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Federal Appeals Court Upholds Rights of Consumers Who Opted Out of Nationwide Class Action Settlement with Insurer

TLPJ Successfully Argued That Opt-Out Litigants Have Right to Own Day in Court Against MetLife

TLPJ Staff Attorney Michael J. Quirk. Photo by Herman Farrer.  Michael J. Quirk

TLPJ Staff Attorney Leslie A. Brueckner. Photo by Herman Farrer. Leslie A. Brueckner

The United States Court of Appeals for the Third Circuit in Philadelphia issued a decision in Drelles v. Metropolitan Life Insurance Company, agreeing with Trial Lawyers for Public Justice (TLPJ) that consumers who opted all of their claims out of a nationwide class action settlement involving Metropolitan Life Insurance Company (MetLife) cannot be barred from fully prosecuting their individual cases against MetLife. MetLife had sought an injunction preventing the opt-out litigants from taking any discovery or asserting any claims in their individual cases against MetLife relating to illegal nationwide sales practices at issue in the class action settlement. On December 24, 2003, the Court of Appeals confirmed that the proposed injunction would have violated the consumers’ rights: "Allowing the preemptive approach espoused by MetLife here would essentially nullify Appellees’ decision to opt out."

"This is a major victory for consumers’ rights," said lead counsel Leslie Brueckner of TLPJ, who argued the appeal on behalf of the opt-out litigants on December 12, 2003. "This ruling ensures the right of consumers to exclude themselves from a class action lawsuit and still have their own day in court. We commend the Court for recognizing and safeguarding the rights of opt-out litigants guaranteed by Rule 23 of the Federal Rules of Civil Procedure and the U.S. Constitution."

"This ruling ensures the right of consumers to exclude themselves from a class action lawsuit and still have their own day in court."

The decision in Drelles arose out of MetLife’s December 1999 settlement of a federal class action filed on behalf of millions of insurance policyholders who had been damaged by MetLife’s illegal nationwide sales practices. Under the terms of that settlement, policyholders were permitted to "opt out" of the class action and pursue their own individual claims against MetLife. Hundreds of such cases are now pending in Pennsylvania state court and elsewhere. In those state court proceedings, the opt-out litigants have been permitted to conduct discovery on MetLife’s nationwide sales practices on the ground that the sales practices are relevant to their individual claims against the insurance company.

In October 1991, however, MetLife sought a federal district court injunction preventing the opt-out litigants from relying on any evidence of MetLife’s illegal sales practices. MetLife argued that an injunction was necessary on the ground that permitting evidence of its practices would disturb, or effectively "relitigate," the nationwide class action that was settled in federal court. TLPJ filed objections to the proposed injunction on behalf of hundreds of opt-out litigants, arguing that it would violate the plain terms of the class notice, the federal Anti-Injunction Act, and the opt-out rights guaranteed by Rule 23 and due process. The district court ultimately agreed with TLPJ and denied the injunction outright.

In rejecting MetLife’s appeal of that decision, the Court ruled that the injunction would violate the opt-out rights guaranteed by federal law. In so ruling, the Court emphasized that, because the individual state-court litigants "opt[ed] out all of their claims" from the nationwide class action, they were not parties to that settlement and could not be restricted in the manner requested by MetLife. The Court flatly rejected MetLife’s claim that the opt-out litigants were improperly attempting to "relitigate" claims that had already been settled: "Appellees . . . are not relitigating the settled claims at all here; they are suing over their own alleged mistreatment at the hands of MetLife, not over someone else’s claim." The Court concluded that "MetLife cannot point to any caselaw authorizing an injunction against opt-out plaintiffs . . . who consciously and purposefully refused to join a class action settlement."

"Our clients opted all of their claims out of the nationwide settlement in order to pursue their own cases," said co-counsel Kenneth R. Behrend of Pittsburgh’s Behrend & Ernsberger, P.C. "If the Court had accepted MetLife’s arguments, the right to opt out would have been rendered meaningless."

"We are pleased that the Court rejected MetLife’s attempts to restrict its customers’ rights," said TLPJ’s Michael J. Quirk, co-counsel. "Not only was the injunction plainly illegal, but it would have prevented customers who opted out of the nationwide settlement from obtaining any relief against MetLife."

TLPJ’s participation in this case is part of its Class Action Abuse Prevention Project, a nationwide campaign dedicated to monitoring, exposing, and fighting class action abuse. Copies of TLPJ’s briefs in In Re MetLife Sales Practices Litigation and copies of the ruling in Drelles v. Metropolitan Life Insurance Company are available at TLPJ’s web site, www.tlpj.org.