Third Circuit disposition — 01-4085

PRECEDENTIAL
Filed December 19, 2002
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 01-4085
IN RE: THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA SALES PRACTICES LITIGATION
FRANK LA MARRA;
GIUSEPPINA LA MARRA;
REARDON GOLINKIN & REED,
Appellants
On Appeal from the United States District Court
for the District of New Jersey
D.C. Civil Action Nos. 01-cv-02813 & 95-cv-04704
(Honorable Alfred M. Wolin)
Argued July 15, 2002
Before: SCIRICA, ALITO and FUENTES, Circuit Ju dges
(Filed December 19, 2002)
SCOTT O. REED, ESQUIRE
(ARGUED)
KAREN A. REARDON, ESQUIRE
Reardon Golinkin & Reed
208 South LaSalle Street,
Suite 1290
Chicago, Illinois 60604
Attorneys for Appellants
EDWARD J. REICH, ESQUIRE
(ARGUED)
MICHAEL H. BARR, ESQUIRE
Sonnenschein Nath & Rosenthal
1221 Avenue of the Americas,
24th Floor
New York, New York 10020
Attorneys for Appellee
OPINION OF THE COURT
SCIRICA, Circuit Judge.
Plaintiffs are unnamed members in a nationwide federal
class action involving the fraudulent sale of insurance
policies by agents of Prudential Insurance Company. The
class action was settled in 1997 and has paid out more
than four billion dollars to eight million class members

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through a comprehensive alternative dispute resolution
program.
Although plaintiffs have received their full allotment of
proceeds under the settlement, they challenged--in state
court and under state law--the manner in which the
defendant insurance company handled their claims.
Defendants removed the case to federal court seeking to
enjoin prosecution of plaintiffs’ claims. After the District
Court granted the requested injunction and found removal
proper, plaintiffs appealed. At issue is whether the District
Court had authority under the All Writs Act to enjoin the
state action and retain removal jurisdiction. We will affirm
the District Court’s issuance of the injunction, but reverse
with respect to the propriety of the removal.
I.
Each of plaintiffs’ claims is related to an eight-million
member class action directed at a pattern of fraudulent
practices in the sales of life insurance policies. A multitude
of federal cases, including many that had been removed
from state court, were consolidated in the United States
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District Court for the District of New Jersey as MDL 1061.
In 1997, the District Court certified a nationwide class and
approved a settlement, In re Prudential Ins. Co. Sales
Practices Litig., 962 F. Supp. 450 (D.N.J. 1997), which we
affirmed. 148 F.3d 283, 289 (3d Cir. 1998). The class
included persons who had purchased certain insurance
policies, including "variable appreciable life" policies
("VALs") from Prudential between 1982 and 1995.1 The
District Court found that during this period, Prudential
"used pervasive and systematic deceptive sales tactics to
sell many individuals a great number of life insurance
policies, to the benefit of Prudential and its sales agents,
but to the detriment of trusting consumers." 962 F. Supp.
at 467.
Among the avenues for relief available to class members
under the settlement was a multi-leveled alternative dispute
resolution process ("ADR"). See Prudential , 148 F.3d at 294-
96. This process permitted the presentation of individual
claims by each class member in order to obtain all of the
relief contemplated by the settlement. Each claim was first
evaluated by the Claim Evaluation Staff, comprised of
Prudential employees. A less than fully-favorable
determination was automatically transmitted to a team of
independent claim evaluators for review. These evaluators
would make a recommendation to the Claim Review Staff--
a group again comprised of Prudential employees. The
claimant--but not Prudential--was entitled to de novo
review of the Claim Review Staff ’s determination by the
Appeals Committee, which was selected jointly by the
company, class counsel, and state regulators. Successful
claimants were awarded, inter alia, refunds of premiums,
rescission of policies, "enhanced value policies which allow

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members to purchase new policies with additional coverage
paid for by Prudential," and various forms of compensatory
relief.2 Id. at 296-97.
_________________________________________________________________
1. VALs are life insurance policies that have cash values that fluctuate
with the performance of the investment of the paid premiums. The
performance of the investment may affect the level of premiums that
must be paid.
2. For a more detailed recitation of the procedures and relief available
under the settlement, see our summary, Prudential, 148 F.3d at 294-97,
and the District Court’s recitation, Prudential , 962 F. Supp. at 488-95.
3
Plaintiffs Frank and Giuseppina La Marra are New Jersey
residents who purchased nine life insurance policies from
Prudential for themselves and their children. Of these,
seven were VALs purchased within the class period. One
was a VAL purchased after the class period. The La Marras
settled their claims with respect to that policy separately.
The last policy was a term life policy not within the scope
of the settlement. Defendants assert, and plaintiffs do not
contest, that after the filing of the complaint, but before the
District Court decided this case, plaintiffs converted that
policy to a VAL, and obtained relief through the procedures
contemplated by the settlement.
The La Marras pursued their claims in ADR.3 At some
point during the ADR process, the La Marras became
dissatisfied with Prudential’s handling of their claims and
filed an action in Illinois state court seeking damages
arising from Prudential’s actions. They have since
completed the ADR process and do not challenge the
adequacy of the relief obtained there.
The complaint alleges four causes of action, all of which
arise under New Jersey state law. Count I is for negligence.
Plaintiffs allege Prudential had a duty of care"in processing
their claims on the ADR Policies in a fair, efficient and
reasonable manner." Because Prudential violated this duty,
"the La Marras have suffered damage including but not
limited to, the lost use of the premiums they wrongfully
paid to Prudential; finance charges, bank charges and legal
fees incurred as the result of their lack of access to those
funds during the period of Prudential’s wrongful delay;
emotional distress and mental anguish; and other
damages." As plaintiffs characterize this claim, it does not
implicate the terms of the settlement nor the relief they
_________________________________________________________________
3. The ADR was designed to allow participation without the assistance of
counsel. The La Marras, however, retained the law firm of Reardon,
Golinkin & Reed to assist them with the process, claiming Prudential
had made it more or less impossible for them to go through the process
on their own. Under the settlement, the La Marras would have been
provided free counsel had they requested it. Class counsel assigned
lawyers for this purpose. It is unclear why the La Marras used Reardon,
Golinkin & Reed instead of appointed counsel.

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4
received under it. They only seek damages resulting directly
from the alleged negligent handling of their claims.
Count II is a claim for "bad faith claims handling" under
New Jersey law. This cause of action arises under a New
Jersey statute, N.J. Stat. Ann. S 17B:30-13.1, which
governs insurance companies’ duties in processing
insurance claims. Plaintiffs contend the various missteps
by Prudential in handling the ADR process violate this
statute.4 The conduct underlying their claim would appear
to be essentially the same conduct allegedly providing the
cause of action in Count I.
Plaintiffs allege in Count III, on behalf of Reardon,
Golinkin & Reed, "intentional interference with contract,"
claiming Prudential’s handling of the ADR process injured
the law firm by interfering with its relationship with the La
Marras. Among other wrongs, plaintiffs allege Prudential
inappropriately communicated directly with the La Marras,
even though they were represented by counsel for purposes
of the ADR process.
The final count, Count IV, is for "unsuitability," a
substantive claim addressing the improper sale of the term
life policy purchased by the La Marras not covered by the
class action. Plaintiffs claim this policy was an"unsuitable"
life insurance product. But again, it appears that after the
complaint was filed, the La Marras converted the policy into
a VAL and processed claims related to this policy through
ADR. Thus, it seems they have obtained relief for all of the
policies they purchased--the seven within the class, the
later-purchased one independently settled, and the term life
policy later converted and processed through ADR. 5
Plaintiffs’ central claims address negligent and bad faith
handling of their claims under the ADR process. They
_________________________________________________________________
4. The ADR process was not created to process insurance claims. It
processed tort claims related to the sale of insurance policies. So it
appears plaintiffs have not stated a claim for bad faith handling of
insurance claims.
5. While the claim seems to be no longer viable, at the time of the filing
of the complaint, plaintiffs may have had a cause of action with respect
to the term life policy.
5
stress they do not take issue with the ultimate results of
that process. Instead, they contend Prudential’s poor
handling of their claims, by means of unreasonable delay
and other factors,6 caused injuries giving rise to claims
under New Jersey law.

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Plaintiffs filed these state law claims in Illinois state court
on December 5, 2000. Prudential removed the case to the
United States District Court for the Northern District of
Illinois on January 5, 2001. On February 1, 2001, the
Judicial Panel on Multidistrict Litigation issued a
conditional order to transfer the case to the United States
District Court for the District of New Jersey. The next day,
plaintiffs moved to remand. Following briefing and
argument, the MDL panel transferred the case.
By the time the Illinois case was transferred to the New
Jersey District Court, Prudential had already filed its
motion to stay the Illinois case. Plaintiffs filed a renewed
motion to remand the case back to state court. Considering
both motions, the District Court ruled in favor of Prudential
and enjoined "further prosecution of the claims set forth in
respondents’ complaint in this or any other forum." It also
held that "[r]espondents’ contention that their lawsuit
should be remanded for lack of subject matter jurisdiction
is without merit." In re Prudential Ins. Co. Sales Practices
Litig., No. 95-4707, at 13 (E.D. Pa. Oct. 12, 2001).
Retaining jurisdiction, the District Court dismissed
plaintiffs’ claims "with prejudice." Id. Plaintiffs appealed.
_________________________________________________________________
6. In their complaint, plaintiffs describe Prudential’s alleged misdeeds as
follows:
Prudential’s claims-handling conduct involved: repeated delays in
responding to the La Marras’ correspondence; repeated attempts to
circumvent their legal counsel through ex parte communications
with them; requesting the La Marras to execute the same claim
forms multiple (as many as six) times on many of the VAL policies;
causing ADR appeals to be scheduled without notice or with notice
after the fact; rejecting properly completed claim forms; and asking
for duplicative, additional and unnecessary signatures, among other
things.
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II.
Plaintiffs challenge both the injunction and the removal.7
They contend the injunction violated the Anti-Injunction
Act, 28 U.S.C. S 2283, which prohibits most federal court
injunctions staying state court proceedings, and that the
Illinois case should have been remanded, as the District
Court lacked any basis for asserting jurisdiction over that
case. While the injunction and the dismissal have a similar
effect, these issues are analytically independent. The
injunction does not turn on the propriety of the removal.
The injunction was issued under the federal court’s
jurisdiction in MDL 1601, which it had whether or not the
state claims were removed. The removal issue goes only to
the court’s authority to dismiss plaintiffs’ claims with
prejudice, an issue related to--but distinct from--the
court’s authority to issue the injunction.
a. Injunction.

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District courts are empowered by the All Writs Act to
"issue all writs necessary or appropriate in aid of their
respective jurisdictions and agreeable to the usages and
principles of law." 28 U.S.C. S 1651. This authority is
limited, however, by the Anti-Injunction Act, which
prohibits injunctions having the effect of staying
_________________________________________________________________
7. Plaintiffs also make two further claims. Citing Erie R.R. Co. v.
Tompkins, 304 U.S. 64 (1938), they contend the District Court erred in
reaching a result contrary to that dictated by New Jersey law. As we
understand it, this is a claim that the District Court reached the wrong
result on the merits. Because we determine the District Court did not
have jurisdiction to resolve these claims, we do not consider this
substantive claim.
Plaintiffs also maintain the District Court lacked personal jurisdiction
over Reardon, Golinkin & Reed, as it is an Illinois law firm with
insufficient contacts with New Jersey for the court to assert jurisdiction
over it. But the firm represents the La Marras in matters related to the
Prudential class action, and the District Court undisputedly had
jurisdiction over them. "Because the District Court had personal
jurisdiction over members of the . . . class, it also had jurisdiction over
attorneys purporting to represent, and act on behalf of " members of that
class, including the La Marras. In re Diet Drugs , 282 F.3d 220, 231 (3d
Cir. 2002).
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proceedings in state courts except "as expressly authorized
by Act of Congress, or where necessary in aid of its
jurisdiction, or to protect or effectuate its judgments." 28
U.S.C. S 2283. "The exceptions in the Anti Injunction Act
are to be construed narrowly." In re Diet Drugs, 282 F.3d at
233. The Act "is an absolute prohibition against enjoining
state court proceedings, unless the injunction falls within
one of three specifically defined exceptions." Atl. Coast Line
R.R. Co. v. Bhd. of Locomotive Eng’rs, 398 U.S. 281, 286
(1970). "Any doubts as to the propriety of a federal
injunction against state court proceedings should be
resolved in favor of permitting the state courts to proceed in
an orderly fashion to finally determine the controversy." Id.
at 297.
The District Court enjoined "further prosecution of the
claims set forth in respondents’ complaint in this or any
other forum." Although the injunction is directed at
plaintiffs, and not at the state court, it has the effect of
staying the state court proceeding, and is therefore subject
to the Anti-Injunction Act’s restriction unless it falls within
one of the exceptions. "It is settled that the prohibition of
S 2283 cannot be evaded by addressing the order to the
parties . . . ." Id. at 287.
Antisuit injunctions are permitted: (1) "as expressly
authorized by Act of Congress"; (2) "where necessary in aid
of its jurisdiction"; or (3) "to protect or effectuate its
judgments." 28 U.S.C. S 2283. Prudential maintains the

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District Court’s injunction was permitted under the second
and third exceptions.
The "relitigation exception," which permits injunctions "to
protect or effectuate [a federal court’s] judgments," is
"founded in the well-recognized concepts of res judicata and
collateral estoppel." Chick Kam Choo v. Exxon Corp., 486
U.S. 140, 147 (1988); In re Prudential Ins. Co. Sales Practice
Litig.: Lowe, 261 F.3d 355, 364 (3d Cir. 2001). It would
appear that at least a significant part of plaintiffs’ action is
barred by res judicata, and is subject to the possibility of
an anti-relitigation injunction. Nonetheless, plaintiffs argue
most of the actions complained of occurred in the ADR
process--necessarily after judgment in the class action
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settlement--which implies they cannot be precluded by that
judgment.
But plaintiffs’ claims here constitute a direct challenge to
the system of remedies specified in the class action
settlement. While plaintiffs contend they do not challenge
these procedures themselves, or the award they derived
from it, their claims cannot be separated from challenges to
the ADR procedures. They allege, for instance, undue delay
in obtaining relief. But a determination of unreasonable
delay or improper handling is necessarily dependent on an
assessment of the adequacy and operation of the
settlement’s ADR procedures.8 It is far from certain,
therefore, that plaintiffs could state these claims in a
manner sufficiently detached from the issues resolved in
the class action to avoid claim preclusion.
Regardless, we need not determine the extent to which
these claims are precluded by the nationwide settlement
because the District Court had the power to issue this
injunction under the "in aid of jurisdiction" exception. We
have recognized that district courts overseeing complex
federal litigation are especially susceptible to disruption by
related actions in state fora. In re Diet Drugs , 282 F.3d at
235-36. Undeniably, this one discrete case would have
provided little disruption to an eight-million-member class
action. But while the Illinois litigation would not have
brought down the settlement on its own, permitting this
kind of action would open up the possibility of a large, or
even an overwhelming, number of collateral attacks on the
settlement itself, especially given the eight-million-member
class. Just as in Prudential-Lowe,9 defendants in large class
actions "would always be concerned that a settlement of the
_________________________________________________________________
8. Furthermore, their allegation that Prudential improperly
communicated with Reardon, Golinkin & Reed appears to conflict with a
provision in the settlement that may authorize such communications.
9. In Prudential-Lowe, plaintiffs obtained the benefits of the Prudential
Sales Practices litigation settlement on some of their policies, but sought
recovery in state court for damages related to other policies. The District

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Court enjoined the use of evidence common to the polices released in the
class-action settlement. We upheld the injunction under the All Writs
Act. 261 F.3d at 369-70.
9
federal class action would leave them exposed to countless
suits in state court despite settlement of the federal
claims," a consequence that would "seriously undermine
the possibility for settling any large, multi district class
action." 261 F.3d at 367.
The settlement here represented a herculean effort to
provide a fair and consistent framework for the resolution
of millions of claims. The comprehensive procedures
implemented for this purpose were integral to this effort.
Permitting continued litigation of these claims would
"unsettle" what had been thought to be settled, and would
disrupt carefully constructed procedures for individual
dispute resolution. Allowing comprehensive settlements to
be undermined in this way would undeniably deter similar
settlements in the future.
Of equal importance, permitting collateral attacks of this
kind in a state court would undermine the rationale girding
Federal Rule of Civil Procedure 23 and Congress’s purposes
underlying diversity jurisdiction and the Multidistrict
Litigation Act, 28 U.S.C. S 1407, an application of
Congress’s constitutional power to regulate interstate
commerce.
At the time of settlement, the District Court "retain[ed]
exclusive jurisdiction as to all matters relating to
administration, consummation, enforcement and
interpretation of the Stipulation of Settlement and of this
Final Order and Judgment, and for any other necessary
purpose." 962 F. Supp. at 566. In previous litigation in this
class action, we noted approval of that retention of
jurisdiction. Prudential-Lowe, 261 F.3d at 367-68. The
Illinois case constituted just the kind of interference that
the Final Order was designed to avoid. The District Court
was well within its authority to enforce that provision by
enjoining the action in Illinois court.
Thus, even if the District Court’s order is not permitted
by the relitigation exception to the Anti-Injunction Act, it is
justified as "necessary in aid of its jurisdiction."
Accordingly, we will affirm the District Court’s injunction
barring litigation of plaintiffs’ claims.
10
b. Removal.
Plaintiffs also argue Prudential’s removal of the case to
federal court was unsupportable, and that the District
Court consequently lacked subject matter jurisdiction to
resolve plaintiffs’ claims. As noted, the propriety of the

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removal does not affect the District Court’s jurisdiction to
issue the antisuit injunction--which was issued under, and
in protection of, the court’s jurisdiction over MDL 1601.
But the court also dismissed plaintiffs’ claims with
prejudice, an action that required it to have subject matter
jurisdiction over those claims. It had such jurisdiction only
if removal was proper.
The District Court did not rely on the conventional bases
of removal jurisdiction. In this case, diversity jurisdiction
does not obtain and no federal question is presented.
Accordingly, the District Court would not have had original
jurisdiction over these state law claims. Instead, the
District Court relied on the All Writs Act--under its
jurisdiction in the nationwide class action--to deny
plaintiffs’ motion to remand and to retain jurisdiction over
the Illinois case.
But the Supreme Court recently held that the All Writs
Act cannot be employed to remove an otherwise
unremovable case. Syngenta Crop Protection, Inc. v. Henson,
123 S. Ct. 366 (2002). Under the traditional boundaries of
the All Writs Act, the Court’s decision was uncontroversial.
Enacted by the first Congress in 1789, the most recent
version of the All Writs Act was adopted in 1948. Yet even
in the modern era of civil litigation, there has been a sea
change in the nature of complex litigation involving class
actions and the aggregation of individual cases and also in
the complex relationship between federal and state
jurisdiction, especially regarding duplicative and competing
class actions.
Within our traditional notions of federalism, the question
arises when mass claims truly national in scope affecting
litigants in fifty states should be handled in the court of a
single state. The Supreme Court has determined that in
such actions the statutory and decisional law of one state
can bind the citizens of all states. Phillips Petroleum Co. v.
11
Shutts, 472 U.S. 797 (1985). Nevertheless, the problems
arising from duplicative or competing nationwide class
actions applying the laws of particular states to passive
litigants in other states are evident.
In any event, the Supreme Court has determined that
even when "necessary in aid of . . . jurisdiction," the All
Writs Act cannot be used to effect a removal. Accordingly,
the District Court erred in refusing to remand the case for
lack of federal subject-matter jurisdiction. Therefore, we will
reverse the District Court’s denial of plaintiffs’ motion to
remand.
III.
For the foregoing reasons, we will affirm the injunction
issued by the District Court, and remand the case with
instructions to remand the Illinois claims back to state

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court.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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