# Appendix — Coulter v. Metropolitan Life Insurance > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386004_1470%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1996 - **Citation:** 519 U.S. 1040 ## Text Supreme Court, U. 2) FILED 96 423 SEP 1 219%) OF THE CLERK No. gt! ue IN THE Supreme Court of the United States OCTOBER TERM, 1995 RONALD COULTER and ANISSA COULTER, et al., Petitioners, METROPOLITAN LIFE INSURANCE COMPANY, Respondents. Petition For a Writ of Certiorari To The U.S. Court of Appeal for the 11th Circuit APPENDIX TO PETITION FOR A WRIT OF CERTIORARI KENNETH W. BEHREND Behrend and Ernsberger 2400 Grant Building Pittsburgh, PA 15219 (412) 391-2515 Attorney for Petitioners . TABLE OF CONTENTS PAGE Extension Letter granting Extension of Time Oe la Grilli v. Metropolitan Life Insurance Co.(Horton) (Order dated July 31, 1996) Clarification of April 2, 1996 Order...............cc0.0.. 2a Grilli v. Metropolitan Life Insurance Co.(Horton) (Opinion dated April 2, 1996) .........cccccccccceccsseseeeees 4a Second Petition for Rehearing..................ccccccecscsssesesesseeseees 19a Grilli v. Metropolitan Life Insurance Co.(Horton) (Order dated May 15, 1996) (Order denying Petition for Rehearing).................. 44a ee e__, RRRGR SETSIRE AS EI ona ae RPC Cm RO 46a Grilli v. Metropolitan Life Insurance Co.(Horton) (Order dated May 15, 1996) (Order denying Petition for Rehearing).................. 75a Grilli v. Metropolitan Life Insurance Co.(Horton) (Order dated November 8, 1995) (Order granting permanent injunction).................... 77a Findings of Fact and Conclusions of Law Regarding Motions to Intervene and to Dismiss Notices of Intention to Appear UE Sei visicctettcecinnsacbibaiits bash haldendesinsoepssedibencaslaxenncss 83a Intervenor's (Pennsylvania Coulter Class’) Sena UD OU ig 10la la SUPREME COURT OF THE UNITED STATES OFFICE OF THE CLERK WASHINGTON, DC 20543-0001 WILLIAM K. SUTER Area Code 202 CLERK OF THE COUR 479-3011 August 2, 1996 Mr. Kenneth W. Behrend 2400 Grant Building : Pittsburgh, PA 15219 Re: Ronald Coulter and Anissa Coulter, et al. v. Metropolitan Life Insurance Company, Inc., et al. Application No. A-77 Dear Mr. Behrend: The application for an extension of time within which to file a petition for a writ of certiorari in the above-entitled case has been presented to Justice Kennedy, who on August 2, 1996, extended the time to and including September 12, 1996. This letter has been sent to those designated on the attached notification list. Sincerely, WILLIAM K. SUTER, Clerk By_/s/__ Melissa A. Blalock Assistant Clerk 2a GRILLI v. METROPOLITAN LIFE INS. CO., INC. Peter J. GRILLI, Special Master, Julio Gonzalez-Roel, et al.; Ronald Coulter; Anissa Coulter, Appellants, Sherry Horton, et al., Plaintiffs- Appellees, v. METROPOLITAN LIVE INSURANCE COMPANY, INC., Rick Urso, Defendants, W. R. Cunningham, et al., Claimants. Nos. 94-3328 and 94-3468 to 94-3479. United States Court of Appeals, Eleventh Circuit. July 31, 1996. Appeal from the United States District Court for the Middle District of Florida (No. 93- EEA TESA), Steven D. Merryday, Judge. Before TJOFLAT, Chief Judge, and RONEY and CAMPBELL,* Senior Circuit Judges. BY THE COURT: 3a Appellees’ motion to clarify opinion is GRANTED. This courts opinion is hereby clarified by inserting the following sentence between the second and third sentences of the last paragraph of the opinion: “These attorney's fees and double costs shall be paid by the appellants. Their liability for such fees and double costs shall be joint and several.” The opinion shall remain otherwise unchanged. *Honorable Levin H. Campbell, Senior U.S. Circuit Judge for the First Circuit, sitting by designation. da GRILLI vy. METROPOLITAN LIFE INS. CO., INC. Peter J. GRILLI, Special Master, Julio Gonzalez-Roel, et al.; Ronald Coulter; Anissa Coulter, Appellants, Sherry Horton, et al., Plaintiffs- Appellees, Vv. METROPOLITAN LIFE INSURANCE COMPANY, INC.; Rick Urso, Defendants, W.R. Cunningham, et al., Claimants. Peter J. GRILLI, Special Master, Julio Gonzalez-Roel, et al., Intervenors, Douglas Connor; Roena Connor; Ronald Coulter; Anissa Coulter; Darrin Johns; Joann Kablach; Eric Maharg; Terrance McConnell; Deborah Myers; Terry Palmer; Marjorie Palmer; Brian Rohm; James Romano; Mary Romano; Albert Darren Wise; Jeanne Yokel, Appellants, Sherry Horton, et al., Plaintiffs- Appellees, v. METROPOLITAN LIFE INSURANCE COMPANY, INC.; Rick Urso, Sa Defendants-Appellees, W.R. Cunningham, et al., Claimants. Peter J. GRILLI, Special Master, Julio Gonzalez-Roel, et al., Intervenors, Edward Beliunas; Paulette Beliu nas; John Brooks; Stephanie Charles; Shelly A. Daughenbaugh; Jerilyn Freiwald; Nina Heathcote; Daniel Heathcote; Robert W. Hemcher; Kenneth D. Johnson; Michele R. Johnson; Frieda E. Kamel; Jerome J. Knorr; Enod S. Knorr; George Liptak; Ruth Liptak; Kenneth J. Magnes; Sandra Marie McCue; Mark A. Ondrusek; Ernestine Peterson; Rori K. Rasel; Clarence Ridgeway; Emily N. Riehl; Joan C. Velenta; Robert Dale Wiles; Catherine Wiles, Appellants, Sherry Horton, et al., Plaintiffs- Appellees, Vv. METROPOLITAN LIFE INSURANCE COMPANY, INC.; Rick Urso, Defendants-Appellees, W.R. Cunningham, et al., Claimants. Peter J. GRILLI, Special Master, Julio Gonzalez-Roel, et al., Intervenors, 6a Ronald Coulter; Anissa Coulter, Appellants, Sherry Horton, et al., Plaintiffs, v. METROPOLITAN LIFE INSURANCE COMPANY, INC., Defendant- Appellee, Rick Urso, Defendant, W.R. Cunningham, et al., Claimants. Nos. 94-3328, 94-3468, 94- 3469 and 94-3470. United States Court of Appeals, Eleventh Circuit. April 2, 1996. In class action litigation against life insurer, certain class members appealed from orders of the United States District Court for the Middle District of Florida, No. 93-1849-Civ-T-23A, Steven D. Merryday, J. The Court of Appeals held that: (1) denial of intervention as of right or permissive intervention was not erroneous; (2) refusal to allow movants to opt out of settlement class after deadline was not error; (3) order referring matter to special master was not appealable; (4) assuming that dismissal without prejudice of motion to declare movant not member of settlement class was appealable, court acted within its inherent power; (5) movants did not have standing to seek injunctive relief based on defendant's alleged improper communications with other potential class members; and (6) appeal was frivolous, entitling appellees to double costs and reasonable attorneys fees. Ta Ordered accordingly. 1. Federal Courts 555 Court of Appeals has provisional jurisdiction to review denial of motion to intervene, although ordinarily not appealable final order, under Eleventh Circuit's “anomalous rule”; if Court concludes district court's order was properly granted, its jurisdiction evaporates because ruling is not final order: if Court finds district court erred, however, Court retains jurisdiction and reverses ruling. 2. Federal Civil Procedure 182.5, 340 Refusal in class action suit against life insurer to allow either intervention as of right or permissive intervention to insureds who had instituted separate suit against same insurer in different forum, or to allow them to represent all residents of that forum in suit, was not erroneous where no court had appointed proposed intervenors as representatives of any class of purchasers of insurer's products, nor had any court appointed their attorney to represent anyone with claim against insurer. 3. Federal Civil Procedure 180 Refusal in class action suit to allow class members to “opt out” of class after deadline was not error; movants failed to meet “excusable neglect” standard for opting out after deadline where their failure to act earlier was result of tactical decision. Fed.R Civ.Proc.Rule 6(b)(2), 28 U.S.C.A. 4. Federal Courts 585.1 Order referring matter to special master is not final appealable order. 28 U.S.C.A. § 1291. 5. Federal Courts 554.1 Portion of order in class action suit providing for resolution of class-status issues by special master was not appealable; movants had sought determination of whether certain persons were members of settlement class. 28 U.S.C.A. § 1291. 6. Federal Courts 589 Dismissal without prejudice may be treated as appealable final order. 7. Federal Courts 587 Class action court's denial of motion that court declare that movant was not member of settlement class was not final appealable order where motion was denied without prejudice and court anticipated further proceedings with respect to issues raised through reference to special master for resolution. 28 U.S.C.A. § 1291. 8. Compromise and Settlement 67 Federal Civil Procedure 1877.1 Denial without prejudice of motion that court declare movant not to be member of settlement class was reasonable, especially when coupled with reference of class-status issue to special master and was within court's inherent power to fashion efficient and economic solutions. 9. Federal Civil Procedure 2825 Injunction 114(2) Class members did not have standing to seek injunctive relief, remedial measures, and sanctions based on defendani's alleged improper communications with potential class members where movants were not affected by alleged misconduct and could ee eT ae not speak for anyone else. 10. Federal Civil Procedure 2840 Appeals from orders denying intervention in class action suit, denying class members request to opt out after deadline, deny- ing without prejudice motion to declare movants not members of settlement class, and denying injunctive relief and remedial measures for alleged improper communications that did not affect moving class members, were frivolous and would result in award of double costs and reasonable attorneys fees to appellees. F.R.A.P.Rule 38, 28 U.S.C.A. Appeals from the United States District Court for the Middle District of Florida. Before TJOFLAT, Chief Judge, and RONEY and CAMPBELL *, Senior Circuit Judges. *Honorable Levin H. Campbell, Senior U.S. Circuit Judge for the First Circuit, sitting by designation. PER CURIAM: Before us for review in these consolidated appeals are orders entered by the district court in a class action suit brought on November 1, 1993, by Sherry Horton and others (“Horton”) against Metropolitan Life Insurance Company (“MetLife”). Among other things, these orders denied motions of two class members to intervene in the case, to have their attomey appointed as co- counsel for the class, and to extend the deadline for opting out of the class. We conclude that appellants’ challenges to these orders are meritless. The orders were necessary to the efficient disposition of the case, and the district court can hardly be faulted for entering them. 10a I. Horton brought this lawsuit in the United States District Court for the Middle District of Florida, to recover, under the federal RICO statute,' damages that she and the members of her class allegedly suffered at the hands of MetLife agents who sold them whole life insurance policies on the alleged misrepresentation that they were retirement and/or savings plans. These sales took place in several locations, including Pittsburgh, Pennsylvania, and Tampa, Florida. On March 25, 1994, approximately four months after Horton brought her suit, Ronald and Anissa Coulter ("the Coulters”), represented by attorney Kenneth W. Behrend of Pittsburgh, sued MetLife in state court in Pittsburgh. They sought recovery for themselves and the members of the Horton class who were residents of Pennsylvania.’ A class has not been certified in that case,’ accordingly, at the present time, the Coulters are 1 Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1964 (1994) (as added by the Organized Crime Control Act of 1970, Pub.L. No. 91-452, § 901(a), 84 Stat. 922, 941-47). Horton also sought recovery under several other theories of liability, including common law fraud. 2They also sought recovery for themselves and others who had purchased MetLife products not formally approved by the Pennsylvania insurance commissioner. The Coulters alleged that, in selling the products described in their complaint, MetLife violated several federal and state laws. 4 That is, as of the date of the oral argument of these appeals, December 5, 1995, a class had not been certified in the Pennsylvania case. proceeding in that case alone. On April 7, 1994, Horton and MetLife reached a settlement agreement. On April 22, the district court certified a settlement class, appointed class counsel, preliminarily approved the proposed settlement and the class notice, and scheduled a fairness hearing for July 18, 1994. In accordance with the settlement agreement, thecourt ordered that any who wished to be excluded from the class opt out by June 13. The court set the same deadline for the filing of claim forms, which accompanied the class notice. On May 30, 1994, the Coulters, through Behrend, moved the district court for leave to intervene as plaintiffs in Horton. They represented that their claims were “atypical of those in the Horton class.” The Coulters’ motion requested that the court sever all Pennsylvania residents from the settlement class so that the Coulters could seek to represent them in the suit they had brought in Pittsburgh. Alternatively, the Coulters asked the court to allow their attorney, Behrend, to represent the members of the Horton class from Pennsylvania. In moving the court to intervene, the Coulters did not present the court with a proposed complaint for filing in the case. In fact, at no time have they sought to litigate a claim independently and apart from the Horton class in that case. The fairness hearing was held as scheduled on July 18, 1994. The district court heard the objections of the Coulters and others to the proposed settlement and to the adequacy of the notice that had been sent to the class. The court also heard argument on the Coulters’ motion to intervene. The court denied their motion in an oral ruling from the bench. The court reduced its ruling to a written order on October 25, 1994.‘ In that order, the court stated that even though the Coulters, 4 Comprehensive finds of fact and ocnclusions of law accompanied the order. 12a as Class members, had a legally protectable interest in the action, they were not entitled to intervene as of right under Rule 24. See Fed.R.Civ.P. 24(a). They could protect their interest either by opting out of the class and litigating separately, or by remaining in the case (where, in the court's view, they were being adequately represented by the plaintiffs’ attorneys) and, if they thought the proposed settlement was unfair, by objecting to it. Turning to the Coulters’ alternative request that they be granted permissive intervention under Rule 24(b), the court observed that the procedures for objecting to the settlement or opting out of the class already offered the Coulters all the relief they were seeking for themselves and the Pennsylvania members of the settlement class. ° The Coulters appealed the court's rulings in appeal No. 94-3328. The court approved the proposed settlement on the same day it issued a written order denying the Coulters intervention. After the district court announced from the bench at the July 18 hearing that it was denying the Coulters’ motion for leave to intervene, Behrend asked the court to exclude the Coulters from the settlement class even though the June 13 deadline for opting out had passed.’ Other parties who let the deadline pass sought the 5 At the same time, the court stated that the Coulters appeared to lack standing to represent the Pennsylvania members of the Horton class on any issue. The Pittsburgh court had not certified a class, had not declared them class members, and had not approved their attorney's representation of any class. € The court's approval of the settlement is not an issue in these appeals. 7 The Coulters repeated this request in a written application filed on September 21, 1994. 13a same relief. The district court denied these requests because (1) none of the movants had established excusable neglect under Federal Rule of Civil Procedure 6(b)(2) for failing to move for an extension of the deadline prior to the deadline date, (2) allowing the requested opt-outs would severely prejudice MetLife’s rights under the settlement agreement, and (3) the movants would suffer litle, if any, prejudice by remaining in the class, since MetLife would permit them to file late proofs of claim and to participate in the settlement and obtain full restitution. The Coulters and the other late movants appeal this ruling in appeal No. 94-3468. On October 4, 1994, the Coulters, again through Behrend, filed a “Petition for Injunctive Relief Pursuant to F.R.C.P. 23(d) for Restraint of Improper Contacts in Violation of Local Rule 4.04, and for Sanctions.” The petition alleged that two MetLife sales representatives had engaged in improper communications with certain potential class members and that MetLife and/or its counsel were permitting the company to sabotage the class notice. The Coulters asked the court for permission to conduct discovery, to re- quire the issuance of a new class notice, to appoint their attomey, Behrend, as co-counsel for the class, and to award attorney's fees. Both MetLife and the Horton plaintiffs opposed the motion. Noting the absence of any evidentiary support for the Coulters’ petition, the district court concluded that the petition “appears to have been filed for the sole purpose of causing delay, derailing the proposed class action settlement, and generating legal fees for the Coulters’ attomey.” The court found the petition “unworthy of additional consideration, and because the Coulters and their attorney have consumed already an enormous amount of the parties’ and the Court's resources,” their request for relief was l4a denied.’ The Coulters appeal this ruling in No. 94-3470. Meanwhile, on September 21, 1994, Edward Beliunas and others ("Beliunas”), who were also represented by Behrend, moved the court to declare that they were not members of the settlement class. The motion was based essentially on counsel's assertion that Beliunas had not received notice of the lawsuit. At the same time, however, the motion seemed to question whether Beliunas had purchased the sort of MetLife product that was involved in Horton and thus whether Beliunas should have been notified at all. Because the question of whether a policy holder is a class member is a fact-specific inquiry determined on a case-by-case basis, the district court denied Beliunas’ motion without prejudice and appointed a special master. The court directed that any of the Beliunas movants who wished to obtain a determination as to whether he or she was a member of the settlement class should petition the special master for such determination. The court set November 22, 1994 as the deadline for filing such petitions. In appointing a special master for this purpose, the court noted that the settlement agreement contemplated the use of a special master to resolve the disputed claims of individual class members. None of the Beliunas movants accepted the court's invitation to petition the special master, however. Instead, all appealed, in appeal No. 94-3469. ¥ In rejecting the Coulters’ petition, the court, sua sponte, admonish[ed] the Coulters and their attorney . . . [to] remain mindful of the provisions of [Federal Rule of Civil Procedure] 11. Rule 11 precludes the filing of superfluous motions for the purposes of wasting valuable resources, perpetuating undue delay, and serving illegitimate self-interests. If applied to the papers filed by the Coulters and their attorney, Rule 11 might well trigger relief markedly different in both effect and object from that which they proposed or contemplated. 15a Il. These appeals raise several issues. We address only four of them, because they are dispositive. These issues, and our resolution thereof, are as follows. (1) Whether, in No. 94-3328, the district court (a) erred in denying the Coulters’ motion for leave to intervene in the action as a matter of right for the purpose of representing their interests and those of the Pennsylvania members of the settlement class, or (b) abused its discretion in denying the Coulters permissive intervention. [1] Though a denial of a motion to intervene is generally not considered an appealable final order, we have provisional juris- diction to review such an order under the Eleventh Circuit's “anomalous mule.“ EEOC v. Easter Airlines, Inc., 736 F.2d 635,637 (11th Cir.1984). If we conclude the district court's order was properly granted, our jurisdiction evaporates because the ruling is not a final order. If we find the district court erred, however, we retain jurisdiction and reverse the ruling. Id. [2] We find no error or abuse of discretion in the ruling. At the time the district court ruled, neither the Pittsburgh court pre- siding over the Coulters’ suit against MetLife, or any other court, had appointed the Coulters as the representatives of any class of purchasers of MetLife products. Moreover, no court had appointed Behrend to represent anyone with a claim against MetLife. We therefore cannot conclude that the district court's denial of intervention was erroneous. [3] (2) Whether, in No. 94-3468, the district court abused its discretion in denying the requests of the Coulters and others to opt out of the settlement class after the June 13, 1994, deadline had expired. Because the Coulters made a tactical decision not to opt out in time, and the other movants failed to meet the “Excusable 16a neglect” standard of Rule 6(b)(2), we see no reason for permitting an opt-out after the expiration of the deadline. Accordingly, we find no abuse of discretion by the district court. (3) Whether, in No. 94-3469, the district court's order (a) denying without prejudice Beliunas’ motion that the court declare that Beliunas was not a member of the settlement class and (b) referring that class-status issue to a special master, is an appealable order and, if so, whether the court's action constituted an abuse of discretion. [4,5] An order referring a matter to a special master is not a final order appealable under 28 U.S.C. § 1291 because it does not terminate the appellant's claim. See Deckert v. Independence Shares Corp., 311 U.S. 282, 290-91 & n. 4, 61 S.Ct. 229, 234 & n. 4, 85 L.Ed. 189 (1940) (order referring issue to master is 17a interlocutory and not appealable); T i 944 F.2d 804, 806 n. 1 (1Ith Cir.1991) (noting that court had found order of reference to special master non-final). We hold, therefore, that the portion of the challenged order providing for the resolution of class-status issues to a special master is not appealable; we therefore do not review it. [6,7] A dismissal without prejudice may be treated as an appealable final order. See ith, 707 F.2d 1325, 1326-27 n. 1 (11th Cir.1983). We do not believe, however, that we have a final order before us. The district court denied a motion without prejudice; it did not dismiss a complaint. In short, it was an interlocutory order. Moreover, the court anticipated further proceedings with respect to the issues raised, and provided a means for Belunias and others to have their class Status reviewed. [8] Assuming for the sake of argument that the disposition is appealable, we conclude that the court's action was entirely reasonable, especially when coupled with the reference to the special master. The court simply drew on its inherent power to fashion an efficient and economic solution to the problem the movants presented. Clearly, there was no abuse of discretion.” [9] (4) Whether, in No. 94-3470, the district court abused its discretion in denying the Coulters’ motion for injunctive relief, remedial measures, and sanctions based on MetLife’s allegedly improper communications with potential class members. We affirm the district court on this issue because the Coulters lacked standing to seek the requested relief. They themselves were not affected by the alleged misconduct, and they could not speak for anyone else. Even if we were to assume that they had standing, the district court did not abuse its discretion in 9 We note in passing that none of the movants objected to the reference to the special master or requested the court to fashion an alternative method for addressing their concerns. 18a denying the requested relief because the Coulters failed to demonstrate that the alleged misconduct occurred. III. [10] These appeals not only lack merit, they are frivolous. We therefore exercise our discretion to award the appellees double costs and reasonable attorney's fees. Those fees shall be determined with respect to each appellant and appellee by the district court following the receipt of our mandate. See Fed.R.App.P. 38; Pelletier v. Zweifel, 921 F.2d 1465, 1523 (11th Cir.), cert. denied, 502 U.S. 855, 112 S.Ct. 167, 116 L.Ed.2d 131 (1991). SO ORDERED. UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT Nos, 94- 4-3468, 94-3469, 94-34 SHERRY HORTON, et al., Plaintiffs, v. METROPOLITAN LIFE INSURANCE COMPANY, Defendant-A ppellee, Ronald and Anissa Coulter, et al., Appellants. Consolidated Appeals from final Order entered October 25, 1994, in the District Court for the Middle District of Florida Civil Action No. 93-1849-CIV-T-23A SECOND PETITION FOR REHEARING Kenneth W. Behrend BEHREND AND ERNSBERGER 2400 Grant Building Pittsburgh, PA 15219 (412) 291-2515 Attomey for Petitioners August 1, 1996 20a TABLE OF CONTENT Faeee Ue CS oo er as Ces a Oe ii Second Petition For Rehearing I. There is a Public Policy to Defer to the States in Matters of Insurance Regulation..................... 1 II. The Individual States have a Strong Rationale to Regulate the Fraudulent Conduct of an Insurance Company Doing Business Within That State............. 3 III. The reading of Georgine v Amchem Products, Inc., 83 F.3d 610 (3rd cir. 1996) Requires that the settlement class, herein, be decertified or that the Horton, members of other than Florida residents be included only if they opt-in and, then, the law of the state of their residence governs the disposition of OE CU ois 5 ho ORES BAe ee EA ee be ee 5 IV. Questionable Federal Question Jurisdiction, Questionable Opt-Out Provision and Questionable Representation Should Require Judicial Caution and Forbearance from Declaring a Settlement Class or Approving ; an Amicable Appearing Settlement Agreement........... 9 V. The Case and Controversy Requirement of Article III of the Constitution of the United States Was Not met a COE GR a ass ks Bele 0c a a ee kee hs wk 10 VI. It is Required by the Due Process Clause of the 5th Amendment and the 14th Amendment of the Constitution of the United States that the Horton Class Contain an Opt-Out Provision That is Clear and Unequivocal both in | PE OCU TET PELE oe er ea Ee 12 Wie CE oa ks a ee ee eek ne eee 14 2la TABLE OF CITATIONS CASES PAGE Atascaderc State Hospital v. Scanlon, 473 U.S. 234 Wg: CERT ES tei Sesh nag te ek ee 2 BMW of North America v. Gore, 116 S.Ct. 1589 (1996) . . 3,4,5 Georgine v Amchem Products, Inc., 83 F.3d 610 I ON il ae 2,5, 6, 7, 10, 14 Gregory v. Ashcroft, Ill S.Ct. 2395, 501 U.S. 452 ST) ice ce oe vik Kee 2 New York Times Co. v. Sullivan 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964)...................... 4 Insurance Co. Hasli , 111 S.Ct. Pacific Mutual Life 1032, 499 U.S. I (S.Ct. 3 SARS an gisgen Spe aa 3 Pennhurst State School and Hospital v. Halderman, 465 ME ME Ce ce esas ie ee 2 Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 86 L.Ed.2d A Ee gi ee 2 San Diego Building Trades Council v. Garmon, 359 U.S. 236, 79 S.Ct. 773, 3 L.Ed.2d 775 1 oo» gar apaing beet aara reais 4 SECOND PETITION FOR REHEARING AND NOW comes the Petitioners, Ronald Coulter and Anissa Coulter and the other Appellants, by their attorneys, Kenneth W. Behrend and the law firm of Behrend and Emsberger, and bring this Petition because of the decision and the ratio decidendi of BMW_of North America v Gore, 116 S. Ct. 1589 (1996) (which was decided on May 20, 1996, twenty-one days after our case was decided) and the decision and the ratio decidendi of Georgine v Amchem Products, Inc., 83 F.3d 610 (3rd Cir. 1996) Georgine decided on June 28, 1996. These dates are after the date of decision of your Honorable Court which was on April 2, 1996 and after the denial for the Petition For Rehearing which was May 15, 1996. These two cases have significant persuasion and authority to which obeisance should be given. The persuasion and authority of these cases were overlooked as they were not decided in time for your consideration. Had they been given consideration, the results probably would have been different in this case. 23a I. THERE IS A PUBLIC POLICY TO DEFER TO THE STATES IN MATTERS OF INSURANCE REGULATION The Congress of the United States has passed the McCarran-Ferguson Act, 59 Stat. 34, which specifically prohibits the regulation of the business of insurance by the federal government, and has specifically legislated that the regulation of insurance lies specifically within the province of the individual States. The plain reading of the McCarran-Ferguson Act, clearly demonstrates that Congress wants the regulation of the business of insurance to take place in the States, by the States and not by the federal government, or the federal courts. It may be said that there is public policy opposed to federal regulation or interference in the business of insurance. Regulation is left exclusively to the states. The Supreme Court of the United States has directed caution and forbearance in general by a federal court, before overriding state law and state concerns. in viewing the scope of federal regulation versus state regulation, the Supreme Court of 24a the United States has found in Gregory v. Ashcroft, infra that: . “it is incumbent_upon the federal courts to be certain of Congress’ intent before finding that federal law overrides” this balance. Atascadero, supra, at 243. We explained recently: “If Congress intends to alter the usual constitutional balance between the States and the Federal Government,’ it must make its intention to do so ‘unmistakably clear in the language of the statute.’ Atascadero State Hospital _v, Scanlon, 473 U.S. 234, 242 (1985); see also Pennhurst State School and Hospital v. Halderman, 465 U.S. 89, 99 (1984)...... This plain statement rule is nothing more than an acknowledgement that the States retain substantial sovereign powers under our constitutional scheme, powers with which Congress does not readily interfere. Gregory v. Ashcroft, 111 S.Ct. 2395, 501 U.S. 452 at 452 (S.Ct. 1991). Congress has_ specifically restricted the federal government's, and the federal court's, power to regulate the business of insurance, via the McCarran-Ferguson Act. It is clear that the intention of Congress and public policy are that the federal government should not regulate the business of insurance. The Horton Court, through the class settlement, is regulating the business of insurance directly to ignoring the McCarran-Ferguson Act. The Horton Court is seeking to regulate all the States and 25a impose the insurance law of Florida on them. Il. THE INDIVIDUAL STATES HAVE A STRONG RATIONALE TO REGULATE THE FRAUDULENT CONDUCT OF AN INSURANCE COMPANY DOING BUSINESS WITHIN THAT STATE In Pacific Mutual Life Insurance Co. v. Haslip, 111 S.Ct. 1032, 499 U.S. 1 (S.Ct. 1991), the Supreme Court found that a State has a strong interest to protect its citizens from fraudulent conduct of an employee of an insurance company and the State can protect its citizens through regulation of insurance by an award of both compensatory and punitive damages. Alabama's common-law rule is that a corporation is liable for both compensatory and punitive damages for the fraud of its employee effected within the scope of his employment. We cannot say that this does not rationally advance the State’s interest in minimizing fraud. Alabama long has applied this rule in the insurance context, for it has determined that an insurer is more likely to prevent an agent's fraud if given sufficient financial incentive to do so. See British General Ins. Co. v. Simpson Sales Co., 265 Ala. 683, 688, 93 So. 2d 763, 768 (1957). 26a y ip, 499 U.S. 1, at 14; 111 S.Ct. 1032, 499 U.S. 1 (S.Ct. 1991). Principles of sovereignty and comity forbid a court from using the laws of an individual state to enact policies for the entire nation, or to impose an individual state’s policy choice on neighboring states. BMW _v. GORE, 116 S.Ct. 1589 (1996). The power of the courts to enforce the State’s right to regulate any business is limited to the States’ authority within the boundaries of that State. The Supreme Court has found in BMW yv. Gore, supra, that a State has the authority to regulate the commerce of business within the State, but that is where the States’ authority ends. The State cannot regulate the conduct of business beyond the States’ boundaries. The award by a court of compensatory and punitive damages pursuant to state law are a form of State regulation. We think it follows from these principles of state sovereignty that a State may not impose economic sanctions on violators of its laws with the intent of changing the tortfeasors lawful conduct in other States. ft.nt. 17..17 State power may be exercised as much by a jury's application of a state rule of law in a civil lawsuit as by a statute. See New York Times Co. v. Sullivan, 376 27a U.S. 254, 265, 84 S.Ct. 710, 718, 11 L.Ed.2d 686 (1964)("The test is not the form in which state power has been applied but, whatever the form, whether such power has in fact been exercised”); San Diego Building Trades Council v. Garmon, 359 U.S. 236, 247, 79 S.Ct. 773, 780, 3 L.Ed.2d 775 (1959)("regulation can be as effectively exerted through an award of damages as through some form of preventative relief”). BMW_v Gore, 116 S.Ct. 1589 (1996). Based on this finding the Court struck down a punitive damages award aimed at influencing BMW's nationwide policy. The Supreme Court stated: . by attempting to alter BMW’s nationwide policy, Alabama would be infringing on the policy choices of other States. To avoid such encroachment, the economic penalties that a State such as Alabama inflicts on those who transgress its laws, whether the penalties take the form of legislatively authorized fines or judicially imposed punitive damages, must be supported by the States’ interest in protecting its own consumers and its own economy. BMW_v. Gore, 116 S.Ct. 1589 . (1996). Concems of federalism and judicial restraint counsel that the federal courts should not legislate to the States what form the deterrence should take, i.e. the amount of damages, and should they be only compensatory and not punitive. The Court in Horton by refusing to review the case as if each individual State had a right 28a to regulate Metropolitan's conduct and by refusing to consider punitive damages, even though numerous states authorize them, essentially took from the States, the ability to regulate the fraudulent sale of insurance within their boundaries. lll. A READING OF GEORGINE V, AMCHEM PRODUCTS, INC, 83 F.3d 610 (3RD CIR. 1996), REQUIRES THAT THE SETTLEMENT CLASS BE DECERTIFIED, OR THAT THE CLASS MEMBERS OF HORTON, OTHER THAN FLORIDA RESIDENTS, BE INCLUDED ONLY IF THEY OPT-IN AND, THEN, THE LAW OF THE STATE OF THEIR RESIDENCE MUST GOVERN THE DISPOSITION OF THEIR CLAIM Georgine v Amchem Products, Inc., supra, is an asbestos injury case, involving between 250,000 and 2,000,000 individuals. A class action was certified by the District Court and the Court approved a settlement which would extinguish “future claims” of “exposure only” plaintiffs even though they had not accrued. The order of certification was vacated. 29a The decision of the United States Court of Appeals for the Third Circuit is in almost complete conflict with the opinion here. The facts of Georgine, supra, and our case are very close to being congruent. The Third Circuit Court recognized the efforts of an extremely able judge and creative lawyers in crafting a 106 page settlement document. The Court opined: “The resolution posed in this settlement is arguably a brilliant partial solution to the scourge of asbestos that has heretofore defied global management in any venue. ” Georgine, supra, page 617. However, an alarm was sounded by the Third Circuit Court when it noted: ... against the need for effective resolution of the asbestos crisis, we must balance the integrity of the judicial system. Senators have complained that the use of class actions to resolve mass toxic torts, particularly those involving future claims, improperly involves the judiciary in the crafting of legislative solutions to vexing social problems. These criticisms are not merely abstract; they are levied in terms of the fundamentals of the federal judicial polity; jurisdiction, justiciability, notice and the requirements of Federal Rule of Civil Procedure 23. (Emphasis added). 30a Georgine, supra, page 617. Based on this concern the Court went on to hold: .. Wwe will vacate the district courts’ order certifying the plaintiff class and remand with directions to decertify the class and vacate the injunction. We recognize that our decision undermines the partial solution to the asbestos litigation crisis. However, in doing so, we avoid a serious rend in the garment of the federal judiciary that would result from the Court, even with the noblest motives, exercising power that it lacks. We thus leave legislative solutions to legislative channels. Georgine, supra, page 618. As in Georgine v Amchem Products, Inc., 83 F.3d 610 (3rd Cir. 1996) we are faced with a case that forces “the judicial system to choose between forging a solution to a major ... problem on the one hand, and preserving its institutional values on the other.” Our case which is offering to extend itself from the Tampa Bay area of Florida across the continent through efforts of imaginative defense counsel, favorable injunction and a latentl y ambiguous class action settlement order, involves potentially millions of American families and life insurance policyholders who had faith that life insurance was safe from the manipulative greed and unscrupulous 3la sales practices of an unscrupulous life insurance company. By now it is sensible to assume that your Honorable Court has become aware that companies other than the Metropolitan Life Insurance Companies have admitted to sales scams on their policy holders, so enormous in scope that they shock even the most cynical. Because life insurance companies are so exclusively state creatures, no one has an understanding of how the companies can be brought before only one court. Because Metropolitan's agents perpetrated different scams against different groups in different states, the lumping of them together for dispositive class action adjudication, clashes with the fundamentals of the federal judicial polity: jurisdiction, justiciability, notice and the requirements of Federal Rule of Civil Procedure 23. Judge Merryday created and employed an innovative way to dispose of hundreds of thousands and maybe a million, whole life policyholder claims against Metropolitan Life Insurance Company. The class action settlement and the injunction issued against the policyholders, who had been cheated by the company and its sales agents, could be administered with an economy of 32a Judicial effort through the direction of the United States District Court for the Middle District of Florida, Tampa Division. With respect to our case, there are many policyholders all over the United States who do not know they have been taken by a Metropolitan Life Insurance Company scam, and may not know for many years that they have been cheated by Metropolitan. They may not learn of their being cheated until some year in the future when they will get a premium notice, increased, in some multiple amount. Some policyholders will only learn of the deception when they retire and are disappointed when their promised expectations are not met. Others will only realize their injury when some honest financial planner explains that the policy they have is inappropriate for the purposes they were advised to purchase it, or when a tax has to be paid which Metropolitan Life Insurance Company did not disclose at the time of purchase and, undoubtedly, other situations, such as how much money was lost by cashing in a policy to provide a commission for a Metropolitan Insurance Company agent. Some policyholders have been cheated by being offered a 33a document that defies adjectival description. However, some policyholders were informed that they could have their money they paid in premiums returned to them, if they could verify in writing that as part of the scam worked on them, they did not know that they were purchasing insurance. Many of these whole life policyholders had taken insurance physical examinations arranged for by Metropolitan Life Insurance Company and knew they were to receive life insurance. The size of the group of Metropolitan Life Insurance Company policyholders injured during the years of the Florida sales office nurses’ retirement scam can only be estimated, Metropolitan Life Insurance has not made a public disclosure. Between a minimum of two hundred thousand and a maximum of a million may have purchased insurance through deception. Most of the estimated policyholders were not even part of the nurses’ scam; they were part of other Metropolitan Life. Insurance Company scams. 34a IV. QUESTIONABLE FEDERAL QUESTION JURISDICTION, A QUESTIONABLE OPT-OUT PROVISION AND QUESTIONABLE REPRESENTATION, SHOULD REQUIRE _ JUDICIAL CAUTION AND FORBEARANCE FROM DECLARING A SETTLEMENT CLASS OR APPROVING AN AMICABLE APPEARING SETTLEMENT AGREEMENT Federal question jurisdiction in the Horton case was based on suspect grounds, that federal regulation of the business of insurance can be accomplished through the Racketeering Influenced Corrupt Organization Act (RICO), specifically that RICO applies to the business of insurance. On the face of the Horton complaint it was clear that RICO was used to obtain jurisdiction in contradiction to the mandate of Congress in the McCarran- Ferguson Act. The Horton court should have used judicial restraint, because of the mandate of congress, and should not have exercisedany jurisdiction, because of the mandate of Congress. It was an unnecessary impingement on the individual States’ rights to protect their citizens, and the individual States’ legitimate interest 35a in punishment and deterrence. Instead of using judicial restraint, consideration for State sovereignty and comity, the Horton court through the settlement order, regulated the business of insurance, not only in Florida, but for every state in the country. The Horton court found that settlement proposal in the Horton action, which only provided for compensatory damages, to be “fair” for every State, and it made no inquiry into the laws of each individual state, despite the fact that the settlement would have a preclusive effect on claims filed in these States. Moreover, no punitive damages were considered, regardless of every States’ individual interest in the regulation of insurance and the deterrence of fraud. This second request for a rehearing in this case is occasioned by the fact that, after the class certification by the district court, after the denial of appeals by this Honorable Court, and. after a request for rehearing was denied by this Honorable Court, there has been a growing consensus of judicial opinion that class certification must be carried out as if the case were going to be litigated, and without taking the settlement into account. See 36a Georgine v. Amchem, id. at 617, 618. As the Third Circuit noted in Georgine: We now hold that because the 23(b)(3) requirements protect the same interests in fairness and efficiency as the 23(a) requirements, and because “[t]here is no language in [Rule 23] that can be read to authorize separate, liberalized criteria for settlement classes,“ id. at 799, the 23(b)(3) criteria must also be applied as if the case were to be litigated. While the better policy may be to alter the class certification inquiry to take settlement into account, the current Rule 23 does not permit such an exception. V. THE CASE AND CONTROVERSY REQUIREMENT OF ARTICLE Il OF THE CONSTITUTION OF THE UNITED STATES WAS NOT MET IN OUR CASE The suit on which the class settlement rests is a feigned suit -- and thus is not a justiciable case or controversy under Article [Il of the Constitution. To qualify, the plaintiffs and plaintiffs’ counsel, had to have the implausible intention of litigating the RICO claim that became the basis of Judge Merryday accepting jurisdiction. The RICO claim asserted was patently not sustainable. 37a The RICO claim was filed, merely to provide a forum to seek approval of a result that plaintiffs and defendants jointly pursued. This contention is supported by numerous facts. First: no opposition pleading was filed to the RICO claim, which on its face should have been dismissed. Second: no deposition discovery was taken. Third: the length of time the case existed from filing to settlement; the complaint was filed on November 1, 1993, the Second Amended Complaint was on February 14, 1994, (no answer or motion to dismiss was filed), and only two months after amending the complaint, on April 12, 1994, the joint motion to settle was filed. Fourth: the joint motion requesting certification of the proposed settlement class, preliminarily approving proposed settlement, approving notice and setting fairness hearing, needs to be closely reviewed. The attorney's fees and settlement amount were negotiated simultaneously, Counsel for plaintiffs was to be paid $2,750,000 to be paid separately from any settlement fund while the class members could keep their policy, or receive a refund of a few hundred to a few thousand dollars each, said refund was already agreed to by Metropolitan via numerous .- 38a agreements with various insurance commissions. Fifth: despite the complexity and enormity of the affect of the settlement upon hundreds of thousand of policyholders due process rights, the fairness hearing was accomplished in one day. Sixth: The standard for class determination and settlement unabashedly was not a litigation standard, but something less stringent, less demanding and more relaxed than a litigation standard. VL. IT IS REQUIRED BY THE DUE PROCESS CLAUSE OF THE STH AMENDMENT AND THE 14TH AMENDMENT OF THE CONSTITUTION OF THE UNITED STATES THAT THE HORTON CLASS CONTAIN AN OPT-OUT PROVISION, THAT IS CLEAR AND UNEQUIVOCAL BOTH IN LANGUAGE AND OPERATION. Due process calls for a Constitutional right to opt-out of the class. It is Appellants’ assertion that there was not an opt-out provision created for the Horton class settlement that applied to the Appellants. A class action settlement, to comply with the due process clauses of the Fifth and Fourteenth Amendments of the United States Constitution, must have an opt-out provision. 39a Phillips Petroleum Co, v. Shutts, 472 U.S. 797, 86 L.Ed.2d 688, 105 S.Ct. 2965. Appellants assert that while there was an opt-out provision drafted for the Horton settlement and the creators of the provision, we believe, though that they had molded an opt-out provision, they had not succeeded, it was Constitutionally defective. As an example, Mr. and Mrs. Coulter first learned that they must act as class members of the Horton class when were told by the District Court, after the Faimess Hearing, and confirmed by the Eleventh Circuit Court of Appeals, that they were in the Horton class. If the Coulters had received a class notice, (which they deny receiving), they would have read, in the class notice and proof of claim form, that if they understood that they were purchasing life insurance, they did not qualify as class participants for any money distribution. The opt-out provision had nothing for the Coulters, once they were declared part of the Horton class. The Coulters understood they were buying life insurance and the Court included 40a them as Horton class members, even though they could not participate in any proceeds of the class settlement. For the opt-out provision to be worthy of the name, there had to be additional time provided; if for some reason, probably not anticipated by the creators of the provision, it would cause Metropolitan policyholders to be declared part of the class, when they were not entitled to receive any proceeds from the class distribution. The class notice put them into the Horton class settlement, and the qualifications for receiving any distribution (i.e. no knowledge that they were purchasing insurance) prevented sharing in the class distribution. For the opt-out provision to be anything but unconstitutional there had to be some provision for people, such as the Coulters, to opt-out after a determination was made that they were part of a class and that they could recover nothing from the class settlement. CONCLUSION It is respectfully submitted, if the body of judicial opinion exemplified by Georgine v. Amchem Products Inc., supra, were to 4la be applied to this case, this Honorable Court would remand the case to the district court with instructions to carry out the process of class certification as if the case were going to be litigated and to rigorously apply all the stringent requirements of FRCP Rule 23 relating to class certification. In the alternative, this Honorable Court should declare the Coulters and all who could not verify that they did not know that they were buying insurance from Metropolitan Life Insurance Company, not to be Hoyton class members. Respectfully submitted, BEHREND AND ERNSBERGER Is! Kenneth W. Behrend, Attorney for Ronald and Anissa Coulter 42a CERTIFICATE OF SERVICE I, Kenneth W. Behrend, hereby certify that a true and correct copy of the within Second Petition for Rehearing was mailed to the Court this Ist day of August, 1996, and to the following by United States mail, first class postage prepaid, addressed as follows: W. Christian Hoyer, Esquire James, Hoyer, Newcomer & Skye, P.A. Suite 750 4830 West Kennedy Boulevard Tampa, FL 33609 Ron Parry, Esquire Amzen, Parry & Wentz 600 Greenup Street Post Office Box 472 Covington, Kentucky 41012-0472 Dinita L. James, Esquire Trenam, Simmons, Kemker, Scharf Barkin, Frye & O'Neill P.O. Box 1102 Tampa, FL 33601 Loma Schofield, Esquire Debovoise & Plimpton — 875 Third Avenue New York, NY 10022 43a Patrice Smiley Andrews Metropolitan Life Insurance Company One Madison Avenue New York, NY 10010 BEHREND AND ERNSBERGER Is/ Kenneth W. Behrend 44a IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT Nos. 94-3328; 94-3468 94-3469; 94-3470 PETER J. GRILLI, Special Master, JULIO GONZALEZ-ROEL, et al.; RONALD COULTER; ANISSA COULTER, Appellants, SHERRY HORTON, et al., Plaintiffs-A ppellees, versus METROPOLITAN LIFE INSURANCE COMPANY, INC.; RICK URSO, Defendants, W. R. CUNNINGHAM, et al., Claimants. Ae ee oe ened Sens Disneiee Come toe Se Middle District of Florida 4Sa ORDER: Appellants’ Motion for Leave to File a Second Petition for Rehearing is Denied. ls/ CHIEF JUDGE Nos, 94-3328, 94-3468, 94 3469, 94-3470 SHERRY HORTON, et al., Plaintiffs, v. METROPOLITAN LIFE INSURANCE COMPANY Defendant-A ppellee Ronald and Anissa Coulter, et al., Appellants. Consolidated Appeals from final order entered October 25, 1994, in the District Court for the Middle District of Florida, Civil Action No. 93-1849-CIV-T-23A PETITION FOR REHEARING Kenneth W. Behrend Behrend and Emsberger 2400 Grant Building Pittsburgh, PA 15219 (412) 391-2515 Attorney for Petitioners April 22, 1996 47a I. THE IMPOSITION OF SANCTIONS PURSUANT TO F.R.A.P. 38 WITHOUT PRIOR NOTICE WAS A VIOLATION OF THE DUE PROCESS CLAUSE OF THE STH AMENDMENT OF THE UNITED STATES CONSTITUTION ............. l A. LIMITATIONS ON IMPOSITION OF F.R.A.P. 38 SALTS AGATA RSC POSNER oe ebb bea eee 1 B. INTERVENTION WAS REASONABLE AND ot RGA ee 8S Pi) ee, a 2 Il. FACTUAL AND LEGAL ERRORS................. 5 A. THE ENTRY OF THE STAY ORDER BY THE U.S. DISTRICT COURT IN PENNSYLVANIA WAS THE IMPETUS FOR THE COULTERS’ INTERVENTION PEON So SU Eh ER er Ua CEN CTE Coe 8 5 B. COULTERS SOUGHT TO PROTECT THEIR RIGHTS IN THEIR CASE IN PENNSYLVANIA, NOT TO TAKE CLASS MEMBERS FROM THE HORTON CASE .. .6 C. THIS COURT IN KIRKPATRICK HAS FOUND THAT THE MAINTENANCE OF A NATIONWIDE CLASS CAN AFFECT THE STATE CONSTITUTIONAL RIGHTS OF THE CLAIMANTS, COULTERS ATTEMPTED TO HAVE A SUBCLASS ESTABLISHED, OR SEVERANCE OF THOSE PUTATIVE MEMBERS TO PROTECT THEIR CONSTITUTIONAL RIGHTS . 6 48a D. THERE WERE TWO DIFFERENT FRAUDULENT SALES SCHEMES, ONE ORIGINATED IN TAMPA AND WAS NATIONAL, ONE ORIGINATED IN PITTSBURGH AND WAS IN PENNSYLVANIA ....7 E. THE DATE TO OPT-OUT WAS JUNE 13, 1994 THE DATE TO FILE THE CLAIM FORM WAS SEVENTEEN DAYS LATER: JUNE 30, 1994 ............00. 8 F. COULTERS GAVE NOTICE OF THEIR INTENTION TO PROCEED ON THEIR OWN (OPT-OUT) BY VIRTUE OF THEIR OWN LAWSUIT, AS WELL AS THEY FILED A MOTION TO INTERVENE IN MAY, BUT WERE NOT HEARD UNTIL JULY, AFTER THE OPT-OUT DEADLINE EXPIRED .............. 8 G. EVEN THOUGH THE COULTERS PRODUCED LETTERS FROM METROPOLITAN AGENTS AND HAD INSUREDS PREPARED TO TESTIFY WHO WERE CONTACTED, THERE WAS ND EVIDENTIARY HEARING GRANTED ON THE INJUNCTION ISSUE 9 H. THE ORDER APPOINTING THE SPECIAL MASTER LIMITED THE AUTHORITY OF THE MASTER BY RULING ON THE CLAIMANTS .- AFFIDAVITS SETTING FORTH THAT THEY WERE INSUFFICIENT TO RECOVER, THUS THE COURT HAD ALREADY DENIED THE CLAIMS AND THERE WAS NO REASON TO UTILIZE THE MASTER SINCE A FINAL ORDER AS TO THERE CLAIMS HAD BEEN MADE