Opposition Brief — Coulter v. Metropolitan Life Insurance

me Court, U.S.

\ 7

b

No. 96-423 | NOV 18 1996

CLERK

IN THE SUPREME COURT OF THE UNieep-onres—

October Term, 1996

RONALD COULTER AND ANNISA COULTER, et al.,

Appellants-Petitioners,

SHERRY HORTON, et al.,

Appellees-Respondents,

v.

METROPOLITAN LIFE INSURANCE COMPANY,

Appellee-Respondent.

BRIEF IN OPPOSITION TO PETITION

FOR WRIT OF CERTIORARI

RON PARRY W. CHRISTIAN HOYER

Arnzen, Parry & Wentz, P.S.C. Counsel of Record

600 Greenup Street JAMES, HOYER & NEWCOMER

P.O. Box 472 4830 W. Kennedy Blvd., Suite 750

Covington, Kentucky 41012 Tampa, Florida 33609

(606) 431-6100 (813) 286-4100

Counsel for Appellees-Respondents,

Sherry Horton, et al.

LIST OF PARTIES TO THE PROCEEDING

It is unclear from the Petition for Writ of Certiorari if the

judgment under review is that of the Findings of Fact and

Conclusions of Law Regarding Motions to Intervene and to Dismiss

Notices of Intention to Appear and Object of the United States

District Court for the Middle District of Florida and/or the Opinion

of the Eleventh Circuit Court of Appeals, Grilli v. Metropolitan Life

Ins. Co., Inc., 78 F.3d 1533 (11th Cir. 1996).

Sherry Horton, Joyce Armbruster and Deborah K. Spamer,

individually and on behalf of the settlement class certified by the

district court, were the Plaintiffs in the district court and Appellees

in the Eleventh Circuit.

Metropolitan Life Insurance Company, Inc. was the

Defendant in the district court and Appellee in the Eleventh Circuit.

The Petitioners herein, Ronald Coulter, Anissa Coulter,

Douglas Connor, Roena Connor, 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, Edward Beliunas, Paulette

Beliunas, 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 Maria McCue, Mark A.

Ondrusek, Ernestine Peterson, Rori K. Rasel, Clarence Ridgeway,

Emily N. Riehl, Joan C. Valenta, Robert Dale Wiles and Catherine

Wiles, were not "parties" to the prior proceedings, as argued herein.

They were putative intervenors, whose denial of intervention was

upheld by the Eleventh Circuit Court of Appeals.

oti.

TABLE OF CONTENTS

TABLE OF CITED AUTHORITIES .......----+-+++-> iv

a ee ee eee ee 1

STATEMENT OF CASE .... 1.00. cece creer: 2

SUMMARY OF ARGUMENT ........-- 550s eee 8

po 5 ORE SRE ee aMaror a aaa: Sk eer ana ee 10

I. PETITIONERS LACK STANDING UNDER

28 U.S.C. § 1254(1) TO SEEK REVIEW OF

THE QUESTION PRESENTED IN THE

PETITION FOR WRIT OF CERTIORARI

AND THEREFORE THE PETITION

SHOULD BE DENIED ..........-+-::- 10

Il. PETITIONERS’ QUESTION PRESENTED

IS OUTSIDE THE SCOPE OF MATTERS

RAISED BY PETITIONERS IN THE

COURT BELOW AND THEREFORE THE

PETITION SHOULD BE DENIED. ....... 13

ll. THE PETITION FOR WRIT OF

CERTIORARI SHOULD BE DENIED

BECAUSE IT FAILS TO ARTICULATE

SUFFICIENT REASON FOR THIS COURT

TO EXERCISE DISCRETIONARY

DPE, Fh ae eee CT 8 ae 8 16

PE EE = aa cpa Se 0 8s See G8 ew hee we 8 8 8 28

-ili-

TABLE OF CITED AUTHORITIES

CASES

Adickes v. Kress & Co., 398 U.S. 144, 147 n.2 (1970) .... 15

Angela R. by Hesselbein v. Clinton, 999 F.2d 320,

Sh CR Ce TOD oc vk. CRA, SR ee 25

BMW _ of North America v. Gore, 116 S. Ct.

SSNS CFO oh eo i oe as Cpe es 27

Bowling v. Pfizer, Inc., 143 F.R.D. 141 (S.D. Ohio 1992) . . 21

Delta Airlines v. August, 450 U.S. 346, 362 (1981) ...... 15

F.T.C. v. National Casualty Co., 357 U.S. 560 (1958) .... 23

Georgine v. Amchem Prod., Inc., 83 F.3d 610

(3d Cir. 1996), cert. granted 1996 WL 480936

(ioe: 3. SI er rs as eee 22

Gregory v. Ashcraft, 501 U.S. 452 (1991) ............ 28

Grilli v. Metropolitan Life Ins. Co., Inc., 78 F.3d

1533, 1535-37 (11th Cir. 1996) . 2.05 osu. A iy

I A.H. Robi : 1] v. Ae &

Sur. Co.), 85 B.R. 373 (E.D. Va. 1988), aff'd, 880

F.2d 709 (4th Cir.), cert. denied, 493 U.S. 959

CES ak ew bre ae a ee 2 en a ee ok es 21

Izumi Seimitsu_ v. U.S. Philips Corp., 510 U.S. 27, 114

soci, Se, IT MR ea er a ie 11

Maywalt v. Parker & Parsley Petroleum Co., 864 F. Supp.

1422 (S.D.N.Y. 1994), aff'd, 67 F.3d 1072 (2d Cir. 1995) . . 21

-jV-

tae iP hl ent natdns Naa. de

Deliv i _v. &

Co, 50 F.3d 1486, 1489 (9th Cir. 1995), cert.

denied Prometheus 1 nding Corp. v. Merchants ome

Delivery Services, Inc., 116 S.Ct. 418 (1995) ..-.----

Miller v. Republic Nat’l Life Ins. Co., 559 F.2d 426

(REN OTE) ech erence FERRET EET

Mitchell v. H.B. Zachry Co., 362 U.S. 310 (1960) .....-

Nelson vy. Greater Gadsden Housing Auth., 802 F.2d

405, 408 (11th Cir. Se eg 5 ee ee

Pacific Mutual Life Ins. Co. Vv. Haslip, 499 U.S. 1, 111

Os SE TUN a i re ee ere ee

Rice v. Sioux City Memorial Park Cemetery, Inc., 349 U.S.

RO a on sia tec ephemera

Seminole Tribe of Florida v. Florida, 116 S. Ct. 1114

Sl Se EO 5 ch ge ce PORES TS AEE

Ticor Title Ins. Co. v. Brown, 511 U.S. 117, 114 S. Ct.

S905 TARE IU 5 es ee Fe ee ES Rees ES

United States v. Mendenhall, 446 U.S. 544, 551-52 n.5

TEER OR le A eB ee ae meat a

Youakim v. Miller, 425 U.S. 231, 234 (1976) ..------

ae +

STATUTES AND RULES

McCarran-Ferguson Act, 15 U.S.C. § 1012(b)............ 24

es, BO Wetales BRU KA ete edb eee her ee ea 24

OND Comet See ES. IO ois ke Haka Fee 10, 11

MISCELLANEOUS

Robert Stern & Eugene Gressman, et al., Supreme

Comrt Premios. § 6.26 (70h 60. BOOED. oak kk Bakke hese s 10

| IN THE SUPREME COURT OF THE UNITED STATES

October Term, 1996

———

RONALD COULTER AND ANNISA COULTER, et al.,

Appellants-Petitioners,

SHERRY HORTON, ¢t al.,

Appellees-Respondents,

v.

METROPOLITAN LIFE INSURANCE COMPANY,

Appellee-Respondent.

ee eas *

BRIEF IN OPPOSITION TO PETITION

FOR WRIT OF CERTIORARI

JURISDICTION

Petitioners maintain that the jurisdiction of this Court is

invoked under 28 U.S.C. § 12541). Respondents herein dispute

this jurisdiction, as set forth in the Argument section below.

a

STATEMENT OF CASE

The general procedural background of this case is set forth

in the Eleventh Circuit’s decision, Grilli v. Metropolitan Life Ins.

Co., Inc., 78 F.3d 1533, 1535-37 (11th Cir. 1996). This case

originated from a class action complaint filed by Respondents,

Sherry Horton, Deborah Spamer and Joyce Armbruster (hereinafter

Horton Respondents), on November 1, 1994. Their cause of action

alleged that Respondent Metropolitan Life Ins. Co., Inc. (MetLife),

by and through its agents, had engaged in deceptive sales practices

in that it sold whole life insurance policies based upon

representations that failed to disclose in whole or in part that the

true product being sole was a life insurance policy. Claims were

asserted, inter alia, under RICO and common law fraud.

Shortly after initiating the action and before a responsive

pleading was filed, MetLife expressed its desire to enter into

settlement negotiations with the Horton Respondents. Thereafter the

parties engaged in vigorous and at times acrimonious settlement

negotiations. Those negotiations culminated in a settlement

agreement, the terms of which were preliminarily approved by the

federal district court on April 22, 1994.

The terms of the settlement agreement, as preliminarily

approved by the court, provided for conditional approval of a class

for purposes of settlement only consisting of:

all persons who purchased a MetLife

whole life insurance policy as a

retirement and/or other savings plan

or vehicle, based in whole or in part

on written materials or other

solicitations that allegedly did not fully

disclose that these plans were life

insurance products, from (a) the Rick

Urso & Associates sales office (or its

predecessor office) between January 1,

1988 and October 31, 1993, or (b) any

other sales office of MetLife between

January 1, 1990 and October 31,

1993.

The contents of the notice and proof of claim form were negotiated

and ultimately agreed upon between counsel and presented to the

court. The parties discussed the best method in which to identify

potential class members based upon the circumstances of the case,

the enormous number of MetLife policyholders, the difficulty in

isolating those policyholders who may have been subjected to the

questioned sales practices and the Horton Respondents’ desire to

A

OO

individually communicate the terms of the settlement to as many

persons as possible. A step-by-step procedural formula to identify

persons to receive individual notice was agreed upon and approved

by the district court.

Thereafter, notice was sent to over 70,000 persons,

approximately 20,000 of whom returned the proof of claim form.

This was supplemented by publication notice in several national and

regional newspapers and specialty journals, as approved by the

district court.

A hearing to assess the fairness of the settlement was

scheduled with the Florida federal district court for July 18, 1994.

Prior to that hearing there began a series of filings precipitated by

clients represented by Attorney Behrend. These included a motion

filed by the Coulter Pehiones to intervene as named parties in the

district court action for the unique purpose of severing not only

themselves but all Pennsylvania residents, although they had no

authority to speak for others. (App. 101a) The Coulter Petitioners

also filed a Notice of Intention to appear and Object to the

Settlement and those Objections were overruled by the district court

-4-

judge. (App. 83a) There were no significant objections to the

settlement by persons other than those clients of Attorney Behrend.

In their subsequent appeal to the Eleventh Circuit, the Coulter

Petitioners did not appeal the district court’s approval of the

settlement itself. Grilli, 78 F.3d at 1537 n.6.

Petitioners then also filed Petitions to enlarge the time for

exclusion or to declare that they were not class members. Each of

these filings had to be addressed by the parties by responsive

pleading.

The parties appeared for the settlement hearing and presented

evidence to the court of the fairness of the settlement. The court

also entertained the various motions advanced by Attorney Behrend

up to that point and heard the objections to the settlement advanced

by his clients.

Even subsequent to the fairness hearing and prior to the

district court’s entry of its order approving the settlement,

Petitioners represented by Attorney Behrend continued to advance

untenable positions to complicate and delay the settlement

proceedings, including the filing of a Petition for an Injunction and

5.

Remedial Measures based upon alleged improper communications

by MetLife agents with potential class members.

Ultimately in October 1994, the district court entered its

detailed Findings and Conclusions regarding the settlement and

pending motions. (App. 83a) The district court denied Petitioners’

Motion to Intervene. It also denied Petitioners’ Request to file late

exclusion forms to exclude them from the class action. It denied

Petitioners’ requested Petition for injunctive relief for improper

communications. Finally, as for Petitioners’ motion to declare they

were not members of the settlement class, the district court

appointed a special master and referred this request to the special

master for case-by-case, fact specific determinations.

Petitioners next filed four appeals with the Eleventh Circuit

Court of Appeals. Dichienian did not challenge the terms of the

class action settlement itself in those appeals. Rather, they

challenged the district court’s denial of their Motion to Intervene,

their Request to file late exclusions, their Petition for injunctive

relief, and their Motion to declare that they are not members of the

class.

This case proceeded through briefing and oral argument in

the circuit court. In its reported opinion of April 2, 1996, the

Eleventh Circuit not only upheld the district court’s rulings, but

found the appeals frivolous and ordered double costs and reasonable

attorney’s fees to appellees. Grilli, 78 F.3d at 1538-39.

Subsequent to the entry of the Eleventh Circuit’s ruling, the

Petitioners continued on with their court filings. They filed a first

Petition for Rehearing with the Eleventh Circuit, challenging the

court’s award of sanctions and raising what they perceived as

"factual and legal errors" with the Court’s Opinion. This Petition

attempted to reargue the merits of the appeals. The Eleventh Circuit

denied this petition for rehearing. Petitioners then filed a motion for

leave to file a Second Petition for Rehearing with the Eleventh

Circuit, with tendered dicot Petition. This Second Petition raised

federalism and constitutional arguments as (to the approval of the

class settlement, similar to those in the question presented herein,

but which were not previously raised in the circuit court. The

circuit court denied the Motion for Leave to File Second Petition for

Rehearing. (App. 75a)

ne

SUMMARY OF ARGUMENT

This Court should deny certiorari. Petitioners herein lack

standing to seek a writ of certiorari because they are not "parties"

able to seek discretionary review under 28 U.S.C. § 1254(1). The

Petitioners were denied intervention in the district court, this denial

was upheld by the circuit cout and, therefore, they are not named

parties to these proceedings.

In addition, Petitioners seek discretionary review of matters

beyond the scope of those properly raised and preserved for review.

They did not seek review of their denial of intervention and now

instead seek to raise constitutional challenges to the district court’s

approval of the underlying settlement in the case. Petitioners did

not challenge the settlement in their appeal to the Eleventh Circuit

and this was not the subject of the Eleventh Circuit’s opinion.

Subsequent to the entry of that opinion, Petitioners moved for leave

to file a Second Petition for Rehearing to raise these new challenges

to the settlement approval in the Eleventh Circuit. The Eleventh

Circuit denied the request, having already heard the merits of the

matters properly raised on appeal. Petitioners now seek to have this

-8-

Court consider those matters presented in the Second Petition for

Rehearing denied by the Eleventh Circuit. This request is beyond

the scope of matters properly preserved for appeal by Petitioners.

Finally, even a limited review of the contentions actually

raised by Petitioners as being worthy of discretionary review reveals

that review by this Court is not compelling. Contrary to Petitioners’

legal argument, a federal district court’s approval of a nationwide

class action settlement pursuant to Federal Rule of Civil Procedure

23 does not violate principles of federalism or run counter to the

McCarran-Ferguson Act. That Act is directed to conflicts between

state law and Acts of Congress, not application of the Federal Rules

of Procedure. No important issue of federal law is implicated.

The petition herein is simply a belated and legally erroneous

attempt by the Petitioners to have this Court review the factual and

legal findings of the district court when it ruled upon class

settlement approval in order to allow Petitioners to continue on with

their individual claims despite their failure to opt out of the class.

This question was not properly preserved for appeal, nor are such

inquiries intended to be addressed with the limited resources of this

-9-

Court. This Petition is pursued for the individual benefits of the

Petitioners, who did not timely opt out of the settlement in order to

pursue individual claims.

ARGUMENT

I. PETITIONERS LACK STANDING UNDER 28 U.S.C. §

1254(1) TO SEEK REVIEW OF THE QUESTION

PRESENTED IN THE PETITION FOR WRIT OF

CERTIORARI AND THEREFORE THE PETITION

SHOULD BE DENIED.

Section 1254(1) provides that Supreme Court review of cases

in the Court of Appeals can be sought upon Petition for Writ of

Certiorari of any party to the proceeding. 28 U.S.C. § 1254(1).

Both the district court and the Eleventh Circuit Court of Appeals

denied Petitioners’ Motion to Intervene as named parties to this

action. One who is refused intervention as a party may seek review

of that denial. See Robert Stern & Eugene Gressman, et al.,

Supreme Court Practice, § 6.16 (7th ed. 1993) (enumerating cases).

Supreme Court Rule 14.1(a) provides that

[t]he statement of any question

presented will be deemed to comprise

every subsidiary question fairly

included therein. Only the questions

set out in the petition, or fairly

-10-

included therein, will be considered by

the Court.

Sup. Ct. R. 14.1(a). In their Petition for Writ of Certiorari,

Petitioners failed to requested review of the lower court’s denial of

their intervention motion.

As this Court has previously held, review of a denial of

intervention is not subsidiary to a stated question, but rather is a

threshold inquiry. Izumi Seimitsu v. U.S. Philips Corp., 510 U.S.

27, 114 S. Ct. 425, 427 (1993). Nor can a challenge to the federal

court’s denial of Petitioners’ Motion to Intervene be said to be

"fairly included" in the single question set forth in the Petition.

As this court noted in Izumi, determining the propriety of the

denial of a motion to intervene is both analytically and factually

distinct from a question presented that is directed to the merits of

the case. Id. Similarly, such as the case herein. Petitioners present

to this court a question completely unrelated both factually and

legally to the question of whether Petitioners should have been

permitted to intervene as named parties in the underlying

proceeding. In addition, while in their Petition for Writ of

Certiorari Petitioners discuss the lower court proceedings on their —

-11-

Motion to intervene, this alone is insufficient to bring this threshold

question within the question presented for review. Id. at 427 n.5.

Nor is this the exceptional case for which Rule 14.1(a)

should be disregarded. Respondents herein submit that the question

presented by Petitioners does not fall within the realm of those

matters for which this court has disregarded Rule 14.1(a). See id.

at 428 (discussing those circumstances where this court has granted

exception to the requirements of Rule 14.1(a)). This court expressly

admonished those intervenors petitioning the Court of the need to

properly comply with Rule 14.1(a) and thereby avoid requiring the

Court to consider disregarding the Rule and reversing the denial of

intervention in order to reach the actual question presented. Id. at

428.

Accordingly, Respondents respectfully submit that Petitioners

herein are not named parties to these proceedings within the

parameters of Rule 14.1(a) and have failed to seek review from this

Court of the denial of their motion to intervene -- the sole issue for

which they have standing.

-]2-

fl. PETITIONERS’ QUESTION PRESENTED IS OUTSIDE

THE SCOPE OF MATTERS RAISED BY PETITIONERS

IN THE COURT BELOW AND THEREFORE THE

PETITION SHOULD BE DENIED.

In the "Opinions Below" section of the Petition, it indicates

that the opinions on review are the reported decision of the circuit

court and the opinion of the district court. (App. 83a) The

referenced district court opinion is actually its ruling on the

Petitioners’ Motion to Intervene. However, in this Court Petitioners

now seek to challenge in their question presented and Petition the

district court’s approval of the class action settlement. While

Petitioners argue the merits of this approval in their Petition, the

Findings approving the settlement are not included in the appendix

nor are they within the scope of matters properly raised for

discretionary review.

There were four distinct appeals presented to the Eleventh

Circuit. They were requests for review of the district court’s

decisions concerning (1) Petitioners’ motion to intervene, (2)

Petitioners’ motion for late exclusion, (3) Petitioners’ request for

injunctive relief for restraint of improper contacts and for sanctions,

and (4) Petitioners’ motion to declare that they were not members

-13-

of the settlement class. The Eleventh Circuit affirmed the district

court’s denial of intervention, late exclusion, and injunctive relief,

and the district court’s referral of the motion for declaration of

nonclass status to a special master. Grilli v. Metropolitan Life Ins.

Co., Inc., 78 F.3d at 1536-37.

Petitioners sought to raise in the Eleventh Circuit, by way of

Second Petition for Rehearing, issues of federalism and

constitutional concerns over the district court’s approval of the class

action settlement. These matters were not raised as part of the

Original appeals that were timely filed and considered by the

Eleventh Circuit. The Motion for Leave to File a Second Petition

for Rehearing was denied. (App. 75a) The Eleventh Circuit did not

consider nor rule upon the legal issues raised by Petitioners for the

first time in their Second Petition for Rehearing.

Although the request to file the Second Petition for

Rehearing was rejected, these new challenges to the district court’s

approval of the settlement were then raised by Petitioners in their

Petition submitted to this Court. They seek in their question

presented to resurrect those issues incorrectly presented to the

-14-

Eleventh Circuit for review and rejected by the Eleventh Circuit.

These matters are outside the scope of those matters reviewed in the

court below.

The question presented by Petitioners was not properly raised

in the lower court and therefore this court should not now consider

it. Delta Airlines v. August, 450 U.S. 346, 362 (1981). The

matters involved in consideration of the question presented herein

were not involved in the lower court and this court does not

normally determine questions not so raised. Youakim v. Miller,

425 U.S. 231, 234 (1976); United States v. Mendenhall, 446 U.S.

544, 551-52 n.5 (1980); and Adickes v. Kress & Co., 398 U:S.

144, 147 n.2 (1970).

Accordingly, because the matters now sought to be raised by

Petitioners before this court were not properly raised in the court

below and preserved for review, this court should not now entertain

consideration of the matters in the question presented.

a

Il. THE PETITION FOR WRIT OF CERTIORARI SHOULD

BE DENIED BECAUSE IT FAILS TO ARTICULATE

SUFFICIENT REASON FOR THIS COURT TO

EXERCISE DISCRETIONARY REVIEW.

Arguing that they are parties to the Renu Circuit

decision, Petitioners herein seek review under 28 U.S.C. § 1254(1).

As set forth above, the question presented in the Petition was not

actually part of the Eleventh Circuit proceedings nor do the

Petitioners have standing to raise such a question. If this court

nevertheless determines that these circumstances do not warrant

denial of the Petition, the Petition should be denied because it fails

to fall within the considerations prompting a review on a writ of

certiorari as set forth in Supreme Court Rule 10. Indeed, the

Petition fails to even address the specific considerations set forth in

Rule 10 and it lacks clarity in its identification of reasons certiorari

review is compelling.

In reviewing the Petition, Petitioners apparently argue that

the actions of either the Eleventh Circuit or the federal district court

in Florida conflict with other decisions of this Court and raise

important federal statutory and procedural issues. These contentions

are without merit.

-16-

Under Rule 10(a), one reason for granting certiorari may be

where there is a conflict among the circuits, see e.g., Mitchel v.

HB. Zachry Co., 362 U.S. 310 (1960), or a conflict between a

circuit court ruling and Supreme Court precedent. The actual

decision of the Eleventh Circuit in Grilli vy. Metropolitan Life Ins.

Co., Inc., 78 F.3d 1533 (11th Cir. 1996) is not in direct conflict

with a decision of any other United States Court of Appeals on those

matters reviewed therein. The Eleventh Circuit properly reviewed

those four matters brought before it on appeal --- propriety of the

district court’s denial of intervention, denial of Petitioners’ request

to file a late exclusion, denial of the petition for injunctive relief and

referral of the motion to declare nonmember status to the special

master. See id. at 1536-37. There has been no allegation that any

of these rulings are in conflict with rulings of another circuit or this

Court.

Under Rule 10(c), one reason for granting certiorari is where

a United States Court of Appeals has decided an important question

of federal law that should be settled by this Court or that conflicts

with relevant decisions of this Court. Again, Petitioners have failed

a A

to establish this in their petition nor can they because such

circumstances do not exist in this case. The legal issues preserved

for review and actually decided by the Eleventh Circuit do not

involve important questions of federal law that should be settled by

this Court. They concern review of fact specific issues ruled upon

by the district court. Nor do the rulings of the Eleventh Circuit in

its reported Opinion conflict with relevant decisions of this Court.

Thus, there is nothing within the reported decision of the

Eleventh Circuit warranting discretionary review. Instead,

Petitioners rely upon the same arguments set forth in their Second

Petition for Rehearing as supportive of discretionary review. While

these arguments were not properly raised and preserved for appellate

review, a review of those arguments reveals that they also fail to

satisfy the relevant sepiieniens to warrant discretionary review.

In their Petition, Petitioners raise essentially two arguments. First,

that states have a strong interest in regulating fraudulent conduct of

insurers in their state and second, that the district court’s approval

of a nationwide class action settlement pursuant to Civil Rule 23

constitutes a regulation of insurance sales in and among the states

-18-

violative of the McCarran-Ferguson Act, 15 U.S.C. § 1012, and

principles of comity and state sovereignty.

Petitioners’ first argument provides no foundation for

granting discretionary review. Relying upon this court’s decision in

Pacific Mutual Life Ins. Co. v. Haslip, 499 U.S. 1, 111 S. Ct. 1032

(1991), Petitioners submit that states have a strong interest in

regulating an insurer’s fraudulent sales conduct within that state.

Respondents herein have no reason to dispute this general legal

proposition. Nor does the Eleventh Circuit’s decision conflict with

this general proposition. This general interest of states in regulating

the insurance industry within their boundaries presents no special or

important reason beyond the academic and hypothetical and

therefore is insufficient to warrant discretionary review. See, Rice

v. Sioux City Memorial Park Cemetery, Inc., 349 U.S. 70 (1955).

Petitioners’ second contention is that the district court’s

approval of a nationwide class action settlement pursuant to Federal

Rule of Civil Procedure 23 constitutes the regulation of insurance

sales and that such regulation conflicts with the McCarran-Ferguson

Act and principles of comity and state sovereignty. As with the first

-19-

contention, this second contention likewise provides no foundation

for granting discretionary review.

In essence, Petitioners claim that this “decision” by the

district court to approve the class action settlement, which was not

part of the Petitioners’ appeal to the Eleventh Circuit, conflicts with

federal law and federalism concerns because it regulates insurance.

In actuality, the Petitioners’ contention that the lower court’s

approval of this nationwide class action settlement pursuant to Rule

23 constitutes the regulation of insurance is nothing more than the

Petitioners’ attempt to attack the lower court’s approval of the class

settlement. As noted, the Petitioners did not appeal the district

court’s approval of the negotiated settlement to the Court of

Appeals. A grant of certiorari by this Court may be of great

practical importance to Petitioners because they failed to promptly

opt out and pursue their individual claims for damages specifically

authorized under Pennsylvania law. However, this is not a

sufficieat reason for granting certiorari. See Ticor Title Ins. Co. v.

Brown, 511 U.S. 117, 114 S. Ct. 1359, 1362 (1994).

As noted in the district court’s Findings of Fact and

Conclusions of Law Regarding Motions to Intervene and to Dismiss

Notices of Intention to Appear and Object (App. 83a), the court

assessed the adequacy and fairness of this settlement based upon

federal procedural law (97a-98a), without the need to resolve

constitutional limits under due process based upon application of

state choice-of-law principles. Cf. Spector Motor Serv., Inc. v.

McLaughlin, 323 U.S. 101, 105 (1944) (court should avoid passing

upon constitutional issues unless unavoidable to do so.) It is within

the authority of the district courts to review and approve such

nationwide class action settlements pursuant to Rule 23. See, e.g.,

Miller _v. Republic Nat'l Life Ins. Co., 559 F.2d 426 (Sth Cir.

1977); Maywalt v. Parker & Parsley Petroleum Co., 864 F. Supp.

1422 (S.D.N.Y. 1994), aff'd, 67 F.3d 1072 (2d Cir. 1995);

Bowling v. Pfizer, Inc., 143 F.R.D. 141 (S.D. Ohio 1992); In re

A.H. Robins Co. (Breland v. Aetna Casualty & Sur. Co.), 85 B.R.

373 (E.D. Va. 1988), aff'd, 880 F.2d 709 (4th Cir.), cert. denied,

493 U.S. 959 (1989).

-21-

While Petitioners rely upon Georgine v. Amchem Prod.,

Inc., 83 F.3d 610 (3d Cir. 1996), cert. granted 1996 WL 480936

(Nov. 1, 1996) that decision is not applicable here, nor is the case

herein directly in conflict with it. Georgine involves a challenge to

a federal court’s certification of a Rule 23(b)(3) class for purposes

of settlement of mass toxic tort asbestos litigation. That case

involved a properly preserved challenge to Rule 23 certification.

The Third Circuit rejected the federal district court’s certification of

Rule 23(b)(3) class for settlement purposes, finding that the

certification requirements were not met in that particular mass tort

context. This Court has granted certiorari of that ruling.

Nevertheless, the Eleventh Circuit’s Opinion on the four issues

raised on appeal before it does not conflict with Georgine. in

addition, Petitioners did not appeal to the Eleventh Circuit the

district court’s approval of settlement, nor does this case deal with

class certification issues in the mass tort context. Instead, and

according to the Petitioners’ question presented, the circumstances

herein involve the regulation of insurance, not mass tort litigation.

In their Petition, Petitioners point to virtually no authority to

support their position that approval of a nationwide class action

settlement in this case constitutes the "regulation of insurance,"

other than their own conclusory statements. Petitioners try to

analogize this case to authorities which are not on point. Petitioners

cite F.T.C. v. National Casualty Co., 357 U.S. 560 (1958) to

support their position that approval of a class action settlement

constitutes a regulation of insurance sales. In that case a specific

federal agency, the Federal Trade Commission, attempted to directly

regulate the advertising practices of insurance companies by express

orders. This is obviously a direct regulation of insurance quite

different from the circumstances herein. The court is not a federal

commission, nor is there any direct and express attempt to impose

specific regulation on a scdlaaectie basis upon the insurance industry

as in National Casualty Co. The negotiated class action settlement

in this case for the payment of 100% restitution to class member

policyholders does not, either directly or indirectly, constitute a

regulation of insurance industry practices, nor has the court’s

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approval of the settlement of this case in any way infringed upon the

states’ ability to regulate insurance practices.

Nor can the federal district court’s approval of settlement

pursuant to federal procedural law and specifically Rule 23 be

considered as conflicting with or violative of the McCarran-

Ferguson Act, assuming arguendo that Petitioners’ characterization

as regulation of insurance sales had some merit. The Act provides

that:

No Act of Congress shall be construed

to invalidate, impair, or supersede any

law enacted by any State, for the

purpose of regulating business of

insurance...

15 U.S.C. § 1012(b). Rule 23 and the federal procedural law

regulating class actions is not an "Act of Congress."

The only relationship that the McCarran-Ferguson Act bears

to these proceedings is as to the question of subject matter

jurisdiction. This action originated as a RICO claim, 18 U.S.C. §

1962, with supplemental state law claims. Prior to considering

approval of the class action settlement, the district judge asked the

parties to address whether the district court had jurisdiction to

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consider approval of a class action settlement, as Respondent

MetLife contended, if the McCarran-Ferguson Act preempted that

RICO claim. As these Respondents noted to the district court, there

is authority supporting the proposition that the McCarran-Ferguson

Act would not preempt the RICO claim, see, e.g., Merchants Home

Delivery Services, Inc. v. Hall & Co., 50 F.3d 1486, 1489 (9th

Cir. 1995), cert. denied Prometheus Funding Corp. v. Merchants

Home Delivery Services, Inc., 116 $.Ct. 418 (1995), and that the

RICO allegations advanced by Respondents presented a colorable

claim sufficient to invoke the district court’s subject matter

jurisdiction, see Angela R. by Hesselbein v. Clinton, 999 F.2d 320,

324 (8th Cir. 1993), even where that federal claim may later be

dismissed. Nelson v. Greater Gadsden Housing Auth., 802 F.2d

405, 408 (11th Cir. 1986). In its Findings of Fact and Conclusions

of Law Regarding Fairness of Class Action Settlement (which

Petitioners appropriately have not included in their appendix,

although their Petition inappropriately challenges the merits of those

findings) the district court found it had subject matter jurisdiction to

approve the settlement.

aa:

Nor does the additional authority Petitioners submit in their

Supplemental Brief lend any further support to their position. In

Seminole Tribe of Florida v. Florida, 116 S. Ct. 1114 (1996), this

Court held that the Eleventh Amendment prohibits Congress from

authorizing federal court suits by Indian tribes against states under

The Indian Gaming Regulatory Act. Id. at 1133. Petitioners seek

to rely upon this Court’s emphasis in Seminole Tribe that the

sovereignty of the states must be maintained and generically apply

that emphasis to its argument that state sovereignty has been usurped

by the Florida district court in violation of the McCarran-Ferguson

Act. The Seminole Tribe decision and the case herein are not

comparable. Petitioners mistakenly believe that the court’s

application of a Federal Rule of Civil Procedure can be violative of

the 8 Sealey RO See Supplemental Brief, p. 5 ("we

have the incongruous result of the insurance regulatory laws of the

sovereign States being abrogated by a Federal Rule of Civil

Procedure"). The Act is directed to conflicts between state and

federal law (Acts of Congress) as to the business of insurance and

the preemptiveness of federal law under those circumstances.

-2%6-

Petitioners further contend that this so-called regulation of

insurance by approval of a nationwide class action settlement

violates comity and state sovereignty, in conflict with the Supreme

Court’s decision in BMW_of North America v. Gore, 116 S. Ct.

1589 (1996). While that case can be characterized as dealing with

the general proposition of whether a judicial ruling can constitute

state regulation, the specific holding of that case is not analogous.

There, the specific award of punitive damages under Alabama law

in an Alabama state court was held to infringe upon the ability of

other states’ rights to regulate business within their boundaries. In

the case herein, the court assessed a negotiated settlement, not a

specific verdict based upon application of a specific state law. The

district court herein considered federal principles governing approval

of class action since not the assessment of specific damages

under Florida or any other state law. The action of the court in

approving this settlement is not an infringement on the states’ rights

or ability to regulate the insurance industry within each particular

state. Therefore, this case is not in conflict with this court’s

reasoning or holding in BMW v. Gore.

Rey

Nor is Petitioners’ reliance on Gregory v. Ashcraft, 501

U.S. 452 (1991), appropriate. That case involved a conflict

between a Missouri constitutional provision and the ADEA and

whether the federal law prevailed over the state constitutional

provision given the Supremacy Clause. The concerns of state

sovereignty in that regard bear no relationship to federalism

concerns based upon a federal court’s exercise of valid procedural

laws.

CONCLUSION

Supreme Court Rule 10 provides that a petition for writ of

certiorari is granted for compelling reasons. The Petitioners present

no compelling reasons to support this Court’s exercise of its limited

judicial resources. Not only do the specific contentions raised by

the Petitioners fail to raise important constitutional or statutory

issues or directly conflict with rulings of this Court or any other

circuit court, but Petitioners also have failed to properly preserve

these issues for discretionary review and lack standing to present

these issues before the Court. For these reasons, Respondents

respectfully submit that the petition should be denied.

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Respectfully Submitted,

BY:

RON PARRY Wb. HOYER

Arnzen, Parry & Wentz James, Hoyer & Newcomer

600 Greenup Street 4830 W. Kennedy Blvd.

P.O. Box 472 Suite 750

Covington, Kentucky 41012 Tampa, Florida 33609

(606) 431-6100 (813) 286-4100

Counsel for Appellees-Respondents,

Sherry Horton, et.al.