Negrete v. Allianz Life Insurance Company of North America ( 2008 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
VIDA F. NEGRETE, as Conservator 
for EVERETT E. OW, an individual
and on behalf of all other similarly
situated persons, No. 07-55505
Plaintiff-Appellee,
v.  D.C. No.
CV-05-06838-CAS
ALLIANZ LIFE INSURANCE OPINION
COMPANY OF NORTH AMERICA, a
Minnesota corporation,
Defendant-Appellant.

Appeal from the United States District Court
for the Central District of California
Christina A. Snyder, District Judge, Presiding
Argued and Submitted
April 8, 2008—Pasadena, California
Filed April 29, 2008
Before: Harry Pregerson, Dorothy W. Nelson, and
Ferdinand F. Fernandez, Circuit Judges.
Opinion by Judge Fernandez
4573
4576 NEGRETE v. ALLIANZ LIFE INSURANCE
COUNSEL
Thomas J. Nolan, Skadden, Arps, Slate, Meagher & Flom
LLP, Los Angeles, California; Sonia Escobio O’Donnell, Jor-
den Burt, LLP, Miami, Florida, for the defendant-appellant.
Francis J. Balint, Jr., Bonnett, Fairbourn, Friedman & Balint,
PC, Phoenix, Arizona, for the plaintiff-appellee.
OPINION
FERNANDEZ, Circuit Judge:
Vida F. Negrete filed this class action lawsuit against Alli-
anz Life Insurance Company of North America. Allianz
appeals a district court order that effectively prevents it from
proceeding with any settlement negotiations on similar class
action claims raised in any federal or state court without first
obtaining permission from Negrete’s Co-Lead Counsel,1 and
from finalizing a settlement in any other court “that resolves,
in whole or in part, the claims brought in [the Negrete]
action,” without first obtaining the district court’s approval.
We reverse.
BACKGROUND
On September 21, 2005, Vida F. Negrete filed a class
1
Co-Lead Counsel are Bonnett, Fairbourn, Friedman & Balint, PC, and
Coughlin, Stoia, Geller, Rudman & Robbins, LLP. Hereafter, they will be
referred to collectively as Negrete Counsel.
NEGRETE v. ALLIANZ LIFE INSURANCE 4577
action lawsuit against Allianz, an insurance corporation, in
which she challenged the sale of Allianz’s fixed deferred
annuities. Negrete, acting as conservator for Everett E. Ow,
alleges that Ow was “sold an unsuitable financial product”
because the maturity date exceeded his life expectancy and
restricted his access to principal without surrender charges.
The complaint asserted claims for violations of the Racketeer
Influenced and Corrupt Organizations Act, 18 U.S.C.
§§ 1961-1968 (“RICO”), breach of fiduciary duty, aiding and
abetting breach of fiduciary duty, unjust enrichment, and vio-
lation of California statutes.2
In November 2006, the district court certified a nationwide
class on the RICO claims only and a California-purchaser-
only class as to the California statutory claims. The district
court’s certification order on the RICO claims covered all
Allianz’s deferred annuities purchased by individuals aged 65
or older within the applicable statutes of limitations.3 This was
not the only action against Allianz regarding its sales of annu-
ities; several similar cases have been filed in various federal
and state courts.
Iorio v. Asset Marketing Inc., No. 05-CV-00633 (S.D. Cal.)
was filed in March 2005, in the United States District Court,
Southern District of California, on behalf of a California class
which purchased certain “bonus” annuity products. In July
2006, the district court in Iorio issued an order certifying a
plaintiff’s class. That class partially overlaps the Negrete
class.
2
A very similar case, Healey v. Allianz Life Insurance Co. of North
America, Case No. CV-058908, was filed in the same district court shortly
after Negrete and similar orders were issued in both cases. However, only
the order in Negrete is before us at this time.
3
In certifying the class, the district court carved out the nationwide class
certified in Castello v. Allianz Life Insurance Co. of North America,
MC03-20405 (Minn. Dist. Ct.), hereafter described in more detail.
4578 NEGRETE v. ALLIANZ LIFE INSURANCE
Mooney v. Allianz Life Insurance Co. of North America,
No. 06-CV-00545 was filed on February 9, 2006, in the
United States District Court, District of Minnesota. Plaintiffs
in that case sought to represent a nationwide class asserting
claims under Minnesota’s Prevention of Consumer Fraud Act
and unjust enrichment. On May 10, 2007, the court certified
a nationwide class of all purchasers of “bonus” annuities.
Negrete contends that many of the annuity transactions at
issue in Mooney overlap those in Negrete.
Castello v. Allianz Life Insurance Co. of North America,
Civ. No. MC03-20405 (Minn. Dist. Ct.) is a certified nation-
wide class action that was filed on December 22, 2003, in the
Fourth Judicial District Court, State of Minnesota. The Cas-
tello class is comprised of individuals who purchased Alli-
anz’s “cash bonus” annuities.
Finally, on January 7, 2007, the Minnesota Attorney Gen-
eral filed an action, State of Minnesota v. Allianz Life Insur-
ance Co. of North America, Civ. No. 07-581 (Minn. Dist. Ct.),
in the Fourth Judicial District Court, State of Minnesota (The
AG Action). The AG Action seeks relief under Minnesota law
on behalf of Minnesota residents who purchased Allianz’s
fixed deferred annuity products. That class may also partially
overlap the Negrete class.
On February 28, 2007, the parties in Castello participated
in a hearing in which the court asked the parties to address
settlement issues. Allianz indicated that it would be willing to
engage in mediation discussions only if the discussions
included possible settlement of Mooney and The AG Action.
The parties in Castello, The AG Action and Mooney were
amenable to that settlement plan, and on March 13, 2007, they
met with a mediator to commence settlement discussions.
Negrete Counsel was neither informed of nor included in that
mediation session, but learned of the proceedings from a third
party. Believing that settlement negotiations in Mooney could
“possibly extend to and extinguish the claims of the class in
NEGRETE v. ALLIANZ LIFE INSURANCE 4579
Negrete,” and that Allianz might be engaged in a collusive
reverse auction, Negrete Counsel contacted Allianz and
requested assurances that:
any settlement negotiations or mediation in the refer-
enced cases will not address any of the claims or
damages asserted on behalf of the Negrete class, that
any proposed settlement reached as a result of those
negotiations will not compromise, impair, prejudice
or affect the claims of the Negrete class members,
and that any proposed settlement class will expressly
exclude all members of the Negrete class.
Allianz declined to provide those assurances. Negrete then
commenced the proceedings that led to this appeal. She
sought an ex parte order prohibiting Allianz from:
settling, attempting to settle, negotiating, compro-
mising, or releasing any claims, causes of action, or
damages relating to any Allianz deferred annuity
purchased by any Class Member in the Negrete/
Healey matter during the relevant Class Period, in
any other forum, including but not limited to, the
Mooney matter, without the express approval of this
Court and participation of Court appointed Co-Lead
Counsel in the Negrete/Healey matter.
Allianz opposed the ex parte application.
On March 19, 2007, the district court, without holding a
hearing, issued an order nominally denying the application
because it was “not authorized by the All Writs Act.” How-
ever, the court went on to order:
Any discussions of a settlement that would affect
any claims brought in this litigation, other than
claims of an individual plaintiff or class member,
must be conducted or authorized by plaintiffs’ Co-
4580 NEGRETE v. ALLIANZ LIFE INSURANCE
Lead Counsel. Any proposed settlement that
resolves, in whole or in part, the claims brought in
this action shall first be subject to review and
approval by the Court in this litigation.
Allianz appealed that order on April 18, 2007.
At a September 10, 2007, status conference, the district
court ordered Negrete and Allianz to commence mediation.
The court also indicated that it did not then intend to enforce
the March 19 order as to the other federal cases because it
would be inappropriate to interfere with the dockets of the
other judges. The court also suggested that it might be
inclined to rescind the order, but it did not do so. Later on,
during a September 24, 2007, status conference, the district
court stated that it had conferred with the judges presiding
over the Mooney and Iorio cases and it “expressed clearly to
both of them that [the court] did not intend for any order that
[it] entered to any way impede their ability to go forward and
set settlement conferences.” Again, the court did not lift its
own order or even state that Negrete Counsel were not to play
a part in those other proceedings. Subsequently, on October
29, 2007, the district court reaffirmed that it was “not going
to seek to enforce an order to prevent [Allianz] from attempt-
ing to settle” the other district court cases. Again, it did not
rescind its own order. Finally, on November 27, 2007, the dis-
trict court indicated that mediation was proceeding in Moo-
ney; it did not, however, mention its own order at that point.
Allianz, which is still bound by the district court’s order,
has continued with this appeal.
STANDARDS OF REVIEW
We review a district court order granting an injunction pur-
suant to the All Writs Act for an abuse of discretion. Brother
Records, Inc. v. Jardine, 432 F.3d 939, 942 (9th Cir. 2005).
A district court abuses its discretion in issuing a preliminary
NEGRETE v. ALLIANZ LIFE INSURANCE 4581
injunction if its decision is based on either an erroneous legal
standard or clearly erroneous factual findings, or if the injunc-
tion is overbroad. Clear Channel Outdoor Inc. v. City of Los
Angeles, 340 F.3d 810, 813 (9th Cir. 2003). “A district court’s
decision is based on an erroneous legal standard if: ‘(1) the
court did not employ the appropriate legal standards that gov-
ern the issuance of a preliminary injunction; or (2) in applying
the appropriate standards, the court misapprehended the law
with respect to the underlying issues in the litigation.’ ” Id.
“Whether an injunction may issue under the Anti-
Injunction Act is a question of law reviewed de novo.” G.C.
& K.B. Invs., Inc. v. Wilson, 326 F.3d 1096, 1106 (9th Cir.
2003). “However, the decision to issue an injunction that
comes within an exception to the [Anti-Injunction] Act is
reviewed for an abuse of discretion.” California v. Randtron,
284 F.3d 969, 974 (9th Cir. 2002).
“[C]hallenges to an injunction . . . pursuant to Fed. R. Civ.
P. 65(d) are reviewed de novo.” Premier Commc’ns Network,
Inc. v. Fuentes, 880 F.2d 1096, 1100 (9th Cir. 1989).
JURISDICTION
At the threshold, we are met with Negrete’s claim that we
lack jurisdiction over the district court’s order because it was
not an injunction and because, even if it was, the issue is now
moot. We disagree.
We recognize that, in general, our jurisdiction extends only
to final district court decisions. See 28 U.S.C. § 1291;
Dependable Highway Express, Inc. v. Navigators Ins. Co.,
498 F.3d 1059, 1063 (9th Cir. 2007); Alsea Valley Alliance v.
Dep’t of Commerce, 358 F.3d 1181, 1184 (9th Cir. 2004).
Nevertheless, a major exception to that rule is for
“[i]nterlocutory orders . . . granting, continuing, modifying,
refusing or dissolving injunctions.” 28 U.S.C. § 1292(a)(1);
see also Plata v. Davis, 329 F.3d 1101, 1106 (9th Cir. 2003).
4582 NEGRETE v. ALLIANZ LIFE INSURANCE
That may not seem to dispose of Negrete’s challenge because
the district court did not denominate its order as an injunction4
and even denied Negrete’s request for a temporary restraining
order. But looks can be deceiving. We cannot content our-
selves with the surface, but must expiscate further.
[1] Simply put, we are not bound by what a district court
chooses to call an order, or even by a failure to give an order
a particular name. We, instead, “ ‘look to [the order’s] sub-
stantial effect rather than its terminology.’ ” Orange County,
Cal. Airport Hotel Assocs. v. H.K. & Shanghai Banking Corp.
Ltd., 52 F.3d 821, 825 (9th Cir. 1995). That does not mean
that we take an expansive view of 28 U.S.C. § 1292(a)(1). Id.
It does mean, however, that in deciding whether an appeal is
proper, we will ask: “(1) does the order have the practical
effect of the grant or denial of an injunction; (2) does the
order have serious, perhaps irreparable consequences; and (3)
is the order one that can be effectively challenged only by
immediate appeal?” Thompson v. Enomoto, 815 F.2d 1323,
1326-27 (9th Cir. 1987); see also Carson v. Am. Brands, Inc.,
450 U.S. 79, 83-84, 101 S. Ct. 993, 996-97, 67 L. Ed. 2d 59
(1981); Plata, 329 F.3d at 1106. Reviewing the order at hand,
we must answer all of those questions in the affirmative.
[2] The order enjoins Allianz from even discussing settle-
ments in other cases that could affect any claims in this litiga-
tion, without obtaining the permission of its opponent in this
litigation or allowing its opponent to actually conduct the dis-
4
In fact, the district court did not even follow the provisions of the fed-
eral rules regarding injunctive orders. See Fed. R. Civ. P. 52(a)(2), 65(d);
Fed. Trade Comm’n v. Enforma Natural Prods., Inc., 362 F.3d 1204, 1216
(9th Cir. 2004); Fed. Election Comm’n v. Furgatch, 869 F.2d 1256, 1262
(9th Cir. 1989). Allianz assigns that as another reason to reverse. How-
ever, as demonstrated in this opinion, we can fully understand the facts
and the law in this instance without more formal findings and conclusions,
and, therefore, we need not remand for further explication of those by the
district court. See LGS Architects, Inc. v. Concordia Homes of Nev., 434
F.3d 1150, 1155 (9th Cir. 2006).
NEGRETE v. ALLIANZ LIFE INSURANCE 4583
cussions; it further precludes any proposed settlement of other
cases without the approval of this district court. In practical
effect, it was an injunction.5 The consequences of the order
are serious to say the least — none of the other cases in which
Allianz is, or may be, involved can be settled by or in the
other courts in which they are located absent permission of
Negrete Counsel and the court in this case. And, of course, the
order can only be challenged by immediate appeal because if
Allianz awaits the final determination of this case, the damage
to prompt proceedings in other cases will have already been
done. A decision by us months or years after that cannot
repair the damage.
Nor does Negrete’s attempt to characterize the order as
nothing more than a scheduling order change our analysis.
That is just another inventive label with no real substance.
The order does not set forth a mere pretrial procedure,6 or
merely prescribe the conduct of the parties while they await
trial.7 As already explained, the order effectively precludes
Allianz from proceeding in other actions brought against it in
other courts. In fact, the district court recognized as much
when it declared that it did not presently intend to enforce the
order as to certain other federal actions because it did not
wish to interfere with the other judges’ handling of the prog-
ress of those actions at that time.
Negrete seizes on those statements by the district court in
suggesting a final reason that we lack jurisdiction — moot-
5
The order was directed at a party — Allianz. It was, clearly, enforce-
able by contempt. And, it was designed to protect the relief sought by
Negrete by assuring that no other settlement in any other case could affect
that relief. See Orange County, 52 F.3d at 825.
6
See Switz. Cheese Ass’n, Inc. v. E. Horne’s Mkt., Inc., 385 U.S. 23, 25,
87 S. Ct. 193, 195, 17 L. Ed. 2d 23 (1966) (denial of summary judgment
order).
7
See Abernathy v. S. Cal. Edison, 885 F.2d 525, 528 (9th Cir. 1989)
(arbitration order).
4584 NEGRETE v. ALLIANZ LIFE INSURANCE
ness. We recognize that an issue becomes moot when no con-
troversy remains,8 or where the parties have no real interest in
the outcome as far as the law is concerned.9 But that surely
does not decide this case. This is not even a case where an
order has been withdrawn so that it has no continuing effect
but the parties are still contending over whether it could be,
or would be, reimposed at a later time. See, e.g., Adarand
Constructors, Inc. v. Slater, 528 U.S. 216, 221-22, 120 S. Ct.
722, 725, 145 L. Ed. 2d 650 (2000) (per curiam); Deakins v.
Monaghan, 484 U.S. 193, 199-200, 108 S. Ct. 523, 528, 98 L.
Ed. 2d 529 (1988).
[3] Here, the district court has never withdrawn its order,
even though it recognized withdrawal as a possibility and
even though Allianz asked it do so. Rather, the court has
merely indicated that it will not now enforce the order regard-
ing certain other federal cases because those courts have indi-
cated that they wish to proceed and the district court is not
inclined to interfere with them. We see no basis for determin-
ing that the controversy is over, that Allianz is not still
affected, or that no effective relief will be granted if we
reverse the district court’s decision. Again, the mere fact that
the district court has not seen fit to withdraw the order itself
indicates that it still considers the order to be viable and
enforceable against Allianz.
[4] Therefore, we have jurisdiction over this appeal.
DISCUSSION
Allianz argues that the injunction in question was not
proper under the All Writs Act,10 and, even if it was, it was
8
See Arizonans for Official English v. Arizona, 520 U.S. 43, 67, 117
S. Ct. 1055, 1068, 137 L. Ed. 2d 170 (1997).
9
See City of Erie v. Pap’s A.M., 529 U.S. 277, 287, 120 S. Ct. 1382,
1390, 146 L. Ed. 2d 265 (2000).
10
28 U.S.C. § 1651.
NEGRETE v. ALLIANZ LIFE INSURANCE 4585
barred by the Anti-Injunction Act11 as far as state court pro-
ceedings are concerned. Both of those arguments depend on
a determination that the injunction was directed against pro-
ceedings in other courts. Plainly it was.
Here, again, the mere form of the injunction does not
describe its true reach. In form, it is directed to Allianz and
Allianz’s attorneys. In substance, it interferes with proceed-
ings in other courts. As the Supreme Court stated in a case
where a district court directed an injunction at a party but, in
effect, stayed proceedings in a state court: “It is settled that
the prohibition of § 2283 cannot be evaded by addressing the
order to the parties or prohibiting utilization of the results of
a completed state proceeding.” Atl. Coast Line R.R. Co. v.
Bhd. of Locomotive Eng’rs, 398 U.S. 281, 287, 90 S. Ct.
1739, 1743, 26 L. Ed. 2d 234 (1970). And, in response to an
argument that the Anti-Injunction Act did not apply “because
the district court order enjoins [a party] rather than the Ten-
nessee proceeding itself” we replied that “[o]rdering the par-
ties not to proceed is tantamount to enjoining the
proceedings.” Bennett v. Medtronic, Inc., 285 F.3d 801, 805
(9th Cir. 2002). The same is true here, and, while the cited
cases apply to the Anti Injunction Act, the principle is per-
fectly general. It applies to the All Writs Act as well, for it is
the restraint on other court proceedings that is problematic.
With that said, the specific issues can now be considered.
A. The All Writs Act
[5] The All Writs Act provides that: “The Supreme Court
and all courts established by Act of Congress may issue all
writs necessary or appropriate in aid of their respective juris-
dictions and agreeable to the usages and principles of law.” 28
U.S.C. § 1651(a). That is a broad, but not unlimited, grant of
authority to federal courts, including the district court. As we
11
28 U.S.C. § 2283.
4586 NEGRETE v. ALLIANZ LIFE INSURANCE
have already noted, we review the district court’s decision for
an abuse of discretion. See Brother Records, Inc., 432 F.3d at
942. We are constrained to find that there was abuse here.
[6] Much of what has been said in the Anti-Injunction Act
area regarding state court cases, an area we discuss in part B
of this opinion, applies here as well, and there is precious lit-
tle authority dealing with injunctions directed by a district
court to a court of equal dignity — another federal district
court. A recent decision of the Third Circuit Court of Appeals
says it all. There, a district court had enjoined proceedings in
another district court. See Grider v. Keystone Health Plan
Cent., Inc., 500 F.3d 322, 326-27 (3d Cir. 2007). The court of
appeals commented on the fact that injunctions of that nature
directed at another district court, as opposed to a state court,
are not typical. Id. at 328. Indeed, they appear to be rarae
aves; like us, the Third Circuit did not find any other appellate
decisions on point.12 It said:
Indeed, the lack of cases in which the All Writs Act
has been used to enjoin settlement efforts in another
federal court is telling. It is clear that the Act is gen-
erally used to prohibit activities in another court that
threaten to undermine a pending settlement in the
enjoining court. When the Act has been used to
block settlement efforts in another court, it is typi-
cally because a party was deliberately using that
forum to circumvent a pending settlement agreement
in the enjoining court.
Id. at 330 (citations omitted). The court then concluded:
Based on the limited precedent in this area, there
does not appear to be any basis for the injunction in
this case. Although significant resources have been
12
It did find one district court case. See In re Managed Care Litig., 236
F. Supp. 2d 1336 (S.D. Fla. 2002).
NEGRETE v. ALLIANZ LIFE INSURANCE 4587
invested in [this] litigation to this point, there is sim-
ply no support for the proposition that a court may
enjoin parties from participating in or reaching a
bona fide settlement in another federal court that
may dispose of claims before it — particularly when
there is no pending settlement in the enjoining court
and the other federal court is . . . charged with
attempting to reach a global settlement.
Id. at 331 (footnote omitted).
[7] We agree with that assessment and find that it has even
more bite here. No settlement was directly in prospect in this
case, and it could not, therefore, be said that a settlement was
being circumvented or co-opted.13 More than that, there were
no facts before the district court that supported the notion that
some kind of collusion was afoot. Negrete Counsel floated out
the specter of a reverse auction, but brought forth no facts to
give that eidolon more substance. A reverse auction is said to
occur when “the defendant in a series of class actions picks
the most ineffectual class lawyers to negotiate a settlement
with in the hope that the district court will approve a weak
settlement that will preclude other claims against the defen-
dant.” Reynolds v. Beneficial Nat’l Bank, 288 F.3d 277, 282
(7th Cir. 2002). It has an odor of mendacity about it. Even
supposing that would be enough to justify an injunction of
one district court by another one, there is no evidence of
underhanded activity in this case. That being so, if Negrete’s
argument were accepted, the “reverse auction argument would
lead to the conclusion that no settlement could ever occur in
the circumstances of parallel or multiple class actions — none
of the competing cases could settle without being accused by
13
Incidentally, the mere fact that some other court might complete its
proceedings before the district court was able to complete the proceedings
in this case does not justify an injunction. See Vendo Co. v. Lektro-Vend
Corp., 433 U.S. 623, 641-42, 97 S. Ct. 2881, 2893, 53 L. Ed. 2d 1009
(1977).
4588 NEGRETE v. ALLIANZ LIFE INSURANCE
another of participating in a collusive reverse auction.” Rutter
& Wilbanks Corp. v. Shell Oil Co., 314 F.3d 1180, 1189 (10th
Cir. 2002) (internal quotation marks omitted).
[8] In short, the district court’s order must be set aside.
There simply was no proper support for the district court’s
enjoining of proceedings in other courts.
B. Anti-Injunction Act
The district court’s error in issuing the injunction was exac-
erbated by its reaching proceedings pending in the courts of
Minnesota, and having the potential of reaching proceedings
in other state courts, if any are filed. That caused a further
clash of jurisdictions that must be resolved.
[9] The authority conferred upon federal courts by the All
Writs Act is restricted by the Anti-Injunction Act, which is
designed to preclude unseemly interference with state court
proceedings. It declares 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. Therefore, unless
one of the exceptions applies, the district court erred when it
issued the injunction in question here.14
At the outset, it is important to note that the Anti-Injunction
Act restriction is based upon considerations of federalism and
speaks to a question of high public policy. It is not a minor
revetment to be easily overcome; it is a fortress which may
14
The phrase “proceedings in a State court” is, as the Supreme Court has
said, “comprehensive. It includes all steps taken or which may be taken
in the state court . . . .” Hill v. Martin, 296 U.S. 393, 403, 56 S. Ct. 278,
282-83, 80 L. Ed. 293 (1935). Particularly in this day and age, that
includes settlement proceedings, mediation proceedings, and the like.
NEGRETE v. ALLIANZ LIFE INSURANCE 4589
only be penetrated through the portals that Congress has made
available.15 As the Supreme Court has explained:
On its face the present [Anti-Injunction] Act is an
absolute prohibition against enjoining state court
proceedings, unless the injunction falls within one of
three specifically defined exceptions. The respon-
dents here have intimated that the Act only estab-
lishes a “principle of comity,” not a binding rule on
the power of the federal courts. The argument
implies that in certain circumstances a federal court
may enjoin state court proceedings even if that
action cannot be justified by any of the three excep-
tions. We cannot accept any such contention. In
1955 when this Court interpreted this statute, it
stated: “This is not a statute conveying a broad gen-
eral policy for appropriate ad hoc application. Legis-
lative policy is here expressed in a clear-cut
prohibition qualified only by specifically defined
exceptions.” Since that time Congress has not seen
fit to amend the statute and we therefore adhere to
that position and hold that any injunction against
state court proceedings otherwise proper under gen-
eral equitable principles must be based on one of the
specific statutory exceptions to § 2283 if it is to be
upheld. Moreover since the statutory prohibition
against such injunctions in part rests on the funda-
mental constitutional independence of the States and
their courts, the exceptions should not be enlarged
by loose statutory construction. Proceedings in state
courts should normally be allowed to continue unim-
15
There are a couple of narrow exceptions to this categorical statement,
of course. See Leiter Minerals, Inc. v. United States, 352 U.S. 220, 225-
26, 77 S. Ct. 287, 290-91, 1 L. Ed. 2d 267 (1957); see also Baines v. City
of Danville, 337 F.2d 579, 593-94 (4th Cir. 1964) (en banc), aff’d, Baines
v. City of Danville, 384 U.S. 890, 86 S. Ct. 1915, 16 L. Ed. 2d 996 (1966)
(per curiam). Neither applies here.
4590 NEGRETE v. ALLIANZ LIFE INSURANCE
paired by intervention of the lower federal courts,
with relief from error, if any, through the state appel-
late courts and ultimately this Court.
Atl. Coast Line, 398 U.S. at 286-87, 90 S. Ct. at 1743 (cita-
tions omitted); see also United States v. Alpine Land & Reser-
voir Co., 174 F.3d 1007, 1014 (9th Cir. 1999); Alton Box Bd.
Co. v. Esprit de Corp., 682 F.2d 1267, 1271 (9th Cir. 1982).
And, as the Supreme Court further stated, “[a]ny doubts as to
the propriety of a federal injunction against state court pro-
ceedings should be resolved in favor of permitting the state
courts to proceed in an orderly fashion to finally determine
the controversy.” Atl. Coast Line, 398 U.S. at 297, 90 S. Ct.
at 1748.
But is there an exception for this piece of class action liti-
gation? Neither party contends that there is, or might be, an
exception founded on an express authorization by Congress
(there is no such authorization) or upon a need to protect or
effectuate a judgment of the district court (there is no such
judgment). That leaves the question of whether an injunction
was necessary in aid of the district court’s jurisdiction. See 28
U.S.C. § 2283.
[10] In general, the necessary-in-aid-of-jurisdiction excep-
tion applies to in rem proceedings where the federal court has
jurisdiction over the res and the state court proceedings might
interfere with that. See Vendo Co., 433 U.S. at 641-42, 97
S. Ct. at 2893. But that principle does not authorize interfer-
ence with parallel in personam state actions merely because
the state courts might reach a conclusion before the district
court does. The Court has said that there are times when
“some federal injunctive relief may be necessary to prevent a
state court from so interfering with a federal court’s consider-
ation or disposition of a case as to seriously impair the federal
court’s flexibility and authority to decide that case.” Atl.
Coast Line, 398 U.S. at 295, 90 S. Ct. at 1747. But, even then,
the Court went on to point out that in the case before it “the
NEGRETE v. ALLIANZ LIFE INSURANCE 4591
state and federal courts had concurrent jurisdiction . . . , and
neither court was free to prevent either party from simulta-
neously pursuing claims in both courts.” Id.; see also Kline v.
Burke Constr. Co., 260 U.S. 226, 230, 43 S. Ct. 79, 81, 67 L.
Ed. 226 (1922); Sandpiper Vill. Condo. Ass’n, Inc. v. La.-Pac.
Corp., 428 F.3d 831, 844 (9th Cir. 2005); Bennett, 285 F.3d
at 806.
[11] Nothing in this case changed that alchemy. In this pro-
ceeding, as in others, the mere fact that the actions of a state
court might have some effect on the federal proceedings does
not justify interference. As the Second Circuit has pointed
out:
Any time parallel state and federal actions are pro-
ceeding against the same defendant, it is conceivable
that occurrences in the state action will cause delay
in the federal action, by provoking motion practice
in federal court regarding the effects of state-court
rulings, or simply by diverting the attention of the
defendant. Such a rule [a rule that would allow an
injunction to avoid delay] would in effect create an
additional exception to the Anti-Injunction Act for
circumstances where a federal court finds it conve-
nient to enjoin related state proceedings—an
approach contrary to the Supreme Court’s direction
that we construe doubts about the permissibility of
an injunction “in favor of permitting the state courts
to proceed in an orderly fashion to finally determine
the controversy.”
Ret. Sys. of Ala. v. J.P. Morgan Chase & Co., 386 F.3d 419,
430 (2d Cir. 2004). And the mere fact that a state court may
reach a conclusion that differs from what a federal court
would prefer does not change the result. See Royal Ins. Co. of
Am. v. Quinn-L Capital Corp., 960 F.2d 1286, 1298 (5th Cir.
1992). We see nothing in this case that would militate for a
different determination here.
4592 NEGRETE v. ALLIANZ LIFE INSURANCE
Courts have held that the existence of advanced federal in
personam litigation may, in some instances, permit an injunc-
tion in aid of jurisdiction. That is a fairly common theme.16
See In re Diet Drugs Prods. Liab. Litig., 282 F.3d 220, 239
(3d Cir. 2002) (MDL class action where class provisionally
certified and settlement preliminarily approved); Hanlon v.
Chrysler Corp., 150 F.3d 1011, 1018, 1024-25 (9th Cir. 1998)
(class action settlement preliminarily approved and state court
action would opt out a whole subclass); Winkler v. Eli Lilly
& Co., 101 F.3d 1196, 1201-03 (7th Cir. 1996) (MDL case
where a state proceeding would overturn the effect of a dis-
trict court discovery order); Battle v. Liberty Nat’l Life Ins.
Co., 877 F.2d 877, 880-81 (11th Cir. 1989) (class action case
had reached judgment stage and state court litigation would
interfere with administration of post-judgment proceedings);
In re Baldwin-United Corp., 770 F.2d 328, 337-38 (2d Cir.
1985) (MDL class action where class certified, settlement
agreements reached, and only district court approval of those
remained); Carlough v. Amchem Prods., Inc., 10 F.3d 189,
195, 202-04 (3d Cir. 1993) (class action where settlement
imminent); Swann v. Charlotte-Mecklenburg Bd. of Educ.,
501 F.2d 383, 383-84 (4th Cir. 1974) (per curiam) (class
action case had reached judgment and state court litigation
would interfere with carrying out the terms of that judgment).
But in less advanced cases, courts have been more chary
about issuing injunctions, as, indeed, they should have been.
For example, the Third Circuit has confronted an MDL action
case where a state court was entertaining a settlement of a
class action covering a class of General Motors truck owners,
who alleged defective placement of fuel tanks, at the same
time as an MDL class action on the same subject was before
the district court. In re Gen. Motors Corp. Pick-Up Truck
Fuel Tank Prods. Liab. Litig., 134 F.3d 133, 137 (3d Cir.
1998). The court of appeals pointed out that no settlement had
16
As the ensuing citations indicate, that has often arisen in multidistrict
litigation (MDL) cases, which the case at hand is not.
NEGRETE v. ALLIANZ LIFE INSURANCE 4593
yet been approved by the MDL court, no provisional settle-
ment was in hand, and no conditional class certification was
extant. Id. at 144-45. Therefore, the state court proceeding
was not the kind of interference that could justify an injunc-
tion. The Second Circuit reached the same result in a similar,
but more advanced, piece of litigation. There the district court
was handling an MDL securities class action arising out of the
collapse of WorldCom. See Ret. Sys., 386 F.3d at 421. The
district court enjoined class action proceedings in an Alabama
court arising out of the same collapse. Id. at 423. That case
had been moving toward trial, and the district court enjoined
it from proceeding until after there was a trial in the federal
class action. Id. No class settlement in the MDL case was
imminent, but the injunction was issued on the basis that dis-
trict court trial dates should be protected. Id. at 428-29. The
court of appeals declared that the district court “has no
interest—no interest that can be vindicated by the exercise of
the federal injunction power—in being the first court to hold
a trial on the merits.” Id. at 429. It, therefore, overturned the
injunction. Id. at 431; see also Zurich Am. Ins. Co. v. Superior
Court, 326 F.3d 816, 826 (7th Cir. 2003) (reversing grant of
injunction where proceedings insufficiently advanced).
[12] Here, none of the considerations that have induced
courts to issue injunctions despite the strictures of the Anti-
Injunction Act was present. This was not an MDL case; dis-
covery was not complete; no class settlement was imminent,
in fact, as far as the record shows no serious settlement prog-
ress had been made; and, finally, there was no evidence of
collusive procedures, reverse auction or otherwise, even
assuming that the existence of those would justify an injunc-
tion of state proceedings.17
17
We need not decide whether reverse auction evidence would justify an
injunction of state court proceedings, as opposed to leaving correction up
to the usual appellate processes. See Parsons Steel, Inc. v. First Ala. Bank,
474 U.S. 518, 525, 106 S. Ct. 768, 772-73, 88 L. Ed. 2d 877 (1986); Atl.
Coast Line, 398 U.S. at 287, 90 S. Ct. at 1743.
4594 NEGRETE v. ALLIANZ LIFE INSURANCE
CONCLUSION
[13] The district court was troubled by the fact that settle-
ments in other courts might draw the fangs from at least a por-
tion of the class action case that it was then considering.
Perhaps they will. But in this instance it was improper for the
district court to react by issuing an injunction against other
federal and state court proceedings.
Rather, the district court must live with the vicissitudes and
consequences of our elegantly messy federal system. The
restrictions inherent in the All Writs Act and explicit in the
Anti-Injunction Act have helped to concinnate the elements of
our national polity; this is not the time to disrupt the harmony.
REVERSED.