoin the Company from proceeding with final settlement of the Runyan
action. Gooch argued that the injunction was “necessary in aid of [the court’s]
jurisdiction” and thus proper under the Anti-Injunction Act, 28 U.S.C. § 2283, which
greatly curtails a federal court’s ability to enjoin state court proceedings except in three
enumerated circumstances. The district court agreed and, on July 24, 2009, issued an
order enjoining the Company and all of those working for or with it from seeking final
approval of the Runyan settlement. This order followed a ruling from the bench in
which the court expressed its belief that an injunction was necessary and proper under
the All Writs Act and Anti-Injunction Act to protect the court’s jurisdiction over the
claims of both Gooch and the class. In a later order regarding scheduling, the court
indicated that:
The Court remains gravely concerned, however, about the apparent
efforts by the Defendants to circumvent this Court’s jurisdiction through
the Arkansas state court litigation. The potential preclusion of the
Plaintiff’s claims and those of the class through the impending approval
of the settlement agreement in the Arkansas state court on November 9,
2009 would effectively render moot this Court’s jurisdiction. This Court
does not believe that such a result would be just in the face of the
Defendants’ apparent procedural gamesmanship and attempts to
circumvent the jurisdiction of this Court. The Court expresses the hope
that these issues may be addressed in time to prevent a possible
substantive injustice against the Plaintiff and potential nationwide class
through procedural tactics. These issues will be addressed upon the
disposition of the pending writ of mandamus before the Sixth Circuit.
(Docket No. 364.) The Company sought interlocutory review of this injunction. We
consolidated that appeal with the Company’s already pending petition for a writ of
mandamus and expedited briefing.
Nos. 09-5598/5868/6357 Gooch v. Life Investors Ins. Co., et al. Page 15
2. Analysis
The Company primarily contends that the Runyan injunction greatly exceeds the
court’s power under the All Writs Act as limited by the Anti-Injunction Act. The All
Writs Act provides that Article III courts generally “may issue all writs necessary or
appropriate in aid of their respective jurisdictions and agreeable to the usages and
principles of law.” 28 U.S.C. § 1651(a). However, what appears to be broad discretion
and authority has been greatly circumscribed, both by case law and by statute. As then-
Chief Justice Rehnquist stated in his capacity as Circuit Justice for the United States
Court of Appeals for the District of Columbia Circuit, the All Writs Act generally should
only be used “sparingly and only in the most critical and exigent circumstances.” Wisc.
Right to Life, Inc. v. Fed. Election Comm’n, 542 U.S. 1305, 1306 (2004) (Rehnquist,
C.J., in chambers).
With regard to the ability of a federal court to intercede in state court proceedings
using its authority under the All Writs Act, the Anti-Injunction Act provides that “[a]
Court of the United States may not grant an injunction to stay proceedings in a State
court except as expressly authorized by Act of Congress, or where necessary in aid of
its jurisdiction, or to protect or effectuate its judgments.” 28 U.S.C. § 2283. The district
court issued its injunction pursuant to the “in aid of its jurisdiction” exception to the
Anti-Injunction Act. “Whether the district court’s injunction falls within the permissible
limits of the Anti-Injunction Act is a question of law and we therefore review the matter
de novo.” Hatcher v. Avis Rent-A-Car Sys., 152 F.3d 540, 543 (6th Cir. 1998).
We have previously observed that the “in aid of jurisdiction” exception applies
only in “two scenarios: where the case is removed from the state court, and where the
federal court acquires in rem or quasi in rem jurisdiction over a case involving real
property before the state court does.” Martingale LLC v. City of Louisville, 361 F.3d
297, 302 (6th Cir. 2004). Furthermore, “a simultaneous in personam state action does
not interfere with the jurisdiction of a federal court in a suit involving the same subject
matter.” Roth v. Bank of the Commonwealth, 583 F.2d 527, 535 (6th Cir. 1978).
Because this case is not an in rem action and was not removed from state court, all we
Nos. 09-5598/5868/6357 Gooch v. Life Investors Ins. Co., et al. Page 16
have here is a parallel in personam action in state court. Our prior precedents, cited
above, plainly prohibit injunctive relief in this situation.
In his appellate briefing, Gooch all but concedes this point. He opens his
discussion of the Runyan injunction as follows:
The issue ultimately presented in the Insurance Company’s appeal of the
District Court’s injunction under the All Writs Act is whether a
defendant should be allowed to collude with plaintiffs having pending
actions in other federal courts to effectuate a proposed settlement in a
state court beyond CAFA’s watchful eye to escape an adverse ruling in
a District Court. Stated differently, the question is whether federal law
allows corporate defendants now to engage in the same “drive by”
certifications (but for settlement purposes) they once vilified and sought
to stop through passage of the Class Action Fairness Act. It may very
well be that federal law, at least for now, allows this to occur. But if the
law presently allows this dangerously unjust result, then the law should
be changed.
(Appellee’s Br. at 63 (emphasis added).)
Gooch then goes on to argue that we should expand the scope of the “in aid of
jurisdiction” exception to encompass the situation allegedly presented by the Company’s
settlement in the Runyan action.10 In support, Gooch cites cases from other circuits that
have allowed a third use of the “in aid of jurisdiction” exception under which federal
courts can essentially take ownership of complex, typically class action, cases to the
exclusion of the state courts.11
10
Gooch also argues that, although it was not the basis for the district court’s order, the Runyan
injunction was also proper “to protect or effectuate [the district court’s judgment],” which is another
exception enumerated in the Anti-Injunction Act. The “judgment” that Gooch seeks to protect and
effectuate, of course, is the district court’s ruling on the meaning of the insurance policy. There are two
problems with this argument. First, Gooch did not make the argument below and it was not the basis of
the district court’s decision, so it is not properly before us. And second, as stated above, the district court
has since vacated its entry of partial summary judgment for Gooch, which was the font of the district
court’s interpretation of the policy, so there is no formal judgment to protect. Thus, the injunction is also
improper under this alternative theory.
11
These cases arise in materially distinguishable factual circumstances, namely when numerous
cases have been consolidated by the Multi-District Litigation panel, the MDL judge has put forth
considerable effort coordinating discovery or settlement discussions, and the state court action could
potentially affect the federal class and federal settlement. For example, in In re Diet Drugs, 282 F.3d 220
(3d Cir. 2002), a federal court issued an injunction in an MDL nation-wide class action enjoining a Texas
state court order that would have acted to opt-out all unnamed members of the Texas class action from the
MDL class settlement. The Third Circuit affirmed, stating that “[u]nder an appropriate set of facts, a
federal court entertaining complex litigation, especially when it involves a substantial class of persons from
Nos. 09-5598/5868/6357 Gooch v. Life Investors Ins. Co., et al. Page 17
Even if we were inclined to expand our interpretation of the scope of the “in aid
of jurisdiction” exception to the Anti-Injunction Act, we do not see this case as being an
appropriate candidate for such an extraordinary move because of the combined impact
of two critical facts. First, the Runyan class action is an opt-out class action and, indeed,
Gooch has opted out of the settlement. Thus, it is impossible for the Runyan settlement
to affect Gooch’s rights or claims. Second, despite the motion for class certification
pending for well over two years now, the district court still has not certified a class.
Where a district court has not certified a class, it necessarily follows that the court has
no cause to take extraordinary injunctive measures to protect the interests of a class.
When there is no risk of harm to a party’s rights and no risk of harm to the rights of a
class that does not exist, we see no reason to extend the reach of the All Writs Act
beyond our prior precedents.
In sum, the Runyan injunction was not authorized under our case law and we find
no compelling reason to extend our precedents here. The injunction should therefore be
vacated.
III.
For the reasons set forth above, we DENY the Company’s petition for a writ of
mandamus in Case Number 09-5598. In Case Number 09-5868, we REVERSE the
decision of the district court and VACATE the injunction of the Runyan action. We
AFFIRM in Case Number 09-6357.
multiple states, or represents a consolidation of cases from multiple districts, may appropriately enjoin state
court proceedings in order to protect its jurisdiction” and “maintaining the federal court’s flexibility and
authority to decide such complex nationwide cases makes special demands on the court that may justify
an injunction otherwise prohibited by the Anti-Injunction Act.” Id. at 235. And, in Newby v. Enron Corp.,
338 F.3d 467 (5th Cir. 2003), the Fifth Circuit affirmed a federal order enjoining a state court case because
the same issues and parties were involved in the consolidated MDL Enron securities litigation class action.
In both of these cases, the federal court was overseeing a coordinated class action under the authority of
the MDL panel. This case, however, is missing these two main attributes.