Opposition Brief — King v. Gadson (No. 05-921)

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that the Georgia law to which he had referred did not apply to

the insurance products at issue in this case. Pet. App. D, 25a-

26a, 29a. In a lengthy legal analysis described below,

the trial court found that the settlement met the require-

ments for approval under Alabama law and was fair to all

class members.

During the fairness hearing, Petitioners sought to examine

Gadson. The trial court noted that Gadson was not properly

subpoenaed but had previously submitted evidence in an

affidavit. Resp. App. D, 74a-75a. Petitioners advised the

trial court that they had conducted a recorded interview with

Gadson. /d. at 75a. The trial court reviewed this evidence.

Id. The trial court ultimately found that Gadson was an

adequate class representative. Pet. App. C, 12a.

D. The Trial Court’s Final Order.

On September 29, 2004, the trial court entered its Final

Order approving the class settlement and dismissing the case

with prejudice. The Final Order defined the class, “pursuant

to Rules 23(b)(2) and 23(b)(3) of the Alabama Rules of Civil

Procedure,” as “all persons (including the named plaintiff) in

Alabama or Georgia who at any time in the Class Period,

purchased or renewed a certificate of group health insurance

from United Wisconsin Life Insurance Company that pro-

vided coverage to that individual and/or his or her family... .”

Pet. App. D, 18a. ;

The Final Order certified a setthement class pursuant to

Ala.R.Civ.P. 23(a) & (b)(3). It also specifically addressed the

Petitioners’ contentions and denied the objections to the set-

tlement, holding that the settlement was fair and reasonable

and met the legal requirements for approval under Alabama

law. The Final Order specifically overruled the objection that

the settlement was not fair to Georgia residents because

Georgia law was stronger (citing Ga. Code Ann. § 33-30-12).

Pet. App. D, 24a, 26a-27a, 29a. The trial court found that

Georgia class members did not have liability or damages

claims superior to those of Alabama class members. /d.*

The trial court also found that there was no evidence of

collusion between Plaintiff's and Defendants’ counsel, noting:

Among the arguments presented by Ms. Askew, the

most serious allegation is her contention that there was

collusion between the plaint..f and defendants in reach-

ing the Stipulation in this Action. The Court does not

take such accusations lightly, but notes that Ms. Askew

failed to provide the Court with any actual evidence or

valid argument to support her suspicions.

Id. at 30a-31a. The trial court further noted that Petitioners’

counsel had filed a new action in Georgia “which asserts

claims against common defendants arising out of the same

conduct alleged against those defendants in this Action.” /d.

at 21a. The trial court concluded that “counsel's involvement

in these other, competing cases explains the impetus behind

and real motivation for the objections offered here.” /d.

The trial court indicated that it had “previously examined

the notice provided to the members of the class and con-

cluded that the required notice was the best notice practicable

and adequately advised the Settlement Class of this action

and the settlement contemplated herein.” /d. at 3la. Finally,

the trial court found that “the settlement here is fair,

reasonable and adequate.” /d. at 33a.

E. Petitioners’ Motions For Reconsideration.

The Petitioners brought motions for reconsideration and to

alter, amend or vacate the Final Order.” In response, the trial

"These arguments were also made by Petitioners’ counsel to the Ala-

bama Supreme Court and were unanimously rejected. See Pet. App. A, la

and B, 2a. Petitioners have not articulated how a state court's comparison

of the insurance regulations of two states and the evaluation of claims

arising under those regulations raises a federal issue.

court conducted another hearing on November 1, 2004, dur-

ing which the Petitioners requested an opportunity to question

Gadson. The trial court offered to order Gadson to testify but

cautioned that it would also require the Petitioners’ attorney

who had interviewed Gadson to testify. Petitioners decided

against calling Gadson to testify. Resp. App. D, 75a-77a.

On November 9, 2004, before the trial court had ruled on

the Petitioners’ motion for reconsideration, Petitioners filed

their notice of appeal to the Supreme Court of Alabama. On

November 10, 2004, the trial court issued an opinion that

overruled Petitioners’ motions, upheld its earlier ruling ap-

proving the settkement and dismissing the action, and found

that the settkement complied with Alabama law. See Pet.

_App. C. This Order found that each of the factors required

by Ala.R.Civ.P. 23(a) and (b) (numerosity, commonality,

typicality, superiority, and class representative’s adequate

representation of the class) had been established. /d. at 6a-

45a. The trial court also found that Petitioners had failed to

present any evidence that could even potentially rebut the

court’s findings. /d. at 10a, I 1a, 12a.

F. Petitioners’ Appeal To The Alabama Supreme

Court.

Petitioners’ appeal to the Alabama Supreme Court sought

decertification of the class on four grounds: (1) that Gadson

was an inadequate representative; (2) that Georgia class mem-

bers were inadequately represented and inadequately compen-

sated under the settlement; (3) that the class notice was

* These motions did not raise the argument, raised for the first time

before the Alabama Supreme Court, that the language used to describe the

class was amended by the trial court’s Final Order. Because this argu-

ment was never raised in the trial court, it was waived and could not be

raised for the first time on appeal. See infra § 1V.B. In any event, there

has been no showing that the language clarification was material to any

issue in the case or to any federal issue.

defective; and (4) that the trial court failed to engage in a

rigorous analysis as required by Ala.R.Civ.P. 23. The Ala-

bama Supreme Court heard oral argument and unanimously

affirmed the settlement. See Pet. App. B, 2a. The Alabama

Supreme Court decision was issued without an opinion and

affirmed the trial court ruling, referring to Alabama Rule of

Appellate Procedure 53(a)(1) and (a)(2)(F), which provides

that “[t}he [Alabama] Supreme Court .. . may affirm a judg-

ment or order of a trial court without an opinion if the court

determines: (1) [t]hat an opinion in this case would serve no

significant precedential purpose; and... (2)... (F) [t]he

court, after a review of the record and the contentions of the

parties, concludes that the judgment or order was entered

without an error of law.” Ala.R.App.P. 53(a)(1) and (a)(2)(F).

Petitioners filed a motion for reconsideration, and on

October 21, 2005, the Alabama Supreme Court denied this

motion. See Pet. App. A, la. Petitioners timely filed-the

current Petition for Writ of Certiorari.

Il, CERTIORARI SHOULD BE DENIED BECAUSE

THIS COURT LACKS JURISDICTION.

This Court lacks jurisdiction to consider the questions pre-

sented by Petitioners. With “very rare exceptions,” this Court

will not review a state court decision unless a federal question

has been raised and decided by the state court. Adams vy.

Robertson, 520 U.S, 83, 86 (1997) (certiorari improvidently

granted where federal due process challenge to state court

certification of multistate class action never raised below).

Where it is unclear whether a state court has ruled on a

federal issuc, this Court will assume that the federal question

was not decided and will deny certiorari unless the petitioner

can demonstrate that the federal question was presented to

and ruled upon by the state court. See Aédums, 520 U.S. at 86;

Bd. of Dirs. of Rotary Int ly. Rotary Club of Duarte, 481 U.S.

537, 549-550 (1987). The Court will attribute the state

court’s decision to an interpretation of state law, unless a

federal basis is apparent in the decision.

A review of the decisions below confirms that neither the

Alabama Supreme Court nor the trial court decided any

federal questions. Indeed, in their summary of the decisions

below, Petitioners do not assert that the Alabama Supreme

Court decided the federal due process or full faith and credit

questions they now present to this Court. See Petition

(“Pet.”) at 9-29. |

As this Court has explained, when “the highest state court

has failed to pass upon a federal question, it will be assumed

that the omission was due to want of proper presentation in

the state courts, unless the aggrieved party in this Court can

affirmatively show the contrary.” Street v. New York, 394

U.S. 576, 582 (1969), quoted in Fuller v. Oregon, 417 U.S.

40, 50 n.11 (1974); Exxon Corp. v. Eagerton, 462 U.S. 176,

181 n.3 (1983); Bd. of Dirs. of Rotary Int'l, 481 U.S. at 550.

Indeed, the record of this case demonstrates that the federal

issues on which Petitioners seek review were never addressed

or properly raised in the Alabama courts.

The rules of the Alabama Supreme Court require a “State-

ment of Issues” in briefs filed with that court. Ala.R.App.P.

28(a)(6). Petitioners’ Statement of Issues lists a variety of

state-law claims but makes no explicit reference to any

federal claim. Resp. App. C, 23a-24a; see Adams, 520 U.S. at

87 n.1 (citing Ala.R.App.P. 28(a)[6] and Eady v. Stewart

Dredging & Const. Co., 463 So. 2d 156, 157 (Ala. 1985)

(holding that “[flailure to comply with A.R.App.P. 28(a)[6]

has been held to be a failure to properly present an issue for

appellate review”)). Indeed, other than a single generic

reference to the “Due Process” clause, the issues identified in

Petitioners’ brief to the Alabama Supreme Court are predi-

cated exclusively on state law, and even the reference to the

due process clause does not identify the U.S. Constitution.

Similarly, Petitioners’ briefs to the Alabama Supreme

Court contain no specific citations to the United States

Constitution generally, the Full Faith and Credit Clause, or

the Fourteenth Amendment.° Moreover, as in Adams, Peti-

tioners failed to provide “pertinent quotations of specific

portions of the record or summary thereof, with specific refer-

ence to the places in the record where the matter appears” to

demonstrate when and how a federal question was raised

and considered by the courts below. See S.Ct.R. 14(g)(i)

(emphasis added). Petitioners’ failure to comply with this

requirement is evidenced by Petitioners’ Appendix, which

excludes all briefs to the Alabama Supreme Court and the

trial court. See Adams, 520 U.S. at 89 n.3.

Peiitioners’ failure to cite to the record below is explained

by the fact that Petitioners never raised the issues now pre-

sented in their petition. In their briefs to the Alabama Su-

preme Court, Petitioners mentioned “due process” only in the

context that the requirements of Ala.R.Civ.P. 23 were not

met. See generally Resp. App. C. Similarly, Petitioners’

only reference to the “full faith and credit clause” related

to the issue of whether the class requirements under

Ala.R.Civ.P. 23 were met.’ See generally id. These refer-

ences clearly fall short of even the “passing invocations of

due process” that this Court has found insufficient to meet the

* Petitioners’ table of authorities likewise contains no such citations.

’ Petitioners did not specify whether this was a reference to the due

process requirements and full faith and credit clause of the U.S. Con-

stitution, or to the analogous provisions of the Alabama Constitution. See

e.x., Bowe vy. Scott, 233 U.S. 658 (1914) (finding a general reference to

_ “due process,” without more specificity, refers to clause in the state, rather

than federal, Constitution). Indeed, Petitioners disavowed the applicabil-

ity of federal law, explaining that their citations to federal authorities were

appropriate only because Alabama's class action rules are “patterned”

after Rule 23 of the Federal Rules of Civil Procedure. Resp. App. C,

32a n.5.

“minimal requirement that it must be clear that a federal

claim was presented.” Adams, 520 U.S. at 89 n.3

Petitioners’ arguments to the trial court primarily focused

on the fact that the requirements under Ala.R.Civ.P. 23 were

not met because Georgia statutory law was allegedly superior

to Alabama law regarding the claims encompassed in the

settlement. Petitioners never raised with the trial court the

issues subsumed within their Question Presented No. 1. For

example, Petitioners never raised with the trial court their

contention that Gadson lacked standing to represent the class,

nor did they raise the alleged defect in the class definition

based on the trial court’s language clarification. Indeed, fol-

lowing the Alabama Supreme Court’s unanimous affirmance,

Petitioners raised for the first time in their Motion for Rehear-

ing the issue that Gadson did not have standing under Georgia

law.

As this Court has observed, “[a]t the minimum. . . there

should be no doubt from the record that a claim under a

federal statute or the Federal Constitution was presented in

the state courts and that those courts were apprised of the

nature or substance of the federal claim at the time and in the

manner required by the state law.” Webb v. Webb, 451 U.S.

493, 501 (1981). That “minimum” prerequisite is lacking

here. Consequently, the petition should be denied.

* Alabama courts generally will not consider issues raised for the first

time on appeal or on a motion for rehearing. See, ¢.g., State v. Newberry,

336 So. 2d 181, 182 (Ala. 1976); State v. Graf, 189 So. 2d 912, 913 (Ala.

1966); Burton v. Burton, 379 So. 2d 617, 618 (Ala. Civ. App. 1980);

Crews v. Houston City Dept. of Pensions & Sec., 358 So. 2d 451, 455

(Ala. Civ. App. 1978), cert. denied, 358 So. 2d 456. This Court has also

declined to “consider issues raised clearly for the first time in a petition

for rehearing when the state court is silent on the question.” Adams, 520

U.S. at 89 n.3; Bd. of Dirs. of Rotary Int'l, 481 U.S. at 549-550.

IV. THE PETITION SHOULD BE DENIED

BECAUSE IT DOES NOT RAISE ANY

FEDERAL OR CONSTITUTIONAL ISSUES.

Petitioners contend that the trial court's approval of the

settlement violated federal due process rights because the trial

court’s fact findings regarding the class representative's

adequacy, typicality, and standing violated constitutional limits

imposed on state courts. Petitioners further argue that the

notice afforded to absent class members violated due process

requirements. As shown above, these issues were never

raised in the Alabama trial court or in the Alabama Supreme

Court. Petitioners therefore waived these arguments.

Even if these arguments had not been waived, the approval

of the settlement and class notice were reviewed by the trial

court under established and uncontroversial principles of law.

Petitioners may be disappointed with the outcome, but they

do not point to any errors of law which create a federal due

process violation.

A. The Trial Court Complied With The Due

Process Requirement To Consider The Ade-

quacy And Typicality Of Gadson As A Class

Representative.

Petitioners contend that the federal constitutional rights of

absent class members were violated because Gadson is an

inadequate class representative and failed to assert claims

“typical” of the class. However, the trial court made explicit

fact findings under Alabama law to support its conclusion

that these requirements were met.

The petition does not identify any incorrect proposition of

federal law in the trial court’s Final Order approving the

settlement. Like its federal counterpart, Alabama Rule of

Civil Procedure 23 requires the trial court to determine that

the class representative “will fairly and adequately protect the

interests of the class.” Ala.R.Civ.P. 23(a)(4). This adequacy

inquiry “serves to uncover conflicts of interest between

named parties and the class they seek to represent.” Amchem

Prods., Inc. v. Windsor, 521 U.S. 591, 625 (1997); accord

Cheminova Am. Corp. v. Corker, 779 So. 2d 1175, 1181 (Ala.

2000). The trial court made specific findings in support of its

determination that Gadson was an adequate representative

and that Rule 23(a)(4)’s requirements were met. See Pet.

App. C, 12a.

Petitioners contend that unlike the class members, Gadson

was not a policy holder, Pet. at 17; see also id. at 11, 15, 18,

20.” This issue was waived below because it was not raised

in the trial court. Hormel v. Helvering, 312 U.S. 552, 556

(1941); Lloyd Noland Hosp. v. Durham, 906 So. 2d 157, 165

(Ala. 2005). Moreover, even if not waived, this issue would

not present a proper subject for this Court’s review because

the trial court made a fact finding that Gadson was a member

of the class and asserted claims that fully encompassed the

class claims. Pet. App. C, at 11a. The trial court concluded

(and the Alabama Supreme Court confirmed) that the require-

ments of Ala.R.Civ.P. 23(a)(4) were met. See id. at 12a.

Alabama Rule 23(a) “inherently mandate: nat ihe person

bringing the action must be a member of the class he seeks to

represent.” Ex Parte Exide Corp., 678 So. 2d 773, 777 (Ala.

1996) (citing Amason v. First State Bank of Lineville, 369 So.

2d 547, 549 (Ala. 1979)). The petition does not demonstrate

* As shown above, Gadsou purchased the insurance policy for her son

and paid for the policy. Petitioners identify nothing in fed. al law that

denies states the right to afford standing to a parent who purcivases insur-

ance for a child and allegedly overpays. In fact, Alabama law affords

such purchasers standing. See Newson v. Protective Indus. Ins. Co., 890

So. 2d 81. 90-91 (Ala. 2004) (relatives who purchased insurance policy

but were not insureds had standing); Nat'l States Ins. Co. v. Jones, 393

So. 2d 1361, 1363-64 (Ala. 1980): accord N.C. Mut. Life Ins. v. Holley,

533 So. 2d 497, 499 (Ala. 1987).

Py)

any due process deficiency in these principles of Alabama

law.""

Petitioners also assert a due process violation because

Gadson allegedly did not meet the “typicality” requirements

required to serve as a Class representative. Like federal law,

Ala.R.Civ.P. 23(a)(3) requires the class representative to

show that his or her claims and defenses are typical of the

claims and defenses of the class. See Che nova, 779 So. 2d

at 1180-81 (internal punctuation omitted); Kornberg v.

Carnival Cruise Lines, Inc., 741 F.2d 1332, 1337 (11th Cir.

1984). Again, however, the petition fails to disclose that the

trial court made factual findings that Gadson’s claims were

typical of the class. The trial court found that Gadson’s

claims arise from the same course of conduct allegedly

perpetrated against the class. Pet. App. C, Ila. These fact

findings, and the legal standards used to reach them, do not

conflict with any identifiable federal law.

Petitioners also contend that a due process violation 6c-

curred because Gadson allegedly lacked standing under

Georgia law. This argument was waived because it was not

raised in the trial court. Hormel, 312 U.S. at 556; Lloyd

Noland Hosp., 906 So. 2d at 165. Petitioners also failed to

properly raise this issue with the Alabama Supreme Court.

The issue was first raised after oral argument in a “Petition to

Submit a Supplemental Brief’ and a Motion for Rehearing,

both denied by the Alabama Supreme Court. Consequently,

this issue is not properly before the Court. See Rutherford v.

Concord Fire Dist., 404 So. 2d 708 (Aia. 1981); Hanson vy.

Petitioners also speculate that Gadson might not have received notice

of the class and the opportunity to opt out because she purchased the pol-

icy tor her son. This was not raised in the trial court level, and it was

therefore waived. Hormel, 312 U.S. at 556; Lloyd Noland Hosp., 906 So.

2d at 165. Further, as shown above, the trial court found that the “best

practicable notice” was provided, which comports with both state and

tederal law.

Denckla, 357 U.S. 235 (1958); Adams, 520 U.S. at 89 n.3

(“we have generally refused to consider issues raised clearly

for the first time in a petition for rehearing when the state

court is silent on the question’’),

Moreover, even if Petitioners had not waived the issue of

whether Gadson had standing to serve as a Class repre-

sentative for Alabama as well as Georgia residents, a state

law determination of standing would not raise a federal or

constitutional issue warranting review by this Court. Indeed,

Petitioners have not even identified a violation of Georgia

law, much less federal law. Petitioners assert that Georgia

law “only recognizes a personal representative, (1.¢., executor

or administrator), as a proper plaintiff. Pet. at 22. In making

this sweeping statement, Petitioners rely only on inapplicable

Georgia law that addresses the distribution of life insurance

proceeds after the policyholder dies. There is no prohibition

under federal, Alabama or Georgia law barring the purchaser

of health insurance from asserting a claim that she overpaid.

Finally, Petitioners assert a due process violation based on

the alleged inadequacy of class counsel. However, the deter-

mination of whether an attorney is competent and adequate to

represent a class is a uniquely fact-bound issue that is

unsuitable for consideration on certiorari. Here, the trial

court made detailed findings that class counsel was competent

and had vigorously and diligently pursued the case. Pet. App.

D, 34a, 36a. The trial court concluded that, “the Objectors/

Interveners have presented no evidence” in support of their

argument regarding the inadequacy of class representation.

Pet. App. C, 12a."

'' Petitioners argue that certiorari is warranted because Gadson did not

testify at the fairness hearing. There is no federal requirement mandating

the use of live testimony as opposed to affidavits at a settlement fairness

hearing. In any event, the trial court offered Petitioners an opportunity to

question Gadson, and Petitioners declined. See Counterstatement of Case,

S ILE, supra.

B. The Trial Court Complied With The Due

Process Requirement To Consider The

Sufficiency Of The Class Notice.

Petitioners complain that a due process violation occurred

because the class definition was altered after class notice.

This issue was waived because it was not raised in the trial

court. Hormel, 312 U.S, at 556; Lloyd Noland Hosp., 906 So.

2d at 165.

Even if this issue had not been waived, it would not present

a due process issue warranting consideration by this Court.

The modification of the class definition was a minor clarifica-

tion that was presented to and approved by the trial court

without objection.

The class conditionally certified in the trial court's Prelimi-

nary Order encompassed “all persons and entities (including

the named plaintiff) in Alabama or Georgia who, at any time

purchased or renewed in Alabama or Georgia a certificate of

medical insurance from United Wisconsin Life Insurance

Company.” Resp. App. A, 2a. Class notice was sent in ac

cordance with this conditional certification. The trial court's

Final Order amended the class definition as follows (change

in bold): “all persons (including the named plaintiff) in Ala-

bama or Georgia who at any time in the Class Period,

purchased or renewed a certificate of group health insur-

ance from United Wisconsin Life Insurance Company that

provided coverage to that individual and/or his or her

family... .° Pet. App. D, 18a (emphasis added).

This modification did not materially alter the scope of the

class. Indeed, a fortiori, not a single absent class member

could be bound by the modified language who was not

similarly bound by the original language. “Purchasers” of

insurance were included in both the conditional approval

order and in the final class definition. The clarifying phrase

“that provided coverage to that individual and/or his or her

family” could only narrow the class (i.e., from all insurance

purchasers to only those purchasers for their own coverage or

for their family members}.

Fu.ther, under established legal principles, state trial courts

may mold and change a class definition. See First Ala. Bank

of Montgomery, N.A. v. Martin, 381 So. 2d 32, 33-34 (Ala.

1980) (“An order certifying a class is inherently not a final

judgment, even regarding the class certified, because Ala. R.

Civ. Proc. 23(c) expressly permits the trial judge to revise his

original order at any time before passing on the merits of

the case”); Gen. Tel. Co. v. Falcon, 457 U.S. 147, 160 (1982)

(courts may modify the class definition even after certi-

fication order is entered); Monumental Life Ins. Co. v. Nat'l

Standard Life Ins. Co., 365 F.3d 408, 414 (Sth Cir. 2004)

(“[d]istrict courts are permitted to limit or modify class

definitions to provide the necessary precision.”). A modifica-

tion to a class definition does not require resending notice

unless there is evidence of prejudice to absent class members.

See Bernard v. Gulf Oil Corp., 890 F.2d 735, 746 (Sth Cir.

1989).

Petitioners have provided no evidence of any prejudice or

of any due process violation associated with the modification

of the class notice in this case. There is no federal doctrine

that prohibits a state court from making such modifications.

Other than the language clarification, the petition does not

identify any other constitutional defect with the class notice.

Like federal law, Alabama rules require that class notice

is “the best notice practicable under the circumstances.”

Ala.R.Civ.P. 23(c)(2). The trial court made specific findings

that the notice met this requirement. Pet. App. D, 19a-20a.

C. The Inclusion Of Georgia Class Members In

The Settlement Did Not Violate The Due

Process Clause.

The central proposition of the Petition for Certiorari ts that

the due process clause was violated because Ms. Gadson is

not an adequate or typical class representative, and because

the class notice was deficient. However, the petition could

also be read to attack the inclusion of Georgia residents in the

settlement based on the alleged superiority of Georgia law.

This issue does not warrant certiorari because it involves the

routine application of settled principles of law by a state

court.

In Shutts, this Court held that a state court can assert juris-

diction over out-of-state class members, provided that such

jurisdiction does not violate the constitutional rights of those

out-of-state class members. Shutts, 472 U.S. 797. To estab-

lish a constitutional violation, it must be shown that the law

applied to the out-of-state class members “conflicts in [a]

material way” with the law that would be applied if the case

had been brought in the class members’ home state. Shuts,

472 U.S. at 816. As the Shutts Court explained, “‘[t}here can

be no injury in applying [forum] law if it is not in conflict

with that of any other jurisdiction connected to this suit.” /d.

In addition, “[t]o constitute a violation of the Full Faith and

Credit Clause or the Due Process Clause, it is not enough that

a state court misconstrue the law of another State. Rather,

{this Court's] cases make plain that the misconstruction must

contradict law of the other State that is clearly established and

that has been brought to the court’s attention.” Sun Oi! Co. v.

Wortman, 486 U.S. 717, 730-731 (1988). In Shutts, the trial

court had failed to “determine whether any difference existed

between the laws of Kansas and other states or whether

another state’s law should be applied.” Shutts, 472 U.S. at

822 n.8.

Here, the trial court gave “thoroughgoing treatment” to

Georgia law as required by Shutts. /d. at 818. The trial court

found that “[i]n assessing the fairness of the settlement with

respect to Georgia residents, the Court will evaluate the

claims of those individuals under Georgia law. Phillips

Petroleum Co. v. Shutts, 472 U.S. 797 (1985). Resp. App.

B, 9a. After two full hearings, extensive briefing and testi-

mony from an expert in Georgia regulatory law, the trial court

rejected Petitioners’ assertion that material differences in

Georgia law were relevant to the adequacy of the Settlement.

Pet. App. D, 25a-28a. The trial court determined that the

Georgia statute relied upon by Petitioners was inapplicable to

this case, but that even if that Georgia statute did apply, there

is no private right of action under Georgia law that would

allow class members to enforce such claims, /d. at 28a. The

Alabama Supreme Court unanimously affirmed this finding.

Whether or not Petitioners agree with the trial court's

interpretation of Georgia law, Petitioners have not shown a

due process violation in connection with the fairness of the

settlement. Indeed, even if the trial court misconstrued the

Georgia insurance statute, that would still not mean that the

settlement violated the due process clause or the full faith and

credit clause.

As stated above, in Sun Oil Co., this Court held that to

constitute a federal due process violation, “it is not enough

that a state court misconstrue the law of another State.” Sun

Oil Co., 486 U.S. at 730-731. Here, Petitioners have not

demonstrated that there is any “clearly established” law in

Georgia that applies to the Gadson litigation and conflicts

with Alabama law in such a way as to create a federal due

process violation.'” The rulings of the Alabama courts com-

plied with the precedent established by this Court.

2 an . . ° _ .

The tria! court in the instant case specifically noted that it was

“unable to locate any case law or other administrative opinions that would

V. CONCLUSION.

For the foregoing reasons, it is respectfully submitted that

the Petition for Writ of Certiorari be denied.

Respectfully submitted,

WILLIAM E. GRAUER *

MAZDA K. ANTIA

HEATHER C. MESERVY

COOLEY GODWARD LLP

4401 Eastgate Mall

San Diego, California 92121

(858) 550-6000

Attorneys for Respondents

American Medical Security, Inc.,

United Wisconsin Life Insurance

* Counsel of Record Company and Amsouth Bank

February 23, 2006

support [Petitioner’s] position” that the Georgia statute would lead to a

better result for plaintiffs. Pei. App. D, 27a. “If such decision [refuting

the forum court's finding] existed, it was incumbent upon defendant to

prove it as matter of fact.” Sun Oil Co., 486 at 732 1.4.

APPENDIX

APPENDIX A

IN THE CIRCUIT COURT OF

MONTGOMERY COUNTY, ALABAMA

[Filed April 6, 2004]

CIVIL ACTION NO.: CV-02-1601

VIVIAN GADSON,

individually and on behalf of all others similarly situated,

Plaintiff,

UNITED WISCONSIN LIFE INSURANCE COMPANY; AMERICAN

MEDICAL SECURITY, INC.; and AMSOUTH BANK, et al.,

Defendants.

ORDER: (1) ACCEPTING STIPULATION OF SETTLE-

MENT AND COMPROMISE PENDING FAIRNESS

HEARING; (2) CERTIFYING TEMPORARY SETTLE-

MENT CLASS; (3) APPROVING CLASS NOTICE; AND

(4) SETTING SCHEDULE FOR CONSIDERATION OF

PROPOSED SETTLEMENT AT FAIRNESS HEARING

The parties having made application, pursuant to Rule

23(e) of the Alabama Rules of Civil Procedure, for an Order

implementing the settlement of all claims in this action and

procedures for the disposition of the action in accordance

with the parties’ Stipulation of Setthkement and Compromise

dated March 10, 2004 (the “Stipulation”), which, together

with the Exhibits annexed thereto, sets forth the terms and

conditions for such settlement and further proceedings re-

lating thereto and for entry of an Order of Final Approval and

Judgment dismissing all claims of the Settlement Class,

subject to the terms and conditions set forth therein; and the

Court having read and considered the Stipulation and the

Exhibits annexed thereto; and all parties having consented to

the entry of this Order, it is hereby ORDERED:

1. Pending the Settlement Fairness Hearing, as defined in

paragraph 3 below, this Court hereby temporarily certifies,

pursuant to Alabama Rules of Civil Procedure 23(a), 23(b)(2)

and 23(b)(3), and for settlement purposes only, a Settlement

Class consisting of all persons and entities (including the

named plaintiff) in Alabama or Georgia who, at any time

purchased or renewed in Alabama or Georgia a certificate of

medical insurance from United Wisconsin Life Insurance

Company. Specifically excluded from the ciass are: (a) any

holders of certificates of insurance whose insurance coverage

through United Wisconsin Life Insurance Company at all

times has been issued solely as small employer group cover-

age or under any other employer sponsored group health plan;

(b) persons presently in a bankruptcy proceeding; (c) persons

that have pending against one or more of the named defen-

dants on the date of the Court’s certification order any indi-

vidual action wherein recovery sought is based in whole or in

part on the type of claims asserted in this Action; (d) persons

who, as to a particular defendant, have previously obtained a

judgment or settled any claims against that same defendant

concerning the type claims asserted herein or have previously

executed releases, releasing any such claims against the same

defendant; (e) persons whose insurance coverage through any

defendant at all times has been issued solely through a policy

of insurance that is part of an employee welfare benefit plan,

pension plan or any similar type plan that is governed by the

ERISA statutes; and (f) persons currently serving as a judge

or justice of any federal court in Alabama or Georgia (the

“Settlement Class’’).

2. Pending the Settlement Fairness Hearing, as defined in

paragraph 3 below, and further proceedings pursuant hereto,

this Court preliminarily approves the settlement of the claims

of the Settlement Class as fair, reasonable and adequate.

3. A hearing (the “Settlement Fairness Hearing’’) shall be

held on September 8, 2004 [at least one hundred fifty (150)

days from the date of this order] at 9:00 a.m. at the Montgom-

ery County Courthouse, Montgomery, Alabama, to determine

whether: (i) the Settlement Class should be certified pursuant

to Ala. R. Civ. P. 23(a), (b)(2) and (b)(3); (ii) the proposed

settlement, as set forth in the Stipulation on the terms and

subject to the conditions provided for therein, is fair, reason-

able and adequate and should be approved by the Court;

(iii) Class Counsel have adequately represented the interests

of Settlement Class Members; and (iv) an Order of Final

Approval and Judgment in the form annexed to the Stipula-

tion should be entered. The Court may adjourn the Settlement

Fairness Hearing on the hearing date without further notice to

members of the Settlement Class.

4. The Court approves, in form and content, the form of

“Notice of Class Action and Proposed Settlement” (the “‘Set-

tlement Notice—Direct Mail Notice”) attached as Exhibit B

to the Stipulation and the form of “Publication Notice”

attached as Exhibit C to the Stipulation, and finds that the

mailing and publication of such notices in the manner and

form set forth in this Order adequately meet the requirements

of Rule 23 of the Alabama Rules of Civil Procedure and due

process and constitute the best notice practicable under the

circumstances and shall constitute due and sufficient notice to

all persons entitled thereto.

5. (a) Within ninety (90) days of the date of this Order (i) a

copy of the Setthement Notice substantially in the form

annexed as Exhibit B to the Stipulation, shall be mailed by

first class mail to all persons who, after reasonable review of

company records, having been identified by defendants as

possible members of the Settlement Class, at the most re-

cent addresses reflected in such company records; and

(ii) Summary Notice in the form annexed as Exhibit C to the

Stipulation shall be published as provided in the Stipulation.

Said publication notice shall allow any class member not

receiving mail notice to provide a correct address in order to

be included in subsequent mailings. The Court finds the fore-

going notice is the best notice practicable and adequately

advises the Settlement Class of this Action and the settlement

contemplated herein.

(b) On or before [seven (7) days prior to the hearing

date] September |, 2004, proof, by affidavit, of such mailing

and publication of notice shall be filed by defendants with the

Court; and

date] September |, 2004, the parties will submit to the Court

any papers seeking approval of the proposed Settlement set

forth in the Stipulation. Plaintiffs’ counsel shall also submit

any request for approval of attorney’s fees and expenses on or

before September 1, 2004.

6. As provided in the form of notice attached to the Stipu-

lation, each Class Member shall have until August 19, 2004

[twenty (20) days prior to the schedule date of the Settlement

Fairness Hearing] to opt out of the class. Each Class Member

not electing to opt-out of the class shall be deemed.a “mem-

ber of the Settlement Class. Each class member seeking to

opt-out of the class must properly complete the Exclusion

Request Form as attached to Exhibit B to the Stipulation and

timely mail said form to comply with the deadline set forth

therein. More specifically, the Exclusion Request Form must

contain the original signatures of the class member (not the

signature of a representative) and the class member’s address,

social security number, group number, and be received by the

Settlement Administrator by the date noted on the Form, not

merely postmarked by the deadline date. Any member of the

Settlement Class may appear at the Settlement Fairness Hear-

ing, either by written papers (as described below) and/or in

person or by counsel of such person’s choice (and at such

person’s own expense), and show cause (i) why the Settle-

ment Class should not be certified, (ii) why the Settlement

should not be approved, (iii) why Class Counsel have not

adequately represented the interests of Settlement Class

Members, or (iv) to be heard on any other objections such

Settlement Class Member may have with respect to any

aspect of the Settlement and/or Class Counsel’s application

for an award of attorneys’ fees; provided, however, that un-

less the Court shall otherwise direct, no person or counsel

shall be heard, and no written objection, memorandum or

other paper shall be received or considered by the Court, un-

less such person or counsel shall file with the Clerk of the

Court no later than August 19, 2004 [twenty (20) days prior

to the schedule date of the Settlement Fairness Hearing],

showing service on counsel of record, in the manner desig-

nated in the Notice, a copy of such written objections, as well

as any pleadings, memoranda or other papers and information

in support thereof, and stating the bases for such objection,

and notice as to whether such person or counsel intends to

appear at the Hearing. Any member of the Settlement Class

who does not object in the manner so provided shall be

deemed to have waived such objection to the fairness,

reasonableness or adequacy of the proposed settlement as set

forth in the Stipulation.

7. Notwithstanding anything in the Stipulation of Set-

tlement and Compromise to the contrary, defendants shall

mail claim forms, premium credit vouchers as described in

paragraph IIB(1)(b) of the Stipulation of Settlement and

Compromise; and the disclosures described in paragraph

IIB(1)(d)Gii) and (iii) of the Stipulation of Settlement and

Compromise within sixty (60) days of the Effective Date as

defined in paragraph IG of the Stipulation of Settlement and

Compromise.

8. Notwithstanding anything to the contrary in the Stipu-

lation of Settlement and Compromise, any Class Member, in

order to be eligible to receive a refund, must complete a claim

form setting forth their name, address, social security number

and group number, and the Class Member shall have foregone

any Opportunity to opt-out of the class. No claim form shall

be accepted unless received by defendant or its designee

within one hundred twenty (120) days of the Effective Date

as defined in paragraph IG in the Stipulation of Settlement

and Compromise.

9. The failure of a Class Member to claim or obtain any

settlement consideration here made available shall not effect

the release of such Class Member’s claims and the settlement

shall retain its full, binding effect. As to any Class Member

who otherwise would be entitled to settlement consideration

and who for any reason fails to mail their claim for settlement

consideration with one hundred twenty (120) days of the

Effective Date as defined in paragraph IG of the Stipulation

of Settlement and Compromise, all rights of such Class

Member to consideration in this action shall lapse and be

forfeited. Defendants shall not be required to remit any addi-

tional consideration to claiming Class Members on account of

the forfeiture by any Class Member.

10. Notwithstanding anything to the contrary in the Stip-

ulation of Settkement and Compromise, defendants or their

designee shall complete processing of all claims within one

hundred eighty (180) days of the Effective Date as defined in

paragraph IG of the Stipulation of Setthement and Com-

promise and shall provide Class Counsel with a final ac-

counting of all claims, approved and unapproved, within two

hundred ten (210) days of the Effective Date.

11. Pending the Settlement Fairness Hearing, all proceed-

ings in connection with prosecution of this Action are hereby

stayed, except those proceedings necessary or appropriate in

connection with effectuating this Order and the Settlement,

and all Settlement Class Members are barred and enjoined

from commencing or prosecuting, either directly, represen-

tatively or in any other capacity, any of the “Released

Claims” against the defendants or the Released Parties as

those terms are defined in the Stipulation.

12. In the event the Stipulation is not approved by the

Court or the Order of Final Approval and Judgment ap-

proving the settlement provided for therein is not entered or

does not become final pursuant to the terms of the Stipulation

or if for any reason the Settlement is terminated before the

Effective Date or the Effective Date otherwise does not occur,

then such settlement shall become null and void and of

no further force and effect (except as otherwise expressly

provided therein) and shall not be used or referred to for any

purpose whatsoever in any action or proceeding except as

otherwise set forth in the Stipulation. In such event, such

Stipulation and ali negotiations, orders and proceedings

relating thereto shall be withdrawn without prejudice as to the

rights, claims or defenses of any and all parties thereto, all of

whom shall be restored to their respective positions as of the

date of the Stipulation.

13. The Court hereby reserves (a) the right to approve the

Settlement with such modifications as may be agreed to by

counsel for the parties thereto consistent with the terms

thereof, without further notice to the Settlement Class; (b) the

right to adjourn and to-reschedule the Settlement Fairness

Hearing, without further notice to the Settlement Class other

than by oral announcement thereof at the time and place for

which such hearing is hereby being scheduled or any ad-

journed date thereof; and (c) the right to entertain during the

Settlement Fairness Hearing an application for the award of

reasonable attorneys’ fees and reimbursement of costs and

expenses for Class Counsel, subject to the limitations set forth

in the Settlement.

14. The Court recognizes that the parties have entered the

Stipulation of Setthement and Compromise for settlement

purposes only, and neither the fact of. nor any provision

contained in the Stipulation of Setthkement and Compromise

nor any action taken under the Stipulation of Settlement and

Compromise shall constitute, be construed as, or be admissi-

ble in evidence as, any admission of the validity of any claim

or any fact alleged by plaintiff in this Action or in any other

pending or subsequently filed action or of any wrongdoing,

fault, violation of law, or liability of any kind on the part of

defendants, or admission by defendants of any claim or alle-

gation made in this Action or in any action, or admission by

any of the plaintiffs, members of the Settlement Class, or

plaintiff's Class Counsel, of the validity of any fact or defense

asserted against them in this Action or any action. The Stipu-

lation of Settkement and Compromise shall, however, be

admissible in any action or proceeding to enforce the terms of

the Stipulation of Setthkement and Compromise.

15. The Stipulation of Setthement and Compromise is

without prejudice to the rights of defendants to (a) oppose

class certification in this Action should the Stipulation of

Setthement and Compromise not be approved by the Court or

implemented for any reason; (b) oppose certification in any

other proposed or certified class action; or (c) use certifica-

tion of the Settlement Class to oppose certification of any

other proposed class arising out of or related to the claims

asserted in this Action.

DONE this 6th day of April, 2004.

/s/ Johnny Hardwick

JOHNNY HARDWICK

Circuit Judge

APPENDIX B

IN THE CIRCUIT COURT OF

MONTGOMERY COUNTY, ALABAMA

[Filed June 29, 2004]

CIVIL ACTION NO.: CV-02-1601

VIVIAN GADSON,

individually and on behalf of all others similarly situated,

Plaintiffs,

UNITED WISCONSIN LIFE INSURANCE COMPANY; AMERICAN

MEDICAL SECURITY, INC.; and AMSOUTH BANK, et al..,

Defendants.

ORDER

Upon motion of the parties and after a hearing and a review

of the June 14, 2004 order from the Superior Court of Cobb

County Georgia in the case styled Stephen Parker, et al. v.

American Medical Security, Inc, et al., the Court finds that

clarification of its April 6, 2004 Order is necessary. There-

fore, the Court orders, judges and decrees as follows:

1) As the April 6, 2004 order states, the Court will

conduct a fairness hearing on September 8, 2004, in order to

determine whether, among other things, the proposed settle-

ment in this case is fair, reasonable and adequate and should

be approved by the Court. In assessing the fairness of the

settlement with respect to Georgia residents, the Court will

evaluate the claims of those individuals under Georgia law.

Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985). The

Court does not interpret the choice of law provision contained

in the stipulation between the parties to require the Court to

disregard Georgia law in assessing the claims of Georgia

10a

residents. In any event, the Court would not, and could not,

be bound by any such agreement between the parties.

2) In the April 6, 2004 Order, the Court excluded from

the definition of the Settlement Class any “persons that have

pending against one or more of the named defendants on the

date of the court’s certification order any individual action

wherein recovery sought is based in whole or in part on the

type of claim asserted in this action.” This exclusion applies

to all individuals who have brought their own lawsuits against

any of the defendants, regardless of whether or not those

individuals are attempting to represent a class. The Court is

informed that individuals Stephen Parker, Anne Parker, Julie

Cox, William Rolader and Sharon Rolader filed a lawsuit on

March 15, 2004 against American Medical Security, Inc. and

United Wisconsin Life Insurance Company in Cobb County,

Georgia on behalf of themselves and a putative class of

Georgia residents. The Court is further informed that the

putative class has not been certified, thus only the individual

claims of the named plaintiffs were pending at the time of the

Court’s preliminary certification of the Settlement Class.

3) As a result of their lawsuit, which was pending at the

time of the preliminary certification of the Settlement Class,

Stephen Parker, Anne Parker, Julie Cox, William Rolader,

and Sharon Rolader are not members of the class as defined

by the Court.

4) The terms of the Court’s April 6, 2004 Order remain

in effect and the parties remain bound by those terms.

Done this the 28th day of June, 2004.

/s/ Johnny Hardwick

JOHNNY HARDWICK

Circuit Court Judge

lla

APPENDIX C

IN THE SUPREME COURT OF ALABAMA

CASE NO. 1040260

ON APPEAL FROM THE CIRCUIT COURT OF

MONTGOMERY COUNTY, ALABAMA

ANGELA KING, VALERIE ASKEW, CHARLES J. KAHN,

JANA HUTCHINSON, and SHARON HENDERSON,

Appellants/Interveners,

Vv.

VIVIAN GADSON, UNITED WISCONSIN LIFE INSURANCE

COMPANY, AMERICAN MEDICAL SECURITY, et al.

Appellees/Class Action Proponents.

CV: 02-1601

BRIEF OF APPELLATE/INTER VENERS IN OPPOSITION

OF CLASS ACTION CERTIFICATION

ORAL ARGUMENT REQUESTED

L. ANDREW HOLLIS, JR., Esq.,

STEVE W. COUCH, Esq.

Attorney for Appellants/

Interveners Angela King, Valerie

Askew, Charles J. Kahn, Jana

Hutchinson and Sharon Henderson

OF COUNSEL:

HOLLIS & WRIGHT

Financial Center

505 North 20th Street, Suite 1750

Birmingham, Alabama 35203

12a

STATEMENT REGARDING ORAL ARGUMENT

Appellant/Interveners, Angela King, Valerie Askew, Charles

J. Kahn, Jana Hutchinson and Sharon Henderson request oral

argument. This is a class action lawsuit affecting more than

30,000 persons over a two state area with respect to their

health insurance. The pertinent facts are many and relatively

complex, and while most of the legal principals are well es-

tablished, because this case involves an appeal of a settlement

class, Appellant/Interveners feel that the Court may benefit

from a factual presentation that can be made with oral argu-

ment. Appellant/Interveners submit that if the legal principles

citied herein are applied to the facts, then it is evident that this

class action should never have been certified.

13a

TABLE OF CONTENTS

Page

Statement Regarding Oral Argument ..................ceeeceeeee il

ee i iiccticncepittninsisilasinitbiaddpcctiddiiniienadnteniniinlient ill

ee Oe Fi icccstinintectevinncetthiosindineintninsienbasenes iv

SUERTE UEF FURITIEIOINOUD cctesriccoeversssinntonnisctosnintsuvenmsnties ix

SIE OEE GE GG iccntscitrvsictectdpnsnscipeisénsconantibiaseanenate I

Re aD 5

Statement of the Facts...........cccccssscceeees iniipiiasiadiiationiiotine 6

Statement of the Standard of Review ............ccccccceeeeeeees 14

II GE TS: FA scccticnevicnetideciatpenesinnsiniiintuniains 15

PIII sicshscohisitnitcienltediiceisibingdtiaataiieinaiiygtihsiiaeniaiipmaniaaaeates 17

I. THE TRIAL COURT ERRED IN CERTI-

FYING VIVIAN GADSON AS_ AN

ADEQUATE CLASS REPRESENTATIVE

WHERE THERE WERE FATAL SUBSTAN-

TIVE AND PROCEDURAL IMPEDIMENTS

PP BRRee CRS FOE RIE 8 eG cssencnesccescerneovessorenses 17

A. Substantive impediments exclude Vivian

Gadson from being certified as an adequate

class representative because she had no

standing to file this case and her claims are

not typical of or common to the claims of

the class pursuant to ARCP 23(a)(3).......... 18

|. Even if Ms. Gadson fits within this

newly defined “class,” this new “class”

is amorphous and thus uncertifiable ...... 24

Il.

14a

TABLE OF CONTENTS—Continued

B. Procedural concerns exclude Vivian Gad-

son from being certified as an adequate

class representative because the unwilling-

ness of Ms. Gadson to represent the class

led to the inability of the Trial Court judge

to properly conduct a rigorous Rule 23

SIRE Y OED <cnsicresiscrsbinvniciiniiniemniurenenioniain

BECAUSE THE SETTLEMENT AGREE-

MENT WAS A PRODUCT OF NEGOTIA-

TIONS THAT EXCLUDED EVERY MEM-

BER OF THE GEORGIA INSURED CON-

SUMING PUBLIC, THE SETTLEMENT

AGREEMENT CANNOT MEET THE

REQUIREMENTS OF TYPICALITY, COM-

MONALITY, AND ADEQUATE REPRE-

SENTATION NECESSARY FOR’ FINAL

PAE CURE Pike victineniinneenivvicniininmnavoninietniguiantsats

A. Scrutiny of Pre-Certification Settlement

CODUIIOE .cacinccnvciwiesrecincsineccsnneniciaebapannbiaieeien

B. Georgia’s Insurance Laws Create Claims

Against the Defendants that are Funda-

mentally Stronger than those Arising

Under Alabama Law, meaning the claims

of the Georgia Insureds and the Alabama

Insureds Are Neither Common. Nor

1. Georgia’s specific and comprehensive

statutory regulation of insurance prac-

tices provides Georgia insureds with

greater legal protection than the legal

protection available to Alabama insur-

UI inscescersnrsdvisivantinvecietibasaiadibiasnal

Page

1Sa

TABLE OF CONTENTS—Continued

Page

C. Lingering Concerns over Substantive

Choice of Law Decisions: Why the Set-

tlement Agreement Violates Rule 23's

Superiority Requirement and Denied Geor-

gia Insureds their Reasonable Expectation

that their Claims would be Governed by

IIIT cl astiisbsneivagsecbanendeardesoprcoesoes 42

Hil. BECAUSE THE SETTLEMENT AGREE-

MENT LACKS THE FAIRNESS, ADE-

QUACY, AND REASONABLENESS NEC-

ESSARY TO BIND THE CLASSES, THE

SETTLEMENT AGREEMENT SHOULD BE

SITIES. salads ancnveternsnvéopevocoetousesevscerscegeveces 46

A. The incorporation of waiver and forfeiture

provisions for late-filed returns are unfair,

inadequate, and unreasonable ...............:00+8 46

B. The substantive money award is grossly

SIMDCQUAS BNE UNTRIE..cccrccvcsvvcrceveseseccvesscosses 47

C. Meaningful equitable relief is conspicu-

ously absent in the Settlement Agreement,

and, thus renders the Settlement Agree-

ment inadequate, unfair, and grossly un-

conscionable, especially fc. those insureds

in both Alabama and Georgia who were

rendered uninsurable due to Defendants’

illegal practices and completely abandoned

under the Settlement Agreement ................ 52

D. The Settlement Agreement violates Geor-

16a

TABLE OF CONTENTS—Continued

Page

E. The Class Action Notice is Inadequate and

Due Process Protections have been Com-

DASISTY ADGIIOUIIG ceccececsecteceescmesteneerecteonones 58

1. Notice given under the “new class

definition” was inadequate to afford

SIS FUCIOIS ccccccsnvecccsvoctonneveterenientsasienines 58

IV. THE TRIAL COURT ERRED WHEN IT

CERTIFIED THIS CLASS ACTION WITH-

OUT CONDICTING [sic] A RIGOROUS

ANALYSIS PURSUANT TO ALABAMA

LAW AND WHEN IT FAILED TO ENTER

AN ORDER CONFORMING WITH ALA.

CEES F OSG S avestenstvcccnrecescnssnecensveenecvensatavnven 60

| ERE Aer ad OE PRL PD Wee OF es MEE ee 64

I I I iia ci a ee 67

17a

TABLE OF AUTHORITIES

United States Supreme Court Cases Page

Bailey v. Patterson, 369 U.S. 31 (1962) ...c.sessss00- 18

Hall v. Beals, 396 U.S. 45 (1969).......cccccccecssceeeees 18

Shutts v. Phillips Petroleum, 472 U.S. 797 (1985)... 42, 59

Sun Oil Co. v. Wortman, 486 U.S. 717 (1988)...... 42

United States Courts of Appeal Cases

Carpenter v. Davis, 424 F.2d 257 (5th Cir. 1970) .. 25

Castano v. Am. Tobacco Co., 84 F.31 734 (Sth

a ts ccatsnaieasiidsihiubasdeitcestadsiesaecnnsiobesenitinsctichpadisinits 45

Eisen v. Carlisle, 391 F.2d 555 (2nd Cir. 1968)... 29

Equal Employment Opportunity Comm'n v. D.H.

Holmes Co., Ltd., 556 F.2d 787 (Sth Cir. 1977)... 25

Huff v. N.D. Cass Co. of Alabama, 468 F.2d 172

ils, BD cabins nip nceppiniciveninciyiesatinubiuioeniamets 17

In re Gen. Motors Corp. Pick-up Truck Fuel

Tank Liab. Litig., 55 F.3d 768 (3d Cir. 1995)... 36

In re Nissan Motor Corp. Antitrust Litig., 552

Fe PE Ue Wally ROE D occsaswennsevtintetrntebevemnies 59

Jenkins v. Raymark Indus., Inc., 782 F.2d 468

Ge ly Be ciinscinsrinbbtessntoticcedpencgsietscsapeat: 29

Mars Steel Corp. v. Cont'l Illinois Nat’l Bank &

Trust, 834 F.2d 677 (7th Cir. 1987)........ceeeees 35

Twigg v. Sears, Roebuck, & Co., 153 F.3d 1222

CE TR aes 0 OI tasisnicenciepineierensbstosehdinsendetilatediin 59

United States District Court Cases

Byes v. Telecheck Recovery Servs., Inc., 173

FP eke Hee CRs Ba. SPN ED cecrcersecneessnnnsnunetinitipans 29

Earnest v. Gen. Motors Corp., 923 F. Supp. 1469

FHee Feels: CUT wicnscvncianiniosiediinctienisieveiiisilbccsihasdianings 25

Hardy v. U.S. Steel Corp., 289 F. Supp. 200

PGs Fas SIE Dd itiinccnseseleitesisaiavusesnestiansensnetendlion 25

18a

TABLE OF AUTHORITIES—Continued

Page

McGuire v. Int’l Paper Co., Civ. A. No. 1:92-

CV-593BRR, 1994 WL 261360 (S.D. Miss.

Le | Beaeontteetiedinw sett covew nnn miter ee Sey el aN 25

Perez v. Metabolife Int'l, inc., 218 F.R.D. 262

Ges als: SPRIGIE \eistaviniddsyinnniatbensnnadcarimnennsaincbet 25

Pipes v. American Sec. Ins. Co., 169 F.R.D. 382

EGR ay PAM SOD seo rsnisanesicevasenbrsabunanepelatcounicainneils 36

Polar Int'l Brokerage Corp. v. Reeve, 187 F.R.D.

FE Rea e es 0 a hitecisnasendevedsquacdeaunpannstantonns 36, 37

White v. Williams, 208 F.R.D. 123 (D.N.J. 2002)... 25

State Court Cases

ALFA Life Ins. Corp. v. Hughes, 861 So. 2d 1088

I, NICO sic: cincss at ula ableton asco lbceaaininebsatelonce taal 14

Amason v. First State Bank of Lineville, 369 So.

Be PE GR FT a iis ctesavinremiiontienitivieicen 17

American Cyanamid Co. v. Stephen, 600 N.E.2d

SSUES EIN eh PRED: SPIE Docsncinconnsesiviviacabinnevsannnts 29

Cutler v. Orkin Exterminating Co., 770 So. 2d 67

CII, FRI ankechiankundeconditincatacconssevioditvngentedsputenioases 18

Disch yv. Oxmoore House, Inc., 2004 WL

BT SIE, basis stbahinvitinsisnesechdianbiaapadiaentanscevon 62

Duvall v. TRW, Inc., 578 N.E.2d 556 (Ohio Ct.

PRD: FAD vinsainsiioeinasevidosteaxstanssweetuneaioulacenss 43

Ex parte Blue Cross & Blue Shield of Alabama,

SBe SO. 26 4G (Ala, F991) crcisscciccesersccessiossesoee 17

Ex parte Citicorp Acceptance Co., 715 So. 2d

PGI CT Riinckactitscsscrectenmaiuiasisieceeanberinenteess 44

Ex parte Exide Corp., 678 So. 2d 469 (Ala.

POURED ics oscoiciinsbigtnonsibinensaNadernshiababeaseesubeseniorwbunaiesis 17

Ex parte Exxon Corp., 725 So. 2d 930 (Ala.

POE Bick cocs abi alcdh caessnantesadieassccuisariatriin can asiasenleas 43

Ex parte Green Tree Fin. Corp., 723 So. 2d.6

Ss 5 i cisarvedcishaidantadhiapncchapiveisadeomabionlenbetiseeats 43.45

19a

TABLE OF AUTHORITIES—Continued

Page

Ex parte Izundu, 568 So. 2d 771 (Ala. 1990)........ 17

Ex parte Owen, 437 So. 2d 476 (Ala. 1983).......... 45

Ex parte Prudential Ins. Co. of America, 72\ So.

Fe IN Fee Dicdcesicteeeetelpencsisichinumdéiiedpatiiocts 17

Funliner of Alabama, L.L.C. v. Pickard, 873 So.

a ants TIED iasidaisdinscsinsedpomianipecieonsleshabinisciconite 18

Gen. Tel. Co. of Southeast v. Trimm, 311 S.E.2d

ee ec ictesennticcnipritininentnstipnabinsliommeiineiaiti 45

Hefty v. All Other Members of the Certified

Settlement Class, 680 N.E.2d 843 (Ind. 1997)... 36

Mitchell v. H,& R Block, Inc., 783 So. 2d 812

SA RN iatisiscienecvaitintidiillenticlasdtnchinnimattesaedibosaags 18

Reynolds Metals Co. v. Hill, 825 So. Zd 100 (Ala.

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Smart Prof’! Photocopy Corp. v. Childers-Sims,

850 So. 2d 1245 (Ala. 2002)..........ccccssseccssereeeess 14

Steinberg v. Sys. Software Assoc., Inc., 306 713

N.E.2d 709 (App. Ct. Ill. 1999)............cccccceserees 37

Taylor v. Liberty Nat. Life. Ins. Co., 462 So. 2d

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Rules and Statutory Provisions

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Ala. Code § 6-5-642 (1975)........cccscccccsercssesserereees 62, 63

Ga. Comp. R. & Regs. 120-2-10-.12 000... 40, 41, 56

Ga. Comp. R. & Regs. 120-2-12-.16 0... 4]

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Secondary Materials

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20a

STATEMENT OF JURISDICTION

The Supreme Court of Alabama has original jurisdiction in

this case pursuant to Alabama Code § 12-2-7 (1975), §6-5-

641, and § 6-5-642. In compliance with Ala, Code § 6-5-

642,' Appellants/Interveners filed this appeal in a timely

manner on November 9, 2004. [C. 1396].

On April 6, 2004, the Trial Court preiiminarily approved

and conditionally certified this class action lawsuit for

settlement purposes between Vivian Gadson and United Wis-

consin Life Insurance Company, American Medical Security,

Inc., Prescription for Good Health Trust and Amsouth Bank.

sd 390]. The class consisted of all persons and entities .. .

in Alabama or Georgia who, at any time purchased or

renewed in Alabama or Georgia a certificate of medical

insurance from United Wisconsin Life Insurance Company.

[C. 464-465]. The Final Order and Judgment approving the

class action settlement was issued on September 29, 2004.

[C. 1032-1075]. On October 6, 2004, Interveners filed their

motion to reconsider. [(C. 1175]. On October 26, 2004, In-

terveners filed their motion to alter, amend, or vacate the

Trial Court’s order on certification of this class action. [C.

1305]. On November |, 2004, the Trial Court held its hearing

on Intervener’s motions [R. 3-39, Volume 9 of 9]. On No-

vember 9, 2004, Interveners filed their notice of Appeal with

the Circuit Court of Montgomery County, Alabama, and to

the Supreme Court of Alabama. [C. 1396]. On November 10,

2004, the Trial Court denied the Interveners’ motions and

other requested relief, and, without written request or addi-

' Ala. Code § 6-5-642 (1975) mandates that an appeal of a court’s

order certifying a class is appealable to this Court within forty-two (42)

days of the order.

> While the Order does not define the parties, it refers back to the

Stipulation of Settlement dated March 10, 2004. [C. 464]. The “Stipu-

lation” is located at [C. 390] and describes the parties as stated.

2la

tional evidence, entered an amended Order on certification.

[C. 1382- 1395].

STATEMENT OF THE CASE

This is a case involving the marketing of comprehensive

major medical health insurance plans. [C. 104, lOSA]J. While

these plans were marketed as “group” coverage, the Defen-

dants’ renewal rating practices revealed that the Defendants

considered individual health factors in calculating an in-

sured’s renewal premium rather than considering the claims

experience and health factors of the entire “group” of which

each certificate holder was a member. [C. 36]. This practice

resulted in highly inflated premiums being placed upon

insureds, especially those who were suffering from serious

illnesses, which insureds had to pay to keep their coverage in

force. [C. 35].

On June 11, 2002, Plaintiff Vivian Gadson filed her initial

Complaint in the Circuit Court of Montgomery County,

Alabama. [C.1]. Ms. Gadson brought this claim in her

individual capacity against Defendants American Medical

Security, Inc., United Wisconsin Life Insurance Company,

Amsouth Bank, and Gerry Reynolds, alleging fraudulent

representation, fraudulent suppression, wanton conduct

including the failure to properly hire, train, and supervise

agent Reynolds, unjust enrichment, unfair business practices,

and conspiracy. [C. l-11]. On July 9, 2002, Plaintiff amended

her complaint to include class allegations wherein Ms.

Gadson sought to represent a class of persons consisting of

Alabama residents on similar common law theories as alleged

in her original lawsuit. [C. 12]. Two days later on July 11,

2002, Ms. Gadson amended her complaint a second time to

allege similar common law claims on behalf of a nationwide

class of persons. [C. 30]. On October 15, 2002, Ms. Gadson

filed the third amendment to her complaint to add claims for

punitive damages. [C. 51-52]. On March 3, 2003, Ms. Gadson

filed her fourth amendment to her complaint adding claims on

22a

behalf of a nationwide group of persons who had participated

in the Prescription for Good Health Trust that was admin-

istered by Defendants. [C. 305]. On March 11, 2004, Ms.

Gadson and the Defendants submitted a Stipulation of

Settlement and Compromise. [C. 390]. On April 6, 2004,

without conducting any evidentiary hearing, the Trial Court

certified a class of persons consisting of Alabama and Geor-

gia residents only and set a fairness hearing to take place on

September 8, 2004. [C. 464-471].

On May 17, 2004, Interveners Jana Hutchinson and Sharon

Henderson made their application to intervene and requested

emergent relief. [C. 472]. On August 19, 2004, Angela King

and Valerie Askew intervened into this case. [C. 550-557].

On September 7, 2004, pursuant to the Notice to the pur-

ported class, Charles J. (“Jack”) Kahn intervened. [C. 982].

On August 19, 2004, Interveners submitted their objections to

the certification of this case as a class action, arguing, among

other issues, (1) that the class should not be certified, (2) the

Notice was defective, (3) that the settlement was not “fair,

adequate and reasonable,” and (4) that the Plaintiff was not an

adequate representative for the putative class of persons

affected by the settlement. |C. 558-618].

Prior to the “Fairness” hearing, the proponents of the settle-

ment filed their respective briefs and affidavits from the

attorneys in support of the certification and settlement of this

class action. The documents submitted by the proponents of

this class action contained no “expert” witness testimony, and

were largely comprised of affidavits submitted from the

claims administrator, various class counsel, and the purported

class representative. [C. 632, 751}.

A “Fairness” Hearing was held oy the Trial Court on Sep-

tember 8, 2004. Neither the Class Plaintiff nor Defendants

called any expert witness or fact witness, including the class

representative. Counsel for Interveners called the class rep-

resentative to testify. [R. 115, Volume 8]. Despite serving her

23a

attorneys with a subpoena in Vivian Gadson’s name, Ms.

Gadson did not appear at her own hearing. [C. 945]. Interven-

ers then called an expert witness who submitted both an

affidavit and testified in opposition to the settlement. [R. 129,

Volume 8, C. 594-618]. On September 29, 2004, the Trial

Court entered the Final Order and Judgment approving the

Class Action Settlement. This Order was prepared by counsel

representing the class Plaintiff and class Defendants. Inter-

veners filed a Motion to Reconsider on October 6, 2004, and

a Motion to Alter, Amend, or Vacate on October 26, 2004,

and again served Vivian Gadson with subpoenas to appear at

the hearing. [C. 946-949]. Vivian Gadson again failed to

appear at the hearing. The Trial Court denied Interveners’

Motions on November 10, 2004 and, without any request to

do so, amended its Order to attempt to comply with Ala.

Code. § 6-5-641 [C. 1382)’.

Appellants/Interveners filed this appeal on November 9,

2004. [C. 1396].

STATEMENT OF THE ISSUES

|. Whether the Trial Court erred in certifying Vivian

Gadson as class representative where there are serious sub-

stantive concerns that Ms. Gadson had no standing to file this

case and her claims are not typical of or common to the

claims of the class pursuant to ARCP 23(a)(3), and serious

procedural concerns that Ms. Gadson’s unwillingness to

represent the class led to the inability of the Trial Court judge

‘ By addressing the substantive portions of the Trial Court’s Final

Order, Appellants are not implying that they have no objections to the

Trial Court's Order of November 10, 2004. In fact, Appellants maintain

that, pursuant to Ala. Code § 6-5-641, after the Notice of Appeal was

submitted in this case on November 9, 2004, that the Trial Court no longer

had jurisdiction to enter its Amended Order as the case was stayed

immediately upon the filing of the Notice of Appeal and that therefore, the

Trial Court’s Amended Order of November 10, 2004 should not be

considered by this Court. See infra. at p.62.

24a

to properly conduct a rigorous Rule 23 analysis, both of

which exclude Ms. Gadson from being certified as an ade-

quate Class representative.

2. Whether the Settlement Agreement can meet the re-

quirements of typicality, commonality, and adequate repre-

sentation necessary for final approval when the negotiations

excluded every member of the Georgia insureds, Georgia’s

laws create claims that are different from and fundamentally

stronger than those owned and asserted by the Alabama

Plaintiffs, the Georgia class members did not have sufficient

contacts or relationships with Alabama to satisfy Rule 23's

superiority requirement, and the Settlement Agreement vio-

lates the reasonable expectations of Georgia consumers to

have a contract executed in Georgia under Georgia’s laws

adjudicated under Georgia’s laws.

3. Whether the Setthement Agreement contains the fair-

ness, adequacy, and reasonableness necessary to bind the

classes where it unfairly and unconstitutionally restrains class

members’ rights to choose their own legal counsel, the waiver

and forfeiture provisions are unreasonable, the substantive

money award is inadequate and unfair, it contains no mean-

ingful equitable relief or punitive damages for fraud, it

violates Georgia law, and the Class Action Notice is woefully

inadequate and violates the class members’ right to Due

Process.

4. Whether the Trial Court erred when it certified this

Class Action lawsuit without conducting a “rigorous anal-

ysis” pursuant to Alabama law and Ala. Code § 6-5-641.

STATEMENT OF FACTS

This is a case involving the marketing of comprehensive

major medical health insurance plans known as “MedOne”™

plans. This insurance product was sold and marketed as

“group” health insurance. MedOne coverage is underwritten

by United Wisconsin Life Insurance Company (“UWLIC”).

25a

[C. 108]. American Medical Security, Inc., (“AMS”) provides

administrative services for UWLIC which allows AMS to

market, underwrite, bill, collect, pay claims, and perform

other services for the AB 2000 policy. [C. 108]. UWLIC and

AMS sold their “group” health insurance through a dis-

cretionary trust with AmSouth Bank serving as the trustee.

[C. 101, 105] The name of the discretionary trust was the

“Prescription for Good Health Trust’. [Id.]. As trustee,

AmSouth Bank held the master policy of insurance through

which certificates of insurance were issued to the “employee/

certificate-holder” that was covered by the health benefits

made the basis of each certificate. [C. 105]. The certificate

holder was also the person who applied for the insurance

coverage. [C. 105, 118] Each certificate of insurance listed an

“employer” who was consistently identified as the same

person that was listed as the “employee/certificate holder” on

each respective certificate. [C. 105, and all others]. The per-

sons who were insured under each respective certificate were

(i) the certificate holder and (ii) any dependent that was

eligible for coverage. [C. 118A].

Once an insured person received a certificate of insurance,

they were a covered person under the plan. At each renewal

period (one calendar year from issuance), the certificate

holder would receive a premium renewal notice reflecting the

premium amount that must be paid in order to keep the

coverage in force. While these plans were marketed as

“group” coverage, the Defendants’ renewal rating practices

revealed that the Defendants considered individual factors

such as a certificate holder’s/insured’s claims experience and

health status in calculating that insured’s renewal premium,

rather than considering the claims experience of the entire

“group” of which each certificate holder was a member. [C.

36] The premium increase assigned to any given certificate

holder depended upon the malady suffered by that individual

insured person. This practice of “tier rating” led to exorbitant

premium increases to insureds that were forced to pay these

26a

charges in order to keep their health insurance in force.

[C. 35]

On June 11, 2002, Plaintiff Vivian Gadson filed her initial

complaint in the Circuit Court of Montgomery County, Ala-

bama. [C. 1]. Ms. Gadson brought this claim in her individual

capacity against Defendants American Medical Security, Inc.,

United Wisconsin Life Insurance Company, Amsouth Bank,

and Gerry Reynolds, alleging fraudulent representation,

fraudulent suppression, wanton conduct including the failure

to properly hire, train, and supervise agent Reynolds, unjust

enrichment, unfair business practices, and conspiracy. [C. 1-

11}.

On July 9, 2002, Plaintiff amended her complaint to in-

clude class allegations wherein Ms. Gadson sought to repre-

sent a class of persons consisting of Alabama residents on

similar common law theories as those alleged in her original

lawsuit. [C. 12]. Plaintiff submitted in her first amended

complaint that there were “questions of law or fact common

to the class, including . . . whether the Defendants were

engaged in ‘Tier’ underwriting and/or whether Defendants

engaged in re-underwriting based upon an insured’s health

and claims history.” [C. 15]. Two days later, on July 11,

2002, Ms. Gadson amended her complaint a second time to

allege a nationwide class action on behalf of ail residents of

the United States of America. [C. 30]. In addition to now

representing a nationwide class of persons, Ms. Gadson also

limited the recovery of each proposed class member to less

than $75,000 and decided to not pursue any recovery of

punitive damages. [C. 29].

On October 15, 2002, Ms. Gadson filed the third amend-

ment to her complaint to add claims for punitive damages.

[C. 51-52]. Like her other complaints, Plaintiff alleged that

her claims as class representative were “typical of those of the

27a

class members in that she was subjected to the same unlawful

treatment and Plaintiff suffered the same type of harm as

suffered by other member of the class.” [C. 55].

On March 3, 2003, Ms. Gadson filed her fourth amendment

to her complaint adding claims on behalf of a nationwide

group of persons who had participated in the Prescription

for Good Health trust that was administered by Defendants.

[C. 305].

Throughout the original complaint and all four amend-

ments that followed, Ms. Gadson alleged that she was an

insured under the AB 2000 policy and that her health and

claim history were used to determine the amount of premium

charged at renewal. Plaintiff filed her action on a MedOne

policy wherein she alleged that her insurance coverage was

provided under master policy AB 2006, Client No. 2400-

006178. [C. 2-3]. Plaintiff further alleged that the Defendants

were underwriting her policy on an annual basis “based upon

her health and claim history and that Plaintiff's health and

claim history were the main factors used to determine the

amount of premium charged... .” [C. 3].

On September 27, 2002, Defendants filed a Motion to Dis-

miss Ms. Gadson’s case, because, among other reasons, Ms.

Gadson was never sold a policy of insurance by the Defen-

dants. [C. 46-47]. The Certificate of Insurance issued in

the instant case was actually issued to Jevon Gadson, Ms.

Gadson’s son.* [C. 105]. Jevon Gadson, not Vivian Gadson,

was listed as the certificate holder or covered person under

the Certificate of Group Insurance upon which Vivian Gadson

based her individual claims and allegations that her claims

were typical to those of the class. [C. 217, 223, 55]. Neither

* There is ro evidence in the record to reflect that Jevon Gadson is a

minor or otherwise incompetent. See infra p. 21. In fact, upon infor-

mation, Jevon Gadson’s date of birth is May |, 1976 which would make

him twenty-eight years old as of the date of this submission.

28a

the Certificate of Group Insurance nor the Master Policy

Certification submitted by AMS ever mention Vivian Gadson

as an “employer,” “employee,” “certificate holder,” or an

“insured” under the policy. [C. 105, 99].

On March 11, 2004, Ms. Gadson and AMS submitted a

Stipulation of Settlement and Compromise to the Trial Court.

[C. 390]. On April 6, 2004, the Trial Court accepted the

Stipulation of Settlement and set a Fairness Hearing to take

place on September 8, 2004. [C. 464-471]. Without con-

ducting any evidentiary hearing, the Trial Court on April 6,

2004, preliminarily certified this class action as consisting of

“all persons and entities ... in Alabama or Georgia who, at

any time purchased or renewed in Alabama or Georgia a

certificate of medical insurance from United Wisconsin Life

Insurance Company.” [C. 464-465]. Pursuant to the April 6,

2004, Order from the Trial Court, Notice was sent to the

members of the purported class containing this same class

description. [C. Brown Envelope at tabs 5 & 6].

99 +6

Prior to the “Fairness” Hearing on May 17, 2004, Inter-

veners Jana Hutchinson and Sharon Henderson made their

application to intervene. [C. 472]. On August 19, 2004,

Angela King and Valerie Askew intervened into this case and

also propounded discovery upon the existing parties to the

lawsuit so that the Interveners would be able to meaningfully

participate at the Fairness Hearing, including interrogatories

and requests for production directed toward the substantive

proposed settlement that was being proposed by the existing

parties. [C. 533-549]. Additionally, Interveners also pro-

pounded notices of deposition for the purported class repre-

sentative, Vivian Gadson, and counsel of record. [C. 550-

557]. On September 7, 2004, pursuant to the Stipulation of.

Settlement and the notice to the purported class of persons

affected by this case, Charles J. (“Jack”) Kahn intervened.

[C. 982]. On August 19, 2004. Interveners submitted their

objections to the certification of this case as a class action

29a

arguing that the class should not be certified, the Notice was

defective, that the settlement was not “fair, adequate and

reasonable,” that the settlement terms incorporated “relief”

that stood in violation of Georgia law, and that the named

class representative was not an adequate representative for

the putative class of persons affected by the settlement.

IC. 558-618].

The Interveners provided the Trial Court an affidavit from

Tim Ryles, the former Insurance Commissioner for the State

of Georgia and the listed expert witness for the class Plaintiff.

[C. 594-618, R. 129 (Vol. 8)]. Likewise, Interveners sup-

plemented the materials submitted at the Fairness Hearing

with an Order from the Superior Court of Cobb County,

Georgia, wherein durational rating was found to violate

Georgia law. [C. 1236]. Interveners also provided the Trial

Court with the Preliminary Order on Certification for another

class pending in Florida against these same Defendants styled

Addison v. United Wisconsin Life Insurance Company, et al.

in which questions of liability went to trial and a ruling

was entered against the Defendants. [C. 1308]. Interveners

brought to the Court's attention the great disparity in the

relief provided in the Addison class and the relief being

proposed in the instant class action. [C. 1308]

After the “Fairness” Hearing of September 8, 2004, coun-

sel for the proponents of this class action and counsel for

interveners/objectors were each asked to prepare proposed

orders for the Trial Court. [R. 183, Volume 8]. On September

29, 2004, the Trial Court entered its Final Order (prepared by

the class proponents) approving the class action settlement

and dismissing the case with prejudice. [C. 1032-1075]. The

Final Order, however, certified a very different class than was

initially certified by the Trial Court and that was described in

the Notice sent to prospective ‘class members. In its Final

Order, the Trial Court certified a class of persons consisting

of “all persons (including the named plaintitf) in Alabama or

30a

Georgia who at any time .. . purchased or renewed a

certificate of group health insurance from United Wisconsin

Life Insurance Company that provided coverage to that

individual and/or his or her family ... .” |C. 1069] [emphasis

added].

On October 6, 2004, Interveners filed a Motion to Re-

consider, and on October 26, 2004, filed a Motion to Alter,

Amend, or Vacate. [C. 1175, 1305]. In compliance with Ala.

Code § 6-5-642, Appellants/Interveners filed this appeal on

November 9, 2004. [C. 1396].

On November 10, 2004 (the day after Interveners filed

their Notice of Appeal in this case, describing, among other

things, that one of the issues on appeal was the Trial Court's

failure to adhere to a rigorous analysis under Ala. Code § 6-5-

641 [C. 1399]), the Trial Court, “without request” from any

of the parties, entered an Order denying the Interveners’

M:. ‘ons and also memorializing an attempt to comply with

the prescriptions of Ala. Code § 6-5-641. [C. 1382-1395].

STATEMENT OF THE STANDARD OF REVIEW

Appellate courts should review a trial court’s ruling on a

Class Certification Order utilizing an abuse-of-discretion

standard of review. ALFA Life Ins. Corp. v. Hughes, 861 So.

2d 1088, 1095 (Ala. 2003) (citing Smart Prof’l Photocopy

Corp. v. Childers-Sims, 850 So. 2d 1245, 1248 (Ala. 2002)).

Appellate review of whether the trial court applied the correct

legal standard in reaching its decision to certify a class ts

reviewed under a de novo standard. Id.

SUMMARY OF THE ARGUMENT

This Court should decertify the class action certified by the

Trial Court on April 6, 2004, and finally approved on

September 29, 2004 for three reasons. First, Vivian Gadson,

the purported class representative, is not adequate to serve as

the class representative. Because she was never insured under

3la

any insurance policy issued by the Defendants, much less the

policy made the basis of the instant case, she has no standing

to file this case and her claims are not typical of or common

to the claims of the class. Moreover, because of her lack of

standing, Vivian Gadson did not posses the capacity to enter

into any settlement negotiations or agreements and any such

actions are a nullity. Furthermore, because of Ms. Gadson’s

unwillingness to represent the class as demonstrated by her

inability to appear for her own Fairness Hearing or deposi-

tions or to answer interrogatories, the Appellant/Interveners

were denied meaningful participation at the Fairness Hearing

and the Trial Court judge was never exposed to the litigant

and was further unable to properly conduct a rigorous Rule 23

analysis.

Second, the Settlement Agreement cannot meet the require-

ments of typicality, commonality, and adequate representa-

tion necessary for final approval. While the Settlement

Agreement purports to represent both Georgia and Alabama

class members, no member of either the Georgia or Alabama

insured public was represented at the negotiations since

Vivian Gadson lacked the capacity to serve as a class repre-

sentative for any insured. Additionally, because Georgia’s

insurance laws create claims against the Defendants that are

unavailable to the Alabama Plaintiff (assuming there had

been one with standing to file this case) and indeed were not

asserted in any of the Alabama Plaintiff's five complaints, the

claims of the Georgia and Alabama class members are neither

common nor typical. Additionally, the Georgia class mem-

bers’ claims do not meet the Rule 23 superiority requirement.

Third, the Settkement Agreement lacks the fairness, ade-

quacy,. and reasonableness essential to bind the classes. The

Settlement Agreement’s incorporation of waiver and for-

feiture provisions are unfair. The substantive money award

available under the Settlement Agreement is utterly inade-

quate, and the Settlement Agreement does not provide mean-

32a

ingful equitable relief or punitive damages for fraud. The

Settlement Agreement violates Georgia law, and the inade-

quate class action notice completely abandons the class

members’ Due Process rights.

ARGUMENT

I. THE TRIAL COURT ERRED IN CERTIFYING

VIVIAN GADSON AS AN ADEQUATE CLASS

REPRESENTATIVE WHERE THERE WERE

FATAL SUBSTANTIVE AND PROCEDURAL

IMPEDIMENTS TO HER CERTIFICATION.

In Ex parte Prudential Ins. Co of America, this Court found

that “[iJf a named plaintiff has not been injured by the wrong

alleged in the complaint, then no case or controversy is pre-

sented and the plaintiff has no standing to sue either on his

own behalf or on behalf of a class.” 721 So. 2d 1135, 1137

(Ala. 1998) (citing Ex parte Exide Corp., 678 So. 2d 469, 474

(Ala. 1991); see also Ex parte Blue Cross & Blue Shield of

Alabama, 582 So. 2d 469, 47.4 (Ala. 1991); Ex parte Izundu,

568 So. 2d 771, 772 (Ala. 1990)). Under ARCP Rule 23, it is

an elementary principle that a class representative be a

member of the class he or she purports to represent. Amason

v. First State Bank of Lineville, 369 So. 2d 547, 549 (Ala.

1979) (stating that “Rule 23(a), ARCP inherently mandates

that the person bringing the action must a member of the class

he seeks to represent”). The Court of Appeals for the Fifth

Circuit found that “[{i]n order to have standing to bring a class

action, the class representative must first and foremost be a

member of the class which he seeks to represent.” Huff v.

N.D. Cass Co. of Alabama, 468 F.2d 172, 179 (Sth Cir.

1972). Indeed, the United States Supreme Court asserts that

* "Because the Alabama Rules of Civil Procedure were patterned after

the Federal Rules of Civil Procedure, cases construing the federal rules are

authoritative in construing the Alabama rules.’” Funliner of Alabama,

L.L.C. v. Pickard, 873 So. 2d 198, 207 n.7 (Ala. 2003) (quoting Reynolds

33a

a person “cannot represent a class of whom they are not

a part.” Bailey v. Patterson, 369 U.S. 31, 33 (1962) (finding

appellants lacked standing to enjoin criminal prosecutions -

under certain state statutes where they themselves had not

been prosecuted or threatened with prosecution under the

Statutes); see also Hall v. Beals, 396 U.S. 45, 49 (1969)

(finding appellants could not represent the class of voters

disqualified from voting because of a new two-month resi-

dency requirement where the appellants were not members of

the class).

In the instant case, the proponents of this class action failed

to even make a showing that Vivian Gadson is a member of

the class she purports to represent, much less satisfy their

burden of showing that Vivian Gadson is an adequate rep-

resentative for the defined class.

A. Substantive impediments exclude Vivian Gadson

from being certified as an adequate class repre-

sentative because she had no standing to file this

case and her claims are not typical of or common

to the claims of the class pursuant to ARCP

23(a)(3).

Throughout the original complaint and all four amend-

ments that followed, Ms. Gadson alleged that she was an

insured under the AB 2000 policy and that her health and

claim history were used to determine the amount of premium

charged at renewal. [C. 3, 18, 57-58, 317]. Plaintiff filed her

action on a MedOne policy, wherein she alleged that her

insurance coverage was provided under master policy AB

2000, client No. 2400-006178. [C. 2-3]. Plaintiff further

alleged that the Defendants were underwriting her policy on

an annual basis “based upon her heaith and claim history and

Metals. Co. v. Hill, 825 So. 2d 100, 104 n.1 (Ala. 2002) (citing Cutler v.

Orkin Exterminating Co., 770 So. 2d 67 (Ala. 2000))); see also Mitchell v.

H & R Block, Inc., 783 So. 2d 812, 816 (Ala. 2000).

34a

that Plaintiff's health-and claim history were the main factors

used to determine the amount of premium charged... .”

{C. 3]. Based upon these allegations, Ms. Gadson alleges in

each and every one of her class action complaints that her

claims as class representative “are typical of those of the class

members in that she was subjected to the same unlawful

treatment and Plaintiff suffered the same type of harm as

suffered by other member so the class.” [C. 55]. Indeed,

Vivian Gadson even filed an affidavit in this case stating that

she has insurance coverage with the Defendants. [C. 715]

Put simply, these assertions are false. Contrary to Appel-

lee’s allegations in her numerous class action complaints, the

Certificate of Insurance issued in this case was actually issued

to Jevon Gadson, Ms. Gadson’s son. [C. 105]. Jevon Gadson,

not Vivian Gadson, is listed as the certificate holder or

covered person under the Certificate of Group Insurance upon

which Vivian Gadson based her individual claims and allega-

tions that her claims were typical to those of the class.

|C. 217, 223, 55]. Neither the Certificate of Group Insurance

nor the Master Policy Certification submitted by AMS

ever mentions Vivian Gadson as an “employer,” “em-

ployee,” “certificate holder,” or an “insured” under the pol-

icy. [C. 105, 99].

The Certificate itself identifies that person to whom the

health insurance coverage was issued as the employce/

certificate-holder,” which in this case, is Jevon Gadson, not

the purported class representative, Vivian Gadson. [C. 105].

According to this same document, the certificate-holder was

also the person who applied for the insurance coverage,

which again, would be Jevon Gadson, not the purported class

representative, Vivian Gadson. [C. 105, 118]. Each certificate

of insurance listed an “employer” who was consistently

identified as the same person that was listed as the “em-

ployee/certificate holder” on each respective certificate.

[C. 105, and all others]. The persons who were insured under

35a

each respective certificate were (i) the certificate holder and

(11) any dependent who was eligible for coverage. [C. 118A].

There is not one single shred of evidence in the record

indicating that Vivian Gadson was ever an insured or a

dependent of an insured under any policy or certificate of

insurance underwritten by UWLIC or administered by AMS,

much less under the policy/certificate number on which she

bases her claims. Notably absent from each and every one of

Appellee’s individual or class action complaints is mention,

reference, or allegation that Jevon Gadson is unable to

represent himself as a certificate holder.” No allegations have

been made that Jevon Gadson is incompetent or otherwise

suffers from an infirmity or any other mental or physical

condition that would prevent him from representing himself

in a case where he, not Vivian Gadson, is the only person who

would have legal standing to bring such a suit under the

certificate made the basis of this case.

Since Vivian Gadson was never an insured or a dependent

under any insurance policy or certificate of insurance issued

by any of the Defendants, Vivian Gadson could not possibly

have had any renewal premium calculated “based upon her

health and claim history.” [C. 3]. Likewise, it would be

impossible for Vivian Gadson’s “health and claim history”

to be “the main factors used to determine the amount of

premium charged ... .” [/d.]. Vivian Gadson ts not now nor

was she ever insured under any policy or certificate of

insurance issued by the Defendants, much less the insurance

plan made the basis of this class action settlement. Therefore,

Vivian Gadson did not have standing to bring this lawsuit and

her claims were not typical of those true members of the

“ There is no evidence in the records to reflect that Jevon Gadson is a

minor or otherwise incompetent. Upon information, (JJevon Gadson’s

social security number that is reflected on the certificate [C. 1053]) Jevon

Gadson’s date of birth is May |. 1976 which would make him twenty-nine

years old as of the date of this submission.

36a

offended class of persons whose claims history and health

condition were actually used in calculating renewal premiums

for their “group” health insurance. The Trial Court erred in

certifying Vivian Gadson as a class representative.

In its Order Accepting the Stipulation of Settlement and

Certifying a Temporary Settlement Class of April 6, 2004, the

Trial Court certified a class of persons consisting of “all

persons and entities . . . in Alabama or Georgia who, at any

time purchased or renewed in Alabama or Georgia a

certificate of medical insurance from United Wisconsin. Life

Insurance Company.” [C. 464-465] (emphasis added).

Pursuant to the April 6, 2004 Order from the Trial Court,

Notice was sent to the members of the purported class

containing this exact same class description. [(C. 414, Brown

Envelope at tabs 5 & 6].

After the “Fairness” Hearing of September 8, 2004, coun-

sel for the proponents and counsel for the interveners/

objectors were asked to prepare their respective proposed

orders for the Trial Court. [R. 183, Volume 8]. On September

29, 2004, the Trial Court entered its Final Order as submitted

by class counsel approving the class action settlement and

dismissing the case with prejudice. [(C. 1032-1075]. The Final

Order, however, certified a very different class than the class

teat was initially certified by the Trial Court, described in the

Aetice sent to prospective class members, and submitted by

the Plaintiffs and Defendants to the Trial Court in their

Stipulation of Settlement. In its Final Order, the Triai Court

certified a class of persons consisting of:

“all persons (including the named plaintiff) in Alabama

or Georgia who at any time .. . purchased or renewed a

certificate of group health insurance from United Wis-

consin Life Insurance Company that provided coverage

to that individual and/or his or her family. . . .”

[C. 1069] (emphasis added).

37a

Apparently, counsel for Appellee realized that Vivian

Gadson did not have standing to bring this case, and that she

was not, as had been long maintained by Interveners, an

individual with claims that were typical to those of the class.

The proposed Order for Final Certification submitted by

counsel for Ms. Gadson sought to correct this fatal flaw by

inserting a new class definition in an obvious effort to make

Vivian Gadson “fit” into a class of persons who were never

insured under the policy made the basis of this case.

Presumably, this “substitution” was done without bringing

same to the Trial Court’s attention. Surely, this “bait and

switch” litigation tactic cannot stand. Certainly, the true class

members deserve the same notice of the new class definition

from which Vivian Gadson now benefits. Frankly, the

members of this class of persons who have truly been insured

and harmed deserve a class representative with claims that are

typical to their own so that their intcrests are actually

protected. Therefore, the Trial Court, undoubtedly without

knowledge of the “substitution” of class definitions by class

counsel in their proposed order, erred in certifying this class

action. Moreover, the manner in which the proponents of this

class action changed the class definition after Notice had

already been sent to the class completely abandons even

the most basic effort to protect the due process rights of the

class members.

|. Even if Ms. Gadson fits within this newly

defined “class,” this new “class” is amor-

phous and thus uncertifiable.

It is a fundamental principle underlying every class action

that the purported class sought to be represented is adequately

and properly defined and plainly ascertainable through

reasonable effort. Earnest v. Gen. Motors Corp., 923 F. Supp.

1469, 1473 (N.D. Ala. 1996); Hardy v. U.S. Steel Corp., 289

F. Supp. 200, 202 (N.D. Ala. 1967). While it is not necessary

that the class be so clearly defined that “any member can be

38a

presently ascertained,” Carpenter v. Davis, 424 F.2d 257, 260

(Sth Cir. 1970), “[flailure to meet this minimum standard

entitles a court to dismiss the class allegations and proceed

with the action on an individual basis.” Earnest, 923 F. Supp.

at 1473; see Equal Employment Opportunity Comm'n v.

D.H. Holmes Co., Ltd., 556 F.2d 787, 791 0.5 (Sth Cir. 1977).

Where class definitions are overly broad, vague, and

amorphous, the court should deny class certification. Perez v.

Metabolife Int'l, Inc., 218 F.R.D. 262, 269 (S.D. Fla. 2003);

White v. Williams, 208 F.R.D. 123, 129-130 (D.N.J. 2002);

McGuire v. Int'l Paper Co., Civ. A. No. 1:92-CV-593BRR,

1994 WL. 261360 at *12-*14 (S.D. Miss. Feb. 18, 1994).

The “new class definition” in the instant case is analogous

to the class defined in Earnest.’ The Earnest Court found the

class definition to be “so broad, amorphous, and vague that it

fail[ed| to meet the minimum standard of definiteness,” and

went on to hold the class claims were due to be dismissed.

923 F. Supp. at 1274. Like the class definition found to be

amorphous in Earnest, the “new class definition” in the

instant case is also so overbroad and vague that it would not

allow class membership to be ascertained through reasonable

effort. Indeed, in order to determine who is a member of this

“new class definition,” each and every potential class member

must be examined—the class definition is a moving target.

Indeed, the “new class definition” would include not only

any person who, unlike Vivian Gadson, was actually insured

under a certificate of insurance, but it would also include any

family member of that insured who paid or contributed

towards the payment of any insurance premium or renewal

premium. These family members necessarily would extend to

” The class was define? as “any persons in the State of Alabama who

own or lease, or have in the past owned or leased vehicles equipped with

engines and/or engine control modules manufactured, sold, assembled

and/or designed by the Deiendants such as those in the said vehicles of the

named Plaintiffs.” 923 F. Supp. at 1474.

39a

mothers, fathers, brothers, sisters, cousins, aunts, uncles,

grandparents, fathers-in-law, and so on infinitely. Certainly, a

class definition such as the one these class proponents “slid

in” would never allow any Trial Court to “reasonably as-

certain” the identity of the class members with any degree of

“reasonable effort”. Rather, this “new class” is defined such

that many persons who are not now nor have ever been

insured by the defendants, such as Vivian Gadson, are now

plaintiffs in a case where their respective health conditions

were never considered in calculating renewal premiums as

alleged in the various complaints. Additionally, this “new

class” definition would require that any Trial Court must

conduct an extensive inquiry into (i.) whether any potential

class member is an insured under a certificate of insurance

with the defendants; if not, then (ii.) the exact relationship of

any person who claimed to be a family member of an insured

to any respective insured; (iii) whether that person (family

member) has paid or contributed towards the payment of any

purchase premium for the insurance; (iv.) whether that person

has paid or contributed towards the payment of any renewal

premium of his or her family member; and (v.) whether the

person who claimed to be a family member could prove that

he or she indeed made such payment and/or contribution.

This type of rigorous inquiry was never meant to become

necessary in order to simply identify who is a member of any

particular class.

Indeed, the Earnest Court could easily have been speaking

of the instant situation when it stated that “it would be

virtually impossible to determine membership in the class.”

Id. at 1474.

40a

B. Procedural concerns exclude Vivian Gadson from

being certified as an adequate class representative

because the unwillingness of Ms. Gadson to

represent the class led to the inability of the Trial

Court to properly conduct a rigorous Rule 23

analysis,

Ala. Code § 6-5-641 mandates that when deciding whether

a class should be certified, “the court shall determine, by

employing a rigorous analysis, if the party or parties re-

questing class certification have proved its or their entitle-

ment to class certification under Ala. R. Civ. P. 23.” Ala.

Code § 6-5-641(e) (1975). The statute goes on to place the

burden of proving certification entitlement under Rule 23

upon the party or parties seeking certification, and instructs

that “if such proof shall not be adduced, the court shall not

order certification of the class.” Jd. Ala. Code § 6-5-641 also

places upon the judge deciding certification the responsibility

to “place in the record of the action a written order addressing

all such factors and specifying the evidence, or lack of

evidence, on which the court has based its decision with

regard to whether each such factor has been established.” /d.

One of these factors is whether the plaintiff is adequate to

represent the class. Ala. R. Civ. P. Rule 23. Many prescient

holdings offer guidance into the inquiry that must be made in

order to make a finding of adequacy. It has long been the law

that “[a] plaintiff secking class certification has the burden to

establish that the requisites for certification are present.” Byes

v. Telecheck Recovery Servs., Inc., 173 F.R.D. 421, 423 (E.D.

La. 1997) With regard to Rule 23(a)(4)'s requirement of

adequate representation, “it is clear that some inspection of

[the] individual representative is required.” /d. at 426 (citing

Jenkins v. Raymark Indus., Inc., 782 ¥.2d 468, 472 (Sth Cir.

1986); 7 Wright and Miller, Federal Practice and Procedure

§ 1766). Furthermore, via the Trial Court's examination of

Rule 23 criteria, “it is necessary to eliminate so far as pos-

4la

sible the likelihood that the litigants are involved in a collu-

sive suit or that plaintiff has interests antagonistic to those of

the remainder of the class.” Eisen v. Carlisle, 39\ F.2d 555,

562 (2nd Cir. 1968) (emphasis added) (overruled on other

grounds recognized by American Cvanamid Co. v. Stephen,

600 N.E.2d 1387 (Ind. Ct. App. 1992)).

During the Fairness Hearing on September. 8, 2004, Ms.

Gadson was called to testify. [R. 115, Vol. 8] Both Ms.

Gadson and her attorneys: knew the date and time of the

Fairness Hearing, and yet, rather than making an appearance

at the Hearing, Ms. Gadson and her attorneys proffered an

affidavit signed by Ms. Gadson wherein she purported to

know about both the facts and claims in the class action

lawsuit that bore her name and stated further that all settle-

ment negotiations were conducted with her knowledge and

approval. [C. 714]

As was argued at the Hearing, counsel for Appellants/

Interveners have grave doubts as to the propricty of Ms.

Gadson’s statements and her ability to represent the interest

of the class that is and will be subjected to the existing par-

tics’ settlement. By filing a Brief on Objections, the existing

partics knew well before the Fairness Hearing that counsel

for Appellants/Interveners questioned Ms. Gadson’s ability

to represent this class. [C. 558]. Additionally, on August 19,

2004, Appellants/Interveners made their Motion to Intervene

and to Propound Discovery upon existing parties. [C. 533]

Included within this request was a notice of deposition

for Vivian Gadson. [C. S550] Moreover, on September 3,

2004, and in an effort to secure Ms. Gadson’s testimony,

Appellants/Interveners requested the Circuit Court of Mont-

gomery County to issue a subpoena for Ms. Gadson to be

present at her hearing on September 8, 2004. [C. 945] After

an exhaustive search, Ms. Gadson could not be found,

relegating Appellants/Interveners to serve counsel for Ms.

Gadson with said subpoena. Presumably and in anticipation

42a

of the confirmation of Ms. Gadson’s inadequacy and inability

to represent the class, counsel for Plaintiff did not have Ms.

Gadson appear at the hearing, but rather, filed a motion for

protective order on September 2, 2004 and a motion to quash

her subpoena on September 7, 2004. [C. 1410] The Trial

Court never ruled on Appellants/Interveners request to pro-

pound discovery. Therefore, subsequent to the Fairness Hear-

ing and before this Trial Court entered its Order of September

29, 2004, counsel for Appellants/Interveners On September

23, 2004 served another deposition notice upon counsel for

Vivian Gadson to appear for deposition at the offices of her

attorneys. [C. 1411] Not surprisingly, on September 27, 2004,

counsel for Ms. Gadson filed yet another motion to quash

her deposition and motion for protective order. [Id.| The

Trial Court granted the Plaintiffs [sic] motion on September

29, 2004. [Id.] Finally, on October 26, 2004, Appellant/

Interveners issued yet another subpoena for Vivian Gadson to

appear at the hearing on reconsideration. [C. 947] Again,

Vivian Gadson did not appear.

Neither the Trial Court nor the Appellants/Interveners ever

had the chance to examine Vivian Gadson to determine her

adequacy. The fact that Ms. Gadson continually evaded ef-

forts made by counsel for the Appellants/Interveners to have

her appear for deposition, answer interrogatories, Vivian

Gadson’s failure to appear at her own “Fairness” Hearing,

and the repeated attempts made by her attorneys to keep her

away from the courthouse speaks volumes about her ability to

represent this class (both the “old” class and the “new class”

that was defined by class counsel with their “substituted”

definition). Why such an exhaustive effort to keep and pre-

vent Vivian Gadson from giving any sworn testimony that

would test those representations she and her attorneys made

to the Trial Court? The answer is clear: counsel for existing

parties knew, as counsel for Appellants/Intervencrs knew,

that Vivian Gadson was not only an inadequate class rep-

resentative, but also that she was never insured by AMS

43a

under any type of medical insurance policy, much less the

policy made the basis of this case, AB 2000, client No. 2400-

006178. Certainly counsel for the proponents of this class

action knew that if Vivian Gadson were ever to testify, this

class action could never be certified under Alabama law. If

indeed Ms. Gadson is an adequate representative as proffered

by the existing parties, certainly there was nothing to fear

from simple questioning to confirm what the existing parties

represented to the Trial Court.

Vivian Gadson’s evasive tactics should go unrewarded by

this Court. Gadson’s unwillingness and utter failure to ac-

lively represent a class of persons with whom she claims to

be a part of, confirms what Appellants have already argued to

this Court; to wit—Vivian Gadson is not an adequate repre-

sentative for that class of persons who were insured through

certificates of insurance issued by the underlying Defendants.

Furthermore and as argued above, Vivian Gadson’s apparent

intent of and participation in negotiating away the claims of

those, unlike herself, who are or were actually insured by the

Defendants along with her willingness io completely aban-

don the due process rights of other members of this newly

defined class, while she profits from the class’ new definition,

speaks volumes about her ability to adequately represent this

class. Moreover, this same observation could be said for

counsel representing the class Plaintiffs and Defendants in

this case. Without question, the interests of the true class

members have not now nor have they ever been represented

or protected in this case. The Trial Court erred in certifying

this case as a class action,

44a

Il. BECAUSE THE SETTLEMENT AGREEMENT

WAS A PRODUCT OF NEGOTIATIONS THAT

EXCLUDED EVERY MEMBER OF THE

GEORGIA INSURED CONSUMING PUBLIC, THE

SETTLEMENT AGREEMENT CANNOT MEET

THE REQUIREMENTS OF TYPICALITY, COM-

MONALITY, AND ADEQUATE REPRESENTA-

TION NECESSARY FOR FINAL APPROVAL.

As before, Vivian Gadson has no standing in this case and

therefore cannot represent a class of persons with whom she

shares a typical claim or controversy. More importantly, nei-

ther Vivian Gadson, nor her counsel had the capacity to enter

into any settlement negotiations on behalf of the insured class

thus making this Settlement Agreement a nullity. However,

even assuming arguendo that Vivian Gadson did have stand-

ing (which she most certainly does not) this settlement still

cannot be certified as the claims of the Georgia resident

insureds vary greatly from those of the Alabama insureds.

The Setthkement Agreement purports to represent class

members in Georgia as well as class members in Alabama.

|C. 464-465]. However, because there was no named plaintiff

in this case that was a resident of Georgia, indeed there was

no member of the Georgia or Alabama insureds with any

standing whatsoever present at the negotiating table, and

because the legal *eenedies available to potential Georgia

class members are ‘Var greater than those available to Alabama

class members, this Settlement Agreement does not meet the

requirements for final approval, and as such should not have

been approved or certified by the Trial Court.

A. Scrutiny of Pre-Certification Settlement Classes

The problems unique to settlement classes turn about the

fulcrum of adequate representation of absent class members

during negotiations. As Judge Posner explained,

the danger of collusive setthements makes it imperative

that the district judge conduct a careful inquiry into the

45a

fairness of a settlement to the class members before

allowing it to go into effect and extinguish, by the

operation of res judicata, the claims of class members

who do not opt out of the settlement.

Mars Steel Corp. v. Cont’l Illinois Nat'l Bank & Trust, 834

F.2d 677, 681-82 (7th Cir. 1987).

Ordinarily, a court relies on class status, particularly the

adequacy of representation required to maintain it, to infer

that the settlement was the product of arm’s length nego-

tiations. Where the court has not yet certified a class or

named its representative or counsel, this assumption is not

justified.

Such is the case here, where the Alabama Plaintiff neither

formally satisfied the Trial Court that she was adequate prior

to negotiations nor assigned a Georgia plaintiff to represent

the claims of the Georgia class members in those negotia-

tions. The purported class representative stands untested and

is in fact inadequate on the necessary factors of commonality,

typicality, or adequate representation, particularly as to the

Georgia class members.

When a settlement class is certified after the terms of the

settlement are reached, courts must require a clearer showing

of a settlement’s fairness, reasonableness, and adequacy, and

the propriety of the negotiations leading to it. Polar Int'l

Brokerage Corp. v Reeve, 187 F.R.D. 108, 113 (S.D.N.Y.

1999). When a class is certified for settkement purposes only,

the court must undertake a more rigorous cxamination to

confirm that the requirements of Rule 23 are satisfied. Hefty

v. All Other Members of the Certified Settlement Class, 680

N.E.2d 843, 850 (Ind. 1997)." The dangers of collusion and,

" The need for scrutiny of pre-certification class action settlements

attracted the notice of Alabama's federal district court: “The conflict of

interest problems inherent in class settlements recently led the Third

Circuit to conclude that class-wide settlements must be scrutinized for the

propriety of class certification just a» vigorously as a litigation class action

46a

incentives to settle quickly that accompany a “settlement”

class action demand that the specifications of Rule 23, which

were designed to protect absentees by blocking unwarranted

or overbroad class definitions, receive strict scrutiny. Polar

Int'l, 187 F.R.D. at 113 n.4. (emphasis added).

B. Georgia’s Insurance Laws Create Claims Against

the Defendants that are Fundamentally Stronger

than those Arising Under Alabama Law, meaning

the claims of the Georgia Insureds and the Ala-

bama Insureds Are Neither Common Nor Typical.

As the complaints filed by the Alabama Plaintiffs support,

the only claims considered by the Alabama Plaintiffs are.

basic, common law claims, unaided by the legislative or ad-

ministrative direction. Prosecuting and successfully proving

such allegations without the aid of statutory and regulatory

insurance laws explicitly defining and proscribing the prac-

tices in which the Defendants engaged poses a major, though

not insurmountable challenge. This exclusive reliance upon

common law legal principles is a burden the Georgia Class

member does not share with the Alabama Class member.

“The strength of plaintiff's case on the merits balanced

against the settkement amount is the most important factor in

determining whether a settkement should be approved.”

Steinberg v. Sys. Software Assoc., Inc., 306 713 N.E.2d 709,

717 (App. Ct. Til. 1999),

|. Georgia’s specific and comprehensive statu-

tory regulation of insurance practices provides

Georgia insureds with greater legal protection

than the legal protection available to Alabama

insureds.

A comparison of the complaints employed by the Alabama

Plaintiffs and Georgia's statutory and regulatory prohibitions

would be examined. Pipes v. American Sec. Ins. Co., 169 F.R.D. 382, 384

(N.D. Ala. 1996) (citing In re GMC Pick-up Truck Prods. Liab. Litig., 55

F.3d 76B, 794 (3d Cir. 1995)).

47a

against the specific practice in which the Defendants alleg-

edly engaged—tier rating of group health insurance—con-

firms the superior legal fortitude of the claims owned by

the Georgia Class. Whereas the Alabama Plaintiffs faced the

obstacles of proving common law fraud, breach of fiduciary

duty, and breach of contract without the aid of specific

legislative and regulatory prohibitions against tier rating

schemes, the Georgia Class can instead assert highly specific

breaches of legal duties, including a private right of action,

based on the clear prohibitions outlined by the General

Assembly of Georgia.

Georgia statutes and regulations explicitly prohibit the

practices implicated in tier rating schemes. Georgia law,

codified in O.C.G.A. § 33-30-12, prohibits the unfair practice

of re-underwriting individuals who are already members of a

health insurance group based on their individual health status

so as to base their renewal premiums on their individual

health. The Defendants’ tier rating scheme runs afoul of

multiple prohibitions contained therein.

First, the statute provides that “the claims experience pro-

duced by small groups covered under accident and sickness

insurance for each insurer shall be fully pooled for rating

purposes” and that “the claims experience produced by any

individual small group of each insurer shall not be used in

any manner for rating purposes or solely as a reason for ter-

mination of any ‘ndividual group.” O.C.G.A. § 33-30-12(b)

(emphasis added).

Second, O.C.G.A. § 33-30-12(c) requires full pooling of

experience for rating purposes.

Third, the statute limits the practice of substandard rating,

stating that “/s/ubstandard rating . . . shall not be used for

renewal rating purposes.” O.C.G.A. § 33-30-12(d) (emphasis

added).

48a

Also, Georgia regulations establish strict rules for the ad-

ministration and operation of group health insurance policies.

Ga. Comp. R. & Regs. 120-2-10-.12 specifically governs

small group health insurance access and pooling. The Defen-

dants’ tier rating scheme for the “MedOne” policies they sold

and marketed as “group” health insurance policies violate this

state regulatory provision in several respects. First, insurers

must use “pool rates” to determine premiums for new and

existing groups. When the class Defendants utilize an indi-

viduals [sic] claims experience to calculate renewal premi-

ums, the class defendants are not “pooling rates.” Further-

more, Ga. Comp. R. & Regs. 1202-10-.12(1)(k), paragraph

(5) states that with regard to a new or existing group, an

insurer may not “use substandard rating for, nor adjust any

individual or group premium by way of a substandard rating

as a result of the health status of anyone who is not a New

Entrant as defined by this Rule.” Ga. Comp. R. & Regs. 120-

2-10-.12(5) (f) (2) (i) (emphasis added).

Next, Ga. Comp. R. & Regs. 120-2-10-.12(3), regarding

“Prohibitions,” delineates practices by any insurer which “are

prohibited with regard to small groups and the small group

health insurance pool.” First, the regulation prohibits “tier

rating which increases rates directly related to the tier within

which any one small group's claims experience falls.” Ga.

Comp. R. & Regs. 120-2-10-.12(3) (b) (emphasis added).

Second, the regulation prohibits any insurer with regard to

small groups and the small group health insurance pool from

engaging in “discriminatory rating practices which result in

premium rate differentials for individual cinployee, member,

enrollee, . . . based solely on any health status related factor

or claims experience.” (Ga. Comp. R. & Regs. 120-2-10.-

12(3)(g)). Finally, Ga. Comp. R. & Regs. 120-2-10-.12(3) (h),

states that “/uj/sing health status-related factors of any kind

and in any manner for the development of group experience

factors at renewal rating” is prohibited practice for insurers

in regards to such groups. (emphasis added).

49a

Furthermore, Georgia law strictly regulates the form and

content of advertisements regarding group health insurance

policies such as those advertised by the Defendants. Ga.

Comp. R. & Regs. 120-2-12-.16 specifically prohibit the ad-

vertising of insurance policies that, like “MedOne,” carry

group or quasi-group implications, unless such is the fact.

Together, the body of Georgia statutory and regulatory law

prohibiting the Defendants’ practices lends superior force to

the actions of Georgia consumers entitled to the benefit of

suing under these laws. Moreover, these statutory prohibi-

tions provide additional support for those bringing suit under

Georgia law, including the availability of a private right of

action. For example, because Georgia law presumes that

contracts for group health insurance sold in Georgia comply

with Georgia insurance law, these laws buttress the Georgia

consumers’ claims for breach of contract. Similarly, because

the Defendants are charged with knowledge of Georgia law,

the claims of the Georgia consumer for fraud are strength-

ened on critical elements like scienter (intent) and false

representation.

C. Lingering Concerns over Substantive Choice of

Law Decisions: Why the Setthement Agreement

Violates Rule 23's Superiority Requirement and

Denied Georgia Insureds their Reasonable Expec-

tation that their claims would be governed by

Georgia Law.

Although the United States Supreme Court’s opinion in

Shutts v. Phillips Petroleum paved the way for extraterritorial

class actions in state courts, so long as the standards of

personal jurisdiction were satisfied, Shutts does not authorize

state courts to foist one state’s substantive law onto anoiyver

state’s citizenry in the name of class action “justice.” 472

U.S. 797 (1985). To the contrary, the United States Supreme

Court has held that state courts must beware applying state

laws where those state laws are (1) substantive, rather than

50a

merely procedural and (2) conflict with the substantive state

law of the absent class members’ state. Sun Oil Co. v.

Wortman, 486 U.S. 717, 730-31 (1988) (holding such action

runs afoul of the Full Faith and Credit Clause and violates

Due Process).

This Court should not allow the proponents of this class

action and the Trial Court to arbitrarily impose Alabama law

over a fundamental matter of substance in this case—the

value of the Georgia Class members’ claims. In Shutts, the

United States Supreme Court acknowledged that a class

member's cause of action implicates a constitutionally pro-

tected property interest. 472 U.S. at 807. The Georgia Class

did not have sufficient contact or relationships with Alabama

for their. claims to be brought or settled under Alabama state

law. See Duvall v. TRW, Inc., 578 N.E.2d 556, 559 (Ohio Ct.

App. 1991). This Court observed that “the United States

Supreme Court cautioned that in the context of class

certification, the court may not take a transaction with little or

no relationship to the forum and apply the law of the forum te

satisfy the procedural requirement that there be a common

question of law.” Ex parte Exxon Corp., 725 So. 2d 930, 932

(Ala. 1998) (citing Shutts, 472 U.S. at 821).

The presence of an extensive regulatory and statutory

prohibition in Georgia, when compared with the absence of

such prohibitions in Alabama, supports a finding that the

dual-state class action settlement sought by the existing

Plaintiffs and Defendants cannot satisfy the superiority

requirement of Rule 23. See, e.g., Ex parte Green Tree Fin.

Corp., 723 So. 2d at 9 (instructing that in multi-state class

actions, variations in state law may “swamp” common issues,

defeating predominance and superiority tests); Ex parte

Citicorp Acceptance Co., 715 So. 2d 199, 204 (Ala. 1997)

(requiring & “rigorous” analysis of applicable choice of law).

Here, the law of two different states would apply to different

class members’ claims. The make-up of those laws differ

considerably,

Sla

For the same reason that lumping two disparate types of

claims together is not a superior method to litigate such

claims, a settlement that treats such disparate claims inter-

changeably falls short of a “superior” settlement. Rule 23's

superiority element asks the court to weigh, among other

factors, the desirability or undesirability of concentrating the

litigation of the claims in the particular forum. FRCP Rule

23(b)(3)(C); ARCP Rule 23(b\3)(C). The concentration of

the Georgia Class members’ claims in an Alabama court

where the claims are settled as if they were Alabama claims

under Alabama laws cannot meet the superiority require-

ment—even when applied to a class certified for purposes of

settlement.

In the instant case, because the claims of the Georgia

consumer implicate substantially different factual and legal

issues, the claims asserted in the instant Class lack the

commonality and typicality necessary to sustain the Settle-

ment Agreement, and as in Ex parte Green Tree’. the differ-

ences in state law swamp whatever common issues might

exist.

Certainly, Georgia insured [sic] harbor a reasonable expec-

tation that their claims against the Defendants should be gov-

erned by Georgia law. There exists a reasonable expectation,

under either Georgia or Alabama choice of law rules, that the

Georgia Class members’ insurance contracts and tort actions

would be governed by the strictures of Georgia law. Gen. Tel.

Co. of Southeast v. Trimm, 311 S.E.2d 460, 461-462 (Ga.

1984) (observing that in contract actions, Georgia follows

traditional rule applying law of the place where the contract

* The Court of Appeals for the Fifth Circuit came to a similar con

clusion, then went on to state that these differences could also deteat the

predominance and superiority requirements of Rule 23. Castano v. Am.

Tobacco Co., 84 F.3d 734, 741 (Sth Cir. 1996) (stating that the court must

consider variations in state law and how they affect predomimance and

superiority ).

S2a

was made); Ex parte Owen, 437 So. 2d 476 (Ala. 1983)

(finding that Alabama follows traditional view that contract is

governed by law of state where it is made).

The Georgia Class members are entitled to the benefit of

Georgia law both because it offers them a stronger hope of

success in establishing liability against the Defendants, and,

quite simply, because their claims should naturally be viewed

through the lens of Georgia insurance regulations,

The Trial Court erred in failing to apply the above dis-

cussed stricter prohibitions and legal variations to those

claims of Georgia insureds during the certification of the

settlement in this case that resulted in the unjustifiable dimin-

ishing of the value of the Georgia Class members’ claims thus

suggesting that this case does not meet the superiority

requirement of ARCP 23.

lll. BECAUSE THE SETTLEMENT AGREEMENT

LACKS THE FAIRNESS, ADEQUACY, AND

REASONABLENESS NECESSARY TO BIND THE

CLASSES, THE SETTLEMENT AGREEMENT

SHOULD BE REJECTED.

A. The incorporation of waiver and forfeiture pro-

visions for late-filed returns are unfair, inadequate,

and unreasonable.

Given that class members will be bound by not opting-out,

the forfeiture provisions for late-filed returns seems unnec-

essarily unfair, especially when there scems no plausible

explanation why late-filed claims could not be honored for

some reasonable, extended period.

The Trial Court correctly raised this question during the

Fairness Hearing with regard to the money that remains

unclaimed by the class members. [R. 80, Vol. 8] Under the

Stipulation in the Settlement Agreement, refunds are given on

a claims-made basis. While counsel for the Plaintiff was

53a

unclear about where the unclaimed settlement funds would go

in the event of non-claim, the Stipulation itself calls for any

unclaimed refund by class members to be forfeited. [R. 80,

Vol. 8; C. 401] Thus, it can be safely stated that any and all

unclaimed money remaining after the expiration of the short

sixty (60) day claim window will be returned to the Defen-

dants, rather than inuring itself to the benefit of the Class

members. Certainly, fundamental fairness dictates that a

Defendant should not be allowed to retain any of its ill-gotten

gains, and yet this Stipulation, along with its many other

inherent flaws and inequities, allows these Defendants to do

this very thing.

B. The substantive money award is grossly inade-

quate and unfair.

Rather than provide a healing balm, the Setthkement Agree-

ment rubs salt in the wounds of the Class members. The

monetary provisions of the agreement include the following:

(1) a sixty-seven percent (67%) refund of the amount

class members paid in premiums as a result of the:

health status being considered to determine renewal

premiums less a 10% durational factor; [(C. 396]

(2) a premium credit voucher of ten dollars ($10) per

month for twenty-four (24) months, subject to conditions

that are onerous and extremely disadvantageous to the

Class members; [Id.j

(3) a free phone call to the Defendants [sic] “Nurse

Healthline” which the Settlement Agreement values at

twenty-seven dollars and fifty cents ($27.50). [C. 397]

These provisions are woefully inadequate. For example,

the “67%” refund is especially insufficient for Georgia con-

sumers, for whom such unlawfully raised premiums would

arguably %e whelly recoverable under state statutes and insur-

ance regulations.

54a

During Class counsel's presentation of their case, the Trial

Court inquired as to the amount of the refund. Counsel for

Plaintiff represented to the Trial Court that the refund for

each class member would consist of sixty-seven percent

(67%) of the entire premium paid by each class member. [R.

68, 78 Vol. 8] This representation is not accurate. The class

notice itself reads:

Class member will be entitled on a claims-made basis

to a refund equal to sixty-seven percent (67%) of the

amount the individual class member paid in premium as

a result of his or her individual heaith status being con-

sidered to determine renewal premiums less the amount

her or she would have paid had a 10% durational factor

been applied at renewal in lieu of taking individual

health status into account.

[C. 396] (emphasis added).

To properly explain to the Trial Court the meaning of this

refund, Appellants/Interveners offered a group of documents

produced by American Medical Security, Inc. (‘AMS”) in

another case. [C. 1001] According to testimony retrieved

from Defendants, AMS attributes three categories of items as

being considered in determining any given insured’s health

insurance renewal premium. These items are “changes in new

business rates”; “changes in case characteristics”, and “changes

in claims experience.”

As counsel for Appellants/Interveners learned through dis-

covery in a separate case, AMS’s position is that it is this

third category only (i.c., “changes in claims experience”)

under a tier rating methodology that an individual's health

Status is used to determine the amount of the renewal pre-

mium. [C. 1004] The above methodology is explained by the

Defendants in a letter to the Alabama Department of Insur-

ance dated August 5, 1999. |C. 1010]

5Sa

Thus, in reading the class notice, it would anpear that

rather than receiving “sixty-seven percent (67%) of an

insured premium,” as counsel for Plaintiff represented to the

Trial Court during the Fairness Hearing, the truth of the

matter is that amy insured would only receive 67% of this

third item (i.e., “change in claims experience’) listed in

premium renewal calculation, not 67% of the entire premium.

This significantly reduced amount is further discounted by the

use of a “ten-percent (10%) durational factor.” [C. 396]

As this Court can see, the refund offered in this settlement

agreement is substantiality less than what was represented to

the Trial Court by Plaintiff's class counsel during the Fairness

Hearing. In fact, according to previous testimony by Tim

Ryles'” during the evidentiary hearing before the Superior

Court of Cobb County, Georgia, each individual class mem-

ber will only actually receive about twenty-three percent

(23%) of the amount that the above referenced THIRD ITEM

contributed to each insured’s premium increase at renewal.

[C. 1004] As indicated during the Fairness Hearing, this

amount ts also Jess than what is believed that these cases are

worth on an individual basis. [R. 112, 113, Vol. 8]

Additionally, the Class will take no joy in the “premium

credit vouchers.” [C. 396, 397] The Settlement Agreement

values such vouchers at $240. To fully realize this benefit,

however, Class members must either (1) be currently insured,

having endured illegal overcharges in premiums; or (2) must

return to the Defendants, electing to purchase health

insurance from them again. Moreover, in order to fully realize

the benefit of their measly ten dollar per month voucher, the

Settlement Agreement makes receipt of the voucher benefit

contingent on Class members managing the logistical burden

and inconvenience of mailing twenty-four separate vouchers

Former Insurance Commissioner for the State of Georgia and the

listed eapert witness for the class Plaintitt [(C.594-618, R. 129 (Vol. 85].

56a

every month for twenty-four months with their premium

payment in order to have the credit applied. Although there

must be ways for the Defendants to track and credit the Class

members’ accounts automatically, the Settlement Agreement

adopts a mechanism designed to minimize, rather than maxi-

mize, the benefits realized by the Class members.

Notably, those electing to return to the Defendants to

realize the benefit of the voucher must “meet standard under-

writing requirements.” [C. 397] Presumably, the “standard

underwriting requirements” bar the return of those unfortu-

nate Class members who became seriously ill, made claims

on their policies, saw their renewal premiums skyrocket,

became unable to pay, lost coverage, and remain uninsurable

because of their continuing illness or unfavorable health

history. [C. 592] The Settlement Agreement’s complete

failure to advance the interests of the Class members the

Defendants exploited in the most unconscionable way should

move this Court to recoil in disgust, as the Defendants

seem to have found a way to exploit these Class members

once again.

C. Meaningful equitable relief is conspicuously ab-

sent in the Settlement Agreement, and, thus ren-

ders the Settlement Agreement inadequate, unfair,

and grossly unconscionable, especially for those

insureds who were rendered uninsurable due to

Defendants’ illegal practices and completely aban-

doned under the Settlement Agreement.

The Setthkement Agreement’s substantive money award

exposes this settlement as a grossly unfair abdication of Class

counsel's fiduciary responsibilities to not only the Georgia

Class members, but the Alabama Class members as well. As

uncovered in investigations and as cluded to by the website of

Plaintiff's class counsel, there are two tyves of discrete

injuries associated with the illegal practices in which the

Defencants engaged. Some Class members were overcharged,

S7a

yet managed to preserve their insurance. Sadly, some Class

members suffered far graver financial damage when their

renewal premiums dramatically increased and they became

incapable of continuing to pay the renewal premiums. In

some cases, such Class members became uninsurable on the

open market. For such Class members, the Settlement Agree-

ment represents an outrageously craven betrayal at the hands

of the Defendants and the Class counsel who purported to

represent them.

Furthermore, the Setthement Agreement provides no relief

for insureds who have become “trapped”. In other words,

these persons are those that were insured with the Defendants,

became stricken with a serious malady such as cancer,

Gardner’s disease, heart disease, etc. and due to the Defen-

dants [sic] rating practices, had their renewal premiums

increased 50%-100% equating to sometimes $3,000.00 to

$4,000.00 per month or more in premiums. [R. 108, 111

Vol. 8] Because these policy holders developed their respec-

tive conditions during their coverage period rendering them

uninsurable by any other insurance company on the open

market effectively “trapping” these persons into paying

greatly inflated premiums in order to keep their coverage in

force often exhausting their life savings and retirement in

order to meet the Defendants [sic] premium demands.

As discussed supra at p. 38, the “67% "refund is especially

inadequate for Georgia consumers, for whom such unlawfully

raised premiums would arguably be wholly recoverable.

Further, such a pittance does absolutely nothing for con-

sumers who, after paying Defendants for health insurance and

falling ill, Defendants successfully drove from their rolls. To

the contrary, the Setthement Agreement extinguishes the

Class’s legal claims for this unconscionable practice. It im-

munizes the Defendants from legal liability for such claims in

exchange for a mere 67% of the illegal excess of the premi-

ums those persons paid Defendants, which when factoring in

58a

the 10% durational factor is actually equivalent to less than

of the amount Defendants illegally overcharged its insureds

until they could pay no more and were cast into financial ruin,

uninsured and cheated.

Unfortunately, despite their awareness of Defendants’

scheme to “constructively cancel” the policies of unhealthy

class members by “rais[ing] the premiums to a point that

particular class members could no longer afford the policy

and would be forced to let the policy !apse,” [C. 317], the

subject Settlement Agreement aids the Defendants in securing

the cancellation of meaningful remedies for such individuals.

The need for protection of those persons who were rendered

uninsured by the Defendants’ illegal and fraudulent scheme

requires meaningful equitable and/or injunctive relief that the

Settlement Agreement wholly lacks. The absence of such

meaningful relief is inexcusable. Nowhere do the existing

parties agree or even suggest that the Defendants accept

returning Class members that the Defendants had driven from

their rolls without regard to health problems so \ong as those

health problems arose anytime after the execution of the

Original insurance agreement with the Defendants. Nowhere

do the existing parties agree or suggest the appointment of

receivers or court officers to ensure that the Defendants com-

ply with acceptable underwriting practices or assess penalties

for non-compliance under the court’s inherent contempt

powers. The subject Settlement Agreement is simply devoid

of any measures to ensure that the Defendants comply with

the paltry remuneration offered to the Class.

Interveners also provided the Trial Court with the Pre-

liminary Order on Certification for another class pending in

Florida against these same Deferidants styled Addison v..

United Wisconsin Life Insurance Company, et al. in which

questions of liability went to trial and a ruling was entered

against the Defendants. [C. 1308]. Interveners brought to the

Court's attention the great disparity in the relief provided in

59a

the Addison class (including the acceptance of persons who

were driven into uninsurability being placed back upon

Defendants rolls and the great reduction in premium require-

ments for those who became “trapped” within the Defen-

dants’ insurance) and the relief being proposed in the instant

class action. [C. 1308] Despite this aid in ascertaining and

defining meaningful and fair relief for the Class, the Trial

Court chose to ignore this instructive document and enter an

amended order on November 10, 2004 that, rather than

address the requests made in Appellants’ motion to alter,

amend or vacate, instead attempted to cure the Trial Court’s

failure to issue an order that complied with Alabama Code

§ 6-5-6411.

The result of the Setthement Agreement’s terms will be to

sell the claims of overcharged consumers cheaply, and, for an

appalling encore, aid and abet the Defendants in barring the

door against those Class members that the Defendants suc-

ceeded in driving away based on their poor health. It is a

bitter irony, indeed, that the Settlement Agreement assesses

the heaviest penalty upon those consumers whose need for

affordable group health insurance was greatest.

D. The Settlement Agreement violates Georgia law.

The Alabama Settlement Agreement incorporates provi-

sions that clearly violate Georgia law. Georgia’s General

Assembly prohibited the use of durational factors in calcu-

lating renewal premiums in the same breath that it banned the

use of tier factors. O.C.G.A. § 33-30-12(d) (“Durations since

issue and tier factors may not be considered.”). Indeed, a

Georgia judge relied on this violation when it enjoined AMS

from pursuing this Alabama Settlement Agreement against

Georgians. (C. 494]'' Additionally, Tim Ryles, the former

'' It is important to note that Defendants’ appeal of Judge Grubbs’

decision is currently before the Georgia Supreme Court. This pending

appeal is yet another reason for this Court to devertify this class action in

60a

insurance commissioner for the state of Georgia and the

expert witness listed by class plaintiff in her Rule 26 dis-

closures in this case, testified that durational rating 1s not

permitted under Georgia insurance regulations, [R. 170, 179

Vol. 9|

The Alabama Settlement Agreement enshrines the pro-

hibited concept of durational factor rating in two separate

places. First, the Alabama Settlement Agreement incorporates

a 10% durational factor in the calculation of the monetary

relief under section B(1)(a). [C. 396] Second, the Settlement

Agreement references “injunctive relief” that purports to

notify Georgia consumers that in the future only durational

factors, not tier factors, will be used to calculate renewal

premiums. [C. 397, 441] Exhibit F to the Settlement Agree-

ment defines a durational factor by stating that “[al durational

factor is a percentage increase that is applied based on the

length of time a policy has been in force... .” [C. 441] Only

this Setthement Agreement would describe such a notice

as “relief.”

In this regard, the Alabama Settlement Agreement awards

itself the dubious distinction of pioneering class action settle-

ments that, under the guise of providing injunctive “relief,”

notify the purported Georgia class members that Defendants

intend to substitute one illegal practice for another. To call

Exhibit F “injunctive relief’ uproots the term “relief” from its

conceptual underpinnings. The Setthement Agreement rede-

fines “relief” to secure a judicial ratification of Defendants’

scheme to continue violating Georgia’s law governing group

health insurance. Surely this Court will not stamp its approval

on Defendants’ attempt to merely trade one illegal renewal

rating methodology for another, as the Setthement Agreement

is in clear violation of Georgia law.

its entirety (which would certainly be warranted since there is no class

plaintiff with standing to bring this case or that has claims typical to those

of the class).

6la

E. The Class Action Notice is Inadequate and Due

Process Protections have been Completely

Abandoned

|. Notice given under the “new class definition”

was inadequate to afford Due Process.

This Court has stated that in order to comply with the

requirements of due process, “what type notice, if any, is due

in a class action depends on how the class is certified.” Taylor

v. Liberty Nat. Life. Ins. Co., 462 So. 2d 907, 911 (Ala. 1984).

Notice is mandatory only in class actions certified under Rule

23(b)(3). Fed. R. Civ. P. 23(c)(2). Thus, in order to afford

absent plaintiffs due process protections, in cases such as the

instant case “[t}he plaintiff must receive notice plus an

opportunity to be heard and participate in the litigation,

whether in person or through counsel.” Shutts, 472 U.S. at

812 (1985). The Court of Appeals for the Eleventh Circuit

delineates what notice of a class action should contain:

“[s]urely the best notice practicable under the circumstances

cannot stop with . . . generalities. It must also contain an

adequate description of the proceedings written in objective,

neutral terms, that, insofar as possible, may be understood by

the average absentee class member . . . .” Twigg v. Sears,

Roebuck, & Co., 153 F.3d 1222, 1227 (11th Cir. 1998) (citing

In re Nissan Motor Corp. Antitrust Litig., 552 F.2d 1088,

1103-1105 (Sth Cir. 1977). Where “the notices do not

adequately inform an absent class member . . . that claims like

his were being litigated or that they had been settled,” the

notice does not comport with due process. Twigg, 153 F.3d

at 1229.

As the Trial Court certified this class action under Rule

23(b)(3), notice is mandatory. Even assuming arguendo that

the “new class definition” is proper, under the “new cCiass

definition” (i.e., the class definition that was “substituted by

the proponents for this class certification and that contained

in the Trial Court’s Final Order of September 29, 2004), there

62a

has been absolutely no due process given because potential

class members received no notice of the new class definition.

Indeed, Vivian Gadson is likely the only non-insured “family

member” to reap any benefit from the settlement of this class

action lawsuit that was erroneously certified by the Trial

Court. However, because the “new class definition” is amor-

phous, there is no proper class definition—as explained supra

at p. 24-25, a court cannot determine the membership of this

“new class definition” without examining each and every

potential class member. Because there has been zero notice

given to the potential members of this “new class definition,”

there has been zero due process afforded those individuals.

Accordingly, the Trial Court abused its discretion in certify-

ing this case as a class action as there was absolutely no

notice and thus no due process provided to the class members

as defined in the Court’s Final Order of September 29, 2004.

IV. THE TRIAL COURT ERRED WHEN IT CERTI-

FIED THIS CLASS ACTION WITHOUT CON-

DUCTING A RIGOUROS ANALYSIS PURSUANT

TO ALABAMA LAW AND WHEN IT FAILED TO

ENTER AN ORDER CONFORMING WITH ALA.

CODE § 6-5-641.

Alabama law is clear that a “rigorous analysis” must be

employed in deciding whether a party or parties have proven

their entitlement to class certification. (See Ala. Code § 6-

5-641). A trial court ts to conduct this analysis with respect to

all ARCP 23 factors and afterwards, “shall place in the record

of the action a written order addressing all such factors and

specifying the evidence, or lack of evidence, on which the

court has based its decision with regard to whether each such

factor has been established.” (Ala. Code § 6-5-641). Here

the Trial Court clearly erred in failing to enter such a written

finding.

Following the “Fairness” Hearing of September 8, 2004,

the Trial Court entered its Order of Final Approval and Final

63a

Judgment on September 29, 2004. [C. 1032] An examination

of this Order that was, as explained above, submitted by

counsel for the proponents of this class certification, reveals

that the Trial Court dedicated a great deal of discussion on the

lack of credibility of Tim Ryles, the former insurance com-

missioner for the state of Georgia and who was the only listed

expert in the class Plaintitf’s Rule 26 disclosure in this case.

[C. 1407] Even more interesting is that the Trial Court

delivered a fourteen (14) page discussion of the $2.5 million

dollars in attorney fees that was agreed upon by the class

Plaintiffs and Defendants. Never in any portion of the Trial

Court's September 29, 2004 Order does the Trial Court

attempt to comply with the strictures of Ala. Code § 6-5-641.

Because the Trial Court failed to enter an Order that complies

with Ala. Code § 6-5-641, the Trial Court erred in certifying

this case as a class action and its ruling is due to be reversed.

(See Disch v. Oxmoor House, Inc., 2004 WL 2418061 (Ala.

Oct. 2004)

Appellant/Interveners filed their Notice of Appeal in this

matter on November 9, 2604 listing, among other reasons for

appeal, that the Trial Court failed to comply with Ala. Code

§ 6-5-641. Interestingly, the Trial Court, without a written

request from any proponent to this class action entered

another Order on November 10, 2004 amending its Order of

September 29, 2004 wherein the Trial Court then attempts to

conduct a “rigorous arialysis” of the evidence in this case and

to deliver its findings in the form of a written order. [C. 1382]

The Trial Court's November 10, 2004 Amended Order (“No-

vember Order”) should be disregarded by this Court. The

November Order was entered in violation of Ala. R. Civ, Pro.

52(b), as it Came more than thirty (30) days after its Final

Order and was entered without any party requesting that the

Trial Court perform a Rule 23 analysis.

Furthermore, the Trial Court lacked jurisdiction over this

case at the time the November Order was entered. Alabama

64a

Code § 6-5-642 clearly states that during the pendency of an

appeal of certification, “the action in the trial court shall be

stayed in all respects.” Ala. Code § 6-5-642. Here, the Trial

Court entered the November Order after a Notice of Appeal

had already been filed. [(C. 1396] Therefore, the Trial Court

had ro jurisdiction over this matter at the time of the No-

vember Order's entry and the Order is thus due to be ignored,

Even if this Court were to consider the Amended Order of

the Trial Court, an examination of the Order itself reveals that

it too, like the September 29, 2004 Order is lacking and fails

to comply with Alabama law. For example, the November

Order still concludes that Vivian Gadson, is an adequate class

representative and that her claims are typical of those of the

class members. [C. 1390, 1391] As argued above, neither the

Trial Court nor the Appellant/Interveners ever had any op-

portunity to conduct an examination of Vivian Gadson at

the “Fairness” Hearing. If Appellant were allowed at the

“Fairness” Hearing to examine the class plaintiff to tests

her representations, surely Vivian Gadson would never have

qualified as an adequate representative for this class. Clearly,

the Trial Court did not apply the correct legal standards in

conducting its analysis of the adequacy of Vivian Gadson

to represent this class, but rather relied on the inaccurate

stipulations between two parties who clearly “sold out” the

interest of true class [sic] in exchange for $2.5 million dollars

in attorney fees after taking one deposition and failed to

protect the interests of any true class member. Moreover, if

the Trial Court itself had conducted any examination of

Vivian Gadson thus fulfilling its duty to conduct a “rigorous

analysis” of the factors under ARCP 23, the truth would

certainly nave risen to the surface; that is, that with the excep-

tion of the unfounded and untrue allegations of Vivian

Gadson in her multiple complaints, amendments thereto and

in an affidavit, all evidence in this case shows that Vivian

Gadson ts not an adequate representative. If this were not the

case, certainly the proponents of this class action would never

65a

have attempted to redefine the class with an eleventh hour

“substitution” of the class definition. This class action is due

to be decertified pursuant to Alabama law.

CONCLUSION

If ever there was a class action that was ripe to be de-

certified by this Court it is certainly this one. This Court

should reverse the Trial Court and decertify the class for three

reasons. First, because Vivian Gadson was never insured

under any health insurance policy sold by Defendants, thus

her claims history or health condition could never have been

used to determine insurance premium renewal rates. Because,

Vivian Gadson did not and does not have legal standing, she

did not have the capacity to enter into any type of settlement

on behalf of a class of persons of which she is not even a

member. There is a complete lack of an adequate class rep-

resentative and the existing parties, including class counsel,

have failed to both protect the interest of the defined class and

satisfy the requirements of ARCP 23. The attempt by the

proponents of this class action cannot cure this fatal flaw by

redefining the class after Notice has already gone to the pur-

ported class members.

Second, because the settlement agreement was a product of

negotiations that excluded every member of Georgia insureds

and the legal remedies available to the Georgia consumer

under Georgia law are greater than and different from those

available to the Alabama insured under Alabama law, the

claims of the Georgia insured and the Alabama insured are

not common or typical. Thus, the setthkement agreement can-

not meet the requirements of typicality, commonality, and

adequate representation necessary for final approval.

Third, the Settlement Agreement proffered by the existing

parties in this case is patently unfair to the Class. The terms

of the agreement are grossly unfair in terms of the monetary

compensation that will actually be realized by the class, and

66a

the non-monetary relief is of little to no value to members of

the class, especially to those who were driven from the De-

fendants’ rolls and are now without the benefits of health in-

surance. The requisites surrounding the rigors of realizing

what little relief that is being offered are unreasonably bur-

densome. The terms of the settlement are in violation of the

laws of the State of Georgia, whose citizens the Settlement

Agreement purports to represent and bind, and the notice (or

lack thereof as the case may be) does not afford the requisite

Due Process protections for any member of this class.

WHEREFORE, PREMISES CONSIDERED, Appellants/

Interveners respectfully request this Honorable Court to

reverse the Trial Court judge and decertify the class.

Respectfully submitted,

/s/ L. Andrew Hollis, Jr.

L. ANDREW HOLLIS, JR.

Bar Code No.: HOL-043

/s/ Steven William Couch

STEVEN WILLIAM COUCH

Bar Code No.: COU-014

OF COUNSEL:

HOLLIS & WRIGHT, PC

505 North 20th Street, Suite 1750

Birmingham, Alabama 35203

(205) 324-3600

67a

APPENDIX D

IN THE SUPREME COURT OF ALABAMA

CASE NO. 1040260

ANGELA KING, VALERIE ASKEW, CHARLES J. KAHN,

JANA HUTCHINSON, and SHARON HENDERSON,

Appellants

VIVIAN GADSON, UNITED WISCONSIN LIFE INSURANCE

COMPANY, AMERICAN MEDICAL SECURITY, INC.

and AMSOUTH BANK,

Appellees.

ON APPEAL FROM THE CIRCUIT COURT OF

MONTGOMERY COUNTY, ALABAMA

CV-02-1601

BRIEF OF APPELLEE VIVIAN GADSON

E. CLAYTON LOWE, JR. JERE LOCKE BEASLEY

PETER A. GRAMMAS W. DANIEL MILES, HII

BRENT D. HITSON CLINTON C, CARTER

LOWE GRAMMAS & BEASLEY, ALLEN, CROW,

HITSON LLP METHIVIN, PORTIS &

Liberty Park Mites, P.C.

1952 Urban Center Parkway P.O. Box 4160

Vestavia Hills, Alabama 35242 Montgomery, Alabama 36104

Telephone: (205) 380-2400 Telephone: (334) 269-2343

Facsimile: (205) 380-2408 Facsimile: (334) 954-7555

Auorneys for Appellee Vivian Gadson

68a

STATEMENT REGARDING ORAL ARGUMENT

The Appellees do not believe that oral argument is needed

for the Court to dispose of this appeal and, therefore, do not

request oral argument. Because this matter involves the

settlement of a class action pursuant to the requirements of

Rule 23 of the Alabama Rules of Civil Procedure and Ala.

Code § 6-5-641, the legal issues and applicable standards are

straightforward and well-settled by this Court. Moreover, the

Court is reviewing the trial court’s ruling here only for an

abuse of discretion in approving a settlement supported by the

defendants and more than 98% of the plaintiff class.

It is vital from the outset that the Court understand the true

nature of this appeal. At the very time the parties to this

lawsuit reached a settlement and proposed it to the trial court,

the lawyers who represent the appellants/objectors filed a

copycat class action in Georgia. These same lawyers also

have at least thirty (30) individual opt-out/excluded cases

pending against the same defendants. In its final order, the

trial court found this fact to be the true motive behind the

objections to this settlement. Thus, while the appellants here

are presented by their attorneys as objectors concerned about

the actual fairness of this class settlement, in reality, they are

more akin to pawns being used to achieve goals wholly in-

consistent with those of the class.

As will be demonstrated in this brief, and as the trial court

determined, the settlement reached in this case is eminently

fair and is supported by more than 98% (more than 30,000

people) of the plaintiff class. The present appeal is nothing

more than a thinly veiled effort to advance appellants’ coun-

sels’ personal agenda and quest for attorneys’ fees at the ex-

pense of the class. Such conduct should be seen for what it is

and should not be sanctioned by this Court.

69a

Therefore, although plaintiff does not believe that oral

argument is necessary, should the Court desire to hear oral

argument from the parties, Appellee Vivian Gadson and her

counsel stand ready to appear.

70a

TABLE OF CONTENTS

Page

STATEMENT REGARDING ORAL ARGUMENT... i

DPR ks CP COG ERE EO shcverbcisivcvacsnsoonictarcdtanenstemssonsins iil

STATEMENT OF JURISDICTION ....0.0..... ce ecseesseeses vi

TABLE OF AUT HORELI...cccicyssonrvvosenscasaslicoagilicasevess ix

L, STATEMENT OF THE CASE ....c.c.ccncscceesssasses I

A. Vivian Gadson And Her Claims Against

DCIS os 5s acide ici diientg aedpebeaetoearets

B. The Stipulation Of Class Settlement And

The Trial Court’s Approval And Certifica-

tion Of A Temporary Settlement Class ....... 3

C. The Copycat Georgia Class And The

Objectors’ Attorneys’ Efforts To Derail

This Settlement In Favor Of Their Georgia

ONG is iccccceeicshecedcdeatesias oubelathgeivesdbcmabiotel 3

D. The Parties Submit Their Evidence And

Arguments In Support Of Final Approval

OOF The. Chass Setter ta ois csccecsssscocnscssicoss 6

E. The September 8, 2004 Fairness Hearing....— 8

F. The September 29, 2004 Final Order And

Post-Judgment Motions .............::ccssseereeeees 10

G. The November |, 2004 Hearing And The

Trial Court’s Final November 10, 2004

SEITE SONIA he SINE, SORE CR Ser ata Bs FOF 1]

HH. : STATEMENT OF THE Tau ccvcsciccccccsccccscces. 12

Hil. STATEMENT OF THE FACTS ........................ 12

A. The Claims Of The Class And The

Substantial Efforts Undertaken To Reach

A Settlement With The Defendants............. 12

IV.

Vi.

Tla

B. The Terms Of The Class Settlement............

Fi NEE EIN cans bbbtnidestioin deakeneetdisedennveeetents

Be PRONE FO TO CAGES .ncevscctcteccovencosscosivones

3. Consideration To The C1aSS .......c00-000000

C. The Court’s Rulings On The Objectors

PAG THCIC ATBUITICINS ....scecossecvoscecseseessesissie

STANDARD OF REVIEW.........ccccoccessososecccseses

SUMMARY OF THE ARGUMENT.................

ETERS dchiadieritccaticirsdataskecstiaxenvesicacss beans

A. Class Settlements Are Highly Favored

RE WEE BO sdensicicaccenistacecootseobenseiuvniaseses

B. Vivian Gadson Is An Adequate Class

rN a a ikieh cack sredatnatececnestesss

C. The Objectors Arguments Are Irreparably

Tainted By Their Attorneys’ Ex Parte

Contact With Vivian Gadson.................0+

1. The September 8, 2004 Hearing .............

2. The November 1, 2004 Hearing .............

3. The Objectors’ Conduct Violated The

Alabama Rules of Professional Conduct

D. The Class Definition Clearly Defines The

BN ibd siete a cesngaeekemaebernastacasesivedesauiess

E. The Objectors Continue To Assert Their

Incorrect Argument That Georgia Law Is

Somehow Better Than Alabama Law With

Regard To The Claims At Issue In This

EM oa. sid ctndchdaabcdvesaceiceabencbcbexstccoedenWeceabuave

1. The Georgia Statute upon Which The

Objectors Rely Does Not Apply To

Members Of The Class In This Case .......

72a

2. Even If O.C.G.A. § 33-30-12 And Ga.

Comp. R. & Regs. 120-2-10-.12(8) Did

Apply In This Case—Which They Do

Not—There Is No Private Right Of

Action Of Enforcement Available To The

CURSE scivihicccnienseecsitviinictenbitaanditetuinwatiis

3. Even If O.C.G.A. § 33-30-12 And Ga.

Comp. R. & Regs. 120-2-10-.12(8) Did

Apply In This Case—Which They Do

Not—They Expressly Allow For Tier-

Rating, Whereas Alabama Law Prohib-

165 FE FP ssid bcpcidespaiovan acta

F. There Was No Collusion Between The

Plaintiff And The Defendants......................

G. The Trial Court Conducted The Rigorous

Analysis Required By Rule 23 of The

Alabama Rules of Civil Procedure And

Ala. Code § 6-5-641 And Correctly Deter-

mined That The Settlement Here Is Fair,

Adequate, And Reasonable................:::cs000

VIF, CUR GCL Aen sith ckncicitecirpnsesivactshdbohslptendiintel

CERTIFICATE OF SERVICE.......... Aietiviaiivesciathstnictats

73a

STATEMENT OF JURISDICTION

This is an appeal from a final judgment entered by the

Circuit Court of Montgomery County, Alabama certifying a

class and approving a class action settlement. The Alabama

Supreme Court has authority to review such final judgments

pursuant to Ala. Code § 12-22-2. See x_...2rally Dickerson v.

Alabama State University, 852 So. 2d 704, 705 (Ala. 2002)

(quoting Ala. C

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