Battle v. Liberty Nat. Life Ins. Co.

• Decision Date: 17 July 1989
• Docket Number: No. 87-7408,87-7408
• Citation: 877 F.2d 877
• Parties: 1989-2 Trade Cases 68,665 Edgar H. BATTLE, d/b/a Edgar H. Battle Funeral Home, et al., Plaintiffs, v. LIBERTY NATIONAL LIFE INSURANCE COMPANY, et al., Defendants, Aubrey Carr, et al., Petitioners-Appellees, James L. Taylor, as the Adm., etc., et al., Respondents-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 877

877 F.2d 877

1989-2 Trade Cases 68,665

Edgar H. BATTLE, d/b/a Edgar H. Battle Funeral Home, et al., Plaintiffs, v. LIBERTY NATIONAL LIFE INSURANCE COMPANY, et al., Defendants, Aubrey Carr, et al., Petitioners-Appellees, James L. Taylor, as the Adm., etc., et al., Respondents-Appellants.

No. 87-7408.

United States Court of Appeals, Eleventh Circuit.

July 17, 1989.

Jimmy E. Alexander, Alexander, Corder & Plunk, Athens, Ala., William D. Jones, III, Johnston, Barton, Proctor, Swedlaw & Naff, Don B. Long, Jr., Birmingham, Ala., for plaintiffs.

William R. Lucas, Jr., Bradley, Arant, Rose & White, Warren B. Lightfoot, William G. Somerville, III, Birmingham, Ala., for Liberty Nat. Life Ins. Co., et al.

George R. Stuart, III, Birmingham, Ala., for Edgar H. Battle, et al.

Andrew P. Campbell, Leitman, Siegal, Payne & Campbell, P.C., Birmingham, Ala., for Aubrey J. Carr.

Appeal from the United States District Court for the Northern District of Alabama.

Before RONEY, Chief Judge, HATCHETT, Circuit Judge, and HENDERSON, Senior Circuit Judge.

RONEY, Chief Judge:

The issue in this case is whether a federal court may enjoin these state court plaintiffs from pursuing claims in state court that are substantially similar to claims settled by final judgment in a federal class action. ¹ We hold that the injunction entered by the district court was proper, under two exceptions to the Anti-Injunction Act, 28 U.S.C.A. Sec. 2283. ²

Background

In 1978, the District Court for the Northern District of Alabama entered final judgment pursuant to a settlement agreement in Battle v. Liberty Nat'l Life Ins. Co., a consolidation of three class actions alleging federal antitrust violations in Liberty's and Brown-Service Funeral Home Co., Inc.'s issuance, sale and performance of certain burial and/or vault insurance policies. The settlement was the result of seven years of litigation in both federal and state courts. The court made permanent two classes: (1) all owners of Alabama funeral homes from June 29, 1954, until September 22, 1977, certified as a class under 23(b)(3), requiring individual notice of the settlement; and (2) all insureds with burial or vault policies, certified as a 23(b)(2) class. For the second class, the court in its previous order had determined that the number of members exceeded 1 million and that the best notice was to be written notice delivered by Liberty agents. In its final judgment, the court concluded that the written notice delivered by Liberty home agents, combined with intense media coverage of the proposed settlement, had served to actually notify about 90% of the policyholder class.

The final judgment established the rights and obligations of about 300 owners of some 400 funeral homes in Alabama and the rights under the burial/vault policies of approximately 1 million policyholders. It covered such details as increasing the merchandise allowance for metal caskets from $75 to $95 and providing for reimbursement to the funeral director, up to $15, for the cost of a child's burial garment.

The court explicitly retained jurisdiction over the case, stating in the judgment:

This Court retains jurisdiction of the subject matter and all parties hereto for the purpose of enabling any of the parties to this action to apply to the Court at any time for further orders and directions as may be necessary or appropriate for the construction or implementation of the terms of this final Judgment.

Under this retained jurisdiction, the court repeatedly has been asked to settle disputes concerning the application of the judgment to particular burial policies.

In February 1983, the family of James and Laura Taylor filed suit in state court against Liberty and Aubrey J. Carr, a funeral director, alleging a failure to provide the merchandise and services required under their burial policies. In each case, the family had rejected the policy casket and had selected a more expensive casket. The funeral director billed for the funeral services but allowed, or offered to allow, credit in the amount of the retail value stated in the burial policies. The Taylor plaintiffs alleged that Liberty had breached its contract for money due under the burial policies, as well as fraud and bad faith in performance.

The circuit court found on summary judgment that the Taylor actions were barred by res judicata and collateral estoppel, in light of the Battle final judgment. The Alabama Supreme Court reversed, holding that due process precluded binding the Taylors by the Battle final judgment because (1) the policyholder class was improperly certified as a 23(b)(2) class; (2) the Taylors did not receive either actual or constructive notice under the provisions established by the district court; and (3) the Taylors were not adequately represented. Taylor v. Liberty Nat'l Life Ins. Co., 462 So.2d 907 (Ala.1984). On remand, the Taylors amended the complaint to assert a claim on behalf of two classes: all policyholders who had died since the final judgment was entered, and all burial and vault policyholders.

In March 1985, the district court issued a preliminary injunction forbidding the plaintiffs in the Taylor suit from continuing to prosecute their case. In May 1987, the district court permanently enjoined the Taylors, and the plaintiffs in two other state court suits raising similar class action claims, Carroll and Elrod, from pursuing these actions.

Federal law permits a district court to enjoin state court actions "where necessary in aid of its jurisdiction, or to protect or effectuate its judgments." 28 U.S.C.A. Sec. 2283. Both of these situations are present in this case.

"In aid of its jurisdiction"

The United States Supreme Court has stated that the "necessary in aid of" jurisdiction exception to the general ban on federal injunctions is properly invoked in order "to prevent a state court from so interfering with a federal court's consideration or disposition of a case as to seriously impair the federal court's flexibility and authority to decide that case." Atlantic Coast Line R.R. v. Brotherhood of Locomotive Eng'rs, 398 U.S. 281, 295, 90 S.Ct. 1739, 1747, 26 L.Ed.2d 234 (1970).

The Battle final judgment involved the resolution of approximately seven years of litigation over complicated antitrust issues. In reaching judgment, several weeks of court hearings were conducted, consuming some 2,300 pages of transcript and review of about 200 exhibits. Almost 200 depositions were taken all over the state totalling some 18,000 pages. It was estimated that about 25 percent of the Alabama population was affected by this litigation. The judgment established the rights of about 2.5 million policies, more than 1 million policyholders and about 300 funeral home operators in the state. Further, the district court has been called on repeatedly to resolve ensuing disputes over the terms of the judgment. Certainly the district court must be able to maintain a flexible approach in resolving the various claims. These state court suits, class actions which on their face challenge the propriety of the Battle judgment, can only undermine the district court's continuing jurisdiction over the case.

In an analogous case, United States v. American Soc. of Composers, Authors and Publishers, 442 F.2d 601 (2d Cir.1971) (ASCAP), the court upheld an injunction prohibiting a state court challenge to a proposed fund distribution pursuant to a 21-year-old federal final judgment because it interfered with the federal district court's retained jurisdiction over the case. The court reasoned that "a variety of state court decisions would tend to frustrate the antitrust policy of the consent decree." Id. at 603. Further, there, as here, the "need for exclusive jurisdiction in the federal district court" was recognized by the district court's explicit retention of jurisdiction in its final judgment. Id.

Three J Farms, Inc. v. Plaintiffs' Steering Comm. (In re Corrugated Container Antitrust Litig.), 659 F.2d 1332 (5th Cir.Unit A Oct. 1981), cert. denied, 456 U.S. 936, 102 S.Ct. 1993, 72 L.Ed.2d 456 (1982), is also persuasive. There, the Fifth Circuit held that the district court properly enjoined plaintiffs in a federal multi-district class action from pursuing similar state class actions. The court concluded that the district court already had invested considerable time in the complicated litigation and that the state court action, which had produced a temporary restraining order effectively prohibiting settlement of the federal action without state court approval, "clearly interfere[d]" with the federal court's ability to dispose of the case pending before it. Id. at 1335.

Moreover, it is not true, as the state plaintiffs argue, that the "necessary in aid of" exception is only available prior to the entry of judgment in federal court. As discussed above, ASCAP involved the application of the exception to a case brought nearly 21 years after final judgment where the district court had retained jurisdiction. More recently, the D.C. Circuit held the exception applicable to an injunction of a state court action challenging federal court orders implementing an earlier consent decree. United States v. District of Columbia, 654 F.2d 802 (D.C.Cir.), cert. denied sub nom. Prince George's County, Md. v. United States, 454 U.S. 1082, 102 S.Ct. 637, 70 L.Ed.2d 616 (1981). Nor does Swann v. Charlotte-Mecklenburg Bd. of Educ., 501 F.2d 383 (4th Cir.1974), cited by the state plaintiffs, hold otherwise. There the district court enjoined, relying in part on the "in aid of" exception, the prosecution of a state court action which interfered with its ability to enforce its prior order of desegregation. The court stated that it was "apparent that the pending state suit could affect the Board's [of Education] efforts to comply with previous federal court desegregation orders." Id. at 384.

The contention that the "necessary in aid of jurisdiction" exception...