Snell v. Allianz Life Insurance Co. of North America , 327 F.3d 665 ( 2003 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 02-1396
___________
Keith Snell; Teresa M. Snell, on behalf *
of themselves and all others similarly *
situated; *
*
Plaintiffs-Appellees, *
*
Debra Wolinsky; Louis Gans, * Appeal from the United States
* District Court for the
Intervenor * District of Minnesota.
Plaintiffs-Appellants, *
*
v. * [TO BE PUBLISHED]
*
Allianz Life Insurance Company of *
North America; Fidelity Union Life *
Insurance Company, *
*
Defendants-Appellees. *
___________
Submitted: December 13, 2002
Filed: May 5, 2003
___________
Before HANSEN,1 Chief Judge, LAY and BYE, Circuit Judges.
___________
1
The Honorable David R. Hansen stepped down as Chief Judge of the United
States Court of Appeals for the Eighth Circuit at the close of business on March 31,
2003. He has been succeeded by the Honorable James B. Loken.
BYE, Circuit Judge.
This case arises out of the settlement of a life insurance sales practices class
action suit against, inter alia, Allianz Life Insurance Company of North America
(Allianz). Debra Wolinsky, who owned an insurance policy subject to the settlement,
timely opted out in writing. She was, however, returned to the class following a
disputed conversation with class counsel. Upon learning Wolinsky did not wish to
be included, class counsel moved to exclude her against Allianz's wishes. The district
court denied the motion to exclude and Wolinsky's own request for leave to file a
motion for reconsideration. The district court granted her motion to intervene for the
limited purpose of appealing the rulings denying her exclusion. Wolinsky appeals the
finding she asked to be included in the class and the decision not to exclude her from
the class. We reverse.
I
The class action was filed in 1997 in Superior Court for Los Angeles County,
California, by Keith and Teresa Snell. Allianz removed the action to federal court
alleging diversity of citizenship, and then made an unopposed motion to transfer the
California case to Minnesota pursuant to 28 U.S.C. § 1404. Named plaintiffs,
through class counsel, and Allianz consented to jurisdiction before a magistrate judge
pursuant to 28 U.S.C. § 636.
The complaint alleges Allianz and two other defendants used misleading and
fraudulent insurance sale practices including "churning" and selling "vanishing
premium" policies. While the original complaint included only state law causes of
action, class counsel filed an amended complaint adding a federal claim arising out
of the Racketeering Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §
1962(c). The amended complaint sought relief in the form of compensatory and
punitive damages and declaratory and injunctive relief including reformation of the
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policies and specific performance. Wolinsky is co-trustee of a trust that was
beneficiary of an insurance policy subject to the settlement. Wolinsky represented
the trust before the district court and before this court. The class is estimated to
include approximately 250,000 people nationwide.
Class counsel and Allianz filed a stipulation of settlement and on March 20,
2000 the magistrate judge issued a preliminary approval order. The proposed
settlement allowed class members to choose between two alternative forms of relief:
(1) the Contributed Insurance Benefit (CIB), which is free term life insurance for 24-
60 months with a death benefit of 5%-10% of the death benefit of that class member's
original insurance policy; and (2) the Claim Review Process (CRP), which is an
arbitration proceeding in which class members would submit written claims and
recover compensation based on the wrongdoing and damages in their particular case.
To participate in CRP class members were required to opt-in by submitting a written
claims form by July 18, 2000. Putative class members could also opt out of the entire
settlement in writing by that date. Everyone in the putative class who did not opt out
of the entire settlement or opt into CRP received CIB only. CIB has a total value of
$43.4 million and CRP was initially funded at $10 million but was not capped.
Should any of the $10 million remain after all CRP claims are processed, the
remainder would be disbursed to the class.
The parties sent out individual notices, published notices, and set up a
telephone call center to answer questions from the public. Wolinsky filed a written
notice to opt out of the settlement on June 13, 2000 – over a month before the
deadline. Fewer than 20 people objected to the proposed settlement and only three
appeared at the fairness hearing. Wolinsky did not object or appear at the fairness
hearing. On September 8, 2000, the magistrate judge overruled the objections,
entered an order approving the settlement, and ordered judgment be entered. The
magistrate judge awarded class counsel $6.6 million in fees and costs, and they
agreed to perform all post-settlement work for free. Incorporated in the order was a
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preliminary list of people who had opted out. Wolinsky's name appeared on the list.
In October 2000, class counsel and counsel for Allianz prepared a second preliminary
list of people who had opted out of the class. Wolinsky's name also appeared on that
list.
What happened next is disputed. Wolinsky claims she called the call center to
find out whether it was possible to opt back into the class. Wolinsky insists,
however, she did not ask to be readmitted to the class. Allianz alleges Wolinsky
asked class counsel to have her readmitted to the class and requested participation in
CRP. Allianz does not assert Wolinsky made any written request for readmission,
only that she made an oral request to class counsel on one occasion via telephone
some time between January 1, 2001, and April 10, 2001.
Class counsel provided no record evidence on the contents of Wolinsky's call,
and its arguments shed no light on whether Wolinsky made the request. Class
counsel neither admits nor denies Wolinsky's claim that she requested information
and not readmission to the class. There is no evidence regarding who at the call
center spoke to her, whether it was even someone in the office of class counsel, much
less what Wolinsky said. In its submissions to the court below class counsel
acknowledges a "miscommunication" but fails to explain what was inaccurately
communicated and to whom. Was the miscommunication between class counsel and
Allianz, between Wolinsky and class counsel, between the call center staff and class
counsel, or within the office of class counsel? The record is regrettably silent on the
question.
Class counsel's equivocations continue in its brief to this court. Class counsel's
response brief joins Wolinsky's appeal of the magistrate judge's denial of the motion
to exclude "not based on . . . [Wolinsky's] rendition of the facts, but instead on
principles of equity." This appears to be a backhanded repudiation of Wolinsky's
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version of the facts but with no foundation in the record, or an explicit representation
to the contrary.
It is undisputed class counsel, during several telephone calls and e-mails in
April and May 2001, represented to counsel for Allianz that Wolinsky requested
readmission to the class and participation in CRP. Despite the fact that six months
had elapsed since the filing deadline, Allianz agreed to make exceptions for Wolinsky
on both accounts: readmission to the class and participation in CRP. The form to
initiate her CRP claim was mailed to her. Wolinsky's name did not appear on the
final list of excluded persons filed with the court on May 29, 2001. Meanwhile,
Wolinsky retained private counsel Leonard S. Becker to pursue her claims against
Allianz. Becker filed suit in federal court in Chicago on July 13, 2001.
Wolinsky avers she first found out she had been readmitted to the class on July
13, 2001, when she received from Allianz the claim form to participate in CRP. The
same day she wrote a letter to the district court clerk's office saying there had been
a "miscommunication." In her letter Wolinsky said she had opted out in writing and
later called the call center to discuss her options, but had never requested
readmission, and she wanted to be listed as having opted out. Wolinsky did not
return the CRP claim form sent by Allianz upon her readmission. She is now in what
she believes to be the worst possible position: a member of the class without the right
to bring private suit, but no access to the CRP. Instead, her remedy is limited to CIB.
The clerk's office sent Wolinsky's letter to class counsel, who filed a "Motion
to Exclude" Wolinsky from the class. Allianz resisted the motion and the magistrate
judge conducted a telephonic hearing. Counsel for Allianz, class counsel and
Wolinsky's private counsel Becker all appeared for the hearing. Class counsel
presented the motion and argued for it. Despite an invitation from the magistrate
judge, Becker did not present argument or evidence. Class counsel again made vague
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references to a miscommunication but never said, or was asked, whether Wolinsky
asked to be readmitted to the class.
During the telephonic hearing the magistrate judge said, "Well, I've got to
believe that from April 10 of 2001 to May 14 of 2001 there had to be communications
between class counsel and Ms. Wolinsky to firm up what her intentions were." There
is no record evidence, however, supporting the magistrate judge's belief; there is no
evidence of any further communications between Wolinsky and class counsel. The
only relevant evidence of events between April 10 and May 14 were the telephone
and e-mail communications between class counsel and counsel for Allianz. Notably,
class counsel did not correct the magistrate judge's impression there were additional
communications between class counsel and Wolinsky.
The magistrate judge denied the motion to exclude on September 17, 2001,
without making an explicit finding of fact with regard to whether Wolinsky requested
readmission to the class. Instead, the magistrate judge found she had been readmitted
to the class pursuant to a mechanism provided for in the settlement, and denied class
counsel's motion to exclude her. The reasons given for the denial were: Allianz's
reliance on class counsel's representations that Wolinsky sought readmission; the
need to draw a line so all 240,000 members of the class do not unilaterally demand
exclusion; and the need for finality. The magistrate judge repeatedly referred to class
counsel as Wolinsky's counsel.
Becker, Wolinsky's private counsel, filed a request for leave to file a motion
for reconsideration and motion to intervene. A second telephonic hearing was held,
and the magistrate judge issued an order on December 4, 2001. The magistrate judge
again did not address the issue of Wolinsky's request to be excluded. The request for
leave to file for reconsideration was denied and the motion to intervene was granted
for the limited purpose of appealing the magistrate judge's decisions regarding
Wolinsky's exclusion.
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During the second telephonic hearing, Becker said, "there's a question of fact
here as to whether or not [Wolinsky] did try to re-enter the class." The magistrate
judge responded, "There is no question of fact. That has already been decided. You
might not like the decision . . . [she] may well take that up on appeal." It appears,
then, the magistrate judge considered the September 17, 2001, order as finding
Wolinsky did request readmission.
Wolinsky now appeals from the magistrate judge's orders of September 17,
2001, and December 3, 2001. Wolinsky first argues the district court did not have
subject matter jurisdiction to preside over the action. Wolinsky then challenges the
magistrate judge's disposition of her motion for exclusion from the class, arguing:
the district court lacked personal jurisdiction over her once she properly opted out;
the district court clearly erred in finding she orally requested readmission to the class;
and the district court abused its discretion in holding Wolinsky remained in the class.
II
We review the district court's findings of fact under the clearly erroneous
standard, its conclusions of law de novo, Fed. Deposit Ins. Corp. v. Lee, 988 F.2d
838, 841-43 (8th Cir. 1993), and its ruling on the "Motion to Exclude" under the
abuse of discretion standard. In re Wirebound Boxes Antitrust Litig., 993 F.2d 152,
154 (8th Cir. 1993).
The only record evidence on the question of whether Wolinsky requested
readmission to the class is her insistence she never so requested. Allianz maintains
Wolinsky asked for readmission, but the only evidence Allianz offered in support of
its position is class counsel's representation to Allianz that Wolinsky made an oral
request for readmission. Class counsel, who may or may not have spoken to
Wolinsky directly when she called the call center, failed to provide evidence on the
question. In the absence of supporting evidence, and in the face of explicit evidence
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to the contrary, it was clear error for the magistrate judge to find Wolinsky made an
oral request for readmission to the class. Her timely written notice to opt out of the
settlement is therefore determinative of her status, and the magistrate judge erred in
holding otherwise.
Even if Wolinsky had requested readmission to the class, it was abuse of
discretion for the magistrate judge to deny the mis-named "Motion to Exclude." The
settlement gave the magistrate judge power to determine disputed matters such as
class membership, however, that power was limited by its terms. The settlement
required timely written notice of opt-outs and written requests to opt into CRP
benefits. In fact, the settlement required a writing for everything – a sensible
precaution against the very type of "miscommunication" that occurred here.
Although no term provided for opting back into the class after properly opting out,
the only reasonable interpretation would require a writing to opt back into the class.
The magistrate judge abused his discretion in holding Wolinsky's purported oral opt-
back-in trumped her undisputed timely written opt-out.
For much the same reason, the equities required Wolinsky's exclusion from the
class. Allianz's purported reliance on class counsel's representations was unjustified.
The terms of the settlement required a writing and Allianz should have made sure her
request to rejoin the class was in writing before agreeing to readmit her. Contrary to
its ululations, Allianz need not have contacted Wolinsky directly to verify her wishes,
it need only have asked class counsel if her request was in writing. The magistrate
judge's concern that allowing Wolinsky out of the class would open the floodgate for
other opted-out class members to demand exclusion is misplaced. Allianz has pointed
to no other class member, or opted-out individual, who would be able to change their
status under the precedent of her exclusion. Moreover, we believe a greater danger
would lie in allowing people who opted out in writing to claim they made an oral
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request for readmission. In conclusion, we believe the equities required Wolinsky's
exclusion from the class and it was an abuse of discretion to deny the motion to
exclude her.
Wolinsky is not a member of the class and she has no interest in the settlement.
Wolinsky's intervenor status was granted for the limited purpose of appealing the two
rulings governing her status in the class. In setting that limit the magistrate judge
applied Fed. R. Civ. P. 24 and concluded Wolinsky's interests sufficient to support
intervention for that purpose and no other. She fails in her briefs to show the
magistrate judge erred in so limiting the scope of her intervention. Wolinsky's
challenges to the settlement and the district court's jurisdiction over it exceed the
limits placed on her intervention by the magistrate judge.2 We therefore limit our
discussion to the issue of Wolinsky's status in the class and decline to address her
challenges to the district court's orders approving the settlement and entering
judgment in the action. Curtis v. City of Des Moines, 995 F.2d 125, 128 (8th Cir.
1993) ("Only a properly named party may initiate an appeal, and those who neither
intervene or otherwise attain party status may not appeal a district court's judgment.")
(citation omitted).
We therefore reverse the order of the magistrate judge and remand the matter
with directions to enter an order granting the motion to exclude Wolinsky from the
class. Wolinsky's pending motion to supplement the record is denied.
2
Devlin v. Scardelletti, et al., 536 U.S. 1 (2002), allowing non-named class
members who have objected in a timely manner to approval of a class action
settlement at the fairness hearing to bring an appeal without first intervening, does not
apply because this is an opt-out class action in which Wolinsky made no objections
to the settlement in the court below either before settlement was final or after she was
reintroduced to the class.
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A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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