Adams v. Southern Farm Bureau Life Ins. Co., 06-13162.

• Decision Date: 25 July 2007
• Docket Number: No. 06-13162.,06-13162.
• Citation: 493 F.3d 1276
• Parties: Walter H. ADAMS, individually, and on behalf of all others similarly situated, Plaintiff, v. SOUTHERN FARM BUREAU LIFE INSURANCE COMPANY, a Mississippi Corporation, Defendant-Intervenor-Defendant-Appellee, Harmon Jourdan, a plaintiff in pending litigation in Mississippi case, Ronnie Carlisle, a plaintiff in pending litigation in Mississippi case, Kimberly Carlisle, a plaintiff in pending litigation in Mississippi case, Cecile Barnett, a plaintiff in pending litigation in Mississippi case, William Hathcock, a plaintiff in pending litigation in Mississippi case, David Lyons, a plaintiff in pending litigation in Mississippi case, Roy Hodges, a plaintiff in pending litigation in Mississippi case, Donnie Smith, a plaintiff in pending litigation in Mississippi case, Wilson Craig, a plaintiff in pending litigation in Mississippi case, Elizabeth Craig, a plaintiff in pending litigation in Mississippi case, Respondents-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

493 F.3d 1276

Walter H. ADAMS, individually, and on behalf of all others similarly situated, Plaintiff, v. SOUTHERN FARM BUREAU LIFE INSURANCE COMPANY, a Mississippi Corporation, Defendant-Intervenor-Defendant-Appellee Harmon Jourdan, a plaintiff in pending litigation in Mississippi case, Ronnie Carlisle, a plaintiff in pending litigation in Mississippi case, Kimberly Carlisle, a plaintiff in pending litigation in Mississippi case, Cecile Barnett, a plaintiff in pending litigation in Mississippi case, William Hathcock, a plaintiff in pending litigation in Mississippi case, David Lyons, a plaintiff in pending litigation in Mississippi case, Roy Hodges, a plaintiff in pending litigation in Mississippi case, Donnie Smith, a plaintiff in pending litigation in Mississippi case, Wilson Craig, a plaintiff in pending litigation in Mississippi case, Elizabeth Craig, a plaintiff in pending litigation in Mississippi case, Respondents-Appellants.

No. 06-13162.

United States Court of Appeals, Eleventh Circuit.

July 25, 2007.

David Anthony Busby, Langston & Langston, PLLC, Jackson, MS, for Respondents-Appellants.

Julianna Thomas McCabe, Landon K. Clayman, Markham R. Leventhal, Jorden Burt, LLP, Miami, FL, Franklin G. Burt, Jorden Burt, LLP, Washington, DC, for Southern Farm Bureau Life Ins. Co.

Appeal from the United States District Court for the Middle District of Georgia.

Before EDMONSON, Chief Judge, and BIRCH and WILSON, Circuit Judges.

BIRCH, Circuit Judge:

In this case, we must determine whether the district court acted properly in concluding that the appellants—a group of plaintiffs alleging claims against appellee Southern Farm Bureau Life Insurance Company ("Southern Farm") in proceedings in Mississippi—are barred by the doctrine of res judicata from bringing their action, due to a consumer class action settlement in an earlier suit against Southern Farm. After the appellants brought their complaints in Mississippi state court in October 2005, Southern Farm filed a Motion to Enforce Final Judgment in the Middle District of Georgia. Southern Farm argued that the settlement, release, and judgment that had been entered by the district court in an earlier 1999 consumer class action—in which the appellants were class members—barred the appellants' pending claims. The district court agreed, and, accordingly, it enjoined the appellants from further prosecuting their claims in Mississippi. This appeal followed. Upon review, we conclude that: (1) the notice afforded the appellants in the 1999 class action settlement satisfied the constitutional requirements of due process; and (2) the claims that the appellants have brought against Southern Farm in Mississippi plainly fall within the scope of the earlier class action settlement and release and, therefore, they are barred by the doctrine of res judicata. Accordingly, we AFFIRM.

I. BACKGROUND

A. The Adams Class Action and Settlement

In January 1998, Walter H. Adams brought an action, on behalf of himself and all others similarly situated, against Southern Farm in the Middle District of Georgia ("the Adams Class Action"). The Adams complaint was generally based on the allegation that Southern Farm had engaged in fraudulent and deceptive conduct in connection with the marketing and sale of flexible premium and universal life insurance policies to its customers.¹ The complaint alleged that, beginning in 1984, Southern Farm had engaged in a scheme to

fraudulently induc[e] existing policyholders to replace their existing policies in order to purchase new policies, without adequately informing the policyholders that by doing so they would lose substantial cash values, pay new and significant commission charges, and, if they lived beyond a certain age, pay significantly greater premiums, and/or be forced to accept less insurance or have their insurance lapse.

R1-1 at 5.

More specifically, the Adams complaint alleged that Southern Farm had engaged in a number of deceptive and misleading sales tactics in selling flexible premium and universal life policies, including, among others: misrepresenting the benefits of the new policies; failing to provide an adequate explanation of concepts such as the policy's "cash value" and the "premium" required by the policy; and "employing performance projections based on unreasonable explanations concerning interest rates and misrepresenting and/or omitting adequate explanation of the consequences of less favorable performance." Id. at 5, 7.² The complaint asserted counts for breach of fiduciary duty, fraud, negligence breach of contract, and breach of the duty of good faith and fair dealing. Adams sought relief for himself and all other class members similarly situated.

Southern Farm denied the allegations of the Adams Class Action. Following discovery, the parties entered into a Stipulation of Settlement. For purposes of the settlement, the proposed "class" was defined as "those persons and entities who currently own, or have owned, one or more flexible premium or universal life insurance policies [] issued between January 1, 1983 and March 24, 1999 by [Southern Farm] to replace other life insurance policies." R5-147, Exh. 1 at 5. After the district court approved the proposed settlement and preliminarily certified the class for settlement purposes, a class notice was sent to each reasonably identifiable class member in May of 1999. A total of 174,343 class notices were sent out, via first class mail, to each class member's last known address. In addition to the mailings, Southern Farm created a toll-free telephone number to field inquiries about the Adams Class Action; it published notice in USA Today; and it posted information about the Adams Class Action and the settlement on the Southern Farm website.

The class notice—which all of the appellants received—was 48 pages in length, and was written in a "Q & A"-type format. The notice indicated that it had been sent because the recipient was believed to be included the class of "current and former flexible premium or universal life insurance policyowners [who were] eligible to participate in the proposed settlement." R5-147, Exh. 1 at 1. The opening pages of the notice stated that the Adams Class Action "involv[ed] claims about how flexible premium and universal life insurance policies have been sold and how those policies have performed." Id. More specifically, in a section entitled "Description of the Lawsuit," the notice advised that the Adams Class Action concerned allegations that Southern Farm had "made misrepresentations or omissions of fact in connection with the sale of flexible premium and universal life insurance policies," including, among other allegations:

misleading policyowners to believe that only a single or fixed, limited number of out-of-pocket premium payments would be required to keep a policy in force, and that the promised death benefits and increasing or stable cash values would continue to exist, without the policymaker making any further out-of-pocket premium payments;

misleading policy owners to believe that interest rates illustrated at the time the policies were sold to Class Members were reasonable, and that such rates were not likely to change, or would not change in an amount sufficient to cause the policies to perform differently than was represented at the time of sale.

Id. at 21.

The notice stated that two forms of relief were available to class members who participated in the Adams Class Action settlement: general relief, and special adjudication relief. For the former, class members were eligible for a "premium credit" towards the purchase of any Southern Farm life insurance policy or annuity, to be used within 12 months of the final settlement. As to the latter, class members who believed that Southern Farm had made direct misrepresentations to them concerning: the operation and performance of their policy; "the number, amount, and frequency of premium payments would affect the cash value"; or the ability to keep the policy in force "based on a fixed number or amount of premium payments" were entitled to elect special adjudication relief. Special adjudication relief consisted of an individualized review by Southern Farm's "claim review team," and, if eligible, special relief in the form of an enhancement of the cash value of the claimant's existing policy. Id. at 30-33.

The notice also stated that putative class members would be automatically included in the proposed settlement with Southern Farm, unless they took the affirmative step of opting out. The notice advised that a settlement hearing had been proposed for 15 July 1999, and stated that once the proposed settlement had been approved by the district court, each class member would receive a second notice offering them an opportunity to participate in the settlement.

Pertinent to the present appeal, the class notice stated that all class members who failed to opt out or object to the settlement would be "bound by the orders and judgments entered by the court, whether favorable or unfavorable to the class," and that class members would "not be able to maintain, continue, or commence any other claim, lawsuit, or proceeding against [Southern Farm] relating to any [flexible premium or universal life] policy." Id. at 20. Section 5 of the class notice, entitled "Dismissal and Release of Claims," stated in bold that once the Adams Class Action was settled, the claims alleged against Southern Farm would be dismissed and "[n]one of those claims [could] thereafter be asserted by class members who remain[ed] in the Class in any other lawsuit or proceeding." Id. at 35. Section 5 stated that class members who participated in the settlement would release Southern Farm from "liability for known and unknown claims relating to the [p]olicies," id., and Section 10 detailed that, upon approval of the settlement, the district court would enter a permanent injunction, barring any class member...