Opinion
99-MD-1309 (PAM)
October 7, 2002
MEMORANDUM AND ORDER
This matter is before the Court on Plaintiffs' Motion to Allow Class Members Mark and Ruth Wimmer and Angela and Richard Perrin to Become Representative Plaintiffs Through Intervention or Amendment.
BACKGROUND
Plaintiffs in this class action are purchasers of Defendant Lutheran Brotherhood's life insurance products. Plaintiffs claim that Lutheran Brotherhood violated Minnesota's Prevention of Consumer Fraud Act ("CFA"), Minn. Stat. § 325F.69 et seq., committed common law fraud, and breached its fiduciary duty by representing to policyholders that their obligation to pay premiums on life insurance policies would "vanish" at some point in the future, when in fact Lutheran Brotherhood knew that the dividends generated by the policies would not cover the cost of the premiums. According to Plaintiffs, Lutheran Brotherhood knew that failure to pay premiums would eventually result in the policies lapsing or becoming underfunded. Plaintiffs claim that Lutheran Brotherhood's misrepresentations regarding the so-called "vanishing premium" occurred at one of two points: (1) when the class member initially purchased the policy; or (2) when a policyholder elected to change to a dividend option allegedly designed to "vanish" the premium after a certain number of years.
Plaintiffs filed the first lawsuit challenging Lutheran Brotherhood's vanishing premium policies on February 24, 1999. Since that time, nearly every issue in this case has been contentiously litigated. On May 17, 2002, the Court determined that the relevant act for determining when the six-year statute of limitations on Plaintiffs' CFA claims began to run was the alleged misrepresentation about the vanishing premium. That misrepresentation may have occurred at the point of sale in most cases, but it may also have occurred at a later date, such as when an existing policyholder elected to switch to one of the vanishing premium dividend or payment options. Thus, the Court found that the class is not limited to post-February 24, 1993, purchasers. The class may also include policyholders who purchased policies as far back as 1982 but who, within the limitations period, elected one of the vanishing premium dividend or payment options.
The immediate effect of the Court's ruling was to eliminate the CFA claims of ten of the eleven class representatives. The only class representative who still has a viable CFA claim against Lutheran Brotherhood is Barbara Watson, and Lutheran Brotherhood has moved for summary judgment on her claim. The Plaintiff class now seeks to add four new class representatives through intervention: Mark and Ruth Wimmer and Angela and Richard Perrin. Lutheran Brotherhood opposes the addition of these new representatives.
DISCUSSION A. Permissive Intervention
Plaintiffs seek the permissive intervention of Mark and Ruth Wimmer and Angela and Richard Perrin pursuant to Fed.R.Civ.P. 24(b) and 23(d). Rule 24 allows for the permissive intervention of parties and provides in pertinent part that
[u]pon timely application anyone may be permitted to intervene in an action: . . . (2) when an applicant's claim or defense and the main action have a question of law or fact in common. . . . In exercising its discretion the court shall consider whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties.
Fed.R.Civ.P. 24(b). Rule 23(d) allows the Court to make appropriate orders "determining the course of proceedings." Fed.R.Civ.P. 23(d). In the context of class actions, courts "appear to be particularly amenable to permissive intervention when no additional issues are presented to the case, when the intervenor's claims are `virtually identical' to class claims, and when intervention would strengthen the adequacy of class representation." 3 Herbert Newberg Alba Conta, Newberg on Class Actions §§ 16.08-.09 (3d ed. 1992).
Lutheran Brotherhood opposes the intervention of the Wimmers and Perrins, contending that: (1) Plaintiffs' application for intervention is untimely; (2) the proposed representatives' claims differ from the current class representatives' claims; and (3) Lutheran Brotherhood will suffer substantial prejudice if the proposed representatives are allowed to intervene. Additionally, Lutheran Brotherhood suggests that even if the Court determines that intervention is proper, Lutheran Brotherhood should be afforded an opportunity to challenge the adequacy of the intervenor as class representatives and the typicality of their claims under Rule 23(a).
1. Timeliness
To determine whether a motion to intervene is timely, the Court must consider "all of the circumstances of the case." Buchet v. ITT Consumer Fin. Corp., 845 F. Supp. 684, 689 (D.Minn. 1994) (quoting Mille Lacs Band of Chippewa Indians v. Minnesota, 989 F.2d 994, 997 (8th Cir. 1993)). In particular, the Court considers "the reason for the proposed intervenor's delay in seeking intervention, how far the litigation has progressed before the motion to intervene is filed, and how much prejudice the delay in seeking intervention may cause to other parties if intervention is allowed." Id. (quoting Mille Lacs Band of Chippewa Indians, 989 F.2d at 998)). However, there are "no ironclad rules" governing the timeliness of a motion to intervene. Id.
Plaintiffs urge the Court to find that their application for intervention is timely because they promptly presented the instant Motion in response to the Court's May 17, 2002, Order. Plaintiffs argue that prior to that Order they had no reason to suspect that the addition of new class representatives would be necessary. Furthermore, although the current cut-off for discovery in this case is November 1, 2002, and the trial ready date is March 1, 2003, Plaintiffs contend that Lutheran Brotherhood has most, if not all, of the evidence that it will need to defend itself against the claims of the proposed new representatives. Any additional evidence that Lutheran Brotherhood might need as a result of the intervention of the new representatives, Plaintiffs claim, may be gathered easily before the close of discovery.
Lutheran Brotherhood, on the other hand, maintains that Plaintiffs have failed to establish that their Motion is timely. First, relying primarily on this Court's ruling in Tuttle v. Lorillard Tobacco Co., Civ. No. 99-1550, 2001 WL 821831, at *3 (D.Minn. July 5, 2001), Lutheran Brotherhood argues that prior decisions from this district on the statute of limitations applicable to CFA claims should have put Plaintiffs on notice that many of their claims might be dismissed. Thus, according to Lutheran Brotherhood, Plaintiffs should have foreseen the need to add new class representatives much earlier, and their application for intervention at this stage of the litigation is prohibitively late. Second, the current deadline for filing nondispostive motions is November 1, 2002, and the deadline for filing dispositive motions is January 15, 2003. At this point, Lutheran Brotherhood argues that it cannot conduct the requisite discovery and file motions by these deadlines on the claims of any new parties.
Lutheran Brotherhood's arguments are unconvincing. As the Court has previously determined, there is substantial ground for difference of opinion on the statute of limitations issue in this case. Although the Court is convinced that its decision regarding the statute of limitations is correct, it will not charge Plaintiffs with clairvoyance. Plaintiffs brought the instant Motion within a reasonable time after learning that ten of the eleven class representatives' CFA claims were dismissed and that certification pursuant to 28 U.S.C. § 1292(b) was denied.
Furthermore, while the close of discovery and the deadlines for motions are fast approaching, Lutheran Brotherhood has not pointed to any specific problem with discovery or the deadlines that is likely to prejudice it or delay the litigation. See United States v. Columbia Pictures Indus., Inc., 88 F.R.D. 186, 189 (S.D.N.Y. 1980) (finding generalized assertions that additional parties would cause delay insufficient to demonstrate that a Rule 24(b) motion was untimely). Accordingly, the Court finds that Plaintiffs' Motion is timely.
2. Different Claims
Rule 24(b)(2) requires a party seeking intervention to establish that his or her claims have a question of law or fact common with those of the original parties. In this case, Plaintiffs seek the intervention of four new class representatives whose claims are virtually identical to those of the original representatives. Thus, Plaintiffs have met the requirement of Rule 24(b)(2).
Lutheran Brotherhood attempts to avoid this straight-forward result by arguing that if the proposed intervenor's claims are identical to those of the current class representatives, then there is no reason to add them as new class representatives. The proposed intervenor's rights are being adequately protected by the current class representatives. Alternatively, Lutheran Brotherhood argues that the proposed intervenor's claims are not identical because there are slight factual differences between their claims and the claims of the current class representatives.
Lutheran Brotherhood's first argument conflates intervention as a matter of right under Rule 24(a) with permissive intervention under Rule 24(b). Although Rule 24(a) establishes that an applicant only has the right to intervene if his or her interests are not adequately represented by the existing parties, Rule 24(b) has no such limitation. Thus, intervention under Rule 24(b) is allowable in the context of class actions to enhance or strengthen the representation of the class.
Lutheran Brotherhood's second argument is a red herring. Rule 24(b)(2) provides that an applicant may be allowed to permissively intervene if his or her claims share a common question of law or fact with the claims of the original parties. In this case, even if there are slight factual differences between the claims of the current class representatives and the proposed intervenors, a common question of law has been raised. Accordingly, the Plaintiffs have satisfied the requirements of Rule 24(b)(2).
3. Prejudice
The third and most important factor bearing on a court's decision to grant or deny a motion for permissive intervention is "`whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties.'" Citizens for an Orderly Energy Policy, Inc. v. Suffolk County, 101 F.R.D. 497, 502 (E.D.N.Y. 1984) (quoting United States Postal Serv. v. Brennan, 579 F.2d 188, 191 (2d Cir. 1978)); Columbia Pictures Indus., Inc., 88 F.R.D. at 189. Nevertheless, as has already been discussed, Lutheran Brotherhood does not present any specific reasons why allowing Mark and Ruth Wimmer and Angela and Richard Perrin to intervene in this action would unduly prejudice it or delay this litigation. Instead, Lutheran Brotherhood merely objects to their intervention by arguing that it has prepared its defense based on the claims of the eleven original class representatives. However, even if Lutheran Brotherhood needs to depose each of the new class representatives and review documents related to their claims in the context of this litigation, four depositions and relatively limited document review hardly seems an undue burden. Accordingly, the Court finds that Lutheran Brotherhood has not established that it will be unduly prejudiced, and Plaintiffs' Motion to allow the intervention of Mark and Ruth Wimmer and Angela and Richard Perrin is granted.
4. Rule 23(a) Requirements
Lutheran Brotherhood claims that it should be allowed an opportunity to challenge the adequacy of the Wimmers and the Perrins to serve as class representatives and the typicality of their claims under Rule 23(a). Specifically, Lutheran Brotherhood asks the Court to allow it to respond to a reply brief filed at the last moment by Plaintiffs. Lutheran Brotherhood contends that this reply brief is, in fact, a motion purporting to establish the typicality and adequacy of the proposed intervenors. Without considering the reply brief, the Court finds that no separate inquiry into the adequacy of the proposed intervenors or the typicality of their claims is necessary. Even assuming that Lutheran Brotherhood is correct in stating that there are some factual differences between the claims of the proposed class representatives and the other class members, factual variations will not necessarily preclude a finding of typicality if "the claim[s] arise from the same event or course of conduct as the class claims, and give rise to the same legal or remedial theory." Alpern v. Utilicorp United, Inc., 84 F.3d 1525, 1540 (8th Cir. 1996). Here, the Wimmers' and the Perrins' have claims are nearly identical to the claims of the rest of the class. Like all other class members, the Wimmers and the Perrins claim that they purchased life insurance policies from Lutheran Brotherhood based on the alleged misrepresentation that their obligation to pay premiums would vanish at some point. Thus, there is a "strong similarity of legal theories" between these proposed class representatives and the class members, and the typicality requirement of Rule 23 is satisfied. In re Hartford Sales Practices Litig., 192 F.R.D. 592, 603 (D.Minn. 1999).
To satisfy the adequacy requirement of Rule 23(a), Plaintiffs must merely show that the proposed new representatives and their attorneys are able and willing to prosecute the action competently and vigorously and that each representative's interests are sufficiently similar to those of the class that it is unlikely that their goals and viewpoints will diverge. See Parkhill v. Minn. Mut. Life Ins. Co., 188 F.R.D. 332, 339 (D.Minn. 1999). The Court has already determined that Plaintiffs' counsel are experienced class action attorneys, willing and able to prosecute this case. Likewise, the Court has already determined that the new representatives' claims are virtually identical to the claims of the rest of the class members. It is unlikely, then, that the goals or viewpoints of these representatives will diverge significantly from those of the class. Finally, there is ample evidence before the Court establishing that the new representatives understand their role and are willing and able to competently prosecute this action on behalf of the class members. Thus, the Court finds that the new representatives are adequate under Rule 23(a).
B. Amendment
Plaintiffs also seek to amend the Complaint to add the claims of the new class representatives. As a threshold matter, the Court must determine whether good cause exits for modifying the case management order in this matter. Fed.R.Civ.P. 16(b); In re Milk Prods. Antitrust Litig., 195 F.3d 430, 437-38 (8th Cir. 1999) ("If we considered only Rule 15(a) without regard to Rule 16(b), we would render scheduling orders meaningless and effectively would read Rule 16(b) and its good cause requirement out of the Federal Rules of Civil Procedure.") (citation omitted). "The primary measure of Rule 16's `good cause' standard is the moving parties' diligence in attempting to meet the case management order's requirements." Bradford v. DANA Corp., 249 F.3d 807, 809 (8th Cir. 2001). Although case management orders are an important tool "designed to streamline the flow of litigation through . . . crowded dockets," id., "mindless subservience to the dictates" of such an order should not overshadow the Court's fundamental obligation to achieve a just adjudication of a civil claim, especially in the absence of any prejudice to the nonmoving party. Med. Graphics Corp. v. Hartford Fire Ins. Co., 171 F.R.D. 254, 264 (D.Minn. 1997).
In this case, Lutheran Brotherhood insists that good cause for amending the case management order does not exist because Plaintiffs should have foreseen that the Court would dismiss many of the class representative's CFA claims for failure to comply with the statute of limitations. Plaintiffs' lack of prescience, Lutheran Brotherhood argues, evidences that they were not diligent in their preparation of the Complaint. Alternatively, Lutheran Brotherhood contends that good cause does not exist because "amendment would likely result in the burdens of additional discovery and delay to the proceedings." Popp Telecom v. Am. Sharecom, Inc., 210 F.3d 928, 943 (8th Cir. 2000).
As noted above, however, the Court's holding with regard to the statute of limitations in this case was not so foreseeable as to necessitate that Plaintiffs move for the intervention of new class representatives prior to the Order of May 17, 2002. Likewise, the Court's ruling on the statute of limitations was not so foreseeable as to necessitate that Plaintiffs amend their Complaint prior to that Order. Rather, Plaintiffs have acted swiftly and diligently in the wake of that Order to protect their interests. Similarly, as the Court stated above, Lutheran Brotherhood has provided no specific justification for its claim that the addition of new parties will cause it undue burdens in conducting discovery or delay the course of this litigation. The Court therefore finds that Plaintiffs have been diligent and that good cause exists for modifying the case management order to allow Plaintiffs to amend their Complaint.
Under Rule 15(a), courts have broad discretion to grant leave to file an amended complaint. Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 330 (1971). The party opposing amendment bears a heavy burden to demonstrate that the amendment will create undue prejudice. Beeck v. Aquaslide'N'Dive Corp., 562 F.2d 537, 540 (8th Cir. 1977). Lutheran Brotherhood does not address whether amendment under 15(a) is appropriate, and in any event, the Court has already determined that Lutheran Brotherhood will not suffer undue prejudice if Plaintiffs' Complaint is amended to add the claims of the new class representatives.
CONCLUSION
The Court agrees with Plaintiffs that the addition of Mark and Ruth Wimmer and Angela and Richard Perrin will bolster class representation in this case. Accordingly, based on all the files, records, and proceedings herein, IT IS HEREBY ORDERED that:
1. Plaintiffs' Motion to Allow Class Members Mark and Ruth Wimmer and Angela and Richard Perrin to Become Representative Plaintiffs Through Intervention or Amendment (Clerk Doc. No. 214) is GRANTED as set forth above; and
2. Plaintiff class shall serve and file the Consolidated Second Amended Class Action Complaint and Defendant shall answer this Complaint in accordance with the Federal Rules of Civil Procedure.