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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 2005

## Text

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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

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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.

\

8

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.

9

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

10

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.

1]

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.

12

“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.

13

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

4

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.

16

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.

17

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

18

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.

19

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.

20

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

21

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

la
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,
v.

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

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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.

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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.

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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

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

Sa

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

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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

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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

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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

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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,

Ve

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

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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 5 HOES Eonar meenees 44,58
es er re EE i cilctidccenetiensbiniianprtenis 28, 29, 44, 46
es et, BD SE actadinsechcssenaideeeensotiipidenaboaiianes 62
Ala. Code § 6-5-641 (1975)... cece eeeeeeee: 28, 56, 60, 61
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]
Stn At SEITE UN idiicsbucsssoniricusabinbiegttanciacatiiicamin ale ae

Secondary Materials
Wright and Miller, Federal Practice and Procedure ... 29

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386016_0737%3A2. Public record. Not legal advice.