Court: District Court, D. New Jersey; February 14, 2005; Federal District Court
Amended Opinion by District Judge Linares addresses the approval of a Proposed Settlement from a class action lawsuit against MassMutual. The document outlines the structure of the opinion, including the introduction, findings of fact, and conclusions of law. Key sections include:
1. **Background**: This includes materials considered by the Court, the history of litigation against MassMutual, and the allegations by plaintiffs. It details the parties involved, their counsel, the settlement terms, the preliminary approval order, and the fairness hearing.
2. **Settlement Agreement**: Class members with permanent policies may receive either general policy relief or claim review relief, while those with term life/disability policies can submit claims. The settlement includes a release and assesses the value of the relief provided.
3. **Jurisdiction**: The opinion confirms both subject-matter and personal jurisdiction over the case.
4. **Notice and Class Certification**: The document discusses the adequacy of notice to class members and validates class certification based on criteria such as numerosity, commonality, typicality, adequacy of representation, and superiority under Federal Rules of Civil Procedure 23.
5. **Fairness of the Settlement**: Factors considered include the complexity and expense of litigation, class reaction, discovery progress, risks associated with liability and damages, defendants’ ability to withstand higher judgments, and the overall reasonableness of the settlement.
6. **Objections**: It lists objections raised against the settlement terms, including concerns about the general policy relief, claim review process, and scope of the release, as well as the lack of an expert valuation report.
7. **Attorneys’ Fees and Expenses**: The opinion outlines the method for determining attorney fees, applying both percentage-of-recovery and lodestar recovery methods. It also discusses the reimbursement of expenses and incentive awards for the named plaintiffs.
The Court concludes that the Proposed Settlement is fair, reasonable, and adequate, approving the settlement and granting the applications for attorneys' fees, expenses, and partial incentive awards for representative plaintiffs, while dismissing the Class Action Complaint with prejudice.
The document outlines the components of the settlement case against Massachusetts Mutual Life Insurance Company (MassMutual), including briefs, affidavits, written objections from Class Members, and records from the Fairness Hearing held on November 22, 2004. It details the history of litigation against MassMutual over nine years, highlighting several putative class action cases across various states, including notable cases such as Varacallo, Karges, Gass, Russo, O’Brien, and Wofford. Class certification was granted in Varacallo and Karges, while other cases faced significant legal hurdles, including motions to dismiss and extensive discovery efforts that involved the production of over 800,000 pages of documents and more than 25 depositions. The Plaintiffs, representing a class of individuals, initiated their Class Action Complaint on June 10, 2004, against multiple subsidiaries of MassMutual, alleging misconduct affecting similarly situated individuals.
The Complaint is filed on behalf of a class of individuals or entities (the “Class” or “Class Members”) who owned specific insurance policies issued by MassMutual between January 1, 1983, and December 31, 2003. These policies include Permanent Policies (whole life, universal life, variable universal life, and variable life), Disability Income Policies with Delayed Coverage Claims, and Term Life Policies with Delayed Coverage and/or Juvenile Smoker Claims, with certain exceptions noted in the Settlement Agreement. The Class definition, including exclusions, is detailed in the Settlement Agreement and the Court’s Final Order.
The Complaint alleges ten causes of action, including violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), breach of contract, common law fraud, fraudulent inducement, breach of fiduciary duty, negligence, negligent misrepresentation, unjust enrichment, imposition of a constructive trust, and reformation. Plaintiffs seek compensatory, statutory, and punitive damages, as well as attorneys’ fees, prejudgment interest, rescission, injunctive relief, reformation, and other equitable remedies.
Specific allegations against MassMutual include misleading policyholders about "vanishing premiums," misrepresentation of non-guaranteed values in Permanent Policies, systematic "churning" to sell replacement policies, charging premiums for non-existent coverage, misrepresenting permanent life insurance products as investment plans, and pricing juvenile policies based on smoker rates despite the insureds being non-smoking minors.
While MassMutual has agreed to settle the claims, it denies any wrongdoing and views the settlement as beneficial to policyholders and a way to avoid the costs and uncertainties of ongoing litigation. The Class Representatives include Paul Varacallo, a New Jersey resident with multiple life insurance policies from MassMutual, and Steven E. Feldman, a California resident.
Feldman holds a Graded Premium Life-20 insurance policy with a separate PUA rider for his mother, June Feldman. The plaintiffs include K. Werner Gass from Ohio, Jeremiah B. Walsh from New Jersey, William A. Karges, Jr. and Jeffrey M. Weiner (as Trustee of Karges Irrevocable Trusts I and II) from California, and Donald A. Wofford from California. Gass and Walsh own Whole Life policies, Karges owns both a Survivorship Whole Life policy and a Modified Premium Whole Life policy, and Wofford has a Whole Life policy insuring his infant son. Class Counsel represents the plaintiffs and includes several law firms experienced in insurance sales practices cases, with notable past settlements and legal precedents established in cases like In re The Prudential Insurance Company of America Sales Practices Litigation. The defendants are Massachusetts Mutual Life Insurance Company (which is the surviving entity from mergers with Connecticut Mutual Life Insurance Company and C.M. Life Insurance Company) and MML Bay State Life Insurance Company, a subsidiary of Massachusetts Mutual. The defendants are represented by Edwards, Angel, LLP.
The firm has significant experience in defending complex and class action litigation. The Settlement Class Action originated from discussions among Class Counsel, representing Plaintiffs in multiple cases, regarding the settlement of ongoing actions against MassMutual. MassMutual insisted that any settlement must resolve all claims by policyholders nationwide and preferred a global negotiation rather than piecemeal settlements. The settlement terms needed to be comparable to other nationwide class settlements previously approved by courts. Initial negotiations were challenging but continued through various communication methods, aided by consultations with actuarial and financial experts. MassMutual provided Class Counsel with extensive documentation and Class Counsel interviewed former ConnMutual employees to inform the settlement terms. Class Counsel, drawing from experience with other insurance cases, proposed utilizing similar structural models for the MassMutual settlement. However, MassMutual sought to incorporate favorable terms from other settlements it had reviewed. After approximately twelve months of negotiations, an agreement was reached that Class Counsel deemed very favorable to Class Members, addressing all sales practices claims against MassMutual nationwide. The parties decided to file a new action in federal court in New Jersey, chosen for its successful precedent in similar cases. The federal Complaint was filed around June 10, 2004, with a request for preliminary approval of the Proposed Settlement submitted shortly thereafter. The Class includes individuals who owned MassMutual or Conn Mutual permanent life insurance policies from January 1, 1983, to December 31, 2003, affected by various deceptive practices, as well as those who purchased term or disability insurance policies during the same period and suffered damages from Delayed Coverage Schemes.
All individuals who purchased a life insurance policy from MassMutual or Conn Mutual between January 1, 1983, and December 31, 2003, and were affected by the Juvenile Policy Smoker Rate Schemes are included in the Class. The Final Order clarifies that Class Members must have had an ownership interest in a policy during the Class Period, either at the Eligibility Date or at the time of the policy’s termination or assignment under Internal Revenue Code 1035. Exclusions from the Class include:
1. Individuals with policies terminated before the Eligibility Date due to the insured's death where a death benefit is paid.
2. Policies issued but not accepted or returned under the free look provision.
3. Rescinded policies with returned premiums due to misrepresentation.
4. Individuals who signed a release of claims against MassMutual while represented by counsel.
5. Individuals with claims already adjudicated in court.
6. Members of MassMutual’s Board of Directors or officers during the Class Period.
7. Individuals who validly elected exclusion from the Class.
8. Insurance companies with ownership interest from an absolute assignment under Internal Revenue Code 1035.
9. Owners of Disability Income Policies, except for those with a Delayed Coverage Claim.
10. Owners of Term Life Policies, except for those with a Delayed Coverage Claim or a Juvenile Smoker Claim.
The Court issued a Preliminary Approval Order on June 24, 2004, certifying the putative class for settlement under Federal Rules of Civil Procedure 23(a), 23(b)(2), and (b)(3). This Order mandated notice to potential Class Members, scheduled a Fairness Hearing for November 22, 2004, allowed for exclusions or objections to the settlement, and barred Class Members from pursuing related litigation unless they opted out. Prior to the Fairness Hearing, both parties submitted extensive documents, including declarations from Class Counsel and an actuarial expert.
Defendants presented declarations from various professionals, including representatives from actuarial, communications, consulting, and legal firms, to support their position in the case. Following these submissions, the parties filed briefs addressing objections from Class Members regarding the Proposed Settlement. A Fairness Hearing was held on November 22, 2004, where counsel for both the Class and Defendants advocated for class certification, Settlement Agreement approval, and Class Counsel’s fee requests. The Court also listened to arguments from nine lawyers representing 26 objectors and five pro se objectors, with less than 100 written objections filed, representing approximately 0.003% of the policies involved. As of the hearing, 2,204 Class policyholders opted out, about 0.06% of the covered policies.
The Proposed Settlement pertains to MassMutual policies issued from January 1, 1983, to December 31, 2003, with certain exclusions. Class Members can choose between two forms of monetary relief: Claim Review Process Relief (CRP) and General Policy Relief (GPR). Claims for term or disability policyholders are restricted, allowing only specific claims related to Delayed Coverage and Juvenile Smoker allegations. MassMutual will also offer prospective relief for these claims. Class Members with Permanent Policies automatically receive General Policy Relief, which includes a Settlement Death Benefit (SDB) that provides additional payment upon the insured's death, based on the insured's age and policy amount, without requiring any action from them. Class Members can opt for Claim Review Relief instead, allowing them to submit various claims to receive monetary relief evaluated by a neutral Claim Evaluator.
Class Members with sales practices or administrative claims outside defined categories will enter the Alternative Dispute Resolution (ADR) process. Those holding Term Life and/or Disability Income Policies can submit Delayed Coverage Claims or Juvenile Smoker Claims exclusively through the Claim Review Process (CRP). MassMutual will provide written disclosures to clarify Delayed Coverage issues and will alter dividend and insurance treatment for juvenile policies once the insured reaches adulthood.
The CRP aims to address claims from Class Members alleging misrepresentation by MassMutual. An independent Claim Evaluator, approved by both Plaintiffs’ counsel and the Court, will assess claims based on submitted materials, including those from MassMutual and sales agents. Relief may be awarded even without proof of damage or misrepresentation, utilizing a scoring system from “0” to “4.” Claims scoring “4” receive full monetary relief according to negotiated schedules, while scores of “3” and “2” receive 65% and 45% of that amount, respectively. A score of “1” results in an alternative relief form, while a score of “0” yields no relief.
For Delayed Coverage Claims, the Claim Evaluator will validate claims if evidence shows premium payments during non-coverage periods, with valid claims receiving either policy credits or cash payments for terminated policies. For Juvenile Smoker Claims, claims will not be validated if the claimant identified the insured as a smoker or if MassMutual provides evidence that the insured was treated as a non-smoker. Valid claims will also receive either policy credits or cash payments.
The Settlement Agreement includes a release that generally prohibits Class Members from pursuing other claims against MassMutual related to this case, with specific exclusions detailed in the Agreement's Section X and included in the Notice of Class Action.
The Proposed Settlement provides substantial value to Class Members, estimated at no less than $698.7 million based on an evaluation by actuarial expert Terry M. Long. This valuation excludes prospective relief related to the Juvenile Smoker and Delayed Coverage Claims and other administrative costs. Including the payment of $58.2 million in attorneys’ fees covered by MassMutual, the total value to the Class may exceed $750 million. Participation in the Claim Review Process (CRP) incurs no costs for Class Members, as MassMutual covers all expenses, including those for the Claim Evaluator and a separate Alternative Dispute Resolution (ADR) process. MassMutual is obligated to pay between $130 million and $165 million in Claim Review Relief, potentially adjustable to $180 million. If awarded claims total less than the guaranteed amount, higher-scoring claimants will receive pro rata increases. ADR awards are uncapped. The Guaranteed Purchase Option (GPR) is a Supplemental Death Benefit estimated to be worth at least $568.7 million, requiring no paperwork or costs from Class Members.
The Court has federal subject-matter jurisdiction over claims against MassMutual under 18 U.S.C. § 1964(c) and 28 U.S.C. § 1331 due to allegations of RICO violations. This jurisdiction extends to supplemental jurisdiction over state law claims under 28 U.S.C. § 1367(a), as they arise from the same set of facts concerning alleged unlawful sales practices. Additionally, diversity jurisdiction exists under 28 U.S.C. § 1332, as named Plaintiffs and Defendants are citizens of different states, and the amount in controversy exceeds $75,000 for each Plaintiff. The Court confirms it has subject-matter jurisdiction to approve the Proposed Settlement, certify the Class, and dismiss the Complaint with prejudice.
The Court establishes personal jurisdiction over both Plaintiffs and Class Members from New Jersey due to their minimum contacts with the forum. It also asserts jurisdiction over out-of-state Class Members, citing that comprehensive notice provided to them, along with the opportunity to object or opt out, fulfills due process requirements under Rule 23(b)(3). Those Class Members who did not timely request exclusion by the October 24, 2004 deadline are subject to the Court's jurisdiction.
The Court's Preliminary Approval Order confirms that the Class Notice Packages and their distribution methods constitute "the best practicable notice," effectively informing Class Members about the class action, proposed settlement terms, and their rights, including the ability to object or exclude themselves. The notices were deemed clear, understandable, and compliant with applicable legal standards, including Fed. R. Civ. P. 23(c) and the Due Process Clause.
The Court notes that the combined notice must meet the requirements of both Rule 23(c)(2) and Rule 23(e), emphasizing that the notice for Rule 23(b)(3) classes must be the best practicable, including individual notice when possible. The notice must clearly articulate the nature of the action, class definition, claims, and the process for exclusion while also informing Class Members of the binding nature of judgments on them. The Court acknowledges that Rule 23(c)(2) imposes stricter notice requirements than Rule 23(e).
Rule 23(c)(2) has more stringent requirements than both Rule 23(e) and the due process clause regarding notice of proposed settlements. Under Rule 23(e), class members must be informed about the nature of the litigation, general terms of the settlement, availability of complete information in court files, and their right to appear at the Fairness Hearing. The notice must be reasonably calculated to inform interested parties of the settlement and allow them to present objections. Approximately 3 million detailed Class Notice Packages were sent via first-class mail to class members, a method deemed "ideal" by other courts. No objections were raised against this notification method, which has been described as extraordinary. The Class Notice Packages included essential information such as the case caption, class member definitions, counsel identification, settlement terms, rights to opt out or object, Fairness Hearing details, and contact information for further inquiries. The notices were crafted in clear language, ensuring comprehensibility for class members, and mirrored an earlier approval by the Third Circuit, which recognized that providing individual notice to each class member is unprecedented in class actions.
The Notice Administrator executed a comprehensive publication strategy for the Summary Settlement Notice, disseminating it in major nationwide newspapers and magazines from August 30 to September 6, 2004. This effort, supported by a media research firm, targeted MassMutual Class Members, ensuring effective outreach. The Summary Notice appeared in prominent publications such as Parade Magazine, USA Weekend, People, Time, Newsweek, Fortune, Business Week, the Wall Street Journal, and the New York Times, achieving a total combined circulation of 76,114,970 and reaching approximately 223,427,175 readers. It is estimated that 92.48 percent of the Class was reached, with an average exposure frequency of 3.09 times, which the Court deemed adequate.
The Summary Notice included critical information: an overview of the Action, Class definition, terms of the Proposed Settlement, opt-out and objection deadlines, Fairness Hearing date, contact details for further inquiries, and details on Class Counsel's fees and expenses. Additionally, a Call Center in Minneapolis established three toll-free numbers for policyholders, the hearing impaired, and MassMutual agents, handling nearly 80,000 calls since its opening on August 23, 2004.
Despite objections regarding the notice's timeliness, the Court found that most Class Members received their Notices with ample time—45 to 60 days prior to deadlines and approximately three months before the Fairness Hearing—to consider their options and seek further information if needed.
Notice mailed even one month prior to deadlines has been deemed timely, as illustrated in cases like Torrisi v. Tucson Elec. Power Co. and Marshall v. Holiday Magic, Inc. Despite some Class Members not receiving the Class Notice Package, a Summary Notice reached approximately 92.48% of the Class, appearing an average of 3.09 times. Rule 23 mandates the “best possible notice” rather than perfect notice, leading the Court to reject various objections regarding notice adequacy.
The Class Notice Packages effectively informed Class Members about the litigation, Settlement Agreement terms, and other requirements. The Court approved the Notices based on established models from prior cases. Class Members had the option to exclude themselves from the Class to pursue individual litigation. The Notices were intended to summarize the litigation and settlement without excessive detail.
Objections claiming insufficient information about the Claim Review Process were dismissed, as Class Members could obtain additional information through various means. Concerns regarding slight discrepancies in the Class definition in the Notices compared to the Preliminary Approval Order were also overruled, as the Notices contained the correct definition aligned with the Proposed Settlement Agreement. After reviewing the notice materials and considering Class Members' objections, the Court concluded that the notice dissemination constituted the best practicable effort to inform Class Members about the action's pendency, the Proposed Settlement terms, and their rights under it.
Individuals within the Class have the right to exclude themselves from the Proposed Settlement, object to any aspect of it—including the final certification of the settlement class, its fairness, and the adequacy of representation by Plaintiffs and Class Counsel—and to appear at the Fairness Hearing, either personally or through hired counsel, provided they do not exclude themselves. The Orders and Judgment in this action will be binding for all who do not request exclusion. Notice provided to all entitled parties was deemed reasonable, sufficient, and compliant with the Federal Rules of Civil Procedure and the Due Process Clause, overruling any objections regarding the Notice. The Court has preliminarily certified the Class for settlement purposes under Rule 23, acknowledging the increasing use of class actions for cases involving policyholders suing insurance companies for misrepresentation. For class certification, the Court must ensure compliance with Rule 23's requirements, including numerosity, commonality, typicality, and adequacy of representation, as well as the superiority and predominance standards under Rule 23(b)(3). The Court's analysis of certification assumes the case would proceed to trial, maintaining adherence to the ordinary requirements of Rule 23.
Settlement class certification in this Circuit requires that the case would have been triable in class form, as established in Georgine v. Amchem Products, Inc. Two courts in New Jersey and California have certified class actions related to the same matter, specifically Varacallo and Karges. An objection was raised regarding res judicata issues stemming from federal court decisions that previously denied class certification, as noted in Wolfson's objection. However, these prior cases did not address settlement class certification and involved different allegations concerning sales tactics. Denials of class certification are typically without prejudice, allowing for the possibility of re-filing a new certification motion. The Court is mandated to outline its findings of fact to confirm compliance with Rule 23 requisites, favoring class certification in borderline cases to serve the interests of justice.
For numerosity, Rule 23(a)(1) indicates that a class must be so numerous that joining all members is impracticable, which is satisfied here with nearly 3,000,000 Class Members. Common sense suggests that joinder is indeed impracticable. The commonality and predominance requirements under Rule 23 are typically assessed together in class actions, reinforcing the appropriateness of class certification in this instance.
The excerpt outlines the commonality requirement for class action certification under Rule 23, emphasizing that it is satisfied if named plaintiffs share at least one question of law or fact with the prospective class. The Third Circuit has upheld this interpretation, indicating that the predominance requirement in Rule 23(b)(3) incorporates the commonality requirement from Rule 23(a). The document lists various common questions relevant to the class action against MassMutual and Conn Mutual, including allegations of uniform deceptive practices, misrepresentation of life insurance policy financing and values, increased economic risk to policyholders, and the use of flawed sales materials. Specific inquiries include whether the companies misled clients about dividend scales and interest rates, improperly completed policy applications, and failed to adequately train their agents. These points collectively demonstrate a significant overlap in legal and factual issues among the class members, supporting the case for class action certification.
Key points include the investigation into whether MassMutual and Conn Mutual encouraged deceptive practices among their sales force, failed to maintain adequate internal controls, and neglected reports of such practices. It also examines whether they mischaracterized life insurance product suitability, delayed coverage effective dates, improperly adjusted dividends and premiums based on inaccurate mortality tables, and devised a scheme to defraud non-smokers. The excerpt addresses the criteria for class certification under Rule 23(b)(3), emphasizing that common questions must predominate over individual issues. The court's evaluation of predominance involves assessing whether class resolution efficiencies outweigh individual adjudication issues. Precedent indicates that even a few common issues can satisfy predominance, particularly in cases of similar misrepresentations or conduct. However, predominance has not been met in cases requiring individualized proof of highly specific facts. Numerous courts have found predominance in nationwide insurance sales practice settlements, and potential choice of law issues do not negate the presence of common issues necessary for class certification.
At the certification stage, the court assesses which state law is likely to apply, as established in prior cases. It clarifies that since this case is not for litigation certification, variations in state laws do not impede predominance, as noted in Prudential II. The Third Circuit emphasized that the existence of differences between state laws does not hinder the certification of a nationwide settlement class, particularly when a common alleged scheme of deceptive insurance sales practices affects all policyholders uniformly.
The court finds that common factual and legal issues predominate over individual member concerns. Additionally, Rule 23(a)(3) requires claims of representative parties to be typical of the class, meaning claims must be fairly encompassed by those of named plaintiffs. Typicality exists when the legal theories are similar or when claims arise from the same conduct by the defendant, even if there are factual differences.
Objections regarding the typicality of claims related to Claim Review Relief versus General Policy Relief are dismissed, as the complaint presents common claims for all class members. Concerns about the class being too sprawling or uncohesive, particularly regarding delayed coverage and juvenile smoker claims, are also rejected. The court agrees with the Third Circuit's perspective in Prudential that despite different injuries, a common wrong provides a sufficient foundation for typicality.
Plaintiffs argue that Prudential's approval encompasses a wider group, including victims of various improper sales practices. This assertion is bolstered by a Third Circuit ruling indicating that typicality and commonality do not necessitate identical claims among class members, as established in *In re Warfarin Sodium Antitrust Litig.* and *Baby Neal for Kanter v. Casey*. Despite some variations in the alleged improper sales practices, the Court acknowledges that the Class Representatives include individuals asserting all types of misconduct, thereby satisfying the typicality requirement under Rule 23(a)(3).
Regarding the adequacy of representation under Rule 23(a)(4), two primary considerations are highlighted: the qualifications and experience of the plaintiff's attorney, and the absence of conflicting interests between the plaintiff and the class. The Court finds that Class Counsel possesses substantial experience in class actions and insurance sales practices, demonstrating diligent representation in prior state court cases. Additionally, the named Plaintiffs are deemed suitable representatives, with no conflicting interests and a commitment to advocate for the Class.
Objectors Gambello, Deese, Basil, and Costello/Robertshaw claim conflicts due to attorney fees and incentive awards. However, this assertion is refuted by evidence showing that discussions about fees only began after all significant settlement terms were finalized, approximately one year into negotiations. Given the lengthy litigation period and the contingency fee arrangement, the Court concludes that the size of the fees did not compromise the ability of Class Counsel or the Class Representatives to secure adequate relief for the Class.
Lastly, the Court emphasizes that Rule 23(b)(3) requires a class action to be the superior method for the fair and efficient adjudication of the controversy, reinforcing the appropriateness of proceeding as a class action in this case.
The Rule outlines four non-exclusive factors for determining the superiority of a class action: 1) individual members' interest in controlling their own litigation, 2) the extent of related litigation initiated by class members, 3) the desirability of consolidating claims in one forum, and 4) potential management difficulties in a class action. In this case, most Class Members incurred relatively small financial losses, making individual prosecution unlikely, as evidenced by only eight pending lawsuits against MassMutual nationwide. Individual Class Members would likely lack the resources to litigate successfully on their own.
In settlement contexts, the concentration of claims in one forum is desirable and relevant, particularly since the New Jersey case involving Plaintiff Paul Varacallo was nearing trial and the district had handled similar nationwide insurance settlements. Class adjudication would save time, effort, and expense while promoting uniform decisions. The experience of objector Ms. Timmick, who faced significant challenges in resolving her claims against MassMutual and incurred substantial litigation costs without success, underscores the advantages of a class action. Her situation illustrates that without class certification, most individuals would lack the incentive or means to pursue claims against MassMutual, making the class action the only viable option for the majority of Class Members to seek redress.
Less than 3,000 exclusion requests were received, indicating that the class action Settlement is a superior resolution for the claims involved. The Settlement Class satisfies the requirements of Federal Rules of Civil Procedure 23(a), (b)(2), and (b)(3), leading to the Court granting final class certification. All objections to this certification have been overruled. Individuals or entities meeting the Class definition, except those who validly requested exclusion, are bound by the Settlement's terms and entitled to its benefits.
Federal Rule of Civil Procedure 23(e) mandates court approval for class action settlements, with the standard for approval being that the settlement must be “fair, reasonable and adequate.” The settlement negotiations, which occurred before class certification, necessitate a thorough examination of fairness. However, the Proposed Settlement is initially presumed fair due to four factors: arm's length negotiations, sufficient discovery, the proponents' experience in similar litigation, and a minimal objection rate (approximately 0.003% of the Class).
The Third Circuit's Girsh factors, which must be analyzed to assess fairness, include: 1) complexity, expense, and duration of litigation; 2) class reaction to the settlement; 3) stage of proceedings and discovery completed; 4) risks of establishing liability; 5) risks of establishing damages; 6) risks of maintaining a class action; 7) defendants' ability to withstand a greater judgment; 8) reasonableness of the settlement fund compared to the best possible recovery; and 9) reasonableness of the settlement fund considering litigation risks.
The nine-factor test requires the Court to conduct both a substantive inquiry into the settlement terms relative to potential litigation outcomes and a procedural inquiry into the negotiation process. The Third Circuit emphasizes that the Court should not impose its ideal of a settlement over the views of the compromising parties, highlighting that the adequacy and reasonableness of the settlement should be assessed rather than the possibility of a better settlement. The law encourages settlements, as established in numerous precedents, including Williams v. First Nat’l Bank. Courts have consistently approved similar insurance sales practices settlements across the nation, which typically offer Class Members a choice between a claim review process or automatic general policy relief. After evaluating the Girsh factors and considering objections, the Court finds the Proposed Settlement to be fair, reasonable, and adequate. The complexity, expense, and duration of the litigation significantly favor settlement, as the parties have already incurred substantial costs, and ongoing litigation has extended for over five years without reaching trial, indicating that resolution is preferable.
MassMutual has produced over 800,000 pages of documents and conducted more than 25 depositions, indicating substantial pre-trial activity. If the case proceeds to trial or is certified as a litigation class, additional discovery is anticipated, and MassMutual plans to contest certification and likely seek summary judgment. A trial would involve numerous experts and incur significant costs, likely leading to appeals, resulting in considerable time and expense for all parties. This context supports the notion that reaching a settlement would minimize unnecessary expenditures.
The document highlights various complex legal issues at stake, including fraud, consumer protection, RICO, breach of contract, breach of fiduciary duty, statute of limitations, and damages. Past cases, such as Prudential and MetLife, have shown that settlements for similar claims were preferable to trial due to their complexity and cost.
Regarding class reaction to the settlement, the document notes that out of 3 million Class Notice Packages mailed, only 2,204 valid exclusion requests and fewer than 100 written objections were received, reflecting a low objection rate of approximately 0.06% for exclusions and 0.003% for objections related to the policies covered. These figures are lower than those seen in previous settlements, suggesting strong support for the settlement among class members. Additionally, over 80,000 Class Members have reached out for more information about the settlement.
The Prudential and Lucent courts indicated that the lack of objections from regulators and the positive reaction from the class members suggest strong support for the proposed settlement. MassMutual's pre-announcement meetings with regulators yielded no objections, reinforcing this view. Historical cases cited show that the absence of governmental objections typically favors settlement approval, especially when extensive notice and outreach have been conducted.
The court also emphasizes the importance of the stage of proceedings and discovery completed to assess settlement propriety. Parties should possess an adequate understanding of the case merits before settling. Although the current case is under nine months old, significant case development has occurred, with settlement discussions commencing nearly nine years after the initial filings. Over 800,000 documents were produced, and more than 25 depositions were taken. Class Counsel also engaged experts to evaluate claims and litigation risks. The year-long negotiation process was comprehensive, supporting the conclusion that the parties had a sufficient grasp of the case merits, making the proposed settlement appropriate at this stage. The analysis parallels past cases where extensive discovery and expert consultation contributed to informed settlement negotiations.
A court must evaluate the risks of litigation by balancing the likelihood of success and potential damages against the benefits of an immediate settlement, as established in Prudential II. While assessing these risks, the court is not required to hold a mini-trial and should consider the success probabilities suggested by class counsel. Numerous similar insurance sales practice cases have failed on dispositive motions, indicating the challenges plaintiffs may face, as demonstrated by various cited cases where class certification was denied or cases were settled with judgments dismissing claims. The court recognizes that, despite some state court successes for plaintiffs, MassMutual likely has viable defenses that could lead to successful litigation outcomes for them.
The court concludes that the immediate settlement is preferable. It emphasizes that its class certification decision is solely for settlement purposes, with MassMutual retaining the right to contest certification for litigation. There are risks associated with potential decertification during litigation, which do not apply to a settlement class, thereby favoring the current settlement approach. Additionally, the ability of defendants to withstand a judgment substantially greater than the settlement amount is a consideration in this analysis, reinforcing the settlement's advantages.
The Proposed Settlement has an estimated minimum value of $698.7 million, excluding legal fees, expenses, and administrative costs. Although the Defendants may incur additional costs, they are deemed capable of enduring a higher judgment, despite potential negative impacts on their credit ratings. Plaintiffs argue that a greater judgment may not significantly benefit Class Members, as they can achieve full recovery under the Settlement. The Court concludes that the Defendants' ability to withstand a larger judgment does not influence the Settlement's approval.
The Court assesses the Settlement's reasonableness against the best possible outcomes for the Class, focusing on whether it represents good value given the risks of litigation. The Third Circuit advises comparing the expected damages, adjusted for litigation risks, with the Settlement amount. The Settlement offers real relief, unlike mere coupons, and allows Class Members the option of a claim review process that can lead to complete monetary relief based on their claims. Considering the litigation risks, the Court doubts individual recoveries would surpass the Settlement benefits.
Overall, the Settlement is viewed as yielding substantial, immediate benefits, making it reasonable in light of potential recoveries and risks. Additionally, the approval of the Settlement by Class Counsel, known for their expertise in this area, further supports the Settlement's fairness, as courts typically respect the judgment of experienced counsel.
The court emphasizes the significant weight given to the opinion of experienced counsel regarding the fairness of the proposed settlement, noting that Class Counsel believes the settlement to be fair, reasonable, and adequate. The settlement is valued at no less than $698.7 million for injured policyholders, offering a Claim Review Process that allows Class Members to receive monetary relief based on their claims. Additionally, Class Members with Permanent Policies will benefit from General Policy Relief (GPR), which provides actual insurance coverage without requiring proof of injury from the alleged deceptive practices.
The court has considered the low number of objections relative to over three million Class Members, giving special weight to concerns from pro se objectors, despite some being represented by professional objectors. Ultimately, the court finds the objections to lack merit, particularly those challenging the GPR. Specific grievances included claims that the Settlement Death Benefit was inadequate or unfair. However, the court notes that such benefits are standard in life insurance policies and that Class Members also have access to the Claim Review Process as an alternative remedy. The court dismisses comparisons of the Settlement Death Benefit to “lottery tickets,” asserting that the GPR is not the sole relief offered and emphasizes the choice available to Class Members.
Class Members who purchased life insurance products recognize the risk of outliving their coverage, but this does not render the benefits provided as illusory or inadequate. The automatic added protection at no extra cost is valuable, especially for those who may not qualify for additional coverage due to age or health. Courts have affirmed the substantial value of such benefits to Class Members. MassMutual commits to actively locating Class Members who died within the Settlement Death Benefit period. Some objections suggest extending the benefit duration or offering alternative forms of relief, such as cash payments or premium reductions. However, the settlement is characterized as a compromise that balances aspirations against the need for resolution. The Court's duty is to assess the fairness and adequacy of the proposed relief, not to weigh it against potentially more lucrative alternatives. Claims that the proposed settlement fails to adequately address alleged harms or improperly compromises certain Class Members' claims are rejected. Additionally, objections asserting a need for the relief to closely correlate with the alleged wrongs are addressed, emphasizing that Class Members had opportunities to submit claims or opt out for separate litigation. The Group Policy Review (GPR) offers an automatic free benefit without requiring proof of wrongdoing, which is seen as a significant advantage for the Class, leading the Court to dismiss the objections.
Objections to the Claim Review Process highlight concerns over the absence of a formal appeals mechanism, dissatisfaction with the scoring system, and the requirement for Class Members to submit supporting documentation. Critics reference other settlements, like Prudential, that included appeals, but overlook that such processes can be costly and lead to prolonged uncertainty for many claimants. The streamlined single-tiered Claim Review Process was chosen to avoid the complexities seen in multi-level systems from cases like Prudential and Michels.
Some objections pertain to the scoring guidelines that allow a Claim Evaluator to assign a score of “0,” which results in no award for the claimant. Objectors argue this is unfair; however, the Defendants assert that this score is meant to deter fraudulent claims. If a claim is deemed legitimate but still scores a “1” (indicating the claim is neither supported nor undermined), the claimant has access to General Policy Relief (GPR).
Concerns about the fairness of the Claim Evaluator’s discretion are countered by the Court's confidence in the evaluator's qualifications, as they have a background in representing policyholders in similar matters. Additionally, MassMutual bears the burden of providing documentation to counter any claims of misrepresentation, ensuring a high standard of proof. The requirement for claimants to submit supporting documentation is deemed reasonable, as Class Members are expected to retain such evidence. Importantly, claimants can still receive relief under the Claim Review Process even without documentation, being eligible to score up to “3.”
Relief under the Claim Review Process (CRP) is available without documentary evidence, as stated in Elkins, 1998 WL 133741, which emphasizes that MassMutual must provide the Policy File that may support individual claims. The scoring system in question has been validated in other settlements related to insurance sales practices. Objector Mucklow raised concerns that the Settlement does not accommodate individuals misled into viewing life insurance as a retirement vehicle. Although he felt this issue went unanswered during the Fairness Hearing, the Court and Mr. Friedman addressed it, clarifying that individuals who believed they were purchasing a retirement scheme have recourse through the CRP. They acknowledged that while these individuals may have initially sought an investment rather than insurance, they ultimately received insurance policies and can now determine if they have a valid claim. Similar objections from Arlene Timmick were noted, but the Court reiterated that those misled into purchasing life insurance instead of an investment vehicle can seek recourse through the CRP or opt out of the Settlement for separate litigation. All objections regarding the fairness and adequacy of the CRP were overruled. Additionally, objections regarding the Settlement's release scope being overly broad were found to be without merit.
In class action settlements, releases can encompass all claims related to the same conduct outlined in the Complaint, including both known and unknown claims, and even those claims over which the court lacks jurisdiction. Objectors have raised concerns that the release improperly includes future claims; however, the law permits releases to bar future claims rooted in past conduct based on the same factual basis. The Settlement Agreement explicitly states that it does not release claims arising from events occurring after the Class Period, thereby clarifying the scope of the release. The Court dismisses objections regarding lack of consideration, noting that the settlement provides substantial compensation, including millions of dollars and additional life insurance coverage for the Class. This release is deemed appropriate and comparable to prior approved releases. Additionally, objections regarding the valuation of benefits to the proposed class being unsupported are countered by reports from actuaries provided by both parties, confirming a minimum valuation of $130 million for the settlement.
If the total relief from CRP Claims is determined to be less than $130 million, the shortfall will be allocated to certain Class Members to ensure a minimum payout of $130 million. Terry Long, an experienced actuary, and the firms Godfrey Perrott and William C. Hines from Milliman, Inc. provided actuarial analyses regarding the settlement's benefits. During the Fairness Hearing, attorney Edward Cochran introduced a new objection regarding the potential demutualization of Massachusetts Mutual, arguing that if the company demutualizes, it could recover the settlement costs from Class Members, effectively nullifying the benefits of the settlement. This argument had not been previously raised by any objectors or in written submissions. Cochran's supplemental memorandum on this issue was submitted without prior notice, prompting Plaintiffs and Defendants to file brief responses to mitigate any unfairness due to the lack of advance warning.
The court emphasized that the Class Notice clearly required objections to be submitted in writing and received by October 25, 2004, indicating that any objections filed after this date would not be considered and would be deemed waived. The Yoes objectors submitted their initial objection on the deadline, demonstrating their awareness of it. The court noted the importance of adhering to deadlines, citing past cases where untimely objections were overruled due to a lack of valid excuses and potential prejudice to the parties involved.
Despite considering the objections for thoroughness, the court found them to lack merit. Objector Mr. Cochran claimed that most mutual companies were contemplating demutualization and argued that MassMutual would have an incentive to do so to avoid settlement costs, supporting his claim with speculation and a single unrelated example. He proposed a modification to the Settlement Agreement to prevent recapturing costs in the event of demutualization. However, the defendants countered that there was no concrete evidence of MassMutual's plans to demutualize and highlighted statements from company representatives indicating no intent to alter their organizational structure.
Loyalty to policyholders and shareholders is not divided within the mutual company, which remains insulated from industry consolidation while maintaining sufficient capital reserves for potential strategic acquisitions. Standard & Poor's reaffirmed MassMutual's AAA rating, noting its strong position for sustained revenue, earnings, and capital growth due to a diversified business model. Defendants argue that Mr. Cochran’s concerns regarding recapturing benefits and demutualization are unfounded. Plaintiffs assert that the precedent set by the MetLife case is not directly relevant, emphasizing that MassMutual has not decided to demutualize, and highlight that if it did, it could not withdraw Settlement Death Benefits or cash values from Class Members. They caution the Court against speculating on MassMutual's surplus in a hypothetical demutualization scenario. Furthermore, any attempt by MassMutual to demutualize and recapture settlement costs would require regulatory and policyholder approval. The Court, upon reviewing the situation, concurs that speculation about demutualization and cost recapture is unwarranted and decides not to mandate the proposed amendment to the Settlement Agreement, as it would hinder the company's ability to address contingent liabilities. All other objections were considered and deemed lacking in merit, predominantly expressing general dissatisfaction with the Proposed Settlement.
The Court has reviewed all objections to the Proposed Settlement, including untimely submissions, and determines that these objections lack merit, affirming that the Settlement is fair, adequate, and reasonable, providing significant benefits to the Class. The Court also addresses the Plaintiffs’ requests for attorneys’ fees, expenses, and incentive awards for named Plaintiffs. Upon evaluating the reasonableness of these requests, the Court approves the attorneys' fees and expenses, partially granting the incentive awards.
The requested $58.2 million in attorneys' fees and expenses represents approximately 7.58% of the Settlement's total benefit to the Class and is 2.83 times the Class Counsel's actual lodestar of over $19.6 million. This fee request aligns with typical awards in comparable cases regarding size and complexity. The Court emphasizes that even with party consent, it must rigorously assess fee applications to avoid potential conflicts of interest where lawyers may advocate for less favorable settlements in exchange for higher fees.
To determine a reasonable fee award, the Court considers two primary approaches: the lodestar method, calculating fees based on hours worked multiplied by an appropriate hourly rate, and the percentage-of-recovery method, which awards a variable percentage of the recovery amount. Each method is suited to different case types, with the percentage-of-recovery method applied in common fund cases to prevent unjust enrichment of class members who benefit from the counsel's efforts.
The Third Circuit allows for either the lodestar or percentage-of-recovery method to determine attorney fees, recommending the latter as a cross-check for reasonableness. In this case, although not a typical common fund case, it is treated similarly due to fees and awards being funded by the Defendants. Previous class action settlements in this circuit have favored the percentage-of-recovery method. This method aligns with how contingent fee attorneys are compensated in the marketplace and incentivizes counsel to maximize recovery efficiently.
When applying the percentage-of-recovery method, the court must first ascertain the settlement's total value before determining an appropriate fee percentage, which typically ranges from 19% to 45% in class actions. Courts often consider 25% as a benchmark, adjusting based on specific case factors, and generally decrease the percentage as the settlement size increases. However, there is no strict requirement for applying a declining percentage in every large fund case.
The declining percentage concept does not override the fact-intensive Prudential/Gunter analysis for determining reasonable attorneys’ fees in class action settlements. The court retains discretion in awarding fees. The total value of the Settlement is at least $698.7 million, with additional benefits from injunctive relief, Part VIII ADR Relief, and legal fees, amounting to approximately $771.9 million for the Class. The requested attorneys’ fees of $58.2 million represent about 7.58% of this value, which, while seemingly reasonable, is part of a broader fairness analysis.
In awarding fees using the percentage-of-recovery method, the court considers several factors established in Gunter v. Ridgewood Energy Corp.: the size of the fund and the number of beneficiaries, objections from class members, the skill and efficiency of counsel, case complexity and duration, risk of nonpayment, time spent by counsel, and awards in similar cases. These factors do not need to be applied rigidly, as one may outweigh others.
The settlement fund is significant, being the third largest for deceptive insurance sales practices, involving about three million policies and a minimum settlement value of $698.7 million. The percentage fee sought is lower than those approved in previous large settlements like Prudential and MetLife, where fees of 7.5% and 7% were found appropriate, respectively.
The fee request is favored due to the Settlement's structure, which ensures relief for every permanent policyholder through Guaranteed Payment Relief (GPR) or Class Relief Payment (CRP), and extends CRP to all term or disability policyholders with Delayed Coverage or Juvenile Smoker claims. The substantial guaranteed benefits to the Class, alongside the sizeable fund, support the reasonableness of the requested fees and expenses. Class Members were informed via Class and Publication Notices that attorneys’ fees and expenses, capped at $58.2 million, would be covered by MassMutual and would not diminish their benefits. Approximately forty-five objections were filed, primarily claiming the fees were excessive, while the request for expenses was not contested. Class Counsel had already spent over $2.584 million of their own funds during the litigation. The Court notes that fewer than fifty objections from over three million Class Members suggest strong support for the fee request. The objections fail to acknowledge the significant benefits achieved for the Class or the fact that fees are paid by the alleged wrongdoer, MassMutual, rather than the settlement fund. Furthermore, the objections do not adequately consider the risks and challenges faced by Class Counsel throughout nearly nine years of litigation. The Court also finds no merit in the objection proposing that fees be paid in installments.
The settlement in question has a clearly defined value, as confirmed by Plaintiffs’ expert actuary, Mr. Long, differing from other settlements like Prudential and Duhaime that involved extensive post-settlement monitoring or uncapped Alternative Dispute Resolution (ADR) processes. The majority of courts have allowed for full payment of fees in insurance sales practices settlements, with examples provided such as a $6.6 million fee in Snell and a $120 million fee in Manners. Class Counsel has demonstrated a strong track record in effectively representing the class throughout the litigation process, which began in 1995, overcoming significant challenges in similar cases against MassMutual and others. Notably, Class Counsel only negotiated their fees after settling all terms for the class, adhering to best practices in settlement negotiations. The court supports the presumption that the requested fee is reasonable based on these factors and recognizes the importance of incentivizing competent counsel in complex litigation.
The complexity and duration of the litigation are critical factors for awarding attorney fees, as established in Gunter v. 223 F.3d at 197. The current case involved multiple lawsuits, one lasting nearly eight years, leading to extensive and contentious litigation regarding liability, damages, and class certification. Settlement negotiations took approximately one year, further supporting the fee request.
Class Counsel worked on a contingent basis, incurring substantial personal expenses for witness depositions, expert consultations, and other litigation costs without governmental support. Many similar cases against the Defendants faced non-payment risks, underscoring the speculative nature of contingent fee arrangements, as noted in Lucent II.
Class Counsel dedicated 63,037.35 hours to these cases, justifying the requested fee of $58.2 million, which reflects their ongoing responsibilities despite the settlement. The Court also compared the fee request to similar cases, determining that approximately 7.58% of the total settlement value aligns with prior awards in analogous deceptive insurance sales practices cases, such as those involving Prudential and Metropolitan Life, which awarded fees of 7.5% and 7%, respectively.
The document presents a series of class action settlements involving various lawsuits with the following details:
1. Co. - $169 million, 11.5%
2. Roy v. Indep. Order of Foresters - $114.2 million, 12.7%
3. Garst v. Franklin Life Ins. Co. - $90.1 million, 14.5%
4. In re Mfrs. Life Ins. Co. Premium Litig. - $555.1 million, 6.5%
5. Elkins v. Equitable Life Ins. Co. - $278.8 million, 1.7%
6. Michels v. Phoenix Home Life Ins. Co. - $100 million, 9%
7. Willson v. New York Life Ins. Co. - $300 million, 7%
The court considers the "25 benchmark" for fee awards and the 19%-45% range typical in class actions. Despite determining that a 9.5% fee could be justified based on the settlement's value to Class Members, the Plaintiffs are only requesting 7.58%. The court agrees that this percentage is reasonable and consistent with what has been awarded in similar cases, particularly referencing a 7.5% fee deemed appropriate in Prudential III, although that case ultimately awarded 4.8% based on parties' agreement.
Additionally, the court plans to validate its fee calculation using the lodestar method, which involves multiplying the hours worked by a reasonable hourly rate. This method may be adjusted based on the risks of non-recovery and the quality of legal work. Each firm involved has submitted a summary of their professional time, including details about the personnel, billing rates, and hours worked on the case. Overall, the court finds the fee request aligns with district standards and supports the approval of the settlement.
The Court acknowledges the significance of the submitted affidavits detailing the attorneys who worked on the case, including their hours and rates, enabling the application of a blended billing rate for the multiplier determination. The Third Circuit's decision in *In re Rite Aid Corp. Secs. Litig.* emphasizes that district courts should utilize blended rates reflecting the fee structure of all attorneys involved. In that case, the failure to apply a blended rate led to a vacated attorney's fee award, suggesting that a proper blending would result in a higher multiplier, prompting a reassessment of the fee award's validity.
In the present matter, the firm Lite DePalma Greenberg Rivas, LLC contributed to several cases against Massachusetts Mutual Life Insurance Company over the past eight years, with a total of 3,947.8 hours logged, resulting in a lodestar of $1,586,410.25. Other firms also reported extensive contributions: Leach Coughlin Stoia Geller Rudman Robbins LLP and Milberg Weiss Bershad Schulman LLP combined for 19,859.50 hours at a lodestar of $5,141,410.50; Finkelstein Krinsk LLP logged 6,316.35 hours for $2,438,894.25; Specter Specter Evans Manogue, P.C. recorded 7,390.70 hours for $2,575,450.00; and Bonnett Fairbourn Friedman Balint, P.C. documented 25,523.3 hours, contributing to a total lodestar across all firms of $19,659,439.50. This total lodestar is to be divided by the requested fee award of $58,200,000, after accounting for Class Counsel’s already advanced expenses.
A fee multiplier of approximately 2.83 has been deemed reasonable for the requested attorneys’ fees and expenses totaling $58.2 million in this litigation. The Third Circuit supports multipliers ranging from one to four in common fund cases. Class Counsel anticipates that this multiplier may decrease due to additional work incurred after a specified cutoff date, including final approval and claim administration tasks.
Class Counsel also seeks reimbursement of $2,584,468.09 in expenses, which have been documented in affidavits from the five firms involved. These expenses cover various litigation-related costs such as class notice, court reporting, legal research services, expert consultations, filing fees, and travel. The Court has determined these expenses are reasonable and adequately documented, referencing prior case law that supports such costs as necessary in litigation.
The requested expenses represent less than 1% of the total settlement value. The Court finds that the fee and expense requests reflect a thorough analysis of relevant factors and confirms that fee negotiations were conducted in good faith without collusion, providing substantial benefits to the Class as the fees will not be deducted from the settlement fund. Ultimately, the award is deemed appropriate given the specific context of the case.
The Court approves a fee and expense award of $58.2 million. It partially grants the Plaintiffs' request for a $10,000 incentive award for each named Plaintiff, recognizing that such awards compensate for personal risks and efforts in the lawsuit. The Court cites multiple precedents supporting incentive awards, emphasizing that while these are typically reviewed leniently when funded by attorneys' fees, the requested awards will deplete the Claim Review Process (CRP) fund, necessitating careful scrutiny to ensure fairness to Class Members. The Settlement Agreement allows for incentive awards to be paid solely from the CRP fund, with no obligation on MassMutual to cover these costs. The Court notes ample authority for such awards, with past cases granting various amounts based on the contributions of named plaintiffs, reaffirming that courts routinely approve these awards in class action litigation to acknowledge the services and risks undertaken by class representatives.
The court awarded $2,000 to plaintiffs who produced documents and $5,000 to those deposed, noting that while the requested amount of $10,000 is comparable to prior incentive awards, such awards require substantial evidence of service and risk incurred by the individuals during litigation. Class Representatives Paul Varacallo, K. Werner Gass, and Jeremiah B. Walsh committed significant time and effort assisting counsel, providing deposition testimony, producing documents, and engaging in regular communication regarding litigation developments. Varacallo filed a certification opposing a summary judgment motion in New Jersey, while Gass pursued a separate action in Ohio. Walsh participated as a trial witness and attended the Fairness Hearing. Dr. Donald Wofford contributed similarly by preparing for depositions and engaging in factual investigations, and he was also involved in litigation against MassMutual in California. Plaintiffs William A. Karges, Jr. and Jeffrey M. Weiner assisted in developing litigation strategies and participated in depositions. Steven E. Feldman contributed by filing the complaint and being prepared for deposition and other procedural requirements. All class representatives actively reviewed and commented on the Proposed Settlement.
Mr. Feldman had no involvement in any actions against the Defendants beyond this class action Settlement. Class Representatives contributed significantly to the litigation and warrant compensation. However, their involvement varied, and incentive awards should not be distributed equally. The Court grants a $10,000 incentive award to each of the following Class Representatives: Paul Varaeallo, K. Werner Gass, Dr. Donald Wofford, William A. Karges, Jr., and Jeffrey M. Weiner, Esq., recognizing their close collaboration with Counsel. In contrast, Mr. Feldman’s participation was minimal, warranting only a $1,000 award as he was not deposed or required to produce documents. Mr. Walsh, who was more involved, will receive $3,000. The Court grants final class certification under Rules 23(a), (b)(2), and (b)(3), approving the Settlement and dismissing claims with prejudice. Class Members not excluded are barred from related actions. The Court awards $58.2 million in attorneys' fees and expenses to Class Counsel, with discretion to distribute among counsel. The request for $10,000 incentive awards for all named Plaintiffs is partially granted, with the specified amounts awarded to each based on their involvement. The Court retains continuing jurisdiction over the action. Additionally, Mr. Ginsburg opted out of the class and lacked standing to object.
Class Counsel informed the Court that the current settlement ranks as the third largest nationwide concerning insurance sales practices, following those of Prudential and MetLife. The Prudential settlement affected over eight million Class Members, with a value between $1.209 billion and $2.077 billion. MetLife's settlement involved more than six million Class Members, valued at $1.645 billion. The proposed settlement in this case encompasses approximately three million policies, with a minimum value of $698.7 million, in addition to injunctive relief, attorneys' fees, expenses, and administrative costs. The Settlement Agreement was initially submitted under seal but was later unsealed and made available for public viewing. Several previous cases against MassMutual or Connecticut Mutual failed to secure class certification, including Cunningham, Thelen, Shocklee, O'Brien, Elliott, McCown, Markarian, and Cohn, with outcomes ranging from settlements to dismissals. Notably, Connecticut Mutual and its subsidiary merged into Massachusetts Mutual in 1996, and this settlement covers policies from all four companies involved.
MassMutual operates as a mutual company owned by its members rather than stockholders, promoting independence and long-term strategic thinking. While conversion to public ownership is a potential future option, it is currently deemed too costly and time-consuming. The focus remains on serving customers throughout their relationship with the company. The eligibility date for certain claims is March 31, 2004, and the class period spans from January 1, 1983, to December 31, 2003. Notably, Michael Ginsburg, who opted out of the class, lacked standing to object but was allowed to speak at the Fairness Hearing. Two class members, Daniel and Toiee Roubein, withdrew their objections after consulting with their attorney, who deemed the proposed settlement fair, reasonable, and adequate. The Court indicated it could still exercise supplemental jurisdiction over claims not meeting the amount in controversy requirement if at least one named plaintiff satisfied it. The Court acknowledged various objections but did not address every one, aligning with Class Counsel and Defendants' positions. It confirmed that the manageability aspect of Rule 23(b)(3)(D) is not necessary to consider in settlement-only class certifications. No objections were raised regarding numerosity, commonality, or the superiority of proceeding as a settlement class action. However, some objectors claimed the class definition resulted in an improper "fail-safe" class.
The Court dismisses the objections raised regarding the class definition, affirming that it is clearly articulated and excludes individuals outside the specified claims, allowing them to pursue separate litigation. Specifically, policyholders with Disability Income Policies and Term Life Policies are excluded unless they have Delayed Coverage Claims or Juvenile Smoker Claims. Mr. Gambello's objections are noted as inconsistent; he criticizes the settlement as deceptive while simultaneously expressing concern about the exclusion of specific policyholders. The Court references relevant case law to support its conclusions and acknowledges the presence of multiple professional objectors whose grievances have been voiced in other class action cases. Additionally, it identifies the nine objectors and notes that only five participated in a supplemental memorandum addressing the demutualization issue. It also mentions a Class Member's proposal for the Court to compel the defendants' demutualization. Lastly, it discusses the calculation of attorneys' fees based on time spent by legal professionals on the case.
The estimated total benefit to the Class amounts to $771.9 million, which includes at least $698.7 million in CRP and GPR, $58.2 million in attorneys' fees and expenses reimbursement, and $15 million in administrative expenses. As of September 2004, Class Counsel had incurred $2.584 million in expenses, representing less than 1% of the settlement value. If expenses are excluded and the attorneys' fees are recalculated to $55,616,000, the percentage of recovery would be approximately 7.2% of the total benefit to the Class. The excerpt references several cases, including Shocklee and Markarian, noting the outcomes related to class certification. It emphasizes that the "lodestar" calculation does not require exactness and that courts can rely on summaries provided by attorneys without needing to examine detailed billing records. Objections to Class Counsel’s billing summaries are overruled. Additionally, various law firms involved in the litigation reported significant unreimbursed expenses, with specific amounts detailed for each firm as of mid-September 2004.
