The opinion of the court was delivered by: Honorable Christina A. Snyder United States District Court Judge
FINAL SETTLEMENT APPROVAL ORDER AND JUDGMENT
April 4, 2011 Time: 10:00 a.m. Courtroom: 5, Second Floor
Following a hearing on January 10, 2011, this Court entered its Order of Preliminary Approval of Class Action Settlement and Related Orders (Doc. No. 199), ("Preliminary Approval Order"), preliminarily approving the Settlement and Release Agreement entered into by and on behalf of the parties in the above-captioned action ("Settlement"), directing that notice of the Settlement be mailed to the Settlement Class members, scheduling a hearing to determine whether the Settlement is fair, reasonable, adequate, in the best interests of the Settlement Class, and free from collusion, and scheduling a hearing to contemporaneously consider a motion by class counsel for an award of attorneys' fees, litigation expenses, and a class representative incentive pursuant to the Settlement.
The Court has considered: (i) the proposed Settlement; (ii) Plaintiff's Motion for Final Approval of Class Action Settlement and Related Orders and supporting papers; (iii) Plaintiff's Motion for Award of Attorneys' Fees, Litigation Expenses, and Class Representative Incentive and supporting papers; (iv) the separate request by Defendants, THE PRUDENTIAL INSURANCE COMPANY OF AMERICA ("Prudential") and DEN-MAT CORPORATION LONG TERM DISABILITY FOR ALL EMPLOYEES ("Den-Mat Plan"), (collectively, "Defendants"), for final settlement approval and entry of judgment, pursuant to the Settlement; (v) Defendants' non-opposition to an award of attorneys' fees, litigation expenses, and a class representative incentive, up to the amounts provided for by the Settlement; (vi) the entire record in this action, including but not limited to the points and authorities, declarations, and exhibits submitted in support of preliminary approval of the Settlement, (Doc. Nos. 192-194); (vii) the absence of any objections by the Settlement Class members to the Settlement; (viii) the absence of any notices of intention to appear, or requests to appear, from the Settlement Class members; (ix) the representations and arguments of Class Counsel and counsel for Defendants at the hearing on this motion; (x) this Court's experiences and observations while presiding over this matter; and (xi) the relevant law.
On these bases, and based upon the findings of fact and conclusions of law below and implicit in this Order, and in the Court's prior Preliminary Approval Order (Doc. No. 199), and good cause appearing, IT IS HEREBY ORDERED, ADJUDGED, 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 Agreement, or if not defined therein, the meanings and/or definitions given to them in this Final Approval Order.
2. Jurisdiction: Plaintiff, Defendants, and all members of the Settlement Class have submitted to the jurisdiction of the Court for purposes of the Settlement. The Court has personal jurisdiction over Plaintiff, Defendants, and the Settlement Class members. The Court has subject matter jurisdiction to release all claims and causes of action as set forth in the Settlement, to dismiss the above entitled action, ("Action"), with prejudice, in its entirety, and to enter judgment in the action. The Court has subject matter jurisdiction to approve the Settlement.
3. Findings in Support of Final Settlement Approval: The Court finds that the Settlement was not the product of collusion, that there is no indicia of unfairness, and that the Settlement is fair, reasonable, and adequate to the Settlement Class in light of the complexity, expense, and likely duration of the litigation, and the risks involved in certifying a class, establishing liability and remedy, 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 Settlement Class and should fully and finally resolve all such claims. In support of these findings, the Court further specifically finds that:
A. There is no evidence of collusion. The proposed Settlement, as set forth in the Agreement, resulted from extensive arms-length negotiation. The action was extensively and vigorously litigated prior to settlement, (as more fully described below). Defendants' challenges to the pleadings and class representative's standing were litigated and decided, extensive discovery was completed, the class certification motion was fully briefed, and that motion was on the eve of hearing before a Settlement was reached. The Parties engaged in arm's length settlement negotiations taking place over a period of months before reaching the proposed Settlement.
B. The Settlement provides substantial benefits for every single member of the Settlement Class, without requiring any Settlement Class member to affirmatively participate in a claims process. No portion of the substantial class relief will be consumed by attorneys' fees, litigation expenses, notice and settlement administration expenses, or the class representative's incentive, since such amounts are all separately provided for.
The Action challenges the adequacy of Prudential's claims handling procedures with respect to the application of California Workers' Compensation "offsets" to reduce the amount of benefits otherwise payable under ERISA group long-term disability policies fully insured by Prudential. Plaintiff alleges that Prudential's existing claims handling guidelines do not permit application of offsets for California Workers' Compensation permanent disability benefits, but that Prudential's claims handling procedures are inadequate to ensure that such offsets are not applied. Prudential denies any inadequacy of its existing claims handling procedures in this respect.
The proposed Settlement provides for injunctive relief which will augment Prudential's existing claims handling procedures to prevent the occurrence of future California Workers' Compensation permanent disability offsets. These additional procedures are set forth in Appendix A to the Agreement, and are incorporated here by reference. Said augmented claims handling procedures will apply, going forward, to each ERISA long-term disability group policy fully insured by Prudential providing coverage for any present or future claimant receiving California Workers' Compensation permanent disability benefits, including any of the Settlement Class members' group policies.
Further, for each Settlement Class member, Prudential will review all past California Workers' Compensation offsets from June 1, 2001 (the date six years prior to the filing of the Action) through the effective date of the settlement. Review will be conducted under the augmented claims handling procedures provided by the Settlement. For any California Workers' Compensation permanent disability offsets applied from June 1, 2004 through the effective date of the settlement, Prudential will pay a 100% refund. For any California Workers' Compensation permanent disability offsets applied from June 1, 2001 through May 31, 2004, Prudential will pay a 25% refund. (In each case, the availability and amount of such Settlement payments are subject to any other available offsets, credits, or releases). Each Settlement Class member will be given clear notice of Prudential's review determination, notice of the right and a fair opportunity to dispute that determination, and (if a dispute is unresolved) notice of the right to appeal that determination, (first administratively and then in court in a separate legal action).
The actual amount of these monetary Settlement benefits cannot be known until Prudential completes the claims review process under the Settlement. Based on a review of a random cross-section of files and Settlement Class claims data produced by Prudential, however, Class Counsel have projected that the amount of permanent disability offsets to be refunded to the Settlement Class will be approximately $3.2 million.
All Settlement benefits (both the injunctive relief and, where applicable, payments) are provided upon the finality of the Settlement, without any requirement that the Settlement Class member submit a claim form or otherwise affirmatively participate in any claims process.
No portion of the monetary settlement relief is consumed by attorneys' fees, litigation expenses, notice expenses, settlement administration expenses, or the class representative's proposed incentive award, since such amounts are all separately provided for and (subject to stipulated maximum amounts and approval by the Court as reasonable) will be paid by Prudential.
The Settlement Class encompasses the entire putative class as alleged in the operative First Amended Complaint in the action, for the period from the outset of the class period (six years prior to the filing of the action -- June 1, 2001) through the date of the Court's Preliminary Approval Order, January 10, 2011, (Doc. No. 199). Only those Settlement Class members who have granted Prudential a general release of all claims, subject to review by Class Counsel, are excluded from the Settlement Class.
The Agreement provides for the dismissal, with prejudice, of the action in its entirety, including the benefits claim under 29 U.S.C. §1132(a)(1)(B) asserted in the First Amended Complaint on behalf of a putative subclass of insureds under the Den-Mat Plan. Based on the declaration of Scott Hall (Ex. 3 to the Gianelli Declaration submitted in support of preliminary settlement approval, Doc. No. 193-1), Ms. Vind is the only such putative subclass member during the class period from June 1, 2001 forward, and the Prudential group long term disability contract issued to Den-Mat was terminated in April 2005.
C. Settlement was reached in this action with the benefit of extensive litigation. Among other things, Plaintiff filed a Complaint and First Amended Complaint; Defendant filed several motions to dismiss, a motion for summary judgment, and a motion for partial judgment on the pleadings. Ms. Vind's claim was remanded to the ERISA Claims Administrator. The parties pursued extensive discovery and related proceedings to compel and/or prohibit discovery. Finally, Plaintiff sought to certify a class, with briefing fully completed prior to presenting the proposed Settlement to the Court. Based upon the extent of these completed law and motion proceedings, including the full briefing of the class certification motion, the Parties were adequately informed of the legal bases for their respective claims and defenses herein, and capable of balancing the risks of continued litigation and the benefits of the proposed Settlement.
D. Before reaching the Settlement, the Parties also conducted substantial discovery. Plaintiff reviewed and analyzed Prudential's existing claims handling guidelines and procedures regarding Workers' Compensation offsets in California, Ms. Vind's policy documents, her expansive claims file, sixty-eight additional randomly-selected claims files for Settlement Class members, and preliminary class data. An expert statistician and a disability claims handling expert were both retained by Plaintiff to assist in the review and analysis of the selected claims files. In total, more than 10,000 pages of materials were produced, reviewed, and analyzed in detail. Based upon the extent of this completed discovery, the Parties were adequately informed of the evidentiary bases for their respective claims and defenses herein, and capable of balancing the risks of continued litigation and the benefits of the proposed Settlement.
E. The Settlement Class is and was at all times adequately represented by Plaintiff and Class Counsel. Class Counsel have fully and competently prosecuted all causes of action, claims, theories of liability, and remedies reasonably available to the Settlement Class members. Both Class Counsel and Defendants' Counsel are highly experienced trial lawyers with specialized knowledge in complex insurance class action litigation. Class Counsel and Defendants' Counsel are capable of properly assessing the risks, expenses, and duration of continued litigation, including at trial and on appeal. Class Counsel and Defendants' Counsel have agreed that the proposed Settlement represents a fair and reasonable resolution to this matter in light of the various risks and costs to the respective Parties of continued litigation.
F. As further addressed below, through the mailing of the Settlement Notice in the form and manner ordered by this Court, the Settlement Class has received the best practicable notice of the certification of the Settlement Class, the Settlement, and of their rights and options as Settlement Class members. Said notice fully satisfied all notice requirements under the law, including all due process rights under the U.S. Constitution.
G. After full, fair, and effective notice, the response of the Settlement Class to this Action, and to the Settlement (including Class Counsel's application for an award of attorneys' fees, litigation expenses, and the class representative's incentive), strongly favors final approval of the Settlement. The Settlement Administrator has mailed 914 Settlement Notices, to each unique Settlement Class member, explaining the Settlement, certification of the Settlement Class, the Settlement's benefits, and Settlement Class members' rights to object and/or request to appear. No objections and no requests to appear have been filed with the Court or received by the Settlement Administrator or the Parties.
4. Conditional Certification of the Settlement Class for Settlement Purposes Only: For purposes of the proposed Settlement only, the Court hereby certifies the Settlement Class, as defined in the Agreement and set forth herein, pursuant to Federal Rules of Civil Procedure, Rule 23(b)(2). The Court appoints Plaintiff, Nelida Vind, as class representative and the law firms of Gianelli & Morris, Ernst Law Group, and Mattison Law Firm as co-Class Counsel for the Settlement Class. The Settlement Class is defined as:
"All California residents who have claimed disability benefits under long term disability group contracts that have been fully insured by Prudential and are governed by ERISA, against whom any offset was applied for California workers' compensation benefits on or after June 1, 2001 and on or before the Preliminary Approval Date. Excluded from the Settlement Class ...