## Facts

- Prudential policyholders brought a nationwide class action alleging deceptive life-insurance sales practices (e.g., churning, vanishing premiums, misleading investment presentations).
- The District of New Jersey conditionally certified a Rule 23(b)(3) settlement class covering certain Prudential permanent whole-life policies issued during 1982–1995, subject to exclusions and opt-out rights.
- The settlement permitted “partial” opt-outs, allowing a policyholder to opt out as to some policies while remaining in the class as to others.
- The settlement and final judgment included broad releases and an injunction barring class members from litigating, in any forum, claims “based on, relating to, or in connection with” the released factual allegations.
- Marvin and Alice Lowe owned five Prudential life-insurance policies; they stayed in the settlement class for three policies (accepting the release) and opted out as to two policies.
- After final approval, the Lowes sued Prudential in Florida state court regarding the two opted-out policies, asserting claims such as fraud and breach of fiduciary duty.
- In the Florida case, the Lowes sought to introduce evidence of Prudential’s broader sales-practices conduct and evidence relating to the three “class” policies to prove a pattern of wrongdoing and support remedies (including punitive damages).
- Prudential moved in the MDL court to enforce the settlement injunction; the district court enjoined the Lowes from using evidence and theories tied to the facts and circumstances underlying the released class claims (including as to the three class policies).
- The Lowes appealed the enforcement injunction.

## Issues

1. Whether the Anti-Injunction Act permitted the MDL court to enjoin the Lowes’ use, in their Florida action on opted-out policies, of evidence and theories grounded in the factual allegations released by the federal class settlement.
2. Whether the injunction improperly restricted prosecution of the Lowes’ non-released claims on the two opted-out policies, or permissibly enforced the settlement release and judgment as to the three policies that remained in the class.

## Decision

- The Third Circuit affirmed the district court’s injunction.
- The court held the injunction fit within the Anti-Injunction Act’s exceptions, particularly the “protect or effectuate its judgments” (relitigation) exception.
- The injunction permissibly enforced the settlement’s release by preventing class members who accepted settlement benefits from reusing the released factual nucleus to advance new litigation.
- The injunction did not bar the Florida action entirely; it limited the Lowes to proving their opted-out claims without relying on released class-policy conduct and class-wide sales-practice allegations that would functionally relitigate settled matters.

## Legal Principles

- Under the Anti-Injunction Act, 28 U.S.C. § 2283, a federal court may enjoin state-court proceedings when necessary “to protect or effectuate its judgments” (relitigation exception) and, in appropriate circumstances, to preserve jurisdiction over a complex settlement.
- A federal court approving a class settlement and retaining jurisdiction may enforce the settlement’s release and injunction to prevent later litigation that would relitigate released claims or factual issues, or otherwise impair the final judgment.
- A settlement release covering claims “based on, relating to, or in connection with” certain conduct may bar a class member from using that same released conduct as a central evidentiary and legal foundation in subsequent litigation, even if the later suit involves transactions outside the formal class definition.
- When a settlement allows partial opt-outs, the opting-out party may pursue non-released claims, but may be restrained from deploying evidence and theories tied to the released portion of the party’s relationship with the defendant in a manner that undermines the bargain and finality of the settlement.

## Conclusion

The Third Circuit upheld an injunction enforcing a nationwide class settlement against Prudential by preventing partial opt-outs from using released, class-wide sales-practices evidence—particularly evidence tied to policies that remained in the settlement class—to advance a state-court action on opted-out policies, because doing so would effectively relitigate matters resolved by the federal judgment.


In re Prudential Ins. Co. of Am. Sales Pracs. Litig., 261 F.3d 355 (3d Cir. 2001)