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Anthony J. Iorio, Max Freifield, and v. Allianz Life Insurance Company

March 3, 2011

ANTHONY J. IORIO, MAX FREIFIELD, AND
RUTH SCHEFFER, ON BEHALF OF THEMSELVES AND ALL OTHERS, SIMILARLY SITUATED, PLAINTIFFS,
v.
ALLIANZ LIFE INSURANCE COMPANY
DEFENDANT.



The opinion of the court was delivered by: Hon. Janis L. Sammartino

[CLASS ACTION] FINAL ORDER: (1) APPROVING CLASS ACTION SETTLEMENT, (2) AWARDING CLASS COUNSEL FEES AND EXPENSES, (3) AWARDING CLASS OF REPRESENTATIVES INCENTIVES, (4)NORTH AMERICA, INC., PERMANENTLY ENJOINING PARALLEL PROCEEDINGS, AND (5) DISMISSING ACTION WITH PREJUDICE

Fairness Hearing

Time: 1:30 p.m. Court: Courtroom 6

Following a hearing on July 1, 2010, ("Preliminary Approval Hearing"), this Court entered its Order (1) Preliminarily Approving Class Action Settlement, (2) Directing Distribution of the Class Action Settlement Notice, (3) Setting a Final Approval Hearing, and (4) Preliminarily Enjoining Parallel Proceedings, (Doc. No. 437) ("Preliminary Approval Order"), preliminarily approving the Settlement entered into by the parties in the above-captioned Action, and scheduling a hearing to determine whether the Settlement is fair, reasonable, adequate, in the best interests of the Class, and free from collusion, whether the Settlement should be finally approved by the Court, and to consider a motion by Class Counsel for an award of attorneys' fees, costs and litigation expenses, and incentives for the Class Representatives ("Fairness Hearing").

The Court has considered: (i) the points and authorities submitted in support of the motion for final approval of the Settlement ("Final Approval Motion"); (ii) the points and authorities submitted in support of the motion for an award of attorneys' fees and costs and litigation expenses, and approval of incentive awards for the Class Representatives ("Fee Motion"); (iii) the declarations and exhibits submitted in support of said motions; (iv) Allianz's separate request for final approval of the Settlement and entry of judgment herein, on the terms and conditions set forth in the Settlement; (v) the Settlement Stipulation and Amendment to Settlement Stipulation; (vi) the entire record in this proceeding, including but not limited to the points and authorities, declarations, and exhibits submitted in support of preliminary approval of the Settlement, filed June 3, 2010 (Doc. Nos. 424-435); (vii) the full and fair notices provided to the Class of the pendency of this class action, the Settlement, the Fairness Hearing, and Class members' rights with respect to this class action lawsuit and Settlement; (viii) the relatively few members of the class certified by the Court who requested exclusion pursuant to their right to do so at the time of the notices of the pendency of this class action; (ix) the existence of only six objections to the Settlement, out of more than 12,000 Class Members, three of which have been withdrawn by the objector; (x) the absence of any objection or response by any official after the provision of all notices required by the Class Action Fairness Act of 2005, 28 U.S.C. §1715; (xi) the oral presentations of Class Counsel and Counsel for Allianz at the Preliminary Approval Hearing and Fairness Hearing; (xii) this Court's experiences and observations while presiding over this matter, and the Court's file herein; and (xiii) the relevant law.

Based upon these considerations, the Court's findings of fact and conclusions of law as set forth in the Preliminary Approval Order and in this Final Order: (1) Approving Class Action Settlement, (2) Awarding Class Counsel Fees and Expenses, (3) Awarding Class Representatives Incentives, (4) Permanently Enjoining Parallel Proceedings, and (5) Dismissing Action with Prejudice ("Final Approval Order"), and good cause appearing:

IT IS HEREBY ORDERED AND DECREED, as follows:

1. Definitions. The capitalized terms used in this Final Approval Order shall have the meanings and/or definitions given to them in the Settlement, or if not defined therein, the meanings and/or definitions given to them in this Final Approval Order.

2. Incorporation of Documents. This Final Approval Order incorporates and makes a part hereof:

A. the Parties' Settlement Stipulation, filed as Exhibit 1 to the Declaration of Robert S. Gianelli in support of final settlement approval, on February 10, 2011, ("Gianelli Declaration"), including all exhibits thereto and the Parties' Amendment to Settlement Stipulation filed as Exhibit 2 to the Gianelli Declaration including all exhibits thereto, (collectively, "Settlement Stipulation"), which sets forth the terms and provisions of the proposed settlement ( "Settlement");

B. the Court's findings and conclusions contained in its Preliminary Approval Order dated July 1, 2010, 2010, (Doc. No. 437), ("Preliminary Approval Order").

3. Jurisdiction. The Court has personal jurisdiction over the Parties, the Class Members (as defined below at paragraph 4 below), including objectors. The Court has subject matter jurisdiction over this action, including, without limitation, jurisdiction to approve the Settlement, to settle and release all claims alleged in the action and all claims released by the Settlement, including the Released Transactions (as defined in the Settlement Stipulation), to adjudicate any objections submitted to the proposed Settlement (including objections by Class Members or CAFA officials), and to dismiss this Action with prejudice. All Class Members, by failing to exclude themselves according to the Court's prior orders and the terms of the prior notices of the pendency of the Action, have consented to the jurisdiction of this Court for purposes of this Action and the Settlement of this Action.

4. Definition of the Class and Class Members. The "Class," which is comprised of the "Class Members," is defined by the Court's Order Granting Plaintiffs' Motion for Class Certification, dated July 25, 2006 (the "Class Certification Order"), (Doc. No. 113), and is as follows: All persons who purchased one of the following annuities from Allianz Life Insurance Company of North America or LifeUSA Insurance Company while they were California residents, age 65 years or older, and prior to July 26, 2006: Bonus Maxxx (including Accumulator Bonus Maxxx, Bonus Maxxx 12% and Bonus Maxxx 14%), BonusDex, Bonus Maxxx Elite, BonusDex Elite, 10% Bonus PowerDex Elite and MasterDex 10; subject to the following categories of persons which are specifically excluded from the Class:

A. Officers, directors or employees of Allianz; any entity in which Allianz has a controlling interest; the affiliates, legal representatives, attorneys or assigns of Allianz; any federal, state or local governmental entity; and any judge, justice or judicial official presiding over this matter, and the staff and immediate family of any such judge, justice or judicial officer.

B. Any person who acted as an independent insurance Agent licensed by the State of

California and appointed by Allianz in the sale of Annuities that are in the Class.

C. Any person who, under the terms of the previous orders and notices to class members in this Action, timely and properly submitted a written request to be excluded from the Class.

All Class Members are subject to this Final Approval Order and the Final Judgment to be entered by the Clerk of Court in accordance herewith.

5. Findings and Conclusions. The Court finds that the Settlement was not the product of collusion or any other indicia of unfairness, is fair, reasonable, and adequate to the Class in light of the complexity, expense, and likely duration of the litigation (including appellate proceedings), and the risks involved in establishing liability, damages, and in maintaining the Action as a class action, through trial and appeal. The Court finds that the Settlement represents a fair and complete resolution of all claims asserted in a representative capacity on behalf of the Class and should fully and finally resolve all such claims. In support of these findings and conclusions, the Court further finds:

A. There is no evidence of collusion. The proposed settlement, as set forth in the Settlement Stipulation, resulted from extensive arms-length negotiation. The Action was extensively and vigorously litigated, up to the commencement of trial (as further described below), prior to any settlement. Plaintiffs and Allianz engaged in intensive arms-length negotiations, over the course of multiple mediation sessions before a capable and well-respected mediator, Robert J. Kaplan of Judicate West, with extensive experience in mediating complex consumer and insurance cases. Extensive negotiations thereafter resulted in the proposed settlement reflected by the Settlement Stipulation.

B. The Settlement provides for substantial cash payments and/or other monetary benefits to every Class Member, without requiring any Class Member to affirmatively participate in a claims process (although some of the categories of Settlement Relief, by their nature, are dependent upon the Class Member's future policy choices, and require an affirmative election to annuitize, convert an existing annuitization option to a different annuitization option, and/or request partial withdrawal). No portion of the substantial Settlement Relief would be consumed by attorneys' fees, litigation expenses, notice expenses, settlement administration expenses, or the requested incentive awards for the Named Plaintiffs, since such amounts are all separately provided for. The Court has considered the realistic range of outcomes in this matter, including the amount Plaintiffs might receive if they prevailed at trial, the strength and weaknesses of the case, the novelty and number of the complex legal issues involved, and the risk that Plaintiffs would receive less than the Settlement Relief or take nothing at trial. The amount offered by the Settlement is fair, reasonable, and adequate in view of these factors.

C. Before reaching the proposed settlement, Plaintiffs and Allianz fully and vigorously litigated their claims and defenses in extensive proceedings before this Court and in the appellate courts. A detailed procedural history of this action is set forth in the Court's docket, and is described in the declaration of Robert S. Gianelli and in Plaintiffs' points and authorities submitted in support of preliminary approval. Inter alia, Allianz's challenges to the pleadings, class certification, class decertification, summary judgment, motion to "clarify" the Court's orders regarding class certification, motion to modify the class definition, motion to strike various remedies in the prayer for relief, and motion to decertify the Class' punitive damages claim, and the Parties' motions in limine and other trial motions, were all heard and decided prior to Settlement. Class certification issues were repeatedly submitted to the Ninth Circuit, through three separate Rule 23(f) petitions filed by Allianz. Trial briefs, witness lists, jury instructions and verdict forms, and deposition testimony designations were all filed and exchanged. All final pre-trial conferences were completed. The Parties reported ready for trial on March 29, 2010, while settlement negotiations involving a mediator were ongoing. Based on the Parties' reported progress made in mediation, a brief continuance to April 1, 2010 was granted. On that morning, with jury selection scheduled to commence, the Parties reported their proposed settlement to the Court.

D. Before reaching the proposed settlement, Plaintiffs and Allianz also conducted extensive discovery, fully completing all fact and expert discovery. More than 40 lay and expert depositions, cumulatively hundreds of hours of testimony, were completed. Plaintiffs took the depositions of 16 key Allianz managerial employees. Plaintiffs defended the depositions of the class representatives (each was deposed twice) and the depositions of 10 absent class members. All seven expert depositions were completed by the parties. Written discovery was no less comprehensive. In addition to extensive requests for production of documents at deposition, Plaintiffs propounded three sets of inspection demands (cumulatively 56 requests), plus pre-trial interrogatories and requests for admission. Plaintiffs also subpoenaed additional documents from selling agents. Properly authenticated and verified policy data and mailing data was produced for every single individual class member and annuity. Voluminous documentary evidence (including 22 separate batches of records produced by Allianz) was produced, reviewed and analyzed. The class representatives submitted to extensive written discovery from Allianz as well. Plaintiffs responded to three rounds of written discovery, including interrogatories, inspection demands, and requests for admission.

E. Based upon this full litigation of relevant legal issues affecting this litigation, extensive investigation of the underlying facts in discovery, and full preparation by the Parties for the trial in the action, Plaintiffs and Allianz were fully informed of the legal bases for the claims and defenses herein, and capable of balancing the risks of continued litigation (both before this Court and on appeal) and the benefits of the proposed settlement.

F. The Class is and was at all times adequately represented by Named Plaintiffs and Class Counsel, including in entering into and implementing the Settlement, and has satisfied the requirements of Federal Rules of Civil Procedure, Rule23, and applicable law. Class Counsel submit that they have fully and competently prosecuted all causes of action, claims, theories of liability, and remedies reasonably available to the Class Members. Further, both Class Counsel and Allianz's Counsel are highly experienced trial lawyers with specialized knowledge in insurance and annuity litigation, and complex class action litigation generally. Class Counsel and Allianz's Counsel are capable of properly assessing the risks, expenses, and duration of continued litigation, including at trial and on appeal. Class Counsel submit that the Settlement is fair, reasonable and adequate for the Class Members. Allianz denies all allegations of wrongdoing and disclaims any liability with respect to any and all claims alleged by Plaintiffs and the Class, including their claims regarding the propriety of class certification, but agrees that the proposed settlement will provide substantial benefits to Class Members. Allianz considers ...


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