Benacquisto, et al v. American Express Fin, et al

Filing 473

ORDER granting 455 Motion to Enforce Settlement (Written Opinion). Signed by Senior Judge David S. Doty on 11/14/2012. (PJM)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 00-1980(DSD/JMM)
Lesa Benacquisto, Daniel
Benacquisto, Richard Thoresen,
Elizabeth Thoresen, Arnold
Mork, Isabella Mork, Ronald
Melchert and Susan Melchert, on
behalf of themselves and all
others similarly situated,
Plaintiffs,
ORDER

v.
American Express Financial
Corporation, American Express
Financial Advisors, American
Centurion Life Assurance
Company, American Enterprise
Life Insurance Company,
American Partners Life
Insurance Company, IDS Life
Insurance Company and IDS Life
Insurance Company of New York,
Defendants.

This matter is before the court upon the motion to enforce
settlement

by

(Ameriprise).1

defendant
Based

on

Ameriprise
a

review

Financial
of

the

Services,

file,

record

Inc.
and

proceedings herein, and for the following reasons, the motion is
granted.

1

Ameriprise Financial Services, Inc. is the successor in
interest to American Express Financial Corporation.

BACKGROUND
This dispute arises out of the purchase of annuities and life
insurance policies (the Policies) by respondents Richard and Lois
Schipper.

In

1992,

the

Schippers

purchased

three

IDS

Life

Insurance Co. (IDS) flexible life annuities. Sheely Aff. Ex. 1, at
3, ECF No. 471.2

The Schippers liquidated one annuity in October

2004 and transferred two other annuities to Commonwealth Financial
Network in 2005.

Id.

Lois Schipper purchased an additional IDS

variable life insurance policy in September 1999, and it was
terminated in 2008.

Id.

On February 24, 2012, the Schippers filed an arbitration claim
with the Financial Industry Regulatory Authority (FINRA Action),
alleging fraud, gross negligence, unsuitability, churning, failure
to supervise, breach of fiduciary duty and breach of contract.
Sheely Aff. Ex. 2, at 4, ECF No. 459.

The Schippers brought claims

against Ameriprise;

their

Fouad

Zeaiter,

advisor; and Commonwealth Financial Network.

Ameriprise

Financial

Id. at 2.

In the present action, Ameriprise argues that the claims
asserted in the FINRA Action are barred by the court’s Final Order
of Judgment in this case (Benacquisto Action), and moves for an
order enforcing the settlement.

In response, the court issued a

briefing schedule, and the Schippers responded.

2

After reviewing

The exhibit does not have page numbers and is not Bates
stamped.
The court uses the ECF page stamps to identify pages
within the exhibit.
2

the

submissions,

the

court

determines

that

unnecessary, and it now considers the motion.

oral

argument

is

See Fed. R. Civ. P.

78(b).

DISCUSSION
In the Benacquisto Action, the court permanently enjoined
class members who did not opt out of the settlement from bringing
any subsequent action based on the policies and annuities that were
the subject of the litigation.

See ECF No. 94, ¶ 14.

the

jurisdiction

court

relating to

expressly
the

retained

administration,

over

consummation,

Moreover,

“all

matters

enforcement

and

interpretation of the Settlement Agreement and [the] Order and
Judgment.”

Id.

¶

19.

Specifically,

the

court

reserved

jurisdiction to determine whether subsequent claims were barred by
the order.

Id. ¶ 19(a).

The court possesses the authority to

issue injunctions to enforce its final orders.

Thompson v. Edward

D. Jones & Co., 992 F.2d 187, 189 (8th Cir. 1993).
In the instant action, Ameriprise argues that the Benacquisto
settlement bars the Schippers from pursuing the FINRA Action.

The

Schippers respond that (1) Ameriprise agreed to address these
matters through arbitration, (2) they did not receive adequate
notice of the class action or the settlement and (3) their claims
are not precluded by the settlement.

3

I.

Arbitration Agreement
Questions of arbitratability are addressed with a “healthy

regard for the federal policy favoring arbitration.” Moses H. Cone
Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983).
Arbitration, however, is a matter of contract, “and a party cannot
be required to submit to arbitration any dispute which [it] has not
agreed so to submit.”

Art Etc. LLC v. Angel Gifts, Inc., 686 F.3d

654, 656 (8th Cir. 2012) (citation and internal quotation marks
omitted).
The

Schippers

argue

that

Ameriprise

consented

to

FINRA

arbitration and that it should be estopped from enforcing of the
settlement agreement.

In support, the Schippers cite a previous

Benacquisto

order

which

the

settlement.

See

No.

163.

in
ECF

court
In

refused
that

to

enforce

instance,

the

however,

Ameriprise signed a uniform submission agreement consenting to
arbitration before the National Association of Securities Dealers
(NASD).3

Id. at 2-3.

submission agreement.

Here, Ameriprise has not submitted a uniform
Rather, in its answer in the FINRA Action,

Ameriprise argued that the Benacquisto Action foreclosed relief and
asserted, as an affirmative defense, that the Schippers “have been
fully satisfied and discharged.”
471.

Sheely Aff. Ex. 1, at 12, ECF No.

Therefore, Ameriprise did not consent to FINRA arbitration,

and the Schippers’ argument fails.

3

FINRA was previously named NASD.
4

II.

Notice
In a class action, the court must “direct to the members of

the class the best notice practicable under the circumstances,
including individual notice to all members who can be identified
through reasonable effort.” Fed. R. Civ. P. 23(c)(2)(B); see Eisen
v. Carlisle & Jacquelin, 417 U.S. 156, 177 (1974).

“Individual

notice of class proceedings is not meant to guarantee that every
member entitled to individual notice receives such notice, but it
is the court’s duty to ensure that the notice ordered is reasonably
calculated to reach the absent class members.”

Reppert v. Marvin

Lumber & Cedar Co., 359 F.3d 53, 56 (1st Cir. 2004) (citations and
internal quotation marks omitted).

If notice is adequate, absent

class members are bound by the settlement even if those individuals
never receive notice.
The

Schippers

Id.
argue

that

they

are

not

barred

by

the

Benacquisto settlement because they did not receive notice of the
action.

On

December

1,

2000,

however,

Amy

Lake,

class

administrator for the Benacquisto Action, mailed notice of the
class action to the Schippers’ Florida address.
¶¶ 2-3, ECF No. 458.

See Lake Aff.

Although, the Schippers contend that they had

relocated to Michigan by December 2000, a temporary change-ofaddress form was not submitted to Ameriprise until May 16, 2001.
R. Schipper Aff. Ex. E, at 37.

On October 18, 2001, the Schippers

submitted a permanent change of address form to Ameriprise. Id. at

5

38. Roughly one month later, Lake mailed notice of the Benacquisto
settlement to the Schippers’ Florida address.

Lake Aff. ¶¶ 7-8,

ECF No. 458.
The court, however, need not answer whether mailing notice to
the

Florida

address

constitutes

insufficient

notice,

because

Ameriprise also published notice of the Benacquisto Action in the
New York Times, Wall Street Journal, U.S.A. Today and in the most
widely-circulated newspaper in every state.

Id. ¶ 6.

Publication

in a newspaper alone is sufficient to confer adequate notice to a
class without personal notice.

Reppert, 359 F.3d at 57.

As such,

the class administrator provided the best practicable notice under
the circumstances, which was reasonably calculated to apprise class
members of their rights and the binding effect of the settlement.
See ECF No. 94, ¶ 5.

Therefore, the Schippers’ argument that they

did not receive notice is unavailing.
III.

Preclusion by the Settlement Agreement
Pursuant to the settlement, class members agreed to release

all past or present claims occurring for the first time between
January 1, 1985, and February 29, 2001 (Class Period), “that are
based upon, related to, or connected with, directly or indirectly,
in whole or in part” the Benacquisto Action or the “Released
Conduct.”

ECF No. 94, ¶ 13(A)(1).

The Released Conduct included:

[A]ny and all direct or indirect acts,
representations, omissions, suggestions, or
communications ... related to or connected in
any way with the ... design, development,
6

marketing, sale, administration, servicing ...
or performance of the Policies or the
Annuities, including, without limitation,
acts, representations, omissions, suggestions
or communications in connection with (I) the
explanation, description, marketing, sale,
solicitation, illustration or replacement of
any Policy or Annuity; (iii) the suitability
of any purchases, sales or replacements of any
Policy or Annuity; (vii) the investment
choices made with respect to assets held in
any Policy or Annuity; (x) the costs,
commissions,
terms,
or
benefits
or
disadvantages of any Policy or Annuity
compared to any other life insurance policy,
annuity, contract or investment; (xii) the
preparation by any financial advisor acting
for the Company of any financial plan or the
provision of financial or investment advice
insofar
as
it
resulted
in
the
sale,
modification or maintenance of any Policy or
Annuity; and (xiv) the administration or
servicing of any Policy or Annuity after its
purchase.
Id. ¶ 13(B)(2).
The parties agree that the Schippers purchased their Policies
during the Class Period.

The Schippers argue, however, that the

claims asserted in the FINRA Action do not fall within the Released
Conduct.

Specifically, the Schippers argue that their claims are

based on the “structure, operation, and function” of the Policies
and

not

their

“design,

Resp’ts Mem. Opp’n 14.

development

...

[or]

administration.”

Ameriprise responds that this is merely an

attempt to rephrase the Released Conduct.

The court agrees.

As a

result, the claims asserted by the Schippers fall within the
Released Conduct of the Benacquisto settlement.

7

The settlement, however, exempts “claim[s] that independently
arise from acts, facts or circumstances that occur for the first
time after the last day of the Class Period.”
¶ 13(A)(3).
“increased

The Schippers allege that their Policies suffered
allocations

and

[a]

rapidly

accelerating

financial spiral” after the Class Period closed.
Opp’n. 14.

ECF No. 94,

downward

Resp’ts Mem.

The Schippers, however, have not identified how this

poor management is distinct from the conduct alleged during the
Class Period.

In other words, there is no allegation of an

independent cause of action arising for the first time after the
Class Period closed. Therefore, the court concludes that the terms
of the settlement preclude the Schippers from arbitrating these
claims.

CONCLUSION
Accordingly, based on the above, IT IS HEREBY ORDERED that
defendant’s motion to enforce settlement [ECF No. 455] is granted.
Dated:

November 14, 2012
s/David S. Doty
David S. Doty, Judge
United States District Court

8