### FILED U.S. COURT OF APPEALS ELEVENTH CIRCUIT MARCH 28, 2003 THOMAS K. KAHN CLERK [PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH

CIRCUIT

________________________ No. 02-15358 Non-Argument Calendar

________________________ D. C. Docket No. 02-00073-CV-4 THOMAS R. HERNDON, Individually, a

nd on behalf of others

similarly situated, Plaintiff-Appel lant,
versus EQUITABLE VARIABLE LIFE INSURANCE COMPANY, Defendant-Appellee.

________________________ Appeal from the United States District Court for the Southern District of Georgia

_________________________ (March 28, 2003) Before TJOFL

AT, BIRCH a

nd RONEY Circ

uit Judges. PER CURIAM: The issue on this appeal is whether a variable li fe insurance policy is a “covered secur ity” u nder t he Sec uriti es Lit igati on Uni form Stand ards Act of 19982

(“SLUSA”),15 U.S.C. §§ 77p( c), 78bb(f) and 28 U .S.C. §§ 1331 , 1367, 1441, and 1446, aquestion

of first impression in this Circuit. Plaintiff Thomas R. Herndon filed in state court an eleven-count class action com plaint against Equita

ble Variable Life Insurance Company (“Equitable”), alleging various Georgia state law claims arising from the sale of a variable li fe insurance policy. U pon removal to fed eral court by Equitable, the district court held that the policy was a “covered securi ty” and dismissed with prejudice on

th e ground that SLUSA (1) makes fe

deral courts the exclusivevenue for class

actions alleging state law claims in conne

ction with the sale of “covered securities,” (2) provides for removal of such state class

actions to federal
cou rt, a nd (3) requires fe deral courts to dism

iss such lawsuits. H

erndon appeals. Neither party requested oral argu ment, and we agree that oral argum ent would not be useful in the decision

al process. We hold that the district court correctly held that a variable li fe insurance policy is a “covered security” under SLUSA and that the state law cla ims were “

in connection

with the purchase or sale” thereof. We therefore AFFIRM the dismissal of the removed co

mplaint, with

prejudice, ther

e being no question that i t met t he statutory requir

ements for dism

issal. In 1996, Brent J. Savage pu rchased from Eq uitabl e a variable life insurance policy insuring his fifteen year old son. O n the application, S avage indicated that his3

son hadneither smoked n or used any other

tobacco products

for the previous tw

elve months. Savage later

assigned that policy to the plaintiff, Thomas R. Herndon, who then, through Savage’s law firm, f iled a class action l

awsuit in Georgia

state c ourt. Although we do not

address the me

rits of Herndon’s claim, the lawsuit alleged that Equitable delibera

tely mis-de signated Savage’ s s on , as well as a puta tive class of other insureds, as a tobacco user so that it could charge highe r premium s. Equitable answered that the

policy’s Pro spectus clearly disclosed that the

premiu ms for insureds under the age of twenty, such as Savage’s son,

were set without

reference to whether the insured used tobacco. As such, Equitable arg ued, there was never a misrepresenta

tion. Congress passed SLUSA w ith the int ent to make feder al court the exclusiv

e
venue for class actio ns all egin g stat e frau d clai ms in the sale of “covered secu rities.” Congr e ss accomplished th is goal by providing for the remova l of state class ac

tion lawsuits to federal court,

and requiring federa

l courts to dismis s those lawsuits that meet certain statutory requi rements. See Riley v. Merrill Ly nch, Pierce, Fenne r & Smith, Inc. , 292 F.3d 1334, 1341 (11th Cir. 2002). The Riley opinion summarized SLUSA’s re

quirements: Under SLUSA, the r

emoving party

must show that ( 1) the suit is a “covered class actio n,” (2 ) the p laint iffs’ claims are basedon stat e law, (3) one or more “co

vered securities”4 has been purchased or sol d, and (4) the defe

nda n t misrepresented

or omit ted a ma teria l fact “ in connection with the purchase or sale of such security .” Id. at 1342. Once the f actors have been show

n by the rem

oving party, the case requires immediate dismissal. Herndon concedes this is a “

covered class acti

on” based on

state law claim

s but argues that (1) a variabl e life insurance pol

icy is not a “co vered security” under SLUSA, and

(2) the misre

presentations and om

issions in dispute wer

e not made “

in connection

with the purchase or

sale of such a secur

ity.” Herndo

n also a rgues th at the district court im

properly dism

issed his case in its e

ntirety rather thandismissing only the class ac

tion components. (1) A variable life insuran ce policy is a “cover ed security” under SLUSA. SLUSA defin es a “c o vered security ” as “a secur

ity issued by a

n investment company that is registered,

or that has filed a r

egistration st

atement, under the Investment

Company

Act of 1940.” 15 U.S.C. § 77r(b )(2). The Supreme Court has held that a “variable ann

uity” is a “ security” that

is required to be re

gistered with

the Securities and Exchange Com mission (“S EC”) under the Se curities Act of 193 3, codifiedat 15 U.S.C. § 77a. See Securities & Exch. Comm’n v. Vari

able Annuity Life Ins. Co. of Am. , 359 U.S. 65, 6 9-73 (1959). The Supreme Court has not yet decided whether a variable life i nsurance policy is a “covered s ecurity” under SLUSA.5

The question here is whether a var iable life insurance policy is a “covered securi ty” under SLUSA, an issue not previously decided by this C ourt but eloquently
a nswered in the affirmative by the dist rict court. See Herndon v. Eq uitabl e Lif

e A ssurance Soc’y , ___ F. Supp.2d ___ (S.D. Ga. 2002). Other district courts are i n accord with the district co urt’s decision. See Araujo v. John Hancock Life Ins. Co. , 206 F. Supp.2d 377, 382 (E.D. N.Y. 2002); In re Lutheran Bhd. Variable Ins. Pro d. Co. Sales , 105 F. Supp.2d 10 37, 1040 ( D. Minn. 2000); Lasley v. New E ngland Variable Life Ins. Co. , 126 F. Supp.2d 1236, 1239 (N.D. Cal. 1999). Several circuits have tange ntially decided the issue, holding that variable annuities, without the life insurance component presented in this case, are covered securities under SLUSA. See Dudek v. Prudential Sec., Inc. , 295 F.3d 875, 878 (8th Cir. 2002); Patenaude v. Equitable Life Assurance Soc’y , 290 F.3d 1020, 1024 (9th Cir. 2002); Lander v. Hartford L ife & Annuity Ins. Co. , 251 F.3d 101 (2d Cir. 2001). In Lan der, for example , the Second Circuit held that variable annuities , b y themselves,

are “covered securities” under SLUSA because they

are “securi

ties” and their sub-accounts are r

egistered with

the SEC under

the Investment

Company A

ct. Id. at 109. The key distincti on, as argued by Ap pellant, is that this case, un like Lander and the cases fr om our ot her sis ter circ uits, i nvolv es a vari able an nuity with6

a life insurance compon ent . We find that distinction to be inconsequential to an analysis of SLUSA’s definition of “covered security.” See 15 U.S.C. § 77r(b)(2). Both Lander

and this case involve i

nsurance compa

nies who issued a variable annuity w hich was both required to be and was actually registered with the SE C
. Boththe Lander

defendant and Equitable were also required to and did register the
r espective

plaintiffs’ indivi

dual annuity accounts with the SEC p ursuant to th e Investment

Company A

ct of 1940 . The fact that a variable life insurance policy account adds a life insurance c omponent to the investment does not negate the fact that the statutory

requirements

of SLUSA have been

met with rega

rd to the annuity
com ponent o f the insurance polic

y. As such, a

variable life insur

ance policy is a “covered security” under SLUSA. Herndon’s post -complaint reallocation of Savag e’s premium

payments to

a
mo ney market accou

nt is irrelevant. First, this Court is limited to revi

ewin g allegationsconcerning “the time during whi

ch it is alleged thatthe misrepres entation, omission, or manipulative or deceptive conduct occurred . . ..” 15 U.S.C. § 77p(f)(3). Second , in any event, a

t least one court has

held money m

arket mutual f

un ds to b e covered securities under SLUSA. See KennethRothschild Trust v. Morgan Stanley Dean Witter , 199 F. Supp .2d 993, 10 00 (C.D. Cal. 2 002). We neednot decide that issue.7

(2) The misrepresen tations and omis sions in dispute wer e made “in connection with” the purchase of such a security
. Herndon argues that the distr

ict court erred by

dete rmining th at the alleged misrepresenta

tions and omissions in dis pute were not m

ade “in connection with” the purchaseor the sale of the va riable life insura

nce policy to Savag e. He argues that the m isrepresentations were made with respect to the sale of the type of insurance policy ( i.e. , a policy for a non-smoker) a nd were “tang

ential” to the varia

ble li f e insurance contract. This Court has rec ently dismis sed a similar a rgument on SLUSA grounds, and we need

not readdress it in th

is case. See Behlen v. Merrill Lynch , 311 F.3d 1087, 1094 (11th

Cir. 2002) (rej ectingargument that a broker’s increased fees andcom missions to an inve stor otherwise eli gible for lower fe

es and comm

iss ion s
were incid ental to and not made “ in connection with” t

he purchase or sale

of securities). (3) The district court properly dismissed the case in its entirety rather than dismissing only the class action components
. According

to the record on appeal,

Herndon made no argument in the district court that it

improperly

dismissed the com

plaint in its “entiret

y.” This could

foreclose the issue. See Brown v. ITT Consumer Fin . Corp. , 211 F.3d 1217, 1221 n.1 (11th Cir. 2000). In any event, Equitable properly points out t hat the amended complaint alleges only

a clas s acti on, an d doe s not alleg e an in divi dual claim.8

The district court’s gra nt of Equit able’s motion to dismiss b ased on SLUS A’s preemption of the Georgia state law claims was proper. AFFIRMED.