Freeman v. MML Bay State Life Insurance , 445 F. App'x 577 ( 2011 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
__________
No. 11-1144
__________
MONTE K. FREEMAN,
o/b/o himself and all others similarly situated,
Appellant
v.
MML BAY STATE LIFE INSURANCE COMPANY
_________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 2-10-cv-04019)
District Judge: Hon. Jose L. Linares
__________
Argued September 13, 2011
Before: SLOVITER, SCIRICA, and SMITH, Circuit Judges
(Filed: September 21, 2011
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Lee R. Anderson, Esq.
Richard M. Paul, III , Esq. (Argued)
Patrick J. Stueve
Stueve Siegel Hanson LLP
460 Nichols Road
Suite 200
Kansas City, MO 64112
Patrick L. Rocco, Esq.
Stone Bonner & Rocco
447 Springfield Avenue
2nd Floor
Summit, NJ 07901
John J. Schirger, Esq.
Miller Schirger
4520 Main Street
Suite 1570
Kansas City, MO 6411
Attorneys for Appellant
Joel S. Feldman, Esq.
Robert B. Hochman, Esq. (Argued)
David B. Johnson, Esq.
Jason M. Adler, Esq.
Sidley Austin
One South Dearborn Street
Chicago, IL 60603
Steven P. Del Mauro, Esq.
Robert L. Ghelli, Esq.
McElroy, Deutsch, Mulvaney & Carpenter
100 Mulberry Street
Three Gateway Center
Newark, NJ 07102
Attorneys for Appellee
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OPINION
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SLOVITER, Circuit Judge.
2
Monte Freeman appeals from the District Court’s grant of summary judgment in
favor of MML Bay State Life Insurance Company (“MML”). We will affirm.1
In 2005, the United States District Court for the District of New Jersey approved a
settlement agreement between MML and a nationwide class of its policy owners that
included Freeman.2 See Varacallo v. Mass. Mut. Life Ins. Co., 226 F.R.D. 207 (D.N.J.
2005). In exchange for significant compensation (valued by the District Court at about
$700 million), class members consented to a broad Release.3 The Release bars Varacallo
class members from bringing any claim “on the basis of, connected with, arising out of,
or in any way related to, in whole or in part,” inter alia, the following transactions: “the
expenses and/or costs (including all expenses, charges, and other deductions) charged or
to be charged against the Policy or Policies,” the “terms, . . . and operation of any Policy,
including . . . the amount or method of calculation of fees, charges, commissions,
distribution costs, administrative expenses, and/or taxes in connection with the sale of, as
part of the premiums for . . . a Policy,” the “cost of insurance, and administrative charge
1
The District Court had jurisdiction under 28 U.S.C. §§ 1332 and 1367, and we
have jurisdiction under 28 U.S.C. § 1291. We exercise plenary review of the District
Court’s grant of summary judgment, and apply the same standard applicable in the
District Court found in Fed. R. Civ. P. 56. See Doe v. C.A.R.S. Prot. Plus, Inc., 527 F.3d
358, 362 (3d Cir. 2008).
2
Freeman does not dispute that he was a Varacallo class member, that he received
notice of the settlement, and that he did not opt out of the settlement.
3
In agreeing to the settlement, MML did not concede that it had engaged in any
wrongful conduct. Varacallo, 226 F.R.D. at 217. Moreover, the settlement did not
require MML to make any changes to any of the released transactions, including its fees
and the cost of insurance.
3
practices whether past present or future,” and “the Company’s Policy or premium charges
and monthly deductions.” App. at 136-39.
The Release also states that class members “acknowledge that they are aware that
they may hereafter discover claims presently unknown or unsuspected, or facts in
addition to or different from those which they now know or believe to be true with
respect to the Released Transactions or with respect to their Policies.” App. at 143.
Nevertheless, the Release continues, “it is the intention of . . . the Class Members in
executing this Release fully, finally, and forever [to] settle, release, discharge, and hold
harmless all such matters, and all claims relating thereto, which exist, hereafter may exist,
or might have existed . . . with respect to their Policies . . . .” Id. It is difficult to
imagine a more comprehensive release. However, the Release cautions that “nothing in
[the] Release shall be deemed to . . . release a Class Member’s right to assert any claims
that independently arise from acts, facts, or circumstances arising exclusively after the
end of the Class Period.” App. at 142; see also Varacallo, 226 F.R.D. at 244 (“Future
claims for future conduct are not included in the release.”).
On January 15, 2010, Freeman filed the instant complaint in the District of
Connecticut, alleging that MML “[b]eginning at or after the commencement of the Policy
term [in Freeman’s case, 1999] . . . began breaching the terms of the Policy on a monthly
basis by deducting as mortality charges, amounts unrelated to mortality,” which is
“inconsistent with its internal mortality tables.” App. at 6. On MML’s motion, the
Connecticut court transferred the action to the District of New Jersey to determine
whether the claims are barred by the Varacallo release because that court, having
4
overseen the Varacallo settlement, “is best equipped to undertake that assessment.”
Freeman v. MML Bay State Life Ins. Co., No. 3:10-cv-66 (D. Conn. July 15, 2010).
MML filed a motion for summary judgment on the ground that Freeman’s claims are
barred by the Varacallo Release, and the District Court granted the same.
Freeman argues that the present claim is not barred by the Varacallo Release
because the present claim is not based on the same factual predicate as the claims in the
Varacallo litigation. The present claim, Freeman contends, involves MML’s breach of
the express terms of the Policy whereas the Varacallo litigation involved deceptive sales
practices. Moreover, the present claim includes only actions that fall after the Varacallo
class period (defined as January 1, 1983 to December 31, 2003). Freeman’s arguments
are unavailing.
It is settled in this circuit that a class representative can enter into a settlement that
bars future claims by class members “even though the precluded claim was not presented,
and could not have been presented, in the class action itself.” In re Prudential Ins. Co. of
Am. Sales Practice Litig., 261 F.3d 355, 366 (3d Cir. 2001) (citations omitted). This rule
promotes judicial economy by preventing the relitigation of settled questions resolved in
comprehensive settlement agreements. Id. The key inquiry is whether the factual
predicate for future claims is identical to the factual predicate underlying the settlement
agreement. See TBK Partners Ltd. v. Western Union Corp., 675 F.2d 456, 460 (2d Cir.
1982), cited with approval in In re Prudential, 261 F.3d at 336.
In its analysis of that issue, the District Court noted that Freeman’s claim “arises
out of the same policy that made him a member of the Varacallo class.” Freeman v.
5
MML Bay State Life Ins. Co., No. 10-4019 (D.N.J. Jan 4, 2011). The plaintiffs’ claims in
Varacallo included challenges to the administration of policies and the calculation of
policy charges. The fact that the plaintiffs in Varacallo were challenging different MML
practices with respect to the policies does not mean that the factual predicates are
different.4 The settlement does not define the scope of the Release by reference to the
claims alleged in the Varacallo complaint, but rather, extends to the extensive list of
released transactions partially recounted supra. Freeman seeks to challenge precisely
what he is barred from challenging by the Release, to wit, the amount or method of
calculation of charges. We conclude that Freeman’s present claim arises from the same
factual predicate as the plaintiffs’ claims in Varacallo.
It is of no moment that Freeman seeks relief only for charges applied after the
Varacallo class period. The Release covers claims that could have been alleged at the
time provided they arise out of, or are in any way related to, the covered transactions.
Freeman’s complaint alleges that the actions presently complained of (i.e. monthly
breaches of contract with respect to mortality charges) were occurring as early as 1999,
which was during the Varacallo class period. Therefore, the instant claim does not fall
within the Release’s exception that allows class members to assert future claims for acts
4
The Varacallo complaint asserted ten causes of action, including breach of
express and implied contract and unjust enrichment, that challenged several MML
practices including “improper practices in marketing, selling, servicing, and
administering permanent and term life insurance as well as disability income insurance
policies.” Varacallo, 226 F.R.D. at 216. Despite the breadth of the Varacallo complaint,
MML concedes that the Varacallo complaint did not specifically allege that MML was
deducting as mortality charges amounts unrelated to mortality.
6
“arising exclusively after the end of the Class Period.” App. at 142. It follows that
Freeman cannot plead around the broad Release negotiated in the comprehensive
settlement merely by asserting that some facts associated with his claim occurred outside
of the class period.5 Freeman has provided no compelling reason to reverse the District
Court, the same court that oversaw the comprehensive settlement and that is therefore in
the best position to interpret the scope of the Release.
For the foregoing reasons, we will affirm the order of the District Court.
5
Freeman misplaces reliance on Hesse v. Sprint Corp., 598 F.3d 581 (9th Cir.
2010), and Stephenson v. Dow Chem. Co., 273 F.3d 249 (2d Cir. 2001). In Hesse and
Stephenson, the courts concluded that due process precludes a class action settlement
from barring subsequent claims on behalf of class members where a conflict of interest
prevented the named plaintiffs from adequately representing class members. Hesse, 598
F.3d at 589; Stephenson, 273 F.3d at 260-61. By contrast, Freeman has not alleged any
conflict of interest on the part of the Varacallo plaintiffs or any other reason that their
representation was inadequate. Likewise, In re Conseco Life Ins. Co. Cost of Ins.
Litigation, No. ML 04-1610, 2005 WL 5678842 (C.D. Cal. Apr. 26, 2005), does not help
Freeman. The court there concluded that the plaintiff’s claims were not based on the
same factual predicate as the class settlement because, unlike the instant case, the
defendants’ actions “first occurred years after the . . . settlement.” Id. at *7. Cf. Ross v.
Metro. Life Ins. Co., 411 F. Supp. 2d 571, 578 n.3 (W.D. Pa. 2006) (holding plaintiff’s
claim barred under prior settlement because defendant’s actions challenged by the
plaintiff were also occurring during class period).
7