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A federal judge has approved the settlement of a class action that charged Metropolitan Life Insurance Co. with systematic discrimination against black and other non-white policyholders. Southern District of New York Judge Harold Baer Jr., in an opinion released Tuesday, endorsed the agreement to settle the case, which charges that black policyholders overpaid for insurance and received fewer benefits when compared with white insureds. Faced with “remarkably few” objections to the terms of the settlement, Baer said nothing “persuade[d] me to conclude the proposed settlement is unfair, inadequate or unreasonable.” The settlement calls for MetLife to pay no less than $52 million and no more than $90 million, largely in the form of benefits to cover former insureds or those with “in-force” policies. The company is also committed to contributing as much as $5 million to the United Negro College Fund. The case was unusual in that it included claims that MetLife sold substandard policies to non-whites, in some cases over a century ago. Many of the claims focused on MetLife’s sales of industrial or “burial” insurance policies, those purchased to cover funeral costs. Premiums for the policies were small and collected door to door on a weekly or monthly basis by MetLife “debit agents.” The company allegedly based the frequent collection system on the inability of poorer policy owners to make larger payments. The stage was set for settlement talks following a 2001 decision by Baer rejecting the company’s motion for summary judgment. In that decision, Judge Baer, assuming the allegations were true for purposes of deciding the motion, said “the payments appeared modest to the policyholder,” but “when the payments were aggregated over a lifetime, it turned out that the industrial life policies were substantially more expensive than other policies sold by MetLife.” Another allegation charged that the company limited commissions paid to agents for the sale of policies to non-whites unless the agents were selling burial policies calling for payments on a weekly basis. The settlement calls for an immediate increase in benefits for all policies currently in force, but gives those policyholders the option to elect a cash payment equal to the present value of the policy. FAIRNESS HEARING Judge Baer, who conducted a fairness hearing on the proposed settlement in February, said the class consisted of hundreds of thousands of people who purchased policies from MetLife. Roughly 40,000 people have submitted claim forms seeking to participate in the settlement. Examining the settlement’s fairness, the judge said in his decision there was little doubt that “allowing this case to continue to trial would lead to a prolonged, expensive, and complex litigation, which would be highly unfavorable to many of the elderly class members, who may not survive the elapsed time it may take before all appeals are exhausted.” The judge also approved a request, negotiated by the parties, for the plaintiffs’ lawyers to receive $24.2 million in attorney fees. “I find that the difficulty in bringing and sustaining this action, which required years of investigation and discovery, and the ability to finally settle it on terms where so many of those who were discriminated against are, at the very least, partially compensated, produced a singular and unique result,” he said. The judge said that statute of limitations concerns and the unavailability of witnesses “made a successful outcome little more than a crap shoot.” He also praised the lawyers for negotiating the fees “separate and apart” from the settlement talks, a factor that distinguished the fee request from “plain vanilla common fund class actions.” And as a policy matter, the judge said, “holding the fee negotiations unencumbered by the settlement itself may well have encouraged” this action and may encourage “future private enforcement of civil rights actions.” Bruce Yannett and Scott Auby of Debevoise & Plimpton represented MetLife. John J. Stoia Jr. of Milberg Weiss Bershad Hynes & Lerach in San Diego, and Andrew Friedman of Bonnett Fairbourn Friedman & Balint in Phoenix, were lead counsel for the plaintiffs.

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