LaPlant v. Northwestern Mutual Life Insurance
701 F.3d 1137
7th Cir.2012Background
- Northwestern Mutual sold Pre-MN annuity contracts to ~36,000 people, including ~3,000 Wisconsin residents.
- In 1985 the company changed the method of calculating annuity dividends; annuitants claim this violates contract terms and notice requirements.
- A Wisconsin state-court class action sought declaratory relief on the 1985 change; later the class was expanded to all states for damages.
- Noonan v. Northwestern Mutual Life Ins. Co., 298 Wis.2d 247 (Ct. App. 2006), affirmed that the Wisconsin class certification ruling was not an abuse of discretion.
- The federal district court remanded under §1453(d)(2), but the Seventh Circuit held the suit did not relate to internal affairs and thus remand was improper; the case must remain in federal court for class certification and merits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §1453(d)(2) remands relate to internal affairs | LaPlant: dispute relates to internal affairs of Northwestern Mutual | Northwestern Mutual: dispute relates to contract/policy terms, not internal affairs | No; §1453(d)(2) does not apply, case not remanded |
| Whether choice-of-law clauses mandate Wisconsin law for nationwide class | Clauses invalidated or overridden; Wisconsin law controls | Clauses show multiple states’ laws; not solely Wisconsin internal affairs | No; multiple-state contract laws apply; not solely Wisconsin law; no remand |
| Whether removal was properly decided and the case should remain in federal court | Removal prevents state-court resolution of nationwide damages | remand appropriate under internal-affairs doctrine | Federal court retains; proceed to certify nationwide class and merits |
Key Cases Cited
- Edgar v. MITE Corp., 457 U.S. 624 (1982) (internal-affairs doctrine definition; matters peculiar to corporate relationships)
- Atherton v. FDIC, 519 U.S. 213 (1997) (limits on remand and internal affairs considerations)
- Drinkwater v. American Family Mutual Insurance Co., 290 Wis.2d 642 (2006) (choice-of-law clauses; make-whole rule in subrogation; insured-state law controls)
- Bush v. National School Studios, Inc., 139 Wis.2d 635 (1987) (Wisconsin recognizing contractual choice-of-law clauses; no automatic invalidation)
- Noonan v. Northwestern Mutual Life Insurance Co., 298 Wis.2d 247 (Ct. App. 2006) (Affirmed trial court on class certification issues in Wisconsin)
- Greenwich Financial Services Distressed Mortgage Fund 3 LLC v. Countrywide Financial Corp., 603 F.3d 23 (2d Cir. 2010) (circuits’ approach to §1332(d) exceptions; no presumption for remand or retention)
- Drinkwater v. American Family Mutual Insurance Co., 290 Wis.2d 642 (2006) (see above (choice-of-law considerations))
- Heath v. Zellmer, 35 Wis. 2d 578 (1967) (Wisconsin common-law choice-of-law principles)