Opinion
Civ. No. 97-2784 (RLE).
September 8, 2000.
I. Introduction
This matter came before the undersigned United States Magistrate Judge pursuant to the consent of the parties, as authorized by the provisions of Title 28 U.S.C. § 636 (c), upon the Motions to Intervene of Class Members, and Objectors, Leo E. Clark ("Clark"), Susan D. Deese ("Deese"), and John P. Willis, III ("Willis"); and upon the Plaintiffs' Motion for Final Approval of Settlement, for a Certification of the Class, and for an Award of Attorneys Fees and Expenses.
A Hearing on the Motions was conducted on August 22, 2000, at which time, the Plaintiffs appeared by Melvyn I. Weiss, John J. Stoia, Jr., Andrew W. Hutton, and Jack L. Chestnut, Esqs.; the Defendants appeared by James F. Jorden, Roland Goss, Paul A. Fischer, and Timothy D. Kelly, Esqs.; Clark appeared by Charles M. Thompson and R. Stephen Griffis, Esqs.; Deese appeared by Benjamin E. Baker, Jr., Esq.; and Willis appeared by Richard Stratton, Esq.
For reasons which follow, we grant the Motions to Intervene, but only for the limited purpose of taking an appeal, and we grant the Motions for Final Approval of Settlement, for a Certification of the Class, and for an Award of Attorneys' Fees and Expenses.
By letter dated July 28, 2000, the Chairman of the Judicial Panel on Multidistrict Litigation advised this Court that a Motion to Transfer, pursuant to Title 28 U.S.C. § 1407, was pending before the Panel, but that, under Panel Rule 1.5, we were "free" to rule on any Motion pending before us, or we could wait until the Panel's ruling. The letter went on to suggest, as follows:
You may want to take into account whether the motion before you involves issues unique to your action, or, on the other hand, raises issues likely to arise in other actions in the transferee district should we order transfer.
At the commencement of the Hearing, we quoted the foregoing, and requested the advices of all counsel as to their views on whether the Motions before this Court should now be heard. Counsel related that they were involved in the referenced "actions in the transferee district," and they saw no reason to defer a ruling at this time. Our independent review satisfies us that the issues involved in the Motions now before this Court are unique to this action and, consequently, we see no purpose in delaying our ruling.
II. Factual and procedural Background
This class action was commenced on July 3, 1997, with the filing of a Complaint in the Superior Court of the State of California, for the County of Los Angeles. A Notice was filed on July 31, 1997, which removed the action to the United States District Court for the Central District of California and, thereafter, upon the Motion of the Defendants, the District Court transferred the action, by Order dated December 4, 1997, to this Court. On January 28, 1999, this Court entered an Order which allowed the Plaintiffs to file an Amended Class Action Complaint, which dismissed Life USA Insurance Company as a Defendant, and which added certain other causes of action. The Defendants filed their Answer to the Amended Complaint on April 8, 1999, and, thereafter, the parties engaged in extensive discovery.A. The Plaintiffs' Claims, and the Defendants' Defenses.
The Plaintiffs' First Amended Complaint alleges that the Defendants, either knowingly or recklessly, misrepresented: 1) that a single prepayment, or a fixed limited number and/or amount of premium payments, would cover all out-of-pocket premiums due on the policies sold by Defendants throughout the Plaintiffs' lives, or for a specified period; 2) the reasonableness of, or the failure to disclose the known or potential variability of, interest crediting rates, policy charges, cash values and/or benefits, as had been illustrated or projected to the Plaintiffs; 3) the cash value and or benefits to be realized or paid, based upon a fixed number and or amount of cash payments; 4) the ability to achieve a rate of return on premiums paid, in excess of guarantees specified in a policy form; 5) the nature, quality, suitability, or benefits of policies sold, including whether the policies were primarily life insurance; 6) the financial impact on the policyowner of agent commissions, and sales loads assessed to the policies; and, 7) the financial impact on the policyholder of surrendering, or using loans or withdrawals of cash values, or other accumulated values, from an existing policy issued either by the Defendants, or by another insurance company, to purchase the policies. In addition to these asserted misrepresentations, the Plaintiffs have alleged that the Defendants failed to adequately supervise, educate, and train, their nationwide sales force of agents. The Defendants have vigorously denied these allegations, and any other assertions of wrongdoing, and they have interposed numerous procedural and substantive defenses.
B. The Categories of Class Members.
The Plaintiffs' First Amended Complaint categorized the asserted class members into the following four groupings according to the nature of the claims being made: 1) Limited Premium Payment Claims — a grouping that is comprised of persons who alleged that they were led to believe that their policy would be "fully paid up," or that their obligation to pay further premiums would "vanish," after a certain point in time, or after a certain level of premium payments; 2) Policy Performance Claims — a category that is composed of persons who alleged that they were promised that their policy would perform in a certain way, such as that the policy would have a certain cash flow, or policy account value, after a certain number of premium payments, or that policy charges would be maintained at a certain level; 3) Retirement Investment Claims — a category that contains persons who alleged that they were led to believe that their insurance policy was essentially a retirement or investment plan, and who were subsequently disappointed with the performance of that policy; and 4) Replacement Claims — a category that consists of persons who alleged that they were misled with respect to the replacement of one insurance policy with another. As we later detail, this categorization of claims has significance in that the proposed settlement relief is tailored to respond to each of these groupings of claims, and they are also employed in the Claim Review Process that has been incorporated into the settlement plan.
C. The Parties' Settlement Negotiations.
The settlement of class action lawsuits can be an excruciatingly laborious task. Here, the parties entered settlement discussions early in the pretrial process, but an acceptable settlement proposal eluded them, causing the negotiations to be protracted. As early as April 1, 1998, the parties were jointly requesting the Court to defer the issuance of a formal Scheduling Order for at least three additional months, during which time they would continue with their informal discovery, and document production, and would thoroughly explore settlement. See, Minute Order of April 1, 1998 [Docket No. 33]. At a Status Conference, which was conducted on July 30, 1998, the parties again requested a deferral in the issuance of a formal Scheduling Order, in order that they could bring further focus to the settlement of this action. See, Order of July 3, 1998 [Docket No. 36].
The Record reflects that the Defendants informally produced some 240, 000 documents to the Plaintiffs and, apparently in recognition of the need to facilitate settlement discussions, the parties agreed to allow direct communications between their respective actuarial consultants. In addition to the document productions, the Defendants produced, at the Plaintiffs' request, "substantial additional demographic information for expert evaluation and consideration." Joint Affidavit of Melvyn I. Weiss and John J. Stoia, Jr., at p. 6, § 18. Following what appears to have been a forthright exchange of views on the liability and damages issues, counsel for the parties set about, in the months of 1999, to create a settlement mechanism which would fairly address the interests of all of the class members. As averred by class counsel, "[t]here were many times when it appeared that a settlement would not be consummated" but, by December of 1999, "the parties had resolved their differences and had agreed to all the material terms of the Settlement, other than the issue of attorneys' fees and expenses." Id. at p. 7, § 23. Without contradiction in this Record, class counsel attest that "[t]he parties engaged in weeks of arms-length negotiations on the remaining issue of fees and expenses," which "will be paid separately from the relief being distributed to the Class." Id. at p. 8, § 23.
Regularly thereafter, this Court conducted Status Conferences with counsel for the parties in order to monitor the progress of a settlement, and to assess that progress against the prospect of further delay in the advancement of this action to Trial. See, Stipulations and Orders of January 28, 1999, June 18, 1999, July 29, 1999, September 24, 1999, and October 28, 1999 [Docket Nos. 42, 46, 47, 48 and 49]. During the course of these Conferences, the Court was assured that a settlement was advancing, but that the actuarial computations, which were generated by the settlement proposals, were extremely complex and time-consuming. Ultimately, on March 20, 2000, this Court issued its Findings and Order, which preliminarily certified a class for settlement purposes, appointed lead counsel for the class, directed the issuance of notice to the class, and scheduled a Fairness Hearing for August 22, 2000. Consistent with the dimensions of this action, and the effort of the parties to thoroughly address all of the aspects of the accord they have reached, their Stipulation for Settlement totaled in excess of two hundred pages, exclusive of appendages.
D. The Implementation of the Proposed Settlement.
Consistent with this Court's Preliminary Approval Order, the Defendants implemented a means to provide proper notice of the terms of the proposed settlement to the members of the Class, established a procedure by which Class members could exclude themselves from the Class, or could object to the settlement, and created a process by which Class members could solicit advice and information from knowledgeable consultants, or from Class counsel. As related by the parties:
Allianz hired Rust Consulting ("Rust") as settlement administrator. With Rust's assistance, the class notice package was mailed, necessary remailings have been made, the publication notice has been published, separate toll free lines have been established and operated for class members and agents, and correspondence, election forms, objections and exclusion requests have been received from class members and processed.Memorandum of Defendants in Support of Final Approval, at p. 7.
The following three options were afforded Class members who had questions about the settlement proposal:
First, the toll-free phone bank maintained by Rust Consulting received thousands of calls seeking information, and the personnel answering those phones were specifically trained by Class Counsel and by counsel for Allianz to provide accurate and consistent information about the settlement. Counsel regularly monitored these calls to ensure that the Rust personnel were providing appropriate and responsive answers to callers. Second, Allianz maintained a toll-free phone line which Class Members could call with more detailed questions about their policies. Third, Class Counsel was available for consultations with Class Members at no charge, and the Rust phone personnel transferred many calls to Class Counsel for no cost confidential consultations on an individualized basis. This combination of sources of information provided all Class Members with freely available and adequate resources to assist them in understanding the proposed settlement, their rights under the proposed settlement and their options under the proposed settlement.Id.
According to the Record before us, "[m]ore than 252, 400 Notice Packages were sent by first class mail to Class Members," from May 11 through 18, 2000. Joint Affidavit of Melvyn I. Weiss and John J. Stoia, Jr.("Joint Affidavit"), at p. 12, § 36. Notices were remailed to over 1, 280 new addresses upon their return by the U.S. Postal Service. Id.
In addition to the individual Notice Packages, that were mailed to all of the Class Members, a Summary Notice was published, on May 30, 2000, in the national editions of The New York Times, and USA Today, and in the local editions of The Dallas Morning News, the Los Angeles Times, and theMinneapolis Star Tribune. Id. at § 38. The Summary Notice also appeared in The Wall Street Journal on May 31, 2000. In addition, the parties created the "Allianz/FULICO Class Action Information Center," which was funded by the Defendants, and was jointly managed by the Defendants, and the Plaintiffs' Lead Counsel. Id. at 39. As averred by Class Counsel:
The Allianz/FULICO Class Action Information Center also handles opt-out requests, Policy service questions and related administrative issues. Nationwide toll-free numbers were established for Class Member inquiries and a separate toll-free number was set up for hearing impaired Class Members. Translators for nearly every language were also available to speak to Class Members.
* * *
The Allianz/FULICO Class Action Information Center became operational on May 12, 2000 and will remain open at least through the time Claim Files are compiled. The Allianz/FULICO Class Action Information Center is open Monday through Friday, from 8:00 a.m. to 6:00 p.m. Central time, except legal holidays. The phone lines at the Allianz/FULICO Class Action Information Center were staffed by operators trained jointly by Plaintiffs' Counsel and Allianz before the Allianz/FULICO Class Action Information Center opened. The toll-free number was printed throughout the Notice, Question and Answer Brochures, publication notices, website notices and Election Forms. The Company also provided the number to its agents and instructed them to refer any Class Member inquiries to the Allianz/FULICO Class Action Information Center for questions about the Settlement. As of July 31, 2000 the trained operators handled over 12,800 telephone calls from Class Members.
Subsequent to the Hearing, Rust has informed the Court that, "[a]s of the close of business on August 22, 2000, the Center had answered over 13, 363 calls, including one call to the line for the hearing-impaired." Affidavit of Richard H. Redfern of August 25, 2000, at p. 1, § 3.
The Record reveals that Plaintiffs' Counsel have been onsite, at the Information Center, so as to continuously monitor incoming calls to ensure that accurate, and complete, information is provided to Class Members. Id. at § 41. "As of July 31, 2000, Plaintiffs' Counsel have spoken to over 3,300 Class Members and monitored over 2,000 calls," and have also responded to correspondence from Class Members. Id. at p. 14, § 42. The expense of this outreach program is projected to approximate $1.2 million. Id. at § 43.
Following the Hearing in this matter, Rust updated its earlier statistics, and advised that, "through the date of the Fairness Hearing, Plaintiff's Counsel has handled 4, 587 policyowner calls for assistance." Affidavit of Richard H. Redfern of August 25, 2000, at p. 2, § 4.
If approved, the settlement imposes a substantial and continuing obligation on Plaintiffs' Counsel to oversee the administration of the Claims Review Process ("CRP"); to monitor the Information Center as the CRP commences; to respond to calls from Class Members concerning the settlement, the CRP, and related issues; to be responsible for responding to any appeals that may be filed from the CRP; and to handle all other post-approval proceedings. Id. at §§ 45-46. The proposed settlement does not provide any additional compensation, to Plaintiffs' Counsel, for these significant, additional duties.
E. The Terms of the Proposed Settlement.
Under the proposed settlement, the Class Members will have access to two alternative forms of relief: the Contributed Insurance Benefit ("CIB"); and the CRP. According to the parties, and the Objectors have not proven to the contrary, this form of relief structure has been adopted in the settlement of other cases involving the same types of charges that the Plaintiffs have alleged, here, against the Defendants.
For those Class Members who choose the CIB approach, they will receive from 24 to 60 additional months of no-cost death benefits on the life of that insured Class Member based upon a percentage of the original face amount of his or her policy. "The CIB insurance coverage (death benefit) is 5% to 10% of the original amount of insurance," and "is a function of the original amount of life insurance under the Class Member's policy and the default insured's age as of the final Settlement date." Plaintiffs' Memorandum in Support, at p. 10. The CIB approach also makes provision for those who have predeceased the implementation date, and those who die after the Eligibility Date of April 19, 2000, but before the Implementation Date, and the settlement allows for the designation of alternate beneficiaries. Based upon the demographics of the Class, the CIB "has a value to the Class actuarially determined to provide $43.4 million." Id.
The Class Members do not need to return any forms in order to receive the CIB relief; they do not have to purchase anything from the Defendants, or to make any other financial commitment in order to receive the CIB; and the terms of the CIB are simple, and straightforward to apply. As characterized by the Defendants, and not meaningfully challenged by the Objectors, "[t]he provision of free insurance as the general policy relief is particularly appropriate in a case such as this, in which the Complaint alleges that class members received less insurance than they thought they were buying, or insurance which was more expensive than they thought it would be," since "[providing free insurance is the best way to try to meet the alleged expectations of class members when they purchased their policies." Memorandum of Defendants' in Support, at p. 9.
As an alternative to the CIB, every Class Member can participate in the CRP, which provides a cost-free, simplified process to resolve any complaints they may have relating to their purchase of an insurance policy form the Defendants. Upon the completion of a simple Claim Form by the Class Member, the Defendants must assemble the "Claim File," which includes information contained within their policy files, and any correspondence, and other materials, relating to the Claimant's policy. The Claimant's Representative, who "will be an experienced advocate, well-versed in life insurance, that will be selected and specially-trained by Plaintiffs' Lead Counsel on the Defendants' marketing programs, the policies, illustration practices, actuarial determinations and marketing techniques," and whose services will be provided to the Claimant at no-cost, will bring such other information, to the "Claim Review Team," which will consist of the Claimant's Representative, and the Company Representative.
Employing objective, predetermined criteria, each member of the Claim Review Team will score the Claimant's request for relief and, thereafter, will compare their scores and discuss the nature of the Claim, and the documents contained in the Claim File, in an attempt to reach an agreement on the extent of relief, if any, that should be provided. When assigning a score to each of the claims, the Claim Review Team may, as a matter of discretion, consider a range of factors, and considerations relating to the Defendants' alleged misconduct, including such matters as worksite marketing, illustrations generated by hand-held computers, and references to the "Private Pension Plan," the "Mortgage Acceleration Plan," and the "disappearing" or "vanishing" premium concept. If the Claim Review Team is unable to agree on a score, then the Claim file automatically proceeds to an independent Arbitrator, who is chosen by the Claimant's Representative, and who reviews the Claim File, and chooses either the score presented by the Claimant's Representative, or that of the Company's Representative.
The agreed-upon scoring criteria are as follows:
A score of "4" means: (a) Documentation exists supporting the substance of the Claim; (b) the Agent admits he or she made a Misrepresentation; (c) the Applicant received a sales illustration that was altered to delete disclosures relating to Rates and charges or premium payments; or (d) the Agent executed the Applicant's signature or any Transaction Document without first obtaining consent of the Applicant or Policyowner.
A score of "3" means Documentation supporting the substance of the Claim does not exist, and the Agent does not admit he or she made a Misrepresentation; but the information in the Claim File, considered as a whole, indicates by clear and convincing evidence that the Claim is valid.
A score of "2" means Documentation supporting the substance of the Claim does not exist, and the Agent does not admit he or she made a Misrepresentation; but:
the information in the Claim File, considered as a whole, supports the Claim; or
for a Replacement Claim, the Claim File indicates that a Replacement occurred and the Company does not demonstrate that the Replacement was in the Applicant's best interest at the time the Applicant applied for the Policy, based on information available to the Company at the time of the Replacement.
A score of "1" means the information in the Claim File, considered as a whole, does not clearly refute the Claim.
A score of "0" means the information in the Claim File, considered as a whole, clearly refutes the Claimant's Claim and establishes that the Claim is without substance or foundation.Stipulation, Exh. A, § II.C.
The successful Claimant will be awarded relief designed to fully compensate for the harm suffered, and every Claimant will be awarded relief so long as the Claim has not been clearly refuted. The awarded relief will be binding on all parties, and the Defendants agree to pay all of the costs of the CRP, including the costs of the Claimant's Representative, the expense of reviewing the Claims, the cost of any relief provided, and the expenses incurred in any arbitration, inclusive of the Arbitrator's fees and costs. As do the Defendants, the Plaintiffs underscore that the relief provided by the CRP is tailored to correspond, on an individualized basis, to the Defendants' alleged wrongdoing. The Defendants have agreed to initially fund the CRP with $10 million for cash, or cash-equivalent awards, but without any cap on the total amount of funds that could be awarded under the CRP. If the total amount of the awards is under $10 million, then the remaining funds will be distributed to the Claimants to whom awards had previously been made.
Lastly, the proposed settlement will pay Plaintiffs' Counsel a total of $6.6 million in attorneys' fees and costs. Plaintiffs' Counsel report, without contradiction, that they have expended over $340,000 in costs and expenses, and that they have spent over 11,000 hours of attorney and professional time, which has an approximate value of $3.2 million under a lodestar approach — that is, by multiplying the hours expended by the applicable hourly rate. In particular, Plaintiffs' counsel stress that the costs of their continued involvement, in the settlement process, by assisting Claimants in the CRP, or in generally advising them, will not be separately compensated, and they note that, in a past settlement of the same kind, they had estimated their post-settlement time and expenses as likely to approach $5 million when, in actuality, those fees and expenses.exceeded $22 million. See,Joint Affidavit, at p. 12, n. 9.
F. Objections to the Proposed Settlement.
If adjudged on the basis of the number of objections, or requests for exclusion from its coverage, the settlement proposal has been well-received. As of August 25, 2000, a total of 1,163 Class Members have been validated as requesting exclusion from the settlement, and objections have been filed, with the Court, by less than twenty policyowners. Affidavit of Richard Hi. Redfern of August 25, 2000, at p. 2, § 5. As Plaintiffs' Counsel underscore, since there are approximately 239,351 policies in the Class, the number of policyholders requesting exclusion is appreciably less than one percent of the Class, and the number advancing objections is minuscule. Generically, the objections can be grouped into several categories:
We note that, of these objections, one was based on religious grounds, one expressed no objection except a concern that the litigation might be wasting the Court's time, two voiced complaints about issues not involved in the settlement, and one objection — filed by a husband and wife — would be subsequently withdrawn upon the receipt of election forms for selecting either CIB or CRP relief.
By our computation, if the number of opt-outs is 1,758, as was tabulated at the time of the Hearing, or was 1,163, as represented after the close of the Hearing, then the percentage of Class Members, who were requesting exclusion from the Class, would be either 0.73% or 0.49% respectively, and the number of objectors would not exceed 0.01% of the Class.
1. A number of Objectors would prefer cash relief, paid immediately, as an option.
2. Several Objectors felt that CIB relief was insignificant, and that CRP was unworkable because of the time that had transpired since the allegedly unlawful acts, and the time that their claims would be reviewed.
3. Certain Objectors concluded that it was unfair to permit a Class Member, who should elect to pursue CRP relief, to potentially face a zero recovery if unable to prove his or her claims, and that the CRP approach was overly burdensome.
4. Objections were expressed that the total amount of the settlement could not be ascertained from the Notice documents.
5. Objections were also filed as to the amount of attorneys fees that were being proposed by the settlement.
6. Objections have also been voiced as to the allowance of a class action settlement, under the circumstances here, given the Supreme Court's holding in Amchem Prods. Inc. v. Windsor, 521 U.S. 591 (1997)
At the time of the Hearing in this matter, counsel for certain of the Objectors, who here seek intervention, were afforded an opportunity to further explicate these objections, and others, and counsel for the Defendants, and for the Class, have been afforded a full opportunity to respond both orally, and in writing.
Given this factual backdrop, we turn to the Motions pending before us.
III. Discussion
A. The Motions to Intervene.
While not entirely clear, since their written materials vary from their comments at the Hearing in this matter, it appears that the proposed Intervenors are requesting leave to intervene in order to preserve their right to appeal from this Court's Order, should they deem an appeal warranted. In this Circuit, however, those who seek to intervene in a class action are recognized as having an inherent right to appeal, whether intervention is allowed, or not. See, Croyden Associates v. Alleco, Inc., 969 F.2d 675, 680 (8th Cir. 1992) ("We express the thought that intervention to allow assertion of all objections to a class settlement, with respect to the settlement itself and adequacy 6f the class representation, represents a preferable method of resolving such differences."), cert. denied, 507 U.S. 908 (1993); Sanyo Mfg. Corp. v. Int'l Union Elec., 69 F.3d 541, 1995 WL 644955 *1 (Table Decision) (8th Cir., November 3, 1995) ("We agree with the unions that Laird lacks standing to appeal because he did not first move to intervene in the district court."); Buchet v. ITT Consumer Financial Corp., 845 F. Supp. 684, 690 (D. Minn. 1994) (recognizing that "intervention is a condition of appeal from the approval of a class action settlement"); White v. National Football League, 822 F. Supp. 1389, 1432 CD. Minn. 1993) (allowing objectors to intervene "solely to preserve their rights to appeal any judgments entered by the court.").
See, Anastasoff v. United States of America, ___ F.3d ___, 2000 WL 1182813 *6 (8th Cir., August 22, 2000), invalidating 8th Cir. Rule 28A(I), which authorizes the issuance of unpublished opinions as nonprecedential, and extending precedential weight to a prior, unpublished opinion.
In order to effectuate the prudential approach directed by our Court of Appeals, we will grant the Motions to Intervene, but solely for the purpose of allowing the Intervenors to take an appeal from any Judgment that we should subsequently enter. We find nothing to support a greater or more intrusive role by those seeking intervention. While we can concede, as do the opponents to intervention, that the proposed Intervenors have "an interest relating to the property or transaction which is the subject of the action," Rule 24(a), Federal Rules of Civil Procedure, we are not persuaded that the Movants are "so situated that the disposition of the action may as a practical matter impair or impede [their] ability to protect that interest." Id.
The opponents to intervention suggest that Deese's Motion to Intervene was untimely filed and, therefore, should be rejected out of course. We are satisfied that the Motion was not untimely filed, since it bears a docketing date, by our Clerk of Court, of July 18, 2000. Similarly, we reject the technical objections as to certain of the moving papers, that were filed by the proposed Intervenors, noting that the Motions did not comport with the applicable Rules of Civil Procedure. Our rejection should not be construed as condoning the proposed Intervenors' resort to a less than compliant approach to the filing of Motions in this District. Rather, it is a necessary result of our effort to effectuate our Court of Appeals' concern that, doing otherwise, could reek substantial judicial inefficiency by encouraging individualized collateral attacks on the same issues we here resolve. Were our analysis solely governed by the precepts of Rule 24, Federal Rules of Civil Procedure, we would be compelled to deny the Motions to Intervene on their merits.
Here, the objections of the proposed Intervenors have been fully explained to the Court and, if the objections were of appreciable consequence, the Movants could elect to opt-out of the Class and pursue their own personal interests, and objections, to a finality. The Movants do not suggest that the settlement would deny them an opportunity, as non-settlers, to subsequently advance their claims against the Defendants and, absent such a showing, we do not understand how their respective interests, in vindicating any wrongs that they believe were perpetrated against them, when they purchased insurance policies from the Defendant, could be impaired or impeded by the proposed settlement. See, Agretti v. ANR Freight Sys., 982 F.2d 242, 247 (7th Cir. 1992) ("[C]ourts have repeatedly held that a settlement which does not prevent the later assertion of a non-settling party's claims, although it may force a second lawsuit against the dismissed parties, does not cause plain legal prejudice to the non-settling party."); Hirshon v. Republic of Bolivia, 979 F. Supp. 908, 912 (D.D.C. 1997) ("The sole factor in determining whether * * * a non-settling party has standing to object to a settlement agreement is whether the agreement causes him plain legal prejudice."). More importantly, the Movants have not demonstrated any such impedance or impairment, and we are not empowered to imagine one, merely to allow full intervention.
Moreover, we are convinced that, at this late date, allowing intervention so as to permit the Movants to undertake discovery, and related pretrial pursuits, would substantially prejudice the interests of the Class. Rule 24(a) makes plain that Motions to Intervene must be timely. Here we can accept that the Movants would not have had a pressing interest to intervene until they were aware of the details of the proposed settlement, but our acceptance of that fact does not dispose of the timeliness issue. See, Buchet v. ITT Consumer Financial Corp., supra at 689 (allowing intervention on the "eve of the final [settlement] approval hearing" because intervenors had no reason to intervene until they received notice of the Amended Settlement Agreement). In Mille Lacs Band of Chippewa Indians v. Minnesota, 989 F.2d 994, 998 (8th Cir. 1993), the Court provided the following guidelines for determining the timeliness of a Motion to Intervene:
We are mindful of the suggestion, by certain of the Movants, that they did not have unfettered access to the discovery documents that undergird certain aspects of the settlement proposal. As best as we can tell, counsel for certain of.the Movants traveled to the offices of Class Counsel for a very brief visit, and then reviewed the available documents in a most cursory fashion. Counsel for one of the other Movants suggests that his efforts to advise his client, concerning the advisability of the proposed settlement, was thwarted by Class Counsel's dilatory response to his letter inquiries. We are not so persuaded. While we can understand counsel's reluctance to incur expense in traveling to a location where the documents were available for review, and then spending the requisite time to properly consider the documentary evidence, we find no showing here that counsel for the Movants were denied an opportunity to pursue such a document review, if that had been their intention.
Whether a motion to intervene is timely is determined by considering all the circumstances of the case. No ironclad rules govern this determination. In determining timeliness, factors that bear particular consideration are the reason for the proposed intervenor's delay in seeking intervention, how far the litigation has progressed before the motion to intervene is filed, and how much prejudice the delay in seeking intervention may cause to other parties if intervention is allowed.
See also, Jenkins by Jenkins v. State of Missouri, 78 F.3d 1270, 1273-74 (8th Cir. 1996).
As we have detailed, the parties to this action have expended substantial time, and resources, to reach an accord that they have presented for our review and, if warranted, our approval. Given this significant investment, allowance of a full-ranged intervention would be plainly prejudicial to the party's interests. See, Farmland Dairies v. Comm'r of the New York State Dept. of Agric., 847 F.2d 1038, 1044 (2nd Cir. 1988);City of Bloomington v. Westinghouse Electric Corp., 824 F.2d 531, 535 (7th Cir. 1987) ("[I]ntervention at this time would render worthless all of the parties' painstaking negotiations because negotiations would have to begin again and [the intervenor] would have to agree to any proposed consent decree."); Jones v. Caddo Parish School Bd., 735 F.2d 923, 935 (5th Cir. 1984); United States v. City of Chicago, 908 F.2d 197, 199 (7th Cir. 1990) ("Litigation will have no end if every time parties resolve amicably (or drop) a point of contention, someone else intervenes to keep the ball in the air."), cert. denied, 498 U.S. 1067 (1991); see also,DeBoer v. Mellon Mortgage Co., 64 F.3d 1171, 1176 (8th Cir. 1995), cert. denied, 517 U.S. 1156 (1996).
Lastly, we do not overlook the opponents' effort to distinguish the Court's holding in Croyden, as well as their ardent concern that the Movants' efforts to intervene are solely for a mercenary purpose. As the opponents urge, both Croyden, and the Eleventh Circuit Court of Appeals' decision in Guthrie v. Evans, 815 F.2d 626 (11th Cir. 1987) — upon which the Court, in Croyden, relied — involved proposed intervenors who did not have the right to opt-out of the class while, here, the Movants do. See, Croyden Associates v. Alleco, Inc., supra at 676 ("non-opt-out class"); Guthrie v. Evans, supra at 629 (recognizing that "opt-outs" were not available to class members in that action). Certainly, as. the opponents urge, the Movants have an additional avenue to preserve their claims against the Defendants — by opting out of the Class — that were unavailable to the movants in Crovden andGuthrie, but we do nothing here other than to allow the Movants to raise their objections to the proposed settlement, if any there should remain, to our Court of Appeals, rather than to commence other litigation to preserve those objections, or to collaterally attack the proposed settlement. of course, in denying their Motions to Intervene, the Movants would be afforded that same right of appeal. See, Marino v. Ortiz, 484 U.S. 301, 304 (1988) ("We think the better practice is for such a nonparty to seek intervention for purposes of appeal; denials of such motions are, of course, appealable.") In our view, Croyden does little more than alert Class Members, who may object to a proposed settlement, that they must seek to intervene, if they wish to preserve those objections on appeal.
The opponents' concern about the motivation of the Movants' counsel, in advancing the objections, and in seeking to intervene for appeal purposes, is more troubling. As characterized by the opponents, the Movants are represented by "professional objectors, " who are a pariah to the functionality of class action lawsuits, as they maraud proposed settlements — not to assess their merits on some principled basis — but in order to extort the parties, and particularly the settling defendants, into ransoming a settlement that could otherwise be undermined by.a time-consuming appeals process. The opponents' concern has been recognized in other jurisdictions. As the Court expressed, inShaw v. Toshiba America Information Systems, Inc., 91 F. Supp.2d 942, 973-74 (E.D. Tex. 2000)
While some of the objections were obviously "canned" objections filed by professional objectors who seek out class actions to simply extract a fee by lodging generic, unhelpful protests, other objections contained considerable merit with respect to this particular case.
Although it gives us pause that, as illustrative of the type of objection filed by the "professional objector," the Court identified one of the law firms who here represents a Movant, see, id. at 973 n. 18, we are not presented with a Record that demonstrates a pressing need for our preservation of the Court processes, as a result of class action marauders. Time will tell.
The opponents to intervention make much of the fact that certain of the Movants' attorneys have now, and in the past, solicited objections to proposed class settlements, through aggressive advertising campaigns, and that counsel for the Movants all practice in the same general geographic area. We are aware of no applicable prohibition on lawyer advertising, where the purpose of that promotion is to assist the public in properly understanding a settlement proposal. We take Movants' counsel at their word, as pro hoc vice officers of this Court, that their conduct here is wholly professional, and not parasitic. If our reliance has been misplaced, we have abundant recourse.
As we subsequently detail, in our considered view, the Movants have raised objections which inform that, in the parlance, they are "gnawing on a bone." This is not a hastily contrived settlement. Great expense, and careful thought, have led to its formulation by lawyers who have exceptional skill, and expertise, in such class action matters. While observers, who peer from outside the settlement process, can second-guess one detail, or another, the objections advanced here, by the Movants in particular, do not rise above the querulous. If, as the opponents fear, the Movants proceed, so as to euchre a tribute in exchange for a settlement, the Courts will not be powerless to act, and to act forcefully, so as to maintain the integrity of the judicial process, as well as the efficacy of the class action mechanism.
Accordingly, given the precedents of this Circuit, we grant the Motions to Intervene, but solely to allow the Intervenors to maintain an appeal, if that should be their choice. No other intervention would be appropriate.
Having allowed a limited intervention, we need not consider the Movants' arguments for permissive intervention, as a greater scope of intervention, under Rule 24(b), Federal Rules of Civil Procedure, is rejected for the reasons we have detailed under Rule 24(a)
B. The Motion for Certification of a Class.
In our Preliminary Approval Order of March 20, 2000, we certified the following Class for purposes of issuing a Notice of the proposed settlement, and of implementing the settlement proposal's outreach program:
Class to consist of all persons or entities who have, as of the Eligibility Date (as defined in the Settlement Agreement), or who had at the time of the Policy's termination (where termination was prior to the Eligibility Date), or who had at the time of the Policy's absolute assignment to an insurance company under Internal Revenue Code § 1035 (where assignment occurred prior to the Eligibility Date), an ownership interest in NTrust II, NTrust IV, NTrust Pref, Legend, UL 1500, UL 3000, or Interest Sensitive Life (a.k.a. "ISL") life insurance policies issued by Allianz or FULICO ("Policies") during the period January 1, 1984 through December 31, 1996 ("Class Period). "Policies" does not include: (a) annuities issued by the Defendants; (b) term life insurance issued by the Defendants; (c) an insurance policy canceled (with refund of premium paid, if any) in accordance with a state's "first look" or "right-to-examine" law or an insurance policy rescinded by Allianz or FULICO with a return of all premiums paid; and (d) any other whole life, universal life or other insurance policy issued by Defendants. The Class does not include the following persons or entities (unless and to the extent the persons or entities are Class Members by virtue of their ownership interest in another Policy) (a) who had, at the time of the insured's death, an ownership interest in the Policy where the insured died prior to the Eligibility Date while the Policy was in-force and a death benefit was paid or is payable; (b) who, while represented by counsel, signed a document that releases Allianz or FULICO ("Defendants") from any further claims concerning the Policy; (c) whose rights and claims respecting the Policy have been finally adjudicated in a court of law; (d) who are or were officers (vice president or above) or inhouse counsel of one or both of the Defendants, or the spouse or other immediate family member thereof; (e) persons and entities who are excluded from the Class pursuant to Section VII of the Settlement Agreement; or (f) any insurance company that has or had an ownership interest in the Policy pursuant to an absolute assignment effected as part of an Internal Revenue Code § 1035 exchange.
The pertinent Eligibility Date is April 19, 2000. Necessarily, we again consider the propriety of certifying the foregoing Class.
"A district court has a duty to assure that a class once certified continues to be certifiable under Fed.R.Civ.P. 23(a)." Petrovic v. Amoco Oil Co., 200 F.3d 1140, 1144 (8th Cir. 1999), citing Hervev v. City of Little Rock, 787 F.2d 1223, 1227 (8th Cir. 1986). We turn, therefore, to the prerequisites of Rule 23(a), which provides as follows:
One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is to numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims and defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.
See also, General Telephone Co. of Southwest v. Falcon, 457 U.S. 147, 156 (1982).
Of course, the Plaintiffs bear the burden of satisfying these prerequisites, see General Telephone Co. v. Falcon, supra at 161, and our analysis of whether that burden has been satisfied is attuned to the fact that the requirements of Rule 23(a) are intended to protect the named, and unnamed parties, as well as any unknown potential class members.Hervey v. City of Little Rock, supra at 1227.
As to the element of numerosity, there can be little dispute but that a class of over 230,000 members is sufficiently numerous to warrant a class action approach. See, e.g., Parkhill v. Minnesota Mutual Life Ins. Co., 188 F.R.D. 332, 337-38 (D. Minn. 1999) (finding class of 290,000 policyholders sufficiently numerous for Rule 23 purposes); In re Hartford Sales Practices Litigation, 192 F.R.D. 592, 602-03 (D. Minn. 1999) (finding an "extremely large" number of policyholders adequate for numerosity purposes). Undoubtedly, the large number of members in the Class before us would render joinder "impracticable." Therefore, we find the numerosity requirement has been satisfied.
"As a general rule, the commonality requirement imposes a very light burden on plaintiff seeking to certify a class and is easily satisfied," and "to satisfy the commonality requirement under Rule 23(a), a party need simply show that "the legal question linking the class members is substantially related to the resolution of the litigation.'" In re Hartford Sales Practices Litigation, supra at 603, quoting DeBoer v. Mellon Mortgage Co., supra at 1174. Stated otherwise, "[t]he interests of the various plaintiffs do not have to be identical to the interests of every class member; it is enough that they "share common objectives and legal or factual positions."' Petrovic v. Amoco Oil Co., supra at 1148, quoting 7A Charles Alan Wright, Arthur R. Miller, and Mary Kay Kane,Federal Practice and Procedure: Civil 2d § 1769 at 367 (2nd ed. 1986)
Here, the Plaintiffs' represent that "the focus of the litigation is [Defendants'] common course of conduct in developing and implementing standardized product performance assumptions to be disseminated through its nationwide sales force, and then manipulating interest crediting rates that applied companywide to all policyowners." Plaintiffs' Memorandum in Support, at p. 31-32. The Plaintiffs' First Amended Complaint identifies thirty-one issues of fact and law, or of mixed fact and law, which are common to the Class Members. See, First Amended Complaint [Docket No. 43] 140 at pp. 61-67. As have the Courts which have previously confronted this question, we find that these uniform issues are adequate to satisfy the commonality requirements of Rule 23(a). See, In re Prudential Sales Ins. Co. America Sales Litigation, 148 F.3d 283, 309-10 (3rd Cir. 1998), cert. denied, 525 U.S. 1114 (1999); In re Hartford Sales Practices Litigation, supra at 603; Parkhill v. Minnesota Mutual Life Ins. Co., supra at 338.
"Typicality under Rule 23(a)(3) means that there are "other members of the class who have the same or similar grievances as the plaintiff."Alpern v. Utilicorp United, Inc., 84 F.3d 1525, 1540 (8th Cir. 1996). "Factual variations in the individual claims will not normally preclude class certification if the claim arises from the same event or course of conduct as the class claims, and gives rise to the same legal or remedial theory." Id., citing Donaldson v. Pillsbury Co., 554 F.2d 825, 831 (8th Cir. 1977), cert. denied, 434 U.S. 856 (1977). As the Court observed inDeBoer v. Mellon Mortgage Co., supra at 1174, "[t]he burden of demonstrating typicality is fairly easily met so long as other class members have claims similar to the named plaintiff," and here that burden has been fully satisfied. While the policies that the Class Members held may not be entirely identical — as several different policy forms have been alleged — the theories underlying the Class claims involve a common nucleus of fact and law.
In addition, we find no inherent conflicts between the interests of the representative Plaintiffs, and of the Class Members. "In order to satisfy the adequacy requirements, the Plaintiffs must show "that (1) the representatives and their attorneys are able and willing to prosecute the action competently and vigorously, and (2) each representative's interests are sufficiently similar to those of the class that it is unlikely that their goals and viewpoints will diverge."' In re Hartford Sales Practices Litigation, supra at 604, quoting In re Potash Antitrust Litigation, 159 F.R.D. 682, 692 (D. Minn. 1995). No one has suggested that the named Plaintiffs, or their attorneys, would not vigorously promote the interests of the Class, although the Objectors raise some question, as to whether the named Plaintiffs can adequately represent claims, which arise from the alleged practices of the Defendants, to which they were not personally exposed. Unfortunately for this argument, the assertion is purely conclusory and, on this Record, we have no responsible basis to infer that any Class-wide claim is at odds with a claim held by the named Plaintiffs. Accordingly, we conclude that the Plaintiffs have borne their burden of satisfying the prerequisites of Rule 23(a), and we turn our analysis to the requirements of Rule 23 (b)(3), Federal Rules of Civil Procedure.
Under closely paralleling circumstances, the Court of Appeals for the Third Circuit recognized that the named plaintiffs, in that litigation, were adequate to represent the interests of those who, finitely, had factual claims which were distinct from theirs. As the Court reasoned:
As discussed, the crux of this class action is the allegation that Prudential engaged in a scheme to defraud policyholders by means of company-wide deceptive sales practices. The named parties, like the members of the class, would need to establish this scheme in order to succeed on any of the claims in the Second Amended Consolidated Complaint. Even those class members with "other" claims share in the common task of demonstrating the existence and implementation of this scheme. Consequently, we believe the proposed class satisfied the adequacy of representation requirement of Rule 23(a).In re Prudential Ins. Co. America Sales Litigation, 148 F.3d 283, 313 (3rd Cir. 1998), cert. denied, 525 U.S. 1114 (1999).
No one has offered any cogent reason to depart from the analysis, and holding, in In re Prudential.
Rule 23(b)(3) provides as follows:
An action may be maintained as a class action if the prerequisites of subdivision (a) are satisfied, and in addition:
* * *
(3) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include: (A) the interest of the members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) the difficulties likely to be encountered in the management of a class action.
In addressing the predominancy issue, we are mindful that two Courts within this District have denied class certification, on this precise question, which involved some of the same genre of claims that are involved here. See, In re Hartford Sales Practices Litigation, supra;Parkhill v. Minnesota Mut. Life Ins. Co., supra.
Both of those cases, however, considered the issue in a different context, as neither Court was confronted with a settlement proposal which, under Rule 23(e), Federal Rules of Civil Procedure, requires "the approval of the court." We do not raise this distinction to suggest that a different standard of review should, apply — for it does not — but to highlight the fact that the certification question, which was before those Courts, was hotly contested and, as a result, the Record presented by the respective parties was markedly different than that which confronts us here. Both Courts acknowledged that the issue of predominance was factdriven, and that no "bright-line" could govern its disposition. See, In re Hartford Sales Practices Litigation, supra at 604; Parkhill v. Minnesota Mut. Life Ins. Co., supra at 340. Illustrative of that fact is the extent to which the Court, in Parkhill, relied upon Affidavits which highlighted individualized factual determinations which fragmentized any commonality that would otherwise be presented by the class issues. See, Parkhill v. Minnesota Mut. Life Ins. Co., supra at 340-41. We have been presented with no such Affidavits, and the allegations of the First Amended Complaint, as we have previously detailed, reflect an alleged course of conduct, on the part of the Defendants, which has accentuated the uniformity of the Defendant's dealings with prospective insureds, and has minimized any individualized claims of fraud or misrepresentation. Accordingly, the Record we confront is distinctly different from that presented in Parkhill and, because the allegations of the pleadings, in Hartford, were not fully recited, we are unable to definitively address whether the Court, there, would have reached the same absence of predominance finding, if it were faced with the pleadings we are obliged to here consider.
When presented with the same mix of claims, as have been raised in this action, the Court of Appeals for the Third Circuit was persuaded that common issues predominated over individualized claims, and the Court affirmed the certification of a class, much larger than that involved here, for settlement purposes. In so holding, the Court reasoned as follows:
As the Supreme Court noted in Amchem, "[p]redominance is a test readily met in certain cases alleging consumer or securities fraud or violations of the antitrust laws * * * [e]ven mass tort cases arising from a common cause or disaster may, depending upon the circumstances, satisfy the predominance requirement." Amchem, ___ U.S. at ___ 117 S.Ct. at 2250 (citing Adv. Comm. Notes, 28 U.S.C. App., p. 697). This case, involving a common scheme to defraud millions of life insurance policy holders, falls within that category. The district court's opinion sets forth a litany of common issues which the class must demonstrate in order to prevail. See supra § IV.B.1 and n. 47-48. While individual questions may arise during the course of this litigation, we agree with the district court that the presence of individual questions does not per se rule out a finding of predominance. In particular, the presence of individual questions as to the reliance of each investor does not mean that the common questions of law and fact do not predominate." Eisenberg v. Gagnon, 766 F.2d 770, 786 (3rd Cir. 1985)In re Prudential Ins. Co. America Sales Litigation, supra at 314-15.
Given the similarity of allegations, as contained in the First Amended Complaint, with those addressed in In re Prudential, we conclude that, under these circumstances, the Plaintiffs have met the predominance requirement of Rule 23(b)(3). Necessarily, our finding is limited to the Record before us, and we draw no brightline demarcation which, generically, would be applicable, in future lawsuits, without regard to the specific content of the pertinent pleadings.
With respect to the other considerations enumerated in Rule 23(b)(3), we have been presented with no showing that the presentation of individualized claims, in separate proceedings, would be superior to the vehicle of a class action. In apparent recognition of that fact, the settlement proposal does allow a cost-free mechanism for the resolution of separate claims, which would allow them to be fully litigated, notwithstanding the relatively modest recoveries that those claims would likely generate. We think this provision speaks eloquently to the unlikelihood that any policyholder would endure the cost of litigating a claim, in his or her own Court action, with the unlikely prospect of any generous recovery.
We are not aware of any litigation, elsewhere, that would tend to undermine the certification being requested by the Class, and this District would appear to be a uniquely appropriate forum for the resolution of the policyowners' claims. The Defendants are either incorporated under Minnesota law and do business here, or they are wholly-owned subsidiaries of Minnesota corporations. The propriety of Minnesota, as the forum District, is amply corroborated by the independent decision of the United States District Court, for the Central District of California, which transferred this action to this venue.
With respect to the issue of manageability, we draw our guidance from the following observation of the Supreme Court, in Amchem Products, Inc. v. Windsor, 521 U.S. 591, 620 (1997)
Confronted with a request for settlement-only class certification, a district court need not inquire whether the case, if tried, would present intractable management problems, see Fed. Rule Civ. Proc. 23 (b)(3)(D), for the proposal is that there be no trial.
Here, the trial of the parties' respective claims would be challenging, indeed, but it would not be managerially insurmountable.
Lastly, we are aware of the concern, by certain of the Intervenors, that the Class, which is proposed for certification, runs afoul of the Supreme Court's pronouncements in Amchem Products, Inc. v. Windsor, supra, because the Class is not sufficiently "cohesive," and therefore, in their view, should be divided into subclasses. The same argument was raised, and rejected, in Petrovic v. Amoco Oil Co., supra at 1145-46, as follows:
Amchem, 521 U.S. at 601-02, 117 S.Ct. 2231, and Ortiz [v. Fibreboard Corp., 527 U.S. 815, 119 S.Ct. 2295] at 2305 [(1999)], each involved a situation in which the parties agreed upon a class definition and a settlement before formally initiating litigation, and then presented the district court with the complaint, proposed class, and proposed settlement. The difficulty inherent in such a situation is that the district court "lack[s] the opportunity, present when a case is litigated, to adjust the class, informed by the proceedings as they unfold." Amchem, 521 at 620, 117 S.Ct. 2231. In our case, however, the parties engaged in more than three years of extensive discovery and preparation for trial, and the class was certified under Fed.R.Civ.P. 23(b)(3) many months before the parties reached the settlement. Indeed, the settlement was reached on the eve of trial.
The difficulties associated with settlements like those in Amchem and Ortiz — the possibility of "collusion between class counsel and the defendant * * * [and] the need for additional protections when the settlement is not negotiated by a court designated class representative, Hanlon v. Chrysler Corporation, 150 F.3d 1011, 1026 (9th Cir. 1998) — are therefore not present here.
* * *
If the objectors mean to maintain that a conflict of interest requiring subdivision is created when some class members receive more than other class members in a settlement, we think that the argument is untenable. It seems to us that almost every settlement will involve different awards for various class members. Indeed, even if every class member were to receive an identical monetary award in settlement, the true compensation would still vary from member to member since risk tolerance varies from person to person (i.e., a more risk-averse class member would place a greater premium on the certainty of a settlement award than a less risk-averse class member would).
We also do not believe, as the objectors suggest, that the stark conflicts of interest that the Supreme Court discerned in Amchem and Ortiz are present here. In those cases the Court found that a conflict existed between class members who already had asbestos-related injuries (and who would want to maximize immediate payout) and class members who might develop asbestos-related injuries in the future (and who would want to maximize testing, protection from inflation, and future fund size). See Amchem, 521 U.S. at 626, 117 S.Ct. 2231, and Ortiz, 119 S.Ct. at 2319-20. We note that the injuries involved in those cases were extraordinarily various, both in terms of the harm sustained and the duration endured. Our case, on the other hand, involves a discrete and identified class that has suffered a harm the extent of which has largely been ascertained.
We think the very same may be said here and, considering the Record before us as a whole, we believe, as the Court did in In re Prudential Ins. Co. America Sales Litigation, supra at 317, quoting Amchem Products, Inc. v. Windsor, supra at 621, that the "proposed class has sufficient unity so that absent members can fairly be bound by decisions of class representatives."
In sum, having closely examined the factors that must be satisfied, even for settlement-only classes, we find and conclude that the proposed Class should be certified, and we grant the Plaintiff's Motion in that respect.
C. The Motions for Final Approval of Settlement, and for an Award of Attorneys' Fees.
To be approved, under Rule 23, a class action settlement agreement must be "fair, reasonable, and adequate." Petrovic v. Amoco Oil Co., supra at 1148, citing In re Flight Trans. Corp. Sec. Litig., 730 F.2d 1128, 1135 (8th Cir. 1984), cert. denied, 469 U.S. 1207 (1985); see also, DeBoer v. Mellon Mortg. Co., supra at 1176. "To determine whether a settlement satisfies these standards, the Court must consider: the merits of the plaintiff's case, weighed against the terms of the settlement; the defendant's financial condition; the complexity and expense of further litigation; and the amount of opposition to the settlement." In re Airline Ticket Comm'n Antitrust Litig., 953 F. Supp. 280, 282 (D. Minn. 1997), quoting Van Horn v. Trickey, 840 F.2d 604, 607 (8th Cir. 1988). of these, "[t]he most important consideration * * * is ""the strength of the case for plaintiffs on the merits, balanced against the amount offered in settlement."'" Petrovic v. Amoco Oil Co., supra at 1150, quoting Grunin v. Int'l House of Pancakes, 513 F.2d 114, 124 (8th Cir. 1975), cert. denied, 423 U.S. 864 (1975).
As is always the case, settlements bring a certainty to the resolution of disputes that a Trial cannot, until the Trial, and any subsequent appeals, are concluded. Fairly appraised, the Plaintiffs' claims are ineluctably subject to a number of procedural and substantive defenses which would be formidable, if not legally insurmountable, as to significant portions of the Class. As the Defendants emphasize, they do not admit liability, and they regard their defenses, based upon the applicable statutes of limitations, as well as the considerable substantive hurdles to a finding of liability, to be insuperable. No one, including the Intervenors, so much as intimates to the contrary. The expense of proving the Class Members' claims would be an extremely costly endeavor, and the ultimate resolution of the action, following a Trial and all possible appeals, could well extend into the distant future, particularly if Trial-error were found, such as to warrant a re-trial, and renewed appeal. Such temporal realities counsel a careful examination of any resolution that incurs less, unavoidable, delay. The delay in implementing this proposed settlement would be inappreciable.
We have no reason to believe that the Defendants are not financially able to bear any resultant Verdict — if one were forthcoming — but the Record has not been fully developed in that respect. We are certain, however, that the Defendants' have sufficient wherewithal to mount the form of arduous defense that their papers predict. The prospect of intractable litigation, when the amounts in controversy, as considered on an individual basis, are fairly modest, counsels an amicable resolution of this dispute.
The proposed settlement assures that all Class Members, if that should be their election, will receive a recovery under the CIB or, if they believe that they have compelling claims that warrant greater relief, they may resort to the CRP, where full compensatory damages are recoverable, without any cap to the totality of the Class claims. Under this mechanism, one Class Member does not compete with others such that one Members recovery from the Class pool will lessen the potential recovery by others. Of course, the CRP requires proof, and the probative weight of the proof will dramatically affect the recovery that could be claimed. If, as would appear to be likely, the passage of time, or a statute of limitation, would diminish the potential of a recovery, the Class Member is not without relief, as he or she need only apply under the CIB program. We think the settlement mechanism is both fair and workable, and it entails no further legal expense on the part of Class Members.
Of course, resolving this case, amicably, has not been without its detractors. As we have previously observed, however, the opposition that has been generated is both scant, and insubstantial. While the "amount of opposition to the settlement" is one factor to consider, the relative absence of objection is not dispositive. Nevertheless we may not ignore the near absence of objection, and the absence of substantial opposition to a proposed settlement may be considered as supporting approval of that accord. DeBoer v. Mellon, supra at 1178 ("The fact that only a handful of class members objected to the settlement similarly weighs in its favor."). More importantly, however, we find the opposition to the proposed settlement to be token, at best.
Some of the Movants, and Objectors, take exception to the amount of compensation that would be awarded under the CIB, or they would prefer cash payments, as opposed to additional insurance coverage for a designated period of time. As the Court observed, in In re Airline Ticket Comm'n Antitrust Litig., supra at 282:
A settlement sum is, in virtually every case, less than the claimed loss. A settlement is, necessarily, a compromise between plaintiffs, who did not win their case, and defendants, who did not lose theirs. These settlements, like all others, reflect each side's considered view of the risks of an adverse judgment and the value of buying peace. The Court finds the parties' views in this regard to be reasonable.
So do we. While at least one of the Movants takes exception to the prospect that a Class Member, who elects to proceed with the CRP, as opposed to accepting CIB relief, could ultimately receive no recovery — suggesting to that Movant, that the CIB relief should be a floor, and that Class Members should be allowed to proceed with the CRP process in addition to the CIB relief — such a proposal is wholly unrealistic. As the Defendants emphasize, without contra-diction from the Plaintiffs, many of the Class Members have claims which could be unprovable, due to the passage of substantial periods of time since the claim accrued, or because they would be barred, in all probability, by an applicable statute of In contrast to the Movant's charitable approach, few choices in life are without some consequence, and we doubt that any settlement could persist — at least with comparable benefits for all Class Members — if the Movant's approach were accepted. We exist in the real world, and not in a realm in which every decision is guaranteed a benefit.
In one objection, the concern is raised that, under one scenario, the CIB relief would only be awarded if the Class Member should die, thereby activating the insurance coverage. Under the life insurance at issue here, however, that is the precise benefit for which coverage was originally secured. Other Objectors have complained that the total value of the settlement package had not been disclosed in the settlement Notice. While true, we do not understand how that omission could prejudice any specific Class Member, who was at liberty to elect to remain in the Class, or to opt-out, and who could select the avenue of relief that best suited his or her needs, based upon the specific disclosures in the Notice, and the attached documentation. Whether the total value of the settlement is adequate, and whether the attorneys' fees being requested are consonant with that value, are questions far removed from the Class Members decision as to whether the proffered relief should meet his or her needs.
We can understand how certain Objectors would not comprehend the full liability exposure to which the Defendants are actuarially exposed — as a result of their extending additional coverage for determined periods of time, but that misapprehension does not diminish the real value of the settlement proposal. Here the Plaintiffs have demonstrated, as corroborated by.the experts of the Defendant, that the value of the settlement can be properly estimated at approximately $53.4 million dollars, with $43.4 million being attributable to the CIB relief, and a minimum of $10 million arising from the CRP program. We conclude that the settlement has real value, and that it provides a real benefit to those Class Members who elect to participate in its coverage. The settlement, in our judgment, is fair and adequate.
Lastly, in various pro forma objections, criticisms are directed at the adequacy, or clarity, of the Notice sent to Class Members. We find the Notice suitable in informing the Class of the essentials of the settlement proposal and, in particular, we note that any further information was available to the Class by virtue of a commendably comprehensive outreach program.
Notably, the Defendants have waived the limitations period for purposes of the CRP, a significant benefit to Class Members that, by every appearance, would not be otherwise available to them.
Several other technical objections have been filed, including that the CRP is burdensome, or that it should allow de novo review upon appeal to an Arbitrator. The alternative dispute mechanism has been well-considered, but it, like any other human endeavor, is not immune to criticism. Nonetheless, we find the amendments proposed by the Objectors provide no superiority in benefits, to the Class Members, than the approach that the parties have agreed-upon. The CRP providently incorporates a cost-free opportunity for a Class Member to litigate his or her claim, with the assistance of legal representation that is provided at the expense of the Defendants. Even if we were to assume, for these purposes, that a Class Member would have to carefully read the settlement proposal, so as to understand his or her right to pursue the CRP approach, we would not expect less of any litigant. Under the proposal here, if a Class Member has questions about any aspect of the settlement agreement, inclusive of the CRP, or about the advisability of following one avenue of relief as opposed to another, the Class Member has ready access to an ombudsman, who is appropriately trained, and who is available by telephone, at no cost to the Class Member, in order to address the Class Member's individually-tailored issues and concerns. If yet unsatisfied, the Class Member can directly inquire of Class Counsel — again without incurring any expense. We find this mode of outreach, as coupled with alternative dispute resolution, to be commendable and, in the context of other class settlements, to be enviable.
Nor do we find any superior benefit to be provided by allowing an Arbitrator, who is selected by Class Counsel, and funded by the Defendants, to have full authority to decide an issue, without regard to the positions taken by the respective parties. Arbitrations are frequently employed with "high-low" parameters, because the parties are desirous of some degree of certainty in the result to be reached. Since the Arbitrator's ultimate decision is final, we see nothing unacceptable in the procedures that the parties have formulated for the resolution of CRP disputes.
In sum, we have closely examined the concerns of the Objectors, and of the Intervenors, and we find them substantively wanting. We are obligated to consider a settlement in the context of contested litigation, whose result is uncertain — seldom, if ever, is a settlement the equivalent, as the Objectors seem to imply, of a "wish list" tendered by the victorious litigant. While the Movants understandably want more from the settlement, they offer no assurance that, under the circumstances presented, a greater recovery could be secured at Trial. Having settled, through Courtassisted mediation, far more complex class action matters than the one presented here, we find the settlement agreement consistent with an exercise of good business judgment by all concerned.
Finally, we must consider the propriety of the Plaintiffs' request for attorneys' fees and costs in the amount of $6.6 million. Given the liberal access, that Plaintiffs' Counsel has extended to the Class Members, and that allows the Class Members to consult, without cost with Class Counsel on any matter relevant to the implementation of this settlement, and given the effort that Class Counsel expended in securing the settlement agreement, that we now review, we are fully satisfied that the requested award of attorneys' fees is both reasonable, and deserving. Class Counsel have secured a favorable recovery for the Class Members, and they should be commensurately rewarded for that recovery. Our acceptance of the fee request is facilitated by the fact that the fee amount was independently negotiated by the settling parties, and comes from a source that does not impact upon the total settlement fund that is available to the Class. The Intervenors, and Objectors, do not so much as suggest, let alone establish, that the fee award has detracted, in any measurable way, from the relief the Class can expect from the settlement that we now approve.
While the requested attorneys' fees exceed the value of the attorneys' time, as computed by a lodestar approach, we find the request reasonable in view of the benefits afforded the Class by the settlement that Class Counsel have secured. Class Counsel funded the prosecution of the Plaintiffs' claims, and expended thousands of hours of legal effort, which could otherwise have been billed to litigation that competes with this one for counsels' time. As a percentage of the total value of the settlement secured, the amount of the requested fees is strikingly small, at least in the milieu of class action lawsuits. Realistically, counsel assumed responsibility for litigating claims that less dedicated attorneys would have ignored, or abandoned, and the fees and costs being requested are, in all things, reasonable. We are also impressed by the fact that Class counsel assume the risk of being obligated, under the Settlement Agreement, to provide legal services, without recompense, for as long as they are needed, in the settlement process, by the Class.
Therefore, given the entirety of the Record before us, we grant the Motion to Approve the Settlement, and we award the attorneys' fees, and costs, that have been requested by the Class.
NOW, THEREFORE, It is —
ORDERED:
1. That the Motions to Intervene of Leo E. Clark [Docket No. 171], Susan D. Deese [Docket No. 240], and John P. Willis, III [Docket No. 251], are GRANTED, but solely for the purpose of instituting an appeal from the Orders of this Court, which resolve the Class Settlement issues, and any Judgment entered thereon.
2. That the Motions for Final Approval of Settlement, for Certification of the Class, and for an Award of Attorneys' Fees are GRANTED, and Plaintiffs' are awarded attorneys' fees and costs in the amount of $6.6 million.
2. That the Court will separately enter an Order Approving Class Action Settlement, which will address, and resolve, any remaining ministerial issues.
3. That Final Judgment shall be entered, consistent with our disposition of this action.