10th Circuit: Jackson Can Step in to Defend Class Action

Barnes v. Security Life of Denver examines, with a lengthy dissent, when an associated company is allowed to intervene

10th Circuit Court of Appeals rams
The 10th Circuit Court of Appeals recently allowed two cases alleging violations of prisoners’ religious rights to proceed. / Law Week File

In a recent opinion, the 10th Circuit Court of Appeals parsed out when a company can intervene from the sidelines as a defendant in a class action. 


In a 2-1 decision, the 10th Circuit panel held that financial services firm Jackson National Life Insurance has the right to intervene in a suit filed against Security Life of Denver. Jackson asserts it, and not SLD, is responsible for administering the life insurance policy the case’s named plaintiff is suing SLD over.

The 10th Circuit majority reversed a district court decision blocking Jackson from stepping in on a putative class action brought by life insurance policyholder Robert Barnes. The lower court had reasoned Jackson’s intervention was unwarranted because SLD would have adequately represented its interests in Barnes’ suit.

As more consumer finance companies enter liability arrangements with other companies, the decision in Barnes v. Security Life of Denver is a look at how courts decide who can intervene on the defense side when one of them is sued.

After the Dec. 23 appellate decision, it’s yet unclear whether Barnes, seeing that the district court and one appellate judge favored its arguments, will ask the whole 10th Circuit to take up the decision en banc.

Sherman & Howard attorneys Mark Williams and Skip Netzorg, who are local counsel for Barnes, declined to comment. Other firms representing the plaintiffs’ side include Kansas City, Missouri’s Stueve Siegel Hanson and Miller Schirger, as well as Girard Sharp in San Francisco.

Wheeler Trigg O’Donnell attorneys Kathryn Reilly and CiCi Cheng are among SLD’s counsel of record, and they also declined to comment. SLD is also represented by Kentucky-based attorneys from Kaplan Johnson Abate & Bird. Jackson didn’t respond to requests for comment.

Barnes originally bought his life insurance policy from Southland Life Insurance Company back in 1984, and in 2004, that company merged with SLD and became the insurer of Barnes’ policy. But two years before that merger, Southland transferred the liability and administration of certain life insurance policies, including Barnes’, to a third company. Jackson bought that company and assumed the liability and administration for Barnes’ policy and others that SLD insures.

Barnes filed a class action against SLD March 27, 2018, alleging the company made certain charges against the cash value of his and others’ life policies that weren’t allowed under the policy terms. 

Finding out about the action, Jackson reached out to Barnes’ counsel that summer to discuss its entry as a defendant. SLD consented to Jackson’s intervention, but Barnes did not, and in August 2018 Jackson filed a motion to intervene; it would defend claims against Jackson-administered policies, and SLD would remain to defend the non-Jackson claims. 

The agreement between Jackson and SLD dictates that Jackson “shall sue or defend, at its own expense and in the name of [SLD] when necessary … any action brought upon a Policy.” But SLD holds “the exclusive right to exercise control of and direction over any claim or litigation” involving its Jackson-run policies. Jackson can settle litigation without SLD’s consent, but not vice-versa.

Jackson argued that it, not SLD, also holds most of the necessary witnesses and documents for the case, and its status as a defendant would speed up the litigation. In contesting the intervention, Barnes argued that Jackson and SLD only support the intervention because it will allow them to “double-team” the plaintiff class.

District Judge William Martinez denied Jackson’s motion to intervene in November 2018, however, saying that if Jackson were allowed in, “Barnes would be forced to litigate against a company with whom it has no contractual relationship,” driving up litigation costs in the long term. 

According to the order, Jackson failed to show that, as one of the requirements for intervention, that SLD wouldn’t adequately protect Jackson’s interests in its stead, “particularly since Jackson has a contractual right to control the litigation.”

“This more than adequate representation of Jackson’s interests by SLD weighs heavily against Jackson’s intervention,” Martinez wrote in the November 2018 order.

The 10th Circuit majority disagreed. While Jackson and SLD share the obvious interest of defeating Barnes’ claims, “[f]rom there, however, their interests clearly diverge,” according to Judge Mary Beck Briscoe’s opinion joined by Judge David Ebel.

SLD and Jackson administer different groups of life policies implicated in the suit, the majority pointed out. It sided with Jackson’s argument that “there is no good reason to assume that Jackson’s and SLD’s interests and defense strategies will coincide in all respects at every stage in this litigation with respect to what amounts to two different sub-classes of policies.”

Under the “minimal burden” a party must satisfy to step in as a defendant, Jackson only had to establish the “possibility,” not any likelihood, that SLD wouldn’t adequately represent its interests, according to the majority.

In his dissent, Judge Harris Hartz noted that Jackson has agreed to indemnify SLD on the policies it administers, including Barnes’, but SLD still has every motivation to defend itself well. If SLD has to pay out to the plaintiffs, it still would have to seek indemnification from Jackson, presumably in court.

“If SLD does a poor job of defending itself with respect to the Jackson-administered policies (for which it expects to be indemnified by Jackson), it could find itself stuck with paying the Barnes judgment on its own,” Hartz wrote.

Jackson didn’t articulate any conflict of interest between it and SLD, or even that their methods computing cost-of-insurance expenses were any different, according to the dissent.

“With absolutely no evidence to the contrary, it appears that the interests of SLD and Jackson in prevailing against Barnes on the Jackson policies are fully congruent,” Hartz wrote.

 — Doug Chartier

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