FILED 

 U.S. COURT OF APPEALS

 ELEVENTH CIRCUIT 

 08/04/98 

 THOMAS K. KAHN 

 CLERK

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

________________________

No. 97-6023

________________________

D. C. Docket No. 95-0809-BH-M

SARAH P. STEANS,

Plaintiff,

versus

COMBINED INSURANCE COMPANY OF AMERICA,

Defendant-Appellee,

ELIZABETH ALDRIDGE,

Cross-Defendant-Appellant,

DORIS WILLIAMS,

Cross-Defendant.

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________________________
2

No. 97-6123

________________________

D. C. Docket No. 95-0809-BH-M

SARAH P. STEANS,

Plaintiff,

versus

COMBINED INSURANCE COMPANY OF AMERICA,

Defendant-Appellee,

ELIZABETH ALDRIDGE,

Cross-Defendant,

DORIS WILLIAMS,

Cross-Defendant-Appellant.

________________________

Appeals from the United States District Court

for the Southern District of Alabama

_________________________

(August 4, 1998)

Before ANDERSON and MARCUS, Circuit Judges, and HANCOCK*, Senior District

Judge.

_____________

*Honorable James H. Hancock, Senior U.S. District Judge for the Northern

District of Alabama, sitting by designation.

ANDERSON, Circuit Judge:
1

 In her complaint, Williams alleged that she purchased an insurance policy based on the

fraudulent misrepresentations of Combined and its agents. Williams alleged that Combined had

actual or constructive knowledge of its insurance agents’ misrepresentations that the policy

would provide health and disability coverage in the event Williams was hospitalized or treated

by a physician for any reason, when, in fact, the policy only provided limited coverage in the

event of an accidental bodily injury. 

3

In this case, the appellants Elizabeth Aldridge and Doris Williams appeal the

district court’s orders prohibiting future punitive damages awards in Alabama against

Combined Insurance Company of America, and enjoining them from prosecuting their

claims for punitive damages in state court. We conclude that the August 19, 1996, order

prohibiting future punitive damages awards was not binding on Aldridge and Williams

and that Aldridge and Williams did not have a full and fair opportunity to litigate the

orders enjoining their state court claims for punitive damages. We vacate and remand. 

I. FACTS AND PROCEDURAL HISTORY

On May 9, 1995, appellant Doris Williams filed a complaint in the Circuit Court of

Mobile County, Alabama, against appellee Combined Insurance Company of America

(“Combined”) alleging that Combined and its agents had engaged in insurance fraud and

seeking compensatory and punitive damages.1

 Appellant Elizabeth Aldridge filed a

complaint against Combined on July 6, 1995, in the Circuit Court of Marengo County,
2

 Aldridge and Williams were represented by the same counsel, but filed separate

lawsuits.

3

 In her complaint, Aldridge, like Williams, alleged that Combined had actual or

constructive knowledge of its insurance agents’ misrepresentations that the policy she purchased

would provide coverage in the event Aldridge was hospitalized or treated by a physician for any

reason, when the policy only provided limited coverage in the event of an accidental bodily

injury. Aldridge also added a second cause of action alleging that Combined negligently and

wantonly trained, supervised, and retained its employees, as well as a third cause of action

alleging that Combined’s insurance agents knew or should have known that the policy would not

provide any benefits to her because she was a Medicaid recipient and, pursuant to Alabama

statutory law, all Medicaid recipients assign their benefits under any insurance policy to the

Alabama Medicaid Agency.

4

 Steans alleged in her complaint that Combined’s insurance agents made false

representations regarding the extent of coverage provided by her policy and that she was sold a

policy that was void from its issuance due to defects in its delivery.

5

 This agreement also settled claims by twelve other individuals represented by Steans’

counsel. Steans’ counsel did not represent Elizabeth Aldridge and Doris Williams.

4

Alabama.2 In her complaint, Aldridge sought compensatory and punitive damages for the

alleged fraudulent misrepresentations of Combined and its agents.3

On August 24, 1995, Sara P. Steans filed a complaint in the Circuit Court of

Mobile County, Alabama, alleging insurance fraud on the part of Combined and its agents

and seeking compensatory and punitive damages.4

 Subsequently, Combined removed

Steans’ action to the United States District Court for the Southern District of Alabama

(hereinafter referred to as “the Steans case”). Prior to trial, the parties in the Steans case

reached an agreement to settle their case, and pursuant to this agreement,5

 filed a motion

requesting that the district court enter an order prohibiting claims for punitive damages by

any other insureds of Combined. On August 19, 1996, the district court held a hearing

with counsel for Combined and counsel for Sara Steans regarding the parties’ settlement
6

 The district court noted that Combined had agreed to pay $775,000 to Steans and 12

other claimants represented by Steans’ counsel, and that Combined had agreed to pay $7.5

million to approximately 50 other claimants in Alabama who were not represented by Steans’

counsel.

5

agreement and the requested order prohibiting punitive damages claims by other insureds. 

On the same date, the district court entered the requested order (“August 19 Order”) and

made the following findings: 

Combined has settled litigation or threatened litigation with approximately

63 plaintiffs/claimants for a total of $8.25 million. The aggregate amount

of the settlements agreed to be paid is four-and-a-half times Combined’s

entire statutory profits earned during the whole of the ten year period

between 1985 and 1994 in the State of Alabama. . . . The ratio of punitive

damages to compensatory damages paid in these settlements is more than

125 to 1. . . . The payment by Combined of the amounts it has either paid or

agreed to pay is sufficient to punish Combined for the alleged Misconduct

and to deter Combined and others from similar Misconduct in the future. . .

. The imposition of additional punitive damages against Combined for such

alleged Misconduct would constitute duplicative, multiple, unjust and

grossly excessive punitive awards.

District Court Order, at 6 (August 19, 1996).6

 Based on these findings, the district court

ordered that

no additional punitive damages may be assessed in Alabama against

Combined or any of its past or present agents for any allegations of the

same or similar Misconduct which occurred on or before the date of this

Order. This Court will retain jurisdiction of this case for purposes of

enforcing this Order and the settlement of this case. In making these

findings and this Order, this Court has considered allegations of 63

Plaintiffs/claimants who reside throughout the state of Alabama, and

evidence relating to Combined’s operation in the entire state of Alabama.
7

 The district court defined the “alleged Misconduct” of Combined to include

1. Intentionally making misrepresentations or engaging in a pattern and practice

of making misrepresentations to policyholders, including, but not limited to,

misrepresenting benefits payable under various insurance policies issued by

Combined, misrepresenting amounts payable under various policies,

misrepresenting issues as to Medicaid or Medicare, misrepresenting the effect of

the age of the policyholders on benefits available, misrepresenting the time during

which benefits are payable, and misrepresenting the type of treatment, medical or

otherwise, covered by the policies;

2. Fraudulently suppressing from policyholders or engaging in a pattern and

practice of fraudulently suppressing from policyholders material and important

information regarding policies, including, but not limited to, suppressing what

benefits are or are not payable under various insurance policies issued by

Combined, suppressing what is or is not covered by various insurance policies,

suppressing what amounts are payable and what amounts are not payable under

various policies, suppressing facts material to issues as to Medicare or Medicaid,

suppressing whether the age of policyholders does or does not impact available

benefits, suppressing the time during which benefits are payable or not payable,

suppressing the type of treatment, medical or otherwise, which is or is not

covered by the policies;

3. Negligent or wanton hiring, training, or supervision of agents;

4. Converting policy holder funds; and

5. Violating Alabama State law in the sale of policies or the servicing of claims.

District Court Order, at 2-3 (August 19, 1996).

6

Id. at 7.7 The August 19 Order was entered without advance notice to either Aldridge or

Williams, and neither Aldridge nor Williams was a party to the Steans case at the time

that the order was entered.

On October 18, 1996, Combined filed a motion with the district court in which it

sought to add Elizabeth Aldridge as a “cross-defendant” in the Steans case and to enjoin

Aldridge’s state court action with respect to her punitive damages claims. On October 21,

1996, the district court entered an order granting the motion to add Aldridge as a cross-
8

 Rule 21 provides in relevant part that “[p]arties may be dropped or added by order of

the court on motion of any party or of its own initiative at any stage of the action and on such

terms as are just.” Fed. R. Civ. P. 21.

9

 In response to the order setting a date for the show cause hearing, Aldridge filed a

motion to shorten time for Combined to answer Aldridge’s “First Interrogatories and Request for

Production.” Aldridge alleged that she needed the discovery material in order to effectively

participate in the show cause hearing. The district court carried Aldridge’s motion to compel

discovery until the show cause hearing, and apparently denied the motion by enjoining

Aldridge’s state court claims for punitive damages. Williams also filed a motion to compel

discovery which was denied by the district court in a February 6, 1997, order.

10 Section 2283 provides that “[a] court of the United States may not grant an injunction

to stay proceedings in a State court 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. § 2283

(1994).

7

defendant under Fed. R. Civ. P. 21,8 and ordered a show cause hearing regarding

Combined’s motion to enjoin Aldridge from prosecuting her claims for punitive

damages.9

 Subsequently, on December 2, 1996, the district court entered an order

enjoining Aldridge from prosecuting her claims for punitive damages in state court. The

district court concluded that an injunction was “necessary to protect” its August 19 order and

enjoined Aldridge under the Anti-Injunction Act, 28 U.S.C. § 2283.10 Aldridge filed a notice

of appeal.

Combined also filed a motion seeking to add Doris Williams as a “crossdefendant” in the Steans case and seeking to enjoin Williams from pursuing her claims

for punitive damages in state court. On December 2, 1996, the district court granted

Combined’s motion to join Williams as a cross-defendant, and ordered all parties to show

cause as to why Williams should or should not be enjoined from pursuing her punitive

damages claims. On January 22, 1997, the district court entered an order enjoining
11 This order was virtually identical to the order enjoining Elizabeth Aldridge. In this

order, the district court concluded that an injunction was “necessary to protect” its August 19

order and enjoined Williams under the Anti-Injunction Act, 28 U.S.C. § 2283.

12 In the previous litigation, the white firefighters appeared and filed objections as amicus

curiae at a fairness hearing regarding the consent decrees. Martin, 490 U.S. at 759, 109 S. Ct. at

2183. The white firefighters also attempted to intervene in the previous litigation, but the trial

court denied their motion to intervene as untimely. Id.

8

Williams from prosecuting her claims for punitive damages in state court.11 Williams

filed a notice of appeal.

II. DISCUSSION

A. The August 19 Order

In its August 19 Order, the district court “ordered, adjudged and decreed that no

additional punitive damages may be assessed in Alabama against Combined or any of its

past or present agents for any allegations of the same or similar Misconduct which

occurred on or before the date of this Order.” District Court Order, at 7 (August 19,

1996). Combined contends that the August 19 Order and its prohibition on future

punitive damages awards is binding on Aldridge and Williams. We disagree. 

In Martin v. Wilks, 490 U.S. 755, 109 S. Ct. 2180 (1989), a group of white

firefighters sued the city of Birmingham, Alabama, alleging that they were being denied

promotions in favor of less qualified black firefighters. The white firefighters alleged that

the City was making promotion decisions on the basis of race in reliance on certain

consent decrees entered in previous litigation to which the white firefighters were not

parties.12 Id. at 758, 109 S. Ct. at 2183. In rejecting the City’s argument that the white
13 But see § 108 of the Civil Rights Act of 1991, 42 U.S.C. § 2000e-2(n)(1) (providing

that a person who had notice of, and an opportunity to present objections to, a proposed consent

decree, cannot challenge in a claim under the Constitution or federal civil rights laws an

employment practice that implements the consent decree). Section 108 is not applicable to the

instant case and does not change the analysis of the Supreme Court in Martin v. Wilks as applied

to this case.

14 Combined argues that the August 19 Order facilitates settlement and thus is supported

by the “strong public policy favoring settlement.” We note that an almost identical argument

was rejected by the Supreme Court in Martin v. Wilks. In rejecting the City’s argument that the

congressional policy favoring voluntary settlement of employment discrimination claims

9

firefighters’ suit constituted an impermissible collateral attack on the consent decrees, the

Court concluded that “‘it is a principle of general application in Anglo-American

jurisprudence that one is not bound by a judgment in personam in a litigation in which he

is not designated as a party or to which he has not been made a party by service of

process.” Id. at 761, 109 S. Ct. at 2184 (quoting Hansberry v. Lee, 311 U.S. 32, 40, 61 S.

Ct. 115, 117 (1940)). The Court reasoned that

[a] judgment or decree among parties to a lawsuit resolves issues among

them, but it does not conclude the rights of strangers to those proceedings. .

. . Joinder as a party, rather than knowledge of a lawsuit and an opportunity

to intervene, is the method by which potential parties are subjected to the

jurisdiction of the court and bound by a judgment or decree.

Id. at 762, 765, 109 S. Ct. at 2184, 2186.13

The reasoning of the Supreme Court in Martin v. Wilks is applicable to the instant

case. At the time that the district court entered the August 19 Order prohibiting future

punitive damages awards, Aldridge and Williams were not parties to the Steans case and

were not in privity with Sara Steans or the other settling plaintiffs. After reviewing the

record and considering the arguments of Combined,14 we see no reason in the instant case
supported binding the white firefighters to the consent decrees, the Court in Martin v. Wilks

concluded that

[a] voluntary settlement in the form of a consent decree between one group of

employees and their employer cannot possibly ‘settle,’ voluntarily or otherwise,

the conflicting claims of another group of employees who do not join the

agreement. . . . ‘Parties who choose to resolve litigation through settlement may

not dispose of the claims of a third party . . . without that party’s agreement. A

court’s approval of a consent decree between some of the parties cannot dispose

of the valid claims of nonconsenting intervenors.’

Id. at 768, 109 S. Ct. at 2188 (quoting Firefighters v. Cleveland, 478 U.S. 501, 529, 106 S. Ct.

3063, 3079 (1986)). 

15 In Martin v. Wilks, the Court noted an exception to the general rule “where a special

remedial scheme exists expressly foreclosing successive litigation by nonlitigants, as for

example in bankruptcy or probate.” Martin, 490 U.S. at 762 n.2, 109 S. Ct. at 2184 n.2. No such

exception is present in the instant case.

16 Because the August 19 Order was not binding on Aldridge and Williams, there was no

need for them to appeal it.

17 At the August 19 hearing, the district court stated to the attorneys for Combined and

Steans that “I take it then from both of you that you consider this case pending before me has

been settled.” Both of the attorneys responded “Yes, your honor.” The district court then stated

“[a]ll right. Then I will discharge the jury and we’ll proceed from that and I will try to give you

your order as soon as possible.”

10

to make an exception to the “principle of general application” that a judgment in

personam is not binding on a person who is not designated as a party.15 Therefore, we

conclude that the district court’s August 19 Order prohibiting future punitive damages

awards is not binding on Aldridge and Williams.16 

We also note that, at the time the district court entered the August 19 Order in the

Steans case, Combined and Steans had already reached an agreement to settle their case.17

During the August 19 hearing, Combined’s counsel argued extensively for the district

court to enter an order prohibiting future punitive damages awards in Alabama against
18 In support of its motion for an order prohibiting future punitive damages awards,

Combined also introduced evidentiary material regarding the amount of damages it had paid in

prior settlement agreements and regarding its operating profits in Alabama. Steans did not

challenge Combined’s evidentiary materials nor did she offer any competing evidence.

19 Midway through the August 19 hearing, Steans’ counsel had made no arguments in

opposition to the proposed order and thus the district court stated to Steans’ counsel that “you

are being awfully quiet down there.” Steans’ counsel responded that “[w]ell, your honor, we

discussed this. They [settled] our cases and we are excited.” The only other comment made by

Steans’ counsel during the hearing was his acknowledgment that the parties had reached a

settlement agreement. See supra note 17.

11

Combined,18 while Steans’ counsel silently acquiesced.19 After reviewing the record of

the August 19 hearing, we are satisfied that prior to the district court’s entry of the August

19 Order, no party tested in an adversarial manner Combined’s request for an order

prohibiting future punitive damages awards. Steans had no interest in contesting Combined’s

position. In fact, she had an affirmative interest--i.e., her own settlement--in acquiescing to the

August 19 Order. Under such circumstances, we attach no significance to the August 19

Order.

B. The December 2 and January 22 Orders Enjoining Aldridge’s and Williams’ State 

Court Actions

On December 2, 1996, and January 22, 1997, the district court entered orders

enjoining Aldridge and Williams, respectively, from prosecuting their state court claims

for punitive damages against Combined. We conclude that the district court abused its

discretion in enjoining Aldridge and Williams because neither Aldridge nor Williams had

a full and fair opportunity to litigate the issue. Aldridge and Williams were enjoined from

prosecuting their state court punitive damages claims without a meaningful opportunity to
20 Both Aldridge and Williams filed “Motion[s] for Leave to Propound Discovery and

Motion[s] to Shorten Time for Combined to Respond.” In these motions, Aldridge and Williams

sought to compel discovery in order to be able to fully and fairly respond to the district court’s

show cause order. Aldridge and Williams sought to conduct discovery regarding (1) the

settlement negotiations and agreement between Sara Steans and Combined, (2) documents and

settlement agreements relating to other plaintiffs in the State of Alabama, and (3) information

relating to the discovery undertaken by Steans concerning the degree of reprehensibility of

Combined, the economic impact of any additional punitive damages verdicts on Combined, and

Combined’s “statutory profit” in Alabama. The district court denied Aldridge’s and Williams’

motions to compel discovery. See supra note 9.

21 The district court reached the same conclusion in issuing its January 22, 1997, order

enjoining Williams’ punitive damages claims against Combined. District Court Order, at 3

(January 22, 1997).

22 Aldridge and Williams also challenge the district court’s October 21, 1996, and

December 2, 1996, orders in which they were joined as “cross-defendants” under Fed. R. Civ. P.

21 to the Steans case. Aldridge and Williams argue that they were not properly made parties

under Rule 21 because Combined did not comply with the requirements of Fed. R. Civ. P. 4

relating to the issuance of a summons and service on an added party. See 7 Charles A. Wright et

al., Federal Practice and Procedure § 1688 (2d ed. 1986). Because the district court did not

address this argument and the issue has not been adequately briefed on appeal, we decline to

12

present evidence, conduct discovery,20 or test the veracity and sufficiency of Combined’s

evidence which served as the basis for the district court’s August 19 Order. 

We also note that in issuing the injunctions against Aldridge’s punitive damages

claims, the district court concluded that “the pursuit of such claims could nullify this

court’s [August 19] order and must therefore be enjoined under 28 U.S.C. § 2283.” 

District Court Order, at 3 (December 2, 1996) (relying on the “necessary . . . to protect or

effectuate its judgments” exception to the Anti-Injunction Act, 28 U.S.C. § 2283).21 We

are confident that a district court cannot enter a judgment purporting to bind nonparties

over which it does not have jurisdiction, seek to join those nonparties to the underlying

litigation,22 and then issue an injunction against those parties based on a need to protect its
address it in the first instance. If the effort to enjoin Aldridge and Williams is pursued on

remand, the district court shall address this argument.

23 However, we reject Combined’s argument that its due process right to be free from the

imposition of excessive punitive damages, a right articulated in BMW of North America, Inc. v.

Gore, 517 U.S. 559, 116 S. Ct. 1589 (1996), would be rendered meaningless in the absence of

the particular procedure and remedy reflected in the district court’s judgment. In Alabama, a

civil defendant has the right to request a post-verdict hearing under Hammond v. City of

Gadsden, 493 So. 2d 1374 (Ala. 1986). In this post-verdict hearing, the trial court reviews the

sufficiency of the evidence supporting a verdict for punitive damages and the excessiveness of

the punitive damages award. See Ala. Code § 6-11-23(b) (1993) (providing for a post-verdict

hearing on punitive damages); Green Oil Co. v. Hornsby, 539 So. 2d 218, 223-24 (Ala. 1989)

(listing factors for the trial court to consider in determining whether a jury’s award of punitive

damages is excessive). In Pacific Mutual Life Insurance Company v. Haslip, 499 U.S. 1, 20-22,

111 S. Ct. 1032, 1044-45 (1991), the Supreme Court approved the procedures in Alabama for

post-verdict review of juries’ punitive damages awards. Further, in BMW of North America,

Inc. v. Gore, supra, the Court considered an Alabama punitive damages award that had survived

the Alabama review procedures, and the Court independently examined whether the award was

so grossly excessive as to violate due process. Finally, in Life Insurance Company of Georgia v.

Johnson, 701 So. 2d 524, 527-32 (Ala. 1997), the Alabama Supreme Court adopted the Supreme

13

earlier judgment. In light of our holding that the district court did not have authority to

bind nonparties with its August 19 Order, we readily conclude that the district court can

not rely on the “necessary to protect its judgments” exception to the Anti-Injunction Act in

order to justify its injunctions prohibiting Aldridge and Williams from pursuing their

punitive damages claims against Combined. Therefore, the district court’s reliance on the

Anti-Injunction Act is misplaced.

Having concluded that the district court’s orders enjoining Aldridge and Williams

constituted an abuse of discretion because Aldridge and Williams did not have a full and

fair opportunity to litigate, we need not address the harder issues entailed in Combined’s

attempt to attain a pre-trial limit on Aldridge’s and Williams’ claims for punitive

damages.23 With the instant poorly developed record and in the absence of a
Court’s BMW analysis as a supplement to its own review procedures. Thus, it cannot be said

that Combined’s due process rights under BMW would be rendered meaningless in the absence

of the particular procedure employed by the district court in the instant case and in the absence

of the particular remedy awarded by the district court. The foregoing procedures are available to

Combined in the instant case and in any future case in Alabama in which punitive damages are

assessed.

24 See, e.g., Ex parte Holland, 692 So. 2d 811, 820-22 (Ala. 1997) (discussing relevant

considerations); Alfa Financial Corp. v. Key, 927 F. Supp. 423, 428-431 (M.D. Ala. 1996)

(discussing other considerations relevant in federal courts), aff’d, 112 F.2d 1172 (11th Cir. 1997)

(unpublished table decision).

25 We also vacate the district court’s October 21, 1996, and December 2, 1996, orders. 

See supra note 22.

14

comprehensive analysis by the district court of all relevant concerns24 (including comity

concerns), we decline to speculate whether a legally supportable procedure (in addition to

the procedures outlined in footnote 23) is available in federal court to accomplish what

Combined seeks in the instant case. 

In light of the foregoing, we conclude that the district court abused its discretion in

enjoining Aldridge and Williams from prosecuting their state court claims for punitive

damages against Combined, and thus the district court’s December 2 and January 22

orders are vacated. 

III. CONCLUSION

For the foregoing reasons, we hold that the district court’s August 19, 1996, order is

not binding on Aldridge and Williams, and we vacate the district court’s December 2,

1996, and January 22, 1997, orders that enjoined Aldridge and Williams from prosecuting

their punitive damages claims in state court.25
15

VACATED AND REMANDED.