In Re: Prudential Insurance Company of America Sales Practice Litigation Marvin Lowe and Alice Lowe

261 F.3d 355, 2001 WL 871764
CourtCourt of Appeals for the Third Circuit
DecidedAugust 2, 2001
Docket00-1389
StatusPublished
Cited by114 cases

This text of 261 F.3d 355 (In Re: Prudential Insurance Company of America Sales Practice Litigation Marvin Lowe and Alice Lowe) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re: Prudential Insurance Company of America Sales Practice Litigation Marvin Lowe and Alice Lowe, 261 F.3d 355, 2001 WL 871764 (3d Cir. 2001).

Opinion

OPINION OF THE COURT

McKEE, Circuit Judge.

This appeal arises in the wake of the settlement of a nationwide class action against The Prudential Insurance Company of America. Two policyholders who were members of the class appeal the district court’s order enjoining them from prosecuting suits they filed in state court in Florida based upon policies that were eligible for inclusion in the nationwide class, but which the plaintiffs excluded from the terms of the class settlement. For the reasons that follow, we will affirm.

I. FACTUAL BACKGROUND 1

A large group of policy holders started a nationwide class action against Prudential Life Insurance Company alleging that Prudential agents had engaged in deceptive sales practices.

The class is comprised of [over 8 million] Prudential policyholders who allegedly were the victims of fraudulent and misleading sales practices employed by Prudential’s sales force. The challenged sales practices consisted primarily of churning, 2 vanishing premiums 3 , and *359 fraudulent investment plans, 4 and each cause of action is based on fraud or deceptive conduct.

148 F.3d at 289.

On October 28, 1996, the class representatives entered into a Stipulation of Settlement with Prudential. App. at 668-724. That same day, the district court entered an Order Conditionally Certifying the Class for Settlement Purposes, Designating Class Counsel and Class Representatives, Staying Pending Motions, Directing Issuance of Notice, Issuing Injunction and Scheduling Settlement Hearing (the “Certification Order”). App. at 725-38. In that Certification Order, the district court also conditionally certified the following for purposes of settlement:

a class that consists of all persons who own or owned at termination an individual permanent whole life insurance policy issued by Prudential or any of its United States Life insurance subsidiaries during the Class Period of January 1, 1982 through December 31, 1995 (the “Policy” or “Policies”), except as specifically described below [not relevant here] (“Policyholders”), and do not timely exclude themselves from participating in the settlement (“Class Members” or the “Class”).

App. at 727. The Certification Order also scheduled a date for a Settlement Hearing

to consider the fairness, reasonableness and adequacy of the proposed settlement and terms and provisions of the Stipulation, .and to determine whether the proposed settlement and the Stipulation should be finally approved by the Court.

Id. at 729. In addition, the Certification Order required that Prudential provide Class Notices to all policyholders. The court required that the Class Notice

(i) contain a short, plain statement of the background of the Actions, the conditional Class certification and the proposed settlement, (ii) describe the proposed forms of relief, (iii) explain the procedures for receiving and participating in the proposed forms of relief, (iv) explain Class Members’ rights of exclu *360 sion, objection and appeal and (v) state that any relief to Class Members is contingent on the Court’s final approval of the proposed settlement.

Id. at 730.

The Class Notice also advised class members of the effect of the proposed settlement and referenced a Release that was attached as Appendix A. The Release stated in relevant part that “Class Members hereby expressly agree that they shall not ... institute, maintain or assert ... any and all causes of action, claims ... that have been, [or] could have been, asserted by Plaintiffs or any Class Member against [Prudential] in any other court action ... connected with ... The Released Transactions 5 ...” Id. at 765.

The Class Notice also told the Class Members how they could exclude themselves from the class and explained that policyholders who owned more than one policy could “choose to remain a Class Member with respect to some Policies, but ... exclude [themselves] from the Class with respect to other Policies.” Id.

Following the mailing of the Class Notice and the Fairness Hearing, the district court entered a Final Order and Judgment certifying a settlement and approving the settlement as fair, reasonable and adequate. In re Prudential Ins. Co. of America Sales Practices Litigation, 962 F.Supp. 450 (D.N.J.1997). The Final Order also clearly informed all class members of the preclusive effect of the Settlement. It stated:

The terms of the Stipulation of Settlement and of this Final Order and Judgment, including all exhibits and supplemental exhibits thereto, shall forever be binding on, and shall have res judicata and claim preclusive effect in all pending and future lawsuits maintained by or on behalf of, the plaintiffs and all other class members, as well as their heirs, executors and administrators, successors and assigns. All claims for compensatory or punitive damages on behalf of class members are hereby extinguished, except as provided for in the Stipulation of Settlement.

Id. In addition, the district court expressly incorporated the Release into the Final Order. Id. at 566.

The Certification Order also contained the following injunction:

Prudential has offered evidence showing the existence of multiple class actions which could act to seriously impair this Court’s ability to oversee the orderly and efficient management of the proposed nationwide class action settlement, and have demonstrated that without preliminary injunctive relief, many similar actions could proceed. Based on its familiarity with the issues in this lawsuit and the complexity of the proposed settlement, the Court finds that such actions may substantially impair the ability of this Court and the parties to implement the proposed settlement ... Therefore, based on the record, including the legal and factual support for an injunction submitted by Prudential, this Court finds that an injunction is necessary to protect its jurisdiction, and hereby issues the following injunction, effective upon the mailing of the Class Notice, with Policyholders having been *361 thus afforded the opportunity to exclude themselves from the Class:
All Policyholders and all persons acting on behalf of or in concert or participation with any Policyholder, are hereby enjoined from filing, commencing, prosecuting, continuing, litigating, intervening in or participating as class members in, any lawsuit in any jurisdiction based on or related to the facts and circumstances underlying the claims and causes of action in this lawsuit, unless and until such Policyholder has timely excluded herself or himself from the Class.

Id. at 735-36 (emphasis added).

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Bluebook (online)
261 F.3d 355, 2001 WL 871764, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-prudential-insurance-company-of-america-sales-practice-litigation-ca3-2001.