Mooney v. Allianz Life Insurance Company of North America
Filing
612
MEMORANDUM OPINION AND ORDER denying 572 Defendant's Motion for Permanent Injunction; denying 592 Motion to Intervene (Written Opinion). Signed by Judge Ann D. Montgomery on 05/11/2011. (TLU)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Linda L. Mooney and Lieselotte
W. Thorpe, on behalf of
themselves and all others
similarly situated,
Plaintiffs,
v.
MEMORANDUM OPINION
AND ORDER
Civil No. 06-545 ADM/FLN
Allianz Life Insurance Company
of North America,
Defendant.
______________________________________________________________________________
Karl L. Cambronne, Esq. and Jeffrey D. Bores, Esq., Chestnut & Cambronne, P.A., Minneapolis,
MN; Alan R. Perry, Jr., Esq. and Jason R. Doss, Esq., Page Perry, LLC, Atlanta, GA; and Diane
A. Nygaard, Esq., The Nygaard Law Firm, Leawood, KS, on behalf of Plaintiffs.
Lawrence J. Field, Esq. and David A. Applebaum, Esq., Leonard, Street and Deinard, P.A.,
Minneapolis, MN, on behalf of Defendant.
John J. Stoia, Jr., Esq., Theodore J. Pintar, Esq., Rachel L. Jensen, Esq., Phong L. Tran, Esq., and
Steven M. Jodlowski, Esq., Robbins Geller Rudman & Dowd LLP, San Diego, CA; and Andrew
S. Friedman, Esq. and Kimberly C. Page, Esq., Bonnett, Fairbourn, Friedman & Balint, P.C.,
Phoenix, AZ, on behalf of Plaintiffs/ Proposed Intervenors Vida F. Negrete and Carolyn Y.
Healey.
Marcus N. Bozeman, Esq., Carney Williams Bates Bozeman & Pulliam, PLLC, Little Rock, AR,
on behalf of amici curiae Harold and Ruby Jones.
Donald Chance Mark, Jr., Esq., and Alyson M. Palmer, Esq., Fafinski Mark & Johnson, P.A.,
Eden Prairie, MN; and Artemus W. Ham, Esq. and Erica Entsminger, Esq., Mainor Eglet, LLP,
Las Vegas, NV, on behalf of amici curiae Benlor C. Rivera, Grace U. Rivera and Nelson M.
Obena.
______________________________________________________________________________
I. INTRODUCTION
On April 1, 2011, oral argument before the undersigned United States District Judge was
heard on the motion of Defendant Allianz Life Insurance Company of North America
(“Allianz”) for a permanent injunction under the All Writs Act, 28 U.S.C. § 1651 [Docket No.
572].
Since 2003, several overlapping class actions have been filed against Allianz by
purchasers of its deferred annuity products. Of these, this matter (“Mooney”) was the first to
judgment. Allianz prevailed. Allianz now argues that all members of the Mooney class who did
not opt out should be barred from pursuing any claims that could have been brought in Mooney.
The proposed injunction would substantially reduce the number of plaintiffs and claims
remaining in the other class actions now pending against Allianz.
Vida Negrete and Carolyn Healey, two named plaintiffs in one of the other actions, move
to intervene here for the purpose of litigating the preclusion issue [Docket No. 592. Plaintiffs in
other pending class actions have filed memoranda with the Court in opposition to Allianz’s
motion, but have not moved to intervene.
For the reasons set forth below, both motions are denied.
II. BACKGROUND
The facts of Mooney are recited in the Court’s January 10, 2007 and May 10, 2007
Orders [Docket Nos. 70 and 82] and will not be repeated here. In short, Plaintiffs Linda L.
Mooney and Lieselotte W. Thorpe alleged that Allianz fraudulently marketed certain two-tiered
deferred annuities as providing an “upfront” or “immediate” bonus, when in fact the bonus was
not available until years after the products were purchased. Plaintiffs asserted claims of
consumer fraud under the Minnesota Prevention of Consumer Fraud Act (“MPCFA”), Minn.
Stat. §§ 325F.68-.70.1
1
The Complaint also alleged unjust enrichment; the Court granted summary judgment to
Allianz on this claim. See Docket No. 292 at 7; 2009 WL 511572, *4 (D. Minn. Feb. 26, 2009).
2
Mooney is but one of several overlapping class actions brought against Allianz by
different counsel, in different states, on behalf of purchasers of Allianz deferred annuities. The
first, Castello, was filed in the Fourth Judicial District for the State of Minnesota in December
2003, and was certified as a nationwide class action in September 2005. Three more actions,
Iorio, Negrete and Healey, were filed in 2005 in California. Mooney was filed in this Court on
February 9, 2006. Others followed.2
Negrete and Healey, consolidated before the Honorable Christina A. Snyder of the
United States District Court for the Central District of California, alleged a nationwide
fraudulent scheme to market unsuitable investment products to senior citizens, in violation of the
federal Racketeer Influenced and Corrupt Organizations Act (“RICO”) and the California
Welfare and Institutions Code §§ 15600 et seq. (“Elder Abuse and Dependent Adult Civil
Protection Act” or “Civil Protection Act”). On November 21, 2006, Judge Snyder certified a
nationwide RICO class in Negrete and Healey, identifying the class members as:
All persons who within the applicable statute of limitations of the date of the
commencement of this action and while 65 years of age of older, purchased one
or more Allianz Life Insurance Company of North America deferred Annuities
either directly, or through surrender (in whole or part) of an existing permanent
life insurance policy or annuity, or by borrowing against an existing permanent
2
Class actions include Castello v. Allianz Life Ins. Co. of N. Am., Civ. No. 03-20405
(Minn. Dist. Ct.); Iorio v. Allianz Life Ins. Co. of N. Am., Civ. No. 3:05-633 (C.D. Cal.); Healey
v. Allianz Life Ins. Co. of N. Am., Civ. No. 2:05-8908 (C.D. Cal.); Negrete v. Allianz Life Ins.
Co. of N. Am., Civ. No. 2:05-6838 (C.D. Cal.); Jones v. Allianz Life Ins. Co. of N. Am., Civil
No. 4:07-145 (E.D. Ark.); Rivera v. Allianz Life Ins. Co. of N. Am., Civil No. 10-2266 (D.
Nev.); Ostrow v. Allianz Life Ins. Co. of N. Am., No. 2009-CV-7621-B (D.C. Sup. Ct.). The
Minnesota Attorney General and the California Attorney General both brought suit against
Allianz. State of Minnesota v. Allianz Life Ins. Co. of N. Am., Civ. No. 07-581 (Minn. Dist.
Ct.); In the Matter of the Licenses and Licensing Rights of Allianz Life Ins. Co. of N. Am., VA1152-AP (California Insurance Department). Other actions against Allianz are also pending.
Declaration of Frank G. Burt (“Burt Decl.”) [Docket No. 575] ¶ 5.
3
life insurance policy.
Negrete v. Allianz Life Ins. Co. of N. Am., 238 F.R.D. 482, 496-97 (C.D. Cal. 2006).3 The
Negrete class explicitly excluded the Castello plaintiffs and products, see id. at 497, but did not
carve out any other class action then pending.
Meanwhile, in March 2007, the Castello court directed the parties in Castello to conduct
settlement discussions. Those discussions included counsel in Mooney and the Minnesota
Attorney General. When Negrete counsel learned of the discussions, they asked Mooney
counsel and Allianz for assurances that no Negrete class claims would be released unless they
were permitted to participate. No such assurances were given. The Negrete Plaintiffs then
sought an order prohibiting settlement discussions. On March 19, 2007, Judge Snyder issued an
order which stated:
Any discussions of a settlement that would affect any claims brought in this
litigation, other than claims of an individual plaintiff or class member, must be
conducted or authorized by plaintiffs’ Co-Lead Counsel. Any proposed
settlement that resolves, in whole or in part, the claims brought in this action shall
first be subject to review and approval by the Court in this litigation.
Order of March 19, 2007, Burt Decl. Ex. 1. Soon after, Mooney counsel notified this Court of
Judge Snyder’s Order.4 Burt Decl. Ex. 2.
3
Judge Snyder also certified a California-only class, whose members do not overlap with
the Mooney class. 238 F.R.D. at 497. Judge Snyder was aware of Mooney and the other class
actions filed at the time, but understood them to be seeking only statewide certification, and also
understood the claims to be different. Id. at 495 & n.13. For convenience, Negrete and Healey
will be referred to collectively as “Negrete” for the remainder of this opinion.
4
Allianz appealed the Order to the Ninth Circuit, which reversed, finding the Order was
not authorized by the All Writs Act and violated the Anti-Injunction Act. Negrete v. Allianz
Life Ins. Co., 523 F.3d 1091, 1103 (9th Cir. 2008); 28 U.S.C. §§ 1651, 2283.
4
Mooney did not settle. On May 10, 2007, after discovery, this Court certified Mooney as
a class action under Federal Rule of Civil Procedure 23(b)(3), defining the class to be:
All individuals who from February 9, 2000, to the present purchased one of the
following two-tiered annuities from Allianz Life Insurance Company of North
America: BonusMaxxx, BonusMaxxx Elite, BonusDex, BonusDex Elite, 10%
Bonus PowerDex Elite, MasterDex 10, and the InfiniDex 10 (“Annuities”). The
Class excludes all persons who purchased the above-listed Annuities from Allianz
while they were California residents and when they were 65 or older.
May 10, 2007 Order [Docket No. 82]; Mooney, 244 F.R.D. 531, 538 (D. Minn. 2007). Allianz
twice moved to decertify the class; both motions were denied. [Docket Nos. 137, 292.] The
Mooney class excluded two groups of Negrete plaintiffs -- the California Civil Protection Act
class, and the RICO claims of California residents – but overlapped the nationwide RICO class.
Thus, the same individual seniors might have MPCFA claims that were represented by class
counsel in Mooney, and also RICO claims handled by class counsel in Negrete.5
In July 2007, the Negrete Plaintiffs asked the Judicial Panel on Multidistrict Litigation to
transfer all the class actions to Judge Snyder pursant to 28 U.S.C. § 1407. The Negrete
Plaintiffs argued their claims arose out of the same misrepresentations as those at issue in
Mooney. Burt Decl. Exs. 6, 7, 21. Allianz responded that the Negrete and Mooney claims were
entirely different. Burt Decl. Ex. 20. Counsel in Mooney and other class actions also opposed
the transfer. Burt Decl. Ex. 21 at 12-13. The Panel ultimately denied transfer in October 2007
[see Docket No. 98], and each of the class actions was left to proceed in the jurisdiction where
5
Allianz has represented that 55% of the annuities held by Negrete plaintiffs are the same
annuities at issue in Mooney, Burt Decl. ¶ 27, and that Mooney was the largest of the class
actions pending against it as of August 2007. Burt Decl. Ex. 20 at 3-4 and n.7. Negrete counsel
represented before the Judicial Panel on Multidistrict Litigation that there was a 70% overlap
between Negrete plaintiffs and Mooney plaintiffs. See Burt Decl. Ex. 21.
5
the case had been filed.6
Mooney was first to trial. Class notices were sent, fact and expert discovery proceeded,
and the case was tried to a jury beginning in September 2009. Burt Decl. ¶ 27. The jury was
instructed on the elements of consumer fraud under the MPCFA. [Docket No. 519.] On October
12, 2009, the jury found Allianz had engaged in deceptive practices, but that the class plaintiffs
did not suffer harm as a result. [Docket No. 529.] This Court entered judgment for Allianz on
the jury verdict. [Docket No. 529.] Plaintiffs moved for an award of attorney’s fees, and Allianz
moved to amend the judgment; Plaintiffs’ motion was denied, and Allianz’s motion was granted
in part. Mooney v. Allianz Life Ins. Co., Civ. No. 06-545, 2010 WL 419962, *3-4 (D. Minn.
Jan. 29, 2010) (unpublished). The amended judgment was entered on January 29, 2010 [Docket
No. 567]. There was no appeal.
After entry of the amended judgment in Mooney, Allianz asked Judge Snyder to preclude
the plaintiffs bound by the judgment from litigating in Negrete any claims that were or could
have been brought in Mooney. Judge Snyder denied the motion, and later denied
reconsideration. Negrete v. Allianz Life Ins. Co. of N. Am., 2010 WL 4116852, *13 (C.D. Cal.
August 18, 2010) (unpublished); 2010 WL 4536779, *7 (C.D. Cal. November 1, 2010)
(unpublished); Burt Decl. Exs. 8, 9.7 Allianz now seeks the same relief from this Court.
6
The Jones action was filed in 2007. Allianz moved to dismiss or stay Jones, arguing it
raised claims similar to Negrete under the “first-filed rule.” The Honorable Susan Webber
Wright of the Eastern District of Arkansas granted a stay on September 7, 2007. Burt Decl. Ex.
11. The stay remains in place. Burt Decl. Ex. 12.
7
Allianz sought a writ of mandamus, which the Ninth Circuit recently declined to issue
[Docket No. 611]. Meanwhile, the Rivera action was filed in December 2010, and the Ostrow
action was filed in 2011. Burt Decl. Exs. 13, 15.
6
III. DISCUSSION
A.
Ancillary Enforcement Jurisdiction
Although this Court did not retain jurisdiction of this matter after judgment was entered,
it may exercise ancillary jurisdiction to “manage its proceedings, vindicate its authority, and
effectuate its decrees.” Jenkins v. Kansas City Missouri Sch. Dist., 516 F.3d 1074, 1081 (8th
Cir. 2008) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 380 (1994)).
This independent basis of subject-matter jurisdiction is sometimes called “ancillary enforcement
jurisdiction.” Ark. Blue Cross & Blue Shield v. Little Rock Cardiology Clinic, P.A., 551 F.3d
812, 817 (8th Cir. 2009).
Allianz argues an exercise of ancillary enforcement jurisdiction is necessary here. In
Allianz’s view, if the overlapping plaintiffs are permitted to litigate claims they might have
brought (but did not actually bring) in Mooney, it challenges this Court’s authority and
effectively vitiates the judgment in Mooney.
The Court is not convinced. Judgment in this matter was entered on January 29, 2010,
well over a year ago, and is now final. There are no pending proceedings in this Court. No sum
of money is owing; no obligations set forth in the judgment have gone unperformed; no
injunction, order or consent decree is being defied. Contrast Jenkins, 516 F.3d at 1080-81
(ancillary enforcement jurisdiction where state threatened to divert funding owed under court’s
desegregation order) with Ark. Blue Cross, 551 F.3d at 819 (no ancillary enforcement
jurisdiction where applicable part of injunction had been dissolved).
There is no settlement to protect. The case is simply over, and a jury determined Allianz
was not liable for any damages. Allianz may now raise the judgment as a defense in future
7
litigation as it sees fit. It is not suggested that any member of the Mooney class disappointed
with the outcome has subsequently filed a “copycat” claim with identical allegations in a
deliberate effort to circumvent the Mooney judgment and get another day in court. See Canady
v. Allstate Ins. Co., 282 F.3d 1005, 1011-12 (8th Cir. 2002) (abrogated in part on other grounds
by Syngenta Crop Protection, Inc. v. Henson, 537 U.S. 28, 33-34 (2002)). Nor is this the
extraordinary case where the loser’s subsequent abusive litigation tactics threaten to effectively
deprive the winner of its victory in court. See Thorogood v. Sears, Roebuck & Co., 624 F.3d
842, 848 (7th Cir. 2010). Under such circumstances ancillary enforcement jurisdiction might be
appropriate, but that is not the case here.
Rather, Allianz asks the Court to find its judgment precludes other class actions, some of
which were pending years before judgment was entered here. This Court is not convinced the
Mooney judgment is threatened by allowing plaintiffs to continue with ongoing litigation of
which the Court and all parties were aware, which does not attempt to revisit any claim actually
litigated in Mooney. Typically it is for the second court, not the first, to determine whether the
first judgment bars the second claim. 18 Charles Alan Wright, Arthur R. Miller & Edward H.
Cooper, Federal Practice & Procedure § 4405 (2d ed. 2010). Judge Snyder has already
considered whether Mooney bars plaintiffs from litigating claims in Negrete, and has concluded
that it does not.
“Ancillary enforcement jurisdiction is, at its core, a creature of necessity.” Peacock v.
Thomas, 516 U.S. 349, 359 (1996). On the facts here, Allianz has shown no necessity for
enforcement. The request is not to compel a recalcitrant loser to comply with a judgment, but
instead to interpret the judgment’s reach so as to preclude the loser’s other claims before other
8
courts.
There has been no showing that any pending class action threatens the judgment in
Mooney. Accordingly, there is no basis for ancillary enforcement jurisdiction, and Allianz’s
motion must be denied.
B.
Relitigation and Res Judicata
Even if this Court has subject matter jurisdiction, Allianz is not entitled to the relief it
seeks. First, the claims in Mooney and the other class actions presently at issue do not arise
from the “same set of factual circumstances,” as required to apply res judicata. Second, an
injunction is not appropriate for reasons of equity.
The All Writs Act, 28 U.S.C. § 1651, grants the Court “broad injunctive power” to
protect its judgments. In re Y&A Group Sec. Litig., 38 F.3d 380, 382 (8th Cir. 1994). The Act
permits the Court to enjoin litigation in a sister federal court, see Liles v. Del Campo, 350 F.3d
742, 746 (8th Cir. 2003) (enjoining “copycat” class action to avoid depletion of limited
settlement funds), although such an injunction is not typical. See Negrete, 523 F.3d at 1099.
More commonly the Act is used to enjoin litigation in state court, where its reach is
circumscribed by the Anti-Injunction Act, 28 U.S.C. § 2283. See, e.g., In re Baycol Prods.
Litig., 593 F.3d 716, 721 (8th Cir. 2010), cert. granted sub nom Smith v. Bayer Corp., No. 091205, 131 S.Ct. 61, 2010 WL 1526440 (Sept. 28, 2010); Canady, 282 F.3d at 1013-14; Grider v.
Keystone Health Plan Cent., Inc., 500 F.3d 322, 328 (3d Cir. 2007); Larson v. AT&T Mobility
LLC, Civ. No. 07-5325, 2011 WL 1085255, *2 (D. N.J. March 21, 2011) (unpublished). The
decision to issue an injunction, and the injunction’s scope, are committed to the Court’s
9
discretion. Thompson v. Edward D. Jones & Co., 992 F.2d 187, 189 (8th Cir. 1993).8
The All Writs Act grants the Court power to enjoin relitigation of matters that it has
already resolved. What constitutes “relitigation” is determined by the principles of res judicata
and collateral estoppel. If the claims in Negrete are precluded by the judgment in Mooney, as
Allianz argues, it may be appropriate to enjoin the overlapping plaintiffs from pursuing those
claims. “The preclusive effect of a federal court judgment is determined by federal common
law,” which in diversity cases “incorporates the rules of preclusion applied by the State in which
the rendering court sits.” Taylor v. Sturgell, 553 U.S. 880, 891 n.4 (2008). To resolve this
question requires analysis of Minnesota law.
The Minnesota Supreme Court holds the application of res judicata to be a question of
law. Hauschildt v. Beckingham, 686 N.W.2d 829, 840 (Minn. 2004). Traditionally, res judicata
precludes not only claims actually litigated in the first action, but also to all claims that might
have been litigated. Id.; see also Restatement (Second) of Judgments § 24 (1982). Res judicata
is not to be rigidly applied; the Court must consider whether the application of res judicata would
work an injustice on the plaintiffs. See Hauschildt, 686 N.W.2d at 837. Under Minnesota law,
res judicata bars a subsequent claim when “(1) the earlier claim involved the same set of factual
circumstances; (2) the earlier claim involved the same parties or their privies; (3) there was a
final judgment on the merits; (4) the estopped party had a full and fair opportunity to litigate the
8
The parties cite several cases addressing the relitigation exception set forth in the AntiInjunction Act, which is to be narrowly construed. See e.g., Baycol, 593 F.3d at 721. If Allianz
sought to enjoin plaintiffs proceeding in state court, the relitigation exception would require the
injunction to be narrowly tailored to preclude only the issues actually decided. Jones v. St. Paul
Companies, Inc., 495 F.3d 888, 892-93 (8th Cir. 2007). In contrast, the All Writs Act has no
similar restrictions. The Court has not been asked to, and does not, reach the extent to which the
restrictions of the Anti-Injunction Act might be applicable in the context of the All Writs Act.
10
matter.” Id., 686 N.W.2d at 840. All four factors must be met for the claim to be precluded. Id.
The first consideration is whether the claim in Mooney arises out of the “same set of
factual circumstances” as the claims in Negrete and the other class actions. See id. “Identity of
subject matter does not establish that two claims are the same cause of action.” Care Institute,
Inc.-Roseville v. County of Ramsey, 612 N.W.2d 443, 447 (Minn. 2000). Rather, whether two
lawsuits “arise[] out of the same set of factual circumstances” depends in part upon whether the
claims arose at the same time, and “whether the same evidence will sustain both actions.”
Hauschildt, 686 N.W.2d at 840-41.9
The decisions cited by the parties illustrate how the rule has been applied by Minnesota
courts. Hauschildt involved two overlapping class actions, both concerning improper
distributions of funds from a preferred stock association maintained by an employer for the
benefit of its current and former employees. The first was brought by the employees against the
employer, requesting an accounting and alleging conversion and breach of fiduciary duty. Id. at
834. After part of the case was dismissed as untimely, two plaintiffs brought a second class
action against the officers of the preferred stock association. Id. at 835. The second action
alleged the officers failed to timely pursue a claim against the employer and also to inform the
employees of the improper distributions in time for them to assert their own claims. Id. at 83536. Even though liability in both actions focused on a common issue - whether the distributions
9
Allianz suggests that the “same evidence” test is “outmoded.” See Reply Mem. at 5-7
& n.1 [Docket No. 604] (citing Gilbert v. Boak Fish Co., 90 N.W. 767, 768 (Minn. 1902) and
Anderson v. Werner Cont’l, Inc., 363 N.W.2d 332, 335 (Minn. Ct. App. 1985)). Yet the
Minnesota Supreme Court continues to refer to, and to apply, the “same evidence” test. See,
e.g., Care Institute, 612 N.W.2d at 448. From these cases it would appear the “same evidence”
test complements, rather than supplants, the “same transaction” test.
11
were proper - the Minnesota Supreme Court found the second claim was not barred by res
judicata. Noting that the first action had focused on events prior to 1998, the Court observed,
“[e]ntirely different evidence is necessary to sustain the Hauschildts’ claim that the officers’
1998 acts and omissions were a breach of fiduciary duty, negligence, or a misrepresentation by
omission.” Id. at 841.
In another case, a plaintiff injured in an automobile accident brought a personal injury
action against the driver of the other car, followed by a lawsuit against her own insurer for
breach of contract as a result of its failure to pay mandatory no-fault insurance benefits. See
Nelson v. Am. Family Ins. Group, 651 N.W.2d 499, 512 (Minn. 2002). As it happened, both
drivers were insured by the same company. Although both actions arose from the same
automobile accident, and involved the same parties (the victim and the insurer), the Minnesota
Supreme Court concluded the breach of contract claim against the insurer was “not identical” to
the personal injury tort claim against the tortfeasor and therefore not barred by res judicata. Id.
In Care Institute, a Minnesota tax court exempted an assisted living facility from past
property taxes in a 1996 decision. In the years following that decision, Ramsey County
continued to assess property taxes against the facility, and to challenge the facility’s entitlement
to exempt status. The Minnesota Supreme Court held the assessment of taxes in subsequent
years not barred by res judicata, because the facts upon which the exemption was based could
change from year to year. Care Institute, 612 N.W.2d at 448. As a result, “the same evidence
[would] not sustain both actions.” Id.
In contrast, res judicata bars a second action based on identical factual allegations, even
if the theory of recovery is different. See, e.g., Gilbert, 90 N.W. at 768 (two lawsuits arising out
12
of same nuisance during same period of time; first action for abatement bars second action for
damages); Nelson v. Short-Elliot-Hendrickson, Inc., 716 N.W.2d 394, 399 (Minn. Ct. App.
2006) (prior nuisance claim bars landowner’s subsequent negligence claim where “similar, if not
identical evidence” would have to be presented about design and installation of stormwater
system); Paulos v. Johnson, 597 N.W.2d 316, 319 (Minn. Ct. App. 1999) (prior action for
medical negligence bars patient’s subsequent suit against same doctor for misrepresentation of
qualifications, where the damages alleged are identical to those in negligence action); Nitz v.
Nitz, 456 N.W.2d 450, 451-52 (Minn. Ct. App. 1990) (prior action for negligent installation of a
birdfeeder bars subsequent action for negligent maintenance and inspection of the same
birdfeeder, where facts alleged are “virtually identical”); Anderson, 363 N.W.2d at 333 (prior
federal securities action bars state fraud action based on “same set of facts” related to stock
purchase negotiations); Hanson v. Friends of Minnesota Sinfonia, 2006 WL 1738243, *3 (Minn.
Ct. App. June 27, 2006) (unpublished) (prior negligence action bars subsequent action for
negligent infliction of emotional distress arising out of same accident where factual allegations
in first complaint were “repeated verbatim” in second).
Viewed against the backdrop of these cases, the claims in Mooney and the claims in
Negrete, Jones, Rivera and Ostrow do not arise out of the “same set of factual circumstances”
necessary for res judicata. The Mooney complaint is manifestly different from the other Allianz
cases; this is not a situation where plaintiffs have transported Mooney’s factual allegations into a
subsequent lawsuit. Compare Amended Class Action Complaint [Docket No. 23] with Burt
Decl. Exs. 3 (Negrete Complaint), 4 (Healey Complaint), 10 (Jones Complaint), 14 (Rivera
Complaint) and 15 (Ostrow Complaint). While the overlapping claims do arise from the
13
purchase of the same annuities at the same time using the identical sales materials, those sales
materials include many independent representations of fact about different features of complex
annuity products. Several of the complaints allege the promise of bonuses, the focus of Mooney,
as part of a wide range of alleged misconduct. See, e.g., Jones Complaint ¶¶ 18, 19, 23, 35. But
they also allege additional misrepresentations of fact about fundamentally different features of
the annuities, which are claimed to have caused different damages to be proven by different
evidence.
A comparison of the alleged misrepresentations is instructive. Mooney alleged plaintiffs
purchased deferred annuities “because Allianz promised to pay . . . an upfront 10% premium
bonus” and represented that the bonus would exceed the penalties plaintiffs would pay to
surrender their existing annuities. Mooney Am. Compl. ¶¶ 6, 15. Negrete alleges seniors were
induced to purchase deferred annuities with maturity dates that exceeded their own life
expectancies by relying on Allianz’s promise that the annuities offered “free withdrawals” and
“special access to money for emergencies,” while being “suitable for senior citizens” and
“satisfy[ing] estate and financial planning requirements.” Negrete Compl. ¶ 96. Jones alleges
Allianz promised the annuities would generate interest within a specified range, yet never paid as
much interest as was promised. Jones Compl. ¶¶ 48-51. Rivera alleges Allianz promised
purchasers of index-based deferred annuities that it would adjust the index every month based on
the annuity purchase date (“monthiversary”), but in fact made the adjustment as of the day
before, resulting in lower earnings. Rivera Compl. ¶¶ 28-32. Ostrow alleges a wide range of
misrepresentations, including that Allianz promised there was “no risk of loss,” no sales charges,
loads, or fees, and that 100% of the premiums earned interest. Ostrow Compl. ¶ 2. Finally,
14
Negrete alleges a nationwide scheme to target seniors for sales of unsuitable investments; Jones
alleges both a nationwide scheme and a breach of fiduciary duty. Negrete Compl. ¶¶ 45-83;
Healey Compl. ¶¶ 26-42, 51-75; Jones Compl. ¶¶ 41-47.
Because the complaints allege different promises and representations as well as different
injuries, plaintiffs’ claims are factually distinct. The Mooney class notice described the
allegations of the Amended Class Action Complaint as follows:
Plaintiffs say that Allianz deceptively marketed and sold the Two-Tiered Bonus
Annuities. Allianz stated that every Plaintiff would “receive” or “get” an
“immediate” or “up front” bonus. Despite these representations, Allianz required
Plaintiffs to hold each Annuity in deferral for five years or more and subsequently
annuitize each Annuity over a period of a minimum of ten years (five years for
beneficiaries). Plaintiffs also say that if a Plaintiff annuitizes within the first ten
years, Allianz assesses an undisclosed expense recovery adjustment against the
annuitization value of the annuity that reduces the value of the bonus.
[Docket No. 221-1] (“Class Notice”). The evidence in Mooney - what Allianz said about “up
front” bonuses, and when those bonuses were actually paid - is irrelevant to the claims in
Negrete, Jones, Rivera and Ostrow. Because these claims do not arise out of the same
misrepresentations, they are not barred by res judicata. And because the first required factor of
res judicata is not met, there is no need to consider the other factors.
Even if res judicata applied, the Court would decline to issue an injunction against the
Negrete plaintiffs for reasons of equity. Minnesota holds that res judicata is not to be applied
rigidly, and that the inquiry should focus on whether barring a claim works an injustice to
plaintiffs. See Hauschildt, 686 N.W.2d at 837.
Here, the Plaintiffs in Negrete10 will be prejudiced if Allianz is allowed to assert the
10
The Court finds no prejudice as to Jones, which at Allianz’s instance has been stayed
since 2007, or as to Rivera and Ostrow, filed after the Mooney judgment became final.
15
defense of res judicata at this late stage. “The doctrine of res judicata exists in order to relieve
parties of the burden of relitigating issues already determined in a prior action, that a party may
not be twice vexed for the same cause.” Beutz v. A.O. Smith Harvestore Prods., Inc., 431
N.W.2d 528, 531 (Minn. 1988) (internal quotation omitted). As the Restatement (Second) of
Judgments provides:
Where the plaintiff is simultaneously maintaining separate actions based upon
parts of the same claim, and in neither action does the defendant make the
objection that another action is pending based on the same claim, judgment in one
of the actions does not preclude the plaintiff from proceeding and obtaining
judgment in the other action. The failure of the defendant to object to the splitting
of the plaintiff’s claim is effective as an acquiescence in the splitting of the claim.
Restatement (Second) of Judgments § 26(a) (1982), comment 1. While the Minnesota Supreme
Court has not yet considered the question, the Minnesota Court of Appeals has applied § 26(a) in
one case to date. See Buchanan v. Dain Bosworth Inc., 469 N.W.2d 508, 510 (Minn. Ct. App.
1991). In that case, the plaintiff brought simultaneous state and federal lawsuits; because the
defendants “did nothing in either state or federal court to indicate acquiescence” to claim
splitting, no waiver was found. Id. Arguably, by requiring a “positive indication” of
acquiescence, the Minnesota Court of Appeals may require more than Section 26(a) itself does.
See Klipsch, Inc. v. WWR Technology, Inc., 127 F.3d 729, 734 (8th Cir. 1997) (holding that
failure to object to claim splitting prior to judgment demonstrates acquiescence).
Under either standard, however, the Court finds Allianz has acquiesced in claim splitting
in Negrete. Negrete was pending for nearly four years before Mooney went to trial, and Allianz
was fully aware of the overlapping claims. Allianz never objected to this Court that the Mooney
plaintiffs were splitting their claims; it did not seek a stay, as it did in Jones; and it did not
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request that the class notice advise the overlapping plaintiffs that a judgment in Mooney would
bar their claims in Negrete. Allianz vigorously opposed class certification on several grounds,
and twice moved to decertify - but never mentioned claim splitting as a reason for decertification
[Docket Nos. 50, 79, 110].
Not only did Allianz fail to timely object to claim splitting, but it also affirmatively
represented that the claims in Mooney and Negrete were different. Allianz might have elected
not to oppose Negrete counsel’s efforts to consolidate all actions before Judge Snyder in
California; instead, Allianz opposed consolidation, assuring the MDL panel that separate,
simultaneous litigation was appropriate. See Burt Decl. Exs. 20 at 3-4, 21 at 7. That Allianz had
to defend the non-overlapping claims is irrelevant. Certainly Allianz was entitled to decide it
was not worthwhile to object to claim splitting; that is the nature of waiver. But having made a
decision, Allianz cannot belatedly change its mind to plaintiffs’ prejudice.
The Court finds Allianz acquiesced in claim splitting in Negrete and Mooney. If Allianz
truly believed the claims were the same, it had many opportunities to protect its rights. It might
have (a) moved for a stay in Mooney; (b) supported consolidation of the cases in multidistrict
litigation, or at least declined to oppose consolidation on the grounds that the cases were
different; (c) objected to Mooney class certification on the grounds of claim-splitting; (d)
requested that the Mooney class notice be drafted to alert Negrete plaintiffs that they would be
precluded; and (e) objected to claim-splitting at any time prior to entry of the Mooney judgment.
See Anderson, 363 N.W.2d at 333 (when plaintiffs filed identical federal and state court actions,
defendants “moved immediately to dismiss or stay” the state court action).
An injunction at this late stage will work an injustice on the Negrete plaintiffs. The class
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notice in Mooney identified the individuals who were excluded from the class, including
plaintiffs in the Iorio class action. Class Notice at 5. It did not identify any other class action by
name, including Negrete. The description of the action focused entirely on the promise of an
“immediate” bonus; it did not suggest that plaintiffs might also have claims about access to
funds, the payment or calculation of interest rates, and schemes to target senior citizens with
inappropriate investments. The Class Notice also stated that by doing nothing, a plaintiff gave
up the right to sue Allianz “about the same legal claims that are the subject of this lawsuit.” Id.
at 6. While the Court found the Class Notice was sufficient to advise plaintiffs of their rights
concerning the claims in Mooney, the Court was not asked to - and did not - consider whether it
advised plaintiffs of the effect on any other claims. Considering the question now, the Court
finds the Mooney Class Notice insufficient to put Negrete plaintiffs on notice that their claims
unrelated to bonuses might be precluded. For example, the notice did not apprise plaintiffs that
they would be “barred from proceeding with any other existing suits,” nor did the Mooney
judgment enjoin plaintiffs from asserting “any . . . claim of any nature whatsoever which any of
them may have” in connection with their Allianz annuity purchases. Compare Thompson, 992
F.2d at 188 (applying res judicata after broadly-worded notice).
The Court is mindful that a major reason res judicata exists is to protect defendants from
multiple lawsuits and to promote judicial economy. In opposing the certification of a nationwide
Mooney class, Allianz recognized the challenge of instructing a jury on 48 states’ consumer
fraud statutes [Docket No. 79 at 14 (“the fact that it would be difficult (if not impossible) to
apply 48 separate laws in the same case simply demonstrates that a class action involving 48
jurisdictions is not manageable under Rule 23(b)(3) and thus should not be certified.”)]. Yet if
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this Court were to find plaintiffs claims are precluded, as Allianz asks, plaintiffs would be
obliged to raise in a single class action every possible theory of liability and damages under all
50 states’ and federal statutes and common law, for every statement made in each annuity’s sales
materials. Proceeding in such a manner clearly does not facilitate judicial economy; but if
Allianz desired it, the time to seek it was before, not after, judgment was entered in Mooney.
The import of the Mooney judgment as it relates to other proceedings is not for this Court
to decide. The motion for a permanent injunction is denied.
C.
Motion to Intervene
Negrete Plaintiffs move to intervene for the purpose of litigating whether their claims are
precluded by the Mooney judgment. A timely11 motion to intervene under Federal Rule of Civil
Procedure 24(a) should be granted where “(1) the proposed intervenor has an interest in the
subject matter of the action; (2) the interest may be impaired; and (3) the interest is not
adequately represented by an existing party to the action.” Kansas Pub. Emp. Ret. Sys. v.
Reimer & Koger Assocs., Inc., 60 F.3d 1304, 1307 (8th Cir. 1995).
The Court finds intervention is not appropriate here. As already noted, the Mooney case
has been litigated, and judgment has been entered. The Negrete Plaintiffs are intervening too
late to affect the outcome of the Mooney litigation, and have no interest in that outcome. Their
interest is in continuing to pursue their other claims before Judge Snyder. That interest is not an
“interest relating to the property or transaction which is the subject of the action.” Fed. R. Civ.
11
Allianz argues the motion to intervene is untimely under Local Rule 7.1 because it was
filed less than 42 days prior to the hearing. Opposition [Docket No. 602] at 2, n.2. Because the
intervention motion was filed after a hearing date had been set for the injunction motion, see
Docket No. 578, and because there was ample time for the intervention motion to be fully
briefed before that date, the Court in its discretion elected to hear both motions at the same time.
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P. 24(a)(2).
The Court also finds Negrete Plaintiffs’ interest in Mooney will be adequately
represented by Mooney Plaintiffs. The Mooney Plaintiffs have presented a spirited opposition to
Allianz’s motion for an injunction, and the Court has full confidence in the ability of Mooney
counsel to fulfill all fiduciary obligations to the class. Although the preclusion issue requires
detailed consideration of the Negrete claims, which were not at issue in Mooney and are
substantially different from the Mooney claims, the Court finds that the Negrete Plaintiffs’
interests will be adquately protected by appearing as amicus curiae, which Allianz has indicated
it will not oppose. Opp. at 2. Intervention in Mooney at this stage is not necessary to protect the
Negrete Plaintiffs’ interests. The motion to intervene is denied.
IV. CONCLUSION
Based upon the foregoing, and all the files, records, and proceedings herein, IT IS
HEREBY ORDERED that Defendant’s Motion for a Permanent Injunction [Docket No. 572] is
DENIED, and the motion to intervene [Docket No. 592] is DENIED.
BY THE COURT:
s/Ann D. Montgomery
ANN D. MONTGOMERY
U.S. DISTRICT JUDGE
Dated: May 11, 2011.
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