Lewis & Ellis Inc. v. Gen. American Life Ins.
| Decision Date | 21 May 1992 |
| Parties | (8th Cir. 2001) IN RE: GENERAL AMERICAN LIFE INSURANCE COMPANY SALES PRACTICES LITIGATION LEWIS & ELLIS, INC.; KAREN SHAPIRO, MOVANTS, JAMES HENDERSON, APPELLANT, WILLIAM P. LUDWIG; JEFFREY L. SIPPIL; DARRELL D. CUNNINGHAM; JOHN R. D'ALESSANDRO; BOBBY L. CHAIN; HOWARD L. ZIMMON, TRUSTEE, HOWARD M. NEWBURG TRUST U.T.A |
| Court | U.S. Court of Appeals — Eighth Circuit |
Appeals from the United States District Court for the Eastern District of Missouri
[Copyrighted Material Omitted] Before Bowman, Morris Sheppard Arnold, and Bye, Circuit Judges.
These consolidated appeals stem from a nationwide class action settlement between General American Life Insurance Company (GALIC) and more than 240,000 current and former policyholders. The policyholders claimed that GALIC committed fraud and made material misrepresentations in the course of selling certain life insurance policies. GALIC agreed to pay at least $55 million to class members in the form of additional policy benefits.
In appeal 01-1264, James Henderson challenges the district court's1 conclusion that the settlement fairly rewards the class. We dismiss his appeal for lack of jurisdiction. In appeal 01-1453, GALIC appeals from the district court's order permitting several class members who tendered arguably defective opt-out requests to be excluded from the class. We affirm.
In May 1997, the Judicial Panel on Multidistrict Litigation consolidated three policyholder actions filed against GALIC in various federal district courts. The Panel transferred the consolidated cases to the Eastern District of Missouri to resolve common pretrial proceedings. The consolidated class of plaintiffs in the Eastern District of Missouri included those who purchased GALIC whole life insurance policies between 1984 and 1996, and those who bought GALIC universal life insurance policies between 1982 and 1996.
The class of plaintiffs pursued several claims against GALIC. The class alleged that GALIC sold "vanishing premium" policies by misrepresenting that a policyholder's premium payments would cease over time, when, in fact, additional premiums would be required. In addition, the class alleged that GALIC "churned" policies by persuading policyholders to remove the cash value or assets of their existing life insurance policies to acquire replacement policies. The class also alleged that GALIC misrepresented to policyholders that some of its policies were actually investments, not life insurance.
GALIC and class counsel negotiated a settlement and presented a Stipulated Agreement to the district court on August 24, 2000. The district court provisionally accepted the Agreement in an August 28, 2000 order. In that order, the district court required GALIC to notify all known class members of the proposed settlement by mail and to publish notice of the settlement in 13 national and regional newspapers. GALIC was ordered to advise class members of their rights to opt out of the proposed settlement to pursue individual lawsuits. GALIC was also required to inform class members of a December 15, 2000 hearing at which the district court would entertain objections to the settlement and consider its overall fairness, see Fed. R. Civ. P. 23(d)(2), (e).
The district court established precise procedures for GALIC policyholders who desired to opt out of the class.
Any Class Member who wishes to be excluded from the Class must send a written request for exclusion to the Clerk of the Court at the address provided in the Class Notice and Publication Notice. Any such exclusion request must be sent by first-class mail, postage prepaid, and must be postmarked no later than November 8, 2000 (i.e., 35 days before the date of the Fairness Hearing...). Exclusion requests must specify the particular Policy or Policies the Class Member wishes to exclude from the Class. If the proposed settlement is approved, any Class Member who has not submitted a timely and properly written request for exclusion from the Class for a particular Policy shall be bound as to that Policy by all subsequent proceedings, orders and judgments in these Actions....
Appellant's App. 267. Class members seeking to opt out of the class were required to write to a claims processing center in Minneapolis, Minnesota established during the class action. They were ordered to send signed letters and to provide background information such as addresses, phone numbers, and GALIC policy numbers.
After the November 8, 2000 opt-out deadline passed, GALIC objected to numerous requests for exclusion that failed to comply with the district court's order.
Twenty-nine class members (representing 47 GALIC policies) had filed opt-out letters that were received in Minneapolis on November 10, 2000, two days after the postmark cut-off date. Each envelope bore a postmark containing the month and year (November 2000), but none of these postmarks recorded a date, so it cannot be determined when these class members mailed their letters. Most of these letters were mailed by an Alabama law firm using its own postage meter, prompting GALIC to hypothesize that the law firm purposefully omitted the date on which the letters were mailed to obscure their tardy filing.
Six other class members (representing 7 GALIC policies) neglected to sign their letters personally. One such class member hand-wrote her opt-out request and printed her name. In the case of the remaining five class members, an attorney prepared the members' opt-out requests and signed his own name.
Finally, GALIC asserted that one class member failed both to postmark his opt-out letter with a particular date in November 2000 and to sign his letter. The class member's Pennsylvania lawyer submitted and signed his opt-out letter.
Class counsel urged the district court to deem the ostensibly tardy opt-out letters to be timely filed. Lawyers for the class proposed that letters received November 10 in Minneapolis must have been postmarked no later than November 8 in Alabama. Class counsel also argued that attorneys were entitled to sign opt-out letters on behalf of their clients. Though class counsel offered no explanation or excuse for class members' apparently defective filings, counsel urged the district court to permit class members to cure any defects by submitting corrected requests for exclusion from the class.
The district court acknowledged that the class members "failed to comply with all the technical requirements of the class notice for [opting out]." Appellant's Add. 3. Despite the evidence of non-compliance, however, the court evaluated the class members' violations and determined that the "interests of justice" required their exclusion from the class. As to the ostensibly tardy opt-out requests, the court found that "from the evidence before me, I believe they were timely mailed." Id. Over GALIC's objections, the district court permitted these class members to opt out of the class settlement.
The district court formally approved the parties' settlement in the same order that permitted class members to opt out of the class. Under the terms of the settlement, a class member could accept a lump sum payment (in policy benefits) or choose to pursue the possibility of greater relief through a claims-processing system operated by plaintiffs' lead counsel. Class members choosing the latter option would have their claims scored by qualified claims processors based upon the extent of their losses and proof of GALIC wrongdoing. The scoring ranged from "three" (meriting the greatest relief) to "zero." GALIC describes a zero score as a sanction for rogue class members who present manifestly frivolous claims in cases where clear evidence demonstrates that GALIC acted properly. Zero scorers would not receive compensation from the settlement fund.
Henderson objected to the very existence of a zero score. He believed that the mere possibility--however remote--that a class member could receive no compensation was unfair. He moved to intervene in the district court and pressed this scoring objection as a reason for rejecting the proposed settlement struck by GALIC and class counsel. The district court overruled Henderson's objection and denied his motion to intervene in the action.
Henderson challenges the merits of the class settlement, but his challenge is quickly derailed by a jurisdictional impediment. Henderson neglected to establish party status in the district court, and he does not contest the district court's order denying him the status of a party on appeal. Because he is not a party, we dismiss his appeal for lack of jurisdiction.
"Absent" class members--those who are not named representatives of the class--may not appeal from a...
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