London v. Wal-Mart Stores, Inc.
| Citation | 340 F.3d 1246 |
| Decision Date | 07 August 2003 |
| Docket Number | No. 02-12257.,02-12257. |
| Parties | Roger LONDON, Plaintiff-Appellee, v. WAL-MART STORES, INC., Defendant, Chase Manhattan Bank, USA, National Association, et al., Defendants-Appellants. |
| Court | United States Courts of Appeals. United States Court of Appeals (11th Circuit) |
Daniel A. Casey, Kirkpatrick & Lockhart, Richard J. Ovelmen, Franklin G. Burt, Enrique D. Arana, Farrokh Jhabvala, Jorden, Burt, Berenson & Johnson, LLP, Miami, FL, for Defendants-Appellants.
Michael A. Hanzman, Alan H. Rolnick, Hanzman & Criden, PA, Coral Gables, FL, for Plaintiff-Appellee.
Carolyn Doppelt Gray, Epstein, Becker & Green, P.C., Washington, DC, for Amicus Curiae American Council of Life Insurers.
William B. Graham, McFarlain & Cassedy, Tallahassee, FL, for Amicus Curiae Nat. Ass'n of Independent Insurers.
John Stewart Mills, The Mills Firm, Jacksonville, FL, for Amicus Curiae Academy of Florida Trial Lawyers.
Appeal from the United States District Court for the Southern District of Florida.
Before EDMONDSON, Chief Judge, DUBINA, Circuit Judge, and HODGES,* District Judge.
American Bankers Ins. Co., American Bankers Life Assurance Co. (together, "Bankers") and Chase Manhattan Bank USA, N.A. (collectively, "Appellants") appeal the district court's grant of class certification to Roger London ("London") in his suit against Appellants.1 London's suit alleged that Appellants violated Florida laws regulating insurance, specifically laws affecting credit life insurance. The district court granted summary judgment to London on several issues, finding that Appellants violated Florida Statutes sections 627.679(1)(c)(1) and 627.682 by procuring insurance contracts without making the required disclosures and without first having the application forms approved by the Florida Department of Insurance ("DOI"). After granting London's motion for summary judgment on several issues, the district court granted class certification. For the reasons that follow, we reverse the district court's grant of class certification.
London sued Appellants in federal district court, alleging that Appellants had violated the federal Truth in Lending Act ("TILA"), but London later added claims under Florida law. London's TILA claims were settled; thus, the current action involves only London's state law claims. Nonetheless, in its discretion, the district court continued to exercise supplemental jurisdiction over the state law claims pursuant to its authority under 28 U.S.C. § 1367(c). London's claims against Appellants involve Appellants' selling of LifePlus Credit Insurance ("LifePlus") on in-store applications for the Chase/Wal-Mart MasterCard.
The theory of London's claims is that his contract with Appellants was illegal under Florida statutes which regulate the sale of insurance in the state. London argues that under Florida common law, an illegal contract is void and unenforceable, and an innocent party to such a contract is entitled to restitution. No economic injury is required in such cases because Florida common law recognizes paying consideration pursuant to an illegal contract as an injury per se. Thus, London argues that, as an innocent party to an illegal contract, he is entitled to restitution under Florida common law.
In the district court, London argued that his contract with Appellants was illegal due to several violations of state law by Appellants. London alleged that Appellants violated Florida Statutes section 627.679(1)(c)(1), which requires that the creditor agent must disclose the following information to the potential buyer of credit life insurance: (1) that the buyer may assign other policies to cover the loan; (2) that the buyer may buy a policy to cover the loan from any provider; and (3) that purchasing the policy from the loan provider is not a prerequisite to obtaining the loan. FLA. STAT. ANN. § 627.679(1)(c)(1) (2002).
In addition, London alleged that the Appellants violated Florida Statutes section 627.410, which requires that all insurance application forms be filed with and approved by the Florida DOI before use, and section 627.682, which applies the same requirements to applications for credit life insurance. FLA. STAT. ANN. §§ 627.410, 627.682 (2002). London also alleged that Bankers was an "agent" for purposes of section 627.679(1)(c)(1), making the statute's disclosure requirements binding on Bankers.
Chase and Wal-Mart offer a co-branded MasterCard through "take-one" applications at Wal-Mart stores. In conjunction with the MasterCard, Chase offers LifePlus coverage. LifePlus is credit life insurance and also pays the insured's minimum monthly payments in the event of the insured's disability, unemployment, or involuntary leave of absence. Bankers issued master group insurance policies to Chase. LifePlus is also offered through direct-mail MasterCard applications, through monthly credit card statements, and via telemarketing solicitations to MasterCard holders.
On December 14, 1998, while shopping at a Wal-Mart in Hallandale, Florida, London filled out an application for a Chase/Wal-Mart Master Card and enrolled in the LifePlus program. London has a B.S. in political science and is a Vice President of Salomon Smith Barney. He has about thirty credit cards. He does not need LifePlus and admits that he did not think he needed LifePlus in order to get the Chase/Wal-Mart credit card.
In deposition testimony, London stated that he later discussed his enrollment in LifePlus with his friend and lawyer, Robert Ader ("Ader"). London and Ader have been close friends since high school. In addition, London has been Ader's stockbroker for many years. Ader had obtained a settlement in a similar class action suit against Rooms-To-Go, and Ader became London's counsel in the present suit. Ader advised London not to cancel his LifePlus coverage, to continue to pay the premiums for the coverage, and to file suit against Appellants. London followed Ader's advice, even though at that time he had paid only $ 0.41 in premiums.
Relying on American Mutual Fire Insurance Co. v. Illingworth, 213 So.2d 747 (Fla.Dist.Ct.App.1968), the district court granted London summary judgment on several issues. Illingworth held that an exclusionary endorsement to an insurance policy that the insurance company had failed to file with the Florida insurance commissioner, in violation of Florida law, rendered the endorsement void. 213 So.2d at 749-50. The district court found that under Illingworth, a party's violation of Florida Statutes sections 627.410 and 627.682 would make the contracts at issue void and unenforceable. The district court also found that Bankers was an "agent" for purposes of section 627.679(1)(c)(1), making the statute's disclosure requirements binding on Bankers.
The court found that Chase and Bankers violated sections 627.410 and 627.682 by failing to file a copy of the "Take-One" in-store application forms with the DOI prior to using the forms. The court also found that Chase and Bankers violated section 627.679(1)(c)(1) by failing to notify their customers that the customers' other insurance policies would be assignable to cover any balance remaining on the customers' credit cards at their death. Thus, under Florida common law, the contracts were illegal, and those who had paid premiums on the illegal contracts were entitled to restitution of the premiums they had paid.
Bankers argued that section 627.682 did not apply to the in-store enrollment form because it was not an "application" under the terms of the statute. The district court rejected this argument on the grounds that not everyone who checked the box for the credit life insurance was actually eligible for the insurance. Thus, the district court reasoned that, under the terms of the statute, checking the box was an "application" rather than an "enrollment."
Bankers also argued that the disclosure requirements of section 627.679(1)(c)(1) are only mandatory when lenders require that the credit/loan be covered by insurance. The district court found that the plain language of the statute foreclosed this argument, because section 627.679(1)(c) begins, "Before any credit life insurance may be sold." FLA. STAT. ANN. § 627.679(1)(c) (2002) (emphasis added).
The district court granted Bankers' cross-motion for summary judgment on the claims based on the disclosures required by sections 627.679(1)(c)(2) and (c)(3) because the court found that it was "undisputed that the life insurance policy did not contain the deferral of coverage and age termination restrictions regulated by [these sections]." The district court also granted Bankers' motion for summary judgment on London's request for injunctive relief requiring that the Appellants comply with the law in the future, noting that the supervision of insurance providers was the job of the DOI, rather than the courts. The court also found that any insured who wished to retain his or her LifePlus coverage was entitled to do so.
The district court eventually certified the following "opt-out" class under Federal Rule of Civil Procedure 23(b)(3): "All Chase/Wal-Mart accountholders purchasing LifePlus insurance from the Defendants in the state of Florida from May 6, 1995 to the present (a) whose accounts are not in default, and (b) who have not received LifePlus insurance benefits." Appellants moved for reconsideration, but the district court denied their motion. This court granted Appellants' petition for review of the class certification pursuant to Rule 23(f) of the Federal Rules of Civil Procedure.
1. Whether London lacks standing because he failed to allege any injury in fact.
2. Whether the district court's grant of class certification after the district court had ruled on the merits violates the rule against one-way intervention.
3. Whether London can fairly and adequately represent the class, as required by Federal Rule of Civil...
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