Keith Snell Teresa M. Snell, on Behalf of Themselves and All Others Similarly Situated Debra Wolinsky Louis Gans, Intervenor v. Allianz Life Insurance Company of North America Fidelity Union Life Insurance Company

Citations: 327 F.3d 665; 55 Fed. R. Serv. 3d 558; 2003 U.S. App. LEXIS 8456Docket: 02-1396

Court: Court of Appeals for the Eighth Circuit; May 5, 2003; Federal Appellate Court

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The case involves a class action settlement concerning life insurance sales practices against Allianz Life Insurance Company of North America, initiated by Keith and Teresa Snell in 1997 and subsequently transferred to federal court. Debra Wolinsky, who opted out of the settlement, was mistakenly re-included after a conversation with class counsel, leading to a denial of her exclusion request by the district court. Wolinsky's appeal challenges the ruling that she requested to be included in the class and the refusal to exclude her. 

The complaint alleged fraudulent practices by Allianz and others, initially based on state law, but later amended to include a federal RICO claim. The settlement offered class members two options: the Contributed Insurance Benefit (CIB), providing temporary term life insurance, or the Claim Review Process (CRP), an arbitration for damages. Class members had until July 18, 2000, to opt-in or opt-out; those who neither opted out nor opted into CRP would receive only the CIB. The CIB was valued at $43.4 million, while the CRP had an initial fund of $10 million with no cap. Any remaining funds after processing CRP claims would be distributed to the class. The appellate court reversed the district court's decision to keep Wolinsky in the class.

The parties involved in the settlement disseminated individual and public notices and established a call center for public inquiries. Wolinsky formally opted out of the settlement on June 13, 2000, prior to the deadline. Fewer than 20 objections were raised, with only three individuals attending the fairness hearing, at which Wolinsky did not participate. On September 8, 2000, the magistrate judge approved the settlement and awarded class counsel $6.6 million in fees, with an agreement for them to handle post-settlement work without charge. Wolinsky's name was included in preliminary lists of individuals who opted out, prepared by class counsel and Allianz.

Disputes arose regarding a potential request for readmission into the class. Wolinsky contended she contacted the call center for information on readmission but did not request it. Conversely, Allianz claimed she asked class counsel for readmission and participation in the Class Relief Program (CRP) via an oral request made between January 1, 2001, and April 10, 2001. There was no documented evidence of the conversation, and class counsel did not clarify the nature of Wolinsky's call or the identity of the call center representative she spoke with.

Class counsel acknowledged a "miscommunication" but did not specify the details or parties involved. They later indicated to Allianz that Wolinsky had requested readmission, which Allianz accepted despite the elapsed deadline, and they mailed her a form to initiate her CRP claim. Wolinsky was not listed among the excluded individuals as of May 29, 2001. 

Wolinsky learned of her readmission on July 13, 2001, when she received the CRP claim form from Allianz. She subsequently informed the district court of a "miscommunication," asserting her original opt-out status and lack of a readmission request, and sought to be recognized as having opted out. She did not submit the CRP claim form and now feels disadvantaged, being classified as a class member without the ability to pursue a private suit or access to the CRP, leaving her remedy limited to the Class Information Bureau (CIB).

Wolinsky's letter was sent to class counsel, prompting a "Motion to Exclude" her from the class, which Allianz opposed. A telephonic hearing was held with representatives from Allianz, class counsel, and Wolinsky's attorney, Becker. Class counsel argued for exclusion but did not clarify whether Wolinsky sought readmission. The magistrate judge expressed belief in the existence of communications between Wolinsky and class counsel during a specified period, but no evidence supported this belief; the only communications documented were between class counsel and Allianz's counsel.

On September 17, 2001, the magistrate judge denied the motion to exclude Wolinsky, finding she had been readmitted to the class under the settlement agreement's provisions. The denial was based on Allianz's reliance on class counsel's claims about Wolinsky's intentions, the need to maintain class integrity, and the importance of finality. The judge mistakenly referred to class counsel as Wolinsky's attorney.

Becker later sought to file a motion for reconsideration and intervene, leading to a second telephonic hearing. The magistrate judge again did not address Wolinsky’s exclusion request but denied the reconsideration request while allowing intervention for appeal purposes. During this hearing, Becker raised the issue of Wolinsky's intent to re-enter the class, but the magistrate judge dismissed it as already resolved.

Wolinsky is appealing the magistrate judge's orders from September 17 and December 3, 2001, arguing lack of subject matter jurisdiction, improper personal jurisdiction following her opt-out, clear error in the finding of her oral request for readmission, and abuse of discretion in allowing her to remain in the class. The district court's factual findings are reviewed for clear error, legal conclusions are reviewed de novo, and the ruling on the Motion to Exclude is reviewed for abuse of discretion.

Wolinsky maintained that she never requested readmission to the class, contradicting Allianz's claim that she made an oral request communicated by class counsel. Class counsel did not provide evidence of such a request, leading to the conclusion that the magistrate judge erred by accepting Allianz's position. Wolinsky’s timely written notice to opt out of the settlement was deemed definitive of her status, and the magistrate judge wrongly ruled otherwise.

Even if Wolinsky had requested readmission, the magistrate judge abused his discretion by denying the motion to exclude her. The settlement explicitly required written communications for opt-outs and requests for benefits, and no provision allowed for an oral opt-back-in after a written opt-out. The interpretation necessitating written requests was sensible, given the possibility of miscommunication.

Allianz’s reliance on class counsel’s representation was unjustified, as it should have ensured Wolinsky's request was documented. The magistrate judge's concern about potential floodgates for other opted-out members seeking readmission was unfounded, as no other class member had presented a similar situation.

Wolinsky was determined not to be a class member and had no interest in the settlement. Her intervenor status was limited to appealing the rulings regarding her class status, and she failed to demonstrate any error in this limitation. Challenges to the settlement and the district court's jurisdiction exceeded the scope of her intervention.

The order of the magistrate judge was reversed, and the matter was remanded with instructions to grant the motion to exclude Wolinsky from the class. Wolinsky's pending motion to supplement the record was denied.