Ozee v. American Council on Gift Annuities, Inc.

• Decision Date: 09 April 1997
• Docket Number: 96-11439,Nos. 96-11332,s. 96-11332
• Citation: 110 F.3d 1082
• Parties: -2209, 1997-1 Trade Cases P 71,828, 37 Fed.R.Serv.3d 908 Dorothy L. OZEE, acting individually as attorney in fact for Louise T. Peter, and as next friend for Louise T. Peter, on behalf of Louise T. Peter individually and all others similarly situated, Plaintiff, Boyd L. Richie, guardian of the estate of Louise T. Peter, Plaintiff-Appellee, v. The AMERICAN COUNCIL ON GIFT ANNUITIES, INC., individually and on behalf of its members, sponsors and all other similarly situated to them, and as successor to The Committee on Gift Annuities, an unincorporated association, et al., Defendants-Appellants, Dan Morales, Attorney General of Texas, Appellant. In re AMERICAN COUNCIL ON GIFT ANNUITIES, INC., et al., Petitioners.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1082

110 F.3d 1082

79 A.F.T.R.2d 97-2209, 1997-1 Trade Cases P 71,828,

37 Fed.R.Serv.3d 908

Dorothy L. OZEE, acting individually as attorney in fact for Louise T. Peter, and as next friend for Louise T. Peter, on behalf of Louise T. Peter individually and all others similarly situated, Plaintiff Boyd L. Richie, guardian of the estate of Louise T. Peter Plaintiff-Appellee, v. The AMERICAN COUNCIL ON GIFT ANNUITIES, INC., individually and on behalf of its members, sponsors and all other similarly situated to them, and as successor to The Committee on Gift Annuities, an unincorporated association et al., Defendants-Appellants Dan Morales, Attorney General of Texas, Appellant. In re AMERICAN COUNCIL ON GIFT ANNUITIES, INC., et al., Petitioners.

Nos. 96-11332, 96-11439.

United States Court of Appeals,Fifth Circuit.

April 9, 1997.

Rehearing and Suggestion for Rehearing En Banc Denied May 21, 1997.

Ronald David Wells, Dallas, TX, Scott Robert Jacobs, Akin, Gump, Strauss, Hauer & Feld, Dallas, TX, Lonny D. Morrison, Morrison & Shelton, Wichita Falls, TX, for Dorothy L. Ozee, Plaintiffs-Appellees.

Ruben Brochner, Charles W. Cunningham, McKool Smith, Dallas, TX, Robert R. Elkin, Wichita Falls, TX, for Richie, Plaintiff-Appellee.

Judy C. Norris, Thompson & Knight, Dallas, TX, for American Council of Gift Annuities, Inc., Lutheran Church of Missouri Synod Texas Dist., Planned Giving Services, Inc., Planned Giving Resources and Prerau & Teitell, Defendants-Appellants.

Gregory S.C. Huffman, George C. Chapman, Thompson & Knight, Dallas, TX, for American Council of Gift Annuities, Inc., Lutheran Church-Missouri Synod, Planned Giving Services, Inc., Planned Giving Resources, and Prerau & Teitell, Defendants-Appellants.

Walter H. Mizell, Richard T. McCarroll, Brown McCarroll & Oaks Hartline, Austin, TX, for Lutheran Church, Missouri Synod Texas Dist., Lutheran Foundation of Texas and Lutheran Church, Missouri Synod Foundation, Defendants-Appellants.

Richard G. Braman, Minneapolis, MN, for Gray, Plant, Mooty, Mooty and Bennett, Defendant-Appellant.

Patrick R. Cowlishaw, Kurt Allen Schwarz, Cohan, Simpson, Cowlishaw & Wulff, Dallas, TX, for Salvation Army, a New York Corporation, Salvation Army, an Illinois Corporation, Salvation Army, a California Corporation, and Salvation Army, a Georgia Corporation, Defendants-Appellants.

Noel M.B. Hensley, George W. Bramblett, Jr., Haynes & Boone, Dallas, TX, for Baptist Foundation of Texas, on behalf of themselves and all others similarly situated, Defendant-Appellant.

Russell Hendrix Roden, James Allen Harrison, Gwinn & Roby, Dallas, TX, for Southern Baptist Convention, Defendant-Appellant.

Susan Abbott Schwartz, Land, Omahana & Kopka, Dallas, TX, for General Conference Corporation of Seventh-Day Adventists doing business as General Conference of Seventh-Day Adventists, and Loma Linda University, Defendants-Appellants.

Susan Louise Karamanian, John H. McElhaney, Dallas, TX, for Anderson University, Mount Holyoke College, Smith College, Vassar College, St. Olaf College and Wittenberg University, Defendants-Appellants.

William Gray Compton, Dallas, TX, for Good Shepherd Home Foundation, Defendant-Appellant.

Jay M. Vogelson, Dallas, TX, Geraldine M. Alexis, Sidley & Austin, Chicago, IL, for Northwestern University, Defendant-Appellant.

Thomas D. Graber, Hutcheson & Grundy, Dallas, TX, for American Baptist Foundation, American Baptist Foreign Mission Society and Evangelical Lutheran Church in America, Defendants-Appellants.

Charles Murray Barnard, Wichita Falls, TX, for University of Colorado Health Sciences Center, Defendant-Appellant.

James D. Blume, Dallas, TX, for United Church of Christ, Defendant-Appellant.

Patricia J. Villareal, Chrysta L. Castaneda, Jones, Day, Reavis & Pogue, Dallas, TX, for Hay-Huggins Co., Inc., Defendant-Appellant.

Jan Soifer, Thomas P. Perkins, Jr., Austin, TX, for Dan Morales, Appellant.

George G. Olsen, Barnaby W. Zall, Williams & Jensen, P.C., Washington, DC, for United States Representative Henry J. Hyde and Other Members of the 104th Congress of the United States of America, amicus curiae.

Robert Junell, Carrollton, TX, pro se.

Kenny Marchant, Carrollton, TX, pro se.

John Montford, Carrollton, TX, pro se.

David Sibley, Carrollton, TX, pro se.

Appeals from the United States District Court for the Northern District of Texas.

Before REAVLEY, SMITH and EMILIO M. GARZA, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

This consolidated case consists of an appeal by the various above-listed defendants from the district court's denial of a motion to dismiss, a separate appeal by Northwestern University challenging the denial of summary judgment, a petition by the defendants for a writ of mandamus, an additional appeal by Texas Attorney General Dan Morales from the denial of his motion to intervene as of right, and a motion by Boyd Richie to dismiss the defendants' and Northwestern's appeals. For the reasons stated below, we dismiss the defendants' and Northwestern's appeals for want of jurisdiction, deny the petition for mandamus, reverse the denial of intervention, and impose sanctions on appeal.

I.

This litigation stems from charitable donations by Louise Peter, a ninety-six-year-old woman, to the Lutheran Foundation of Texas, one of the many defendants. Peter, who suffers from dementia and Alzheimer's disease, inherited a substantial fortune from her brother late in life. Her guardian, Boyd Richie, alleges that soon thereafter, the leaders of the Lutheran Church--Missouri Synod began unscrupulously pressuring Peter to let them manage her money. After resisting for years, she eventually invested $1.7 million with the Lutheran Foundation of Texas. Approximately $1.5 million of this went into a revocable management trust and a charitable remainder unitrust; the remaining $200,000 went to buy charitable gift annuities, the financial products that are the epicenter of this lawsuit.

Charitable gift annuities are hybrids of altruism and capitalism. To purchase one, the donor or "annuitant" writes a check to a charitable organization. The charity, in return, promises to pay the annuitant a fixed stream of income for the remainder of his life. Precisely how much the annuitant will receive per year depends primarily on the size of the "donation" and the annuitant's age--the older he is, the more he receives, because the older he is, the less the time is during which the charity expects to have to pay the annuity.

As with bonds, the annual payout is expressed as a percentage, which is referred to as the charitable gift annuity rate. Unlike with bonds, however, the principal on which this "interest" is being paid becomes the property of the charity when the check is handed over. In other words, the annuitant trades a "donation" to a charity for a guaranteed stream of income that continues as long as he lives. ¹

In many respects, then, charitable gift annuities are quite similar to the commercial annuities sold by life insurance companies. As with commercial annuities, an annuitant who outlives his actuarial life expectancy stands to reap a substantial profit, the gift portion of the "donation" notwithstanding. The difference is that charitable gift annuities also provide the annuitant a large tax deduction and the satisfaction of having given to the charity of his choice, advantages that the plaintiffs in this case contend make charitable gift annuities competitive with other financial products.

Enter the principal defendant, the American Council on Gift Annuities, Inc. (the "Council"). According to Richie, the Council was formed years ago to suppress competition among charities in setting gift annuity rates, which competition apparently would have had the undesirable effect of causing potential donors to shop for the best rate. The Council purportedly sets rates that it warns charities not to exceed, actively monitors compliance, and lobbies against government regulation of the charitable gift annuity industry. Richie thus alleges that the Council is the hub of a vast, sinister price-fixing conspiracy comprising charities across the country.

Dorothy Ozee, Peter's grand-niece and next friend, filed suit in federal district court alleging (1) that the Council and numerous other organizations (hereinafter, "the defendants") had violated § 1 of the Sherman Act by agreeing to fix rates of return on charitable gift annuities; and (2) a number of supplemental Texas state law claims, including illegal sale of annuities and breach of fiduciary duty. The defendants moved to dismiss the antitrust claims on the ground that charitable donations do not constitute "trade or commerce" within the meaning of the Sherman Act. ² The district court denied the motion to dismiss and granted partial summary judgment in Peter's favor on one state law claim of illegal sale of annuities. A Texas state court later appointed Richie guardian of Peter's estate, so Ozee's name was dropped from the suit, and Richie was substituted as the named plaintiff.

Perhaps recognizing that the denial of their first motion to dismiss did not bode well for their chances of success on the merits, the defendants decided to attack their problem from another angle: They persuaded both Congress and the Texas Legislature to pass bills specifically designed to squelch this suit. The federal bill, which the President signed into law on December 8, 1995, was entitled the Charitable Gift Annuity Antitrust Relief Act (the "Relief Act"), and provided that

it shall not be unlawful under any of the antitrust laws, or under a State law similar to any of the antitrust laws, for 2 or more persons described in section 501(c)(3) of Title 26 that are exempt from taxation under section 501(a) of Title 26 to use, or to agree to use, the same annuity rate for the purpose of issuing 1 or more charitable gift annuities.

15 U.S.C. § 37(a). Congress made the Relief Act explicitly retroactive....