Reply Brief — Coulter v. Metropolitan Life Insurance

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1996

RONALD AND ANISSA COULTER, et al.,

SHERRY HORTON, et al.,

-- Ve

METROPOLITAN LIFE INSURANCE COMPANY,

Petitioners,

Plaintiffs- Respondents,

Defendant-Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

ELEVENTH CIRCUIT

REPLY BRIEF OF PETITIONERS TO BRIEF IN

OPPOSITION OF PLAINTIFFS-RESPONDENTS

Daniel W. Cannon

611 Pennsylvania Avenue S.E.

Washington, D.C. 20003

(202)543-7664

Kenneth W. Behrend

(Counsel of Record)

Behrend and Emsberger

2400 Grant Building

Pittsburgh, PA 15219

(412) 391-2515

Attorneys for Petitioners

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ii

STATUTES AND RULES iii

TABLE OF AUTHORITIES

Case

Seminole Tribe v. Florida,

USO AR SEG ee A a as eee eee es

United Airlines, Inc. v. McDonald,

432 U.S. 385, 97 S.Ct. 2464, 53 L.Ed. 2d 423 (1977)

:

ill

STATUTES AND RULES

Case Page

McCarran-Ferguson Act, 15 U.S.C.A.

Sa aE eA ite re 1.2.6

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1996

RONALD AND ANISSA COULTER, et al.,

Petitioners,

SHERRY HORTON, et al.,

Plaintiffs- Respondents,

—

METROPOLITAN LIFE INSURANCE COMPANY,

Defendant-Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

ELEVENTH CIRCUIT

REPLY BRIEF OF PETITIONERS TO BRIEF IN

OPPOSITION OF PLAINTIFFS-RESPONDENTS

The brief in opposition of plaintiffs-respondents

mischaracterizes and misrepresents the motives of petitioners and

the course of events in this case.

In the interest of brevity, only a few such examples will be

discussed in this reply brief. Perhaps the fundamental problem is

the respondents’ failure to grasp the significance of the McCarran-

Ferguson Act. This is brought out sharply by the following

Statement on Page 9 in the brief in opposition:.

That Act is directed to conflicts between state law

and Acts of Congress...

2

This is a total misrepresentation of the McCarran-Ferguson :

Act. The Act is not simply a mere guide to construing statutes; it

is a delegation by the Congress to the states of its constitutional

power to regulate the business of insurance. The question

presented is whether the federal courts may nullify state laws

enacted to implement this delegated power. This is an important

question of federal law that has not been, but should be, resolved

by this Honorable Court. Therefore, the informative guidance of

Supreme Court Rule 10 is eminently satisfied, contrary to the

attempt by plaintiffs-respondents to obfuscate the matter by means

of a procedural fog.

The plain facts of this case are that:

1. Against their will, the petitioners were placed in a

plaintiff class in which they did not belong because they had

known that a component of the products they purchased was life

insurance. A form of notice was mailed out but it did not notify

anyone in the United States, including petitioners, that they were

class members (see petitioners’ app. 39a )

2. Against their will, the petitioners were not permitted to

name a class representative or a class co-counsel and thus were

completely shut out of negotiations. It should be noted that the

settlement called for payment of an attorneys fee to class counsel

of $2,750,000.00, which perhaps accounts for their lack of

objectivitity in interpreting rules, statutes, judicial decisions, and

events related to this case.

3. Against petitioners’ will, the class representatives and

the class counsel negotiated a settlement which bargained away

petitioners’ rights under Pennsylvania law and granted them no

benefits in return because they could not certify that they had not

known they were buying life insurance.

4. Against petitioners’ will, a nationwide injunction was

issued by a federal district court in Tampa, Florida purporting to

prohibit petitioners from pursuing their rights in any other forum.

On top of ali this, the brief in opposition for plaintiffs-

respondents now claims that the petitioners have no standing to ask

the Supreme Court to review this kind of treatment by the federal

courts.

If this viewpoint were followed, there would be no justice

for the petitioners anywhere in this land, and the Supreme Court

would be powerless to rectify such an abuse of the federal judicial

system.

The specific key words of Supreme Court Rule 10 are:

...& United States court of appeals has decided an

important question of federal law that has not

been, but should be, settled by this Court...

which is one of the indicators listed as among those factors that

“indicate the character of the reasons the Court considers”.

The respondents completely misrepresent the gist of

Supreme Court Rule 10, which clearly embraces the instant case.

4

On page 10, respondents assert that:

“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.“

In the first place, petitioners made it abundantly clear to

both the district court and the negotiating parties that petitioners

did not want to be part of the main Horton plaintiff class and

wanted to be severed or placed in a separate subclass so that their

claims of improper sales practices in Pennsylvania could be

resolved by the application of Pennsylvania law.

In the second place, the settlement and Claim Form

approved by the district court excluded petitioners from class

membership and any benefits of the settlement. This was because

the types of improper sales practices in Pennsylvania were

distinctly different from those in Florida. A prerequisite to class

membership and collecting benefits as a member of the Horton

class was a certification that the claimant was unaware that the

product was insurance. Pennsylvania claimants could not make

such a certification since part of the misrepresentations made to

them was that insurance was a “component” of the product. How

does one opt out of a class to which he has never belonged by

definition or by eligibility for benefits?

All of the above demonstrates that respondents’

mischaracterization lacks any legal or equitable foundation.

At pages 23-24, respondents assert that

5

..nor has the court's approval of the settlement of

this case in any way infringed upon the states’

ability to regulate insurance practices.

Respondents conveniently omit any reference to the

nationwide injunction issued by the district court which purports to

prohibit petitioners from invoking in their state courts the full

panoply of insurance regulatory powers, both inherent and

delegated by the Congress, held by their sovereign state of

Pennsylvania. Respondents’ assertions are entitled to no weight

whatsoever.

The respondents are in error when, at page 8 of their brief

in opposition, they assert that, because the petitioners are not

named parties to the Horton class action suit, they lack standing

to seek review.

It is instructive on this point to note United Airlines, Inc.

vy. McDonald, 432 U.S. 385, 97 S.Ct. 2464, 53 L.Ed. 2d 423

(1977), which held that an unnamed absentee plaintiff class

member in a Federal class action suit had timely filed a petition to

intervene 18 days after the entry of final judgment by the U.S.

district court.

The majority opinion stated, 431 U.S. at page 392, that:

..it would be circular to argue that unnamed

member of the putative class was not a proper

party to appeal...

Respondents compound their fallacious and distorted

misinterpretation of petitioners’ position at page 26, as follows:

aaa atria ai aii ici ii

6

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 McCarran-

Ferguson Act.... 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.

This is a blatant misinterpretation of the McCarran-

Ferguson Act, which says nothing about the preemptiveness of

federal law under any circumstances.

The truth is that the McCarran-Ferguson Act is oriented

against federal preemptiveness by an Act of Congress let alone by

a Federal Rule of Civil Procedure.

At page 27, respondents come right out and say it:

The district court herein considered federal

principles governing approval of class action

settlement, not the assessment of specific damages

under Florida or any other state law.

Thereby, respondents explicitly admit that the district court

completely junked state sovereignty and the McCarran-Ferguson

Act's mandate to apply state law and instead applied a federal

procedural rule.

CONCLUSION

The brief in opposition of the plaintiffs-respondents

mischaracterizes the motives of the petitioners; misconstrues the

3

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relevant rules, statutes, and judicial decisions; misinterprets the

course of events in the courts below and arrives at predictably

erroneous conclusions. The petition for a writ of certiorari raises

the important question as to whether compliance with federal

procedural rules relieves federal courts from applying any state

laws at all, particularly in regard to improper practices carried on

in the business of insurance; the petition for a writ of certiorari

should be granted.

Respectfully submitted,

Daniel W. Cannon Kenneth W. Behrend

611 Pennsylvania Avenue S.E. (Counsel of Record)

Washington, D.C. 20003 Behrend and Emsberger

(202)543-7664 2400 Grant Building

Pittsburgh, PA 15219

(412) 391-2515

Attorneys for Petitioners

Dated: December 9, 1996