In re Insurance Brokerage Antitrust Litigation, MDL No. 1663, Civil Action No. 04-5184; U.S. District Court (DNJ); opinion by Cecchi, U.S.D.J.; filed August 1, 2013. DDS No. 59-7-xxxx [38 pp.]
This matter comes before the court on plaintiffs' motion for final approval of the proposed settlement agreement and class counsel's motion for attorney fees, reimbursement of expenses, and service award payments to the named plaintiffs. The court conducted a fairness hearing on July 17, 2013.
This matter involves several class actions filed against insurers and insurance brokers alleging industrywide conspiracies, in violation of federal antitrust laws, the Racketeer Influenced and Corrupt Organizations Act (RICO), and state statutory and common law. Plaintiffs are purchasers of insurance, and defendants are insurers (the insurer defendants) and insurance brokers (the broker defendants).
Plaintiffs' actions were consolidated by the Judicial Panel on Multidistrict Litigation into MDL 1663, In re Insurance Brokerage Antitrust Litigation, and transferred to the District of New Jersey. On transfer, the actions were severed into two consolidated dockets — the first pertaining to claims regarding property and casualty insurance (the commercial case), and the second pertaining to claims regarding employee benefits insurance (the employee benefits case).
The law firms of Miller Faucher & Cafferty (now Cafferty Clobes Meriwether & Sprengel) and Whatley, Drake & Kallas (now Whatley Kallas) were appointed class counsel for plaintiffs.
On June 21, 2013, plaintiffs filed a motion for final approval of the proposed settlement. In response thereto, the court has received no objections to the settlement and only two requests for exclusion.
The settlement class consists of all persons and entities that, during the period from Jan. 1, 1998, through Dec. 31, 2004, inclusive, purchased excess casualty or commercial umbrella insurance policies in any layer of coverage from any insurance company affiliated with any excess casualty insurer defendant group through Marsh & McLennan Companies Inc., or any subsidiaries or affiliates thereof.
According to the settlement agreement's plan of allocation, all settlement class members shall be allocated a portion of the net settlement fund. The settlement class members are divided into two groups: those that previously settled in the regulatory settlements and those that did not.
Pursuant to the plan of allocation, payments will be made, pro rata, based on the premiums the settlement class members paid for their excess casualty insurance policies. The nonregulatory settlement class members will be allocated 75 percent of the net settlement fund and will receive a larger pro rata share of their premium payment than the regulatory settlement class members will receive. The regulatory settlement class members will be allocated 25 percent of the net settlement fund and will receive a smaller pro rata share of their premium payment. In addition, as a matter of administrative efficiency, all settlement class members will receive a minimum payment of at least $10, and the payments to settlement class members that would otherwise receive less than $10 on a straight pro rata basis will be increased to $10.
Class counsel filed an application for an award of attorney fees of $3.465 million, which is approximately 33 percent of the settlement fund, and for reimbursement of litigation expenses of $1,023,188.76. Class counsel also applied for service awards of $1,000 for each named plaintiff.
Held: Final approval of the settlement agreement is granted in this class action against insurers and insurance brokers alleging industrywide conspiracies in violation of federal antitrust laws, the Racketeer Influenced and Corrupt Organizations Act (RICO), and state statutory and common law.
Rule 23 of the Federal Rules of Civil Procedure requires the court to engage in a two-step analysis to determine whether to certify a class action for settlement purposes. First, the court must determine if plaintiffs have satisfied the prerequisites for maintaining a class action as set forth in Rule 23(a). If plaintiffs can satisfy these prerequisites, the court must then determine whether the alternative requirements of Rule 23(b) are met.
Rule 23(a) provides that class members may maintain a class action as representatives of a class if they show that (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.
Here, the numerosity requirement is met where the settlement class members number more than 20,000. There can be no serious question that joinder of all these parties, geographically dispersed throughout the United States, would be impracticable.
Plaintiffs also satisfy the commonality requirement due to the conspiratorial nature of allegations in antitrust and RICO actions. In this case, common questions of law and fact include, inter alia, (a) whether the settling defendants engaged in a contract, combination or conspiracy to allocate the market for the sale of insurance; (b) whether the settling defendants' contract, combination or conspiracy reduced and unreasonably restrained competition in the sale of insurance; (c) whether the settling defendants participated in a pattern of racketeering activity; and (d) whether the settling defendants violated RICO.
The named plaintiffs' claims are typical of those brought by the settlement class members at large.
Finally, the court must consider adequacy of representation both as to the named plaintiffs and their class counsel under Rules 23(a) and (g). The class representatives fairly and adequately protect the interests of the class. There is no indication that the named plaintiffs' interests are antagonistic to those of the absent class members.
As to class counsel's adequacy, the court has found that the two firms serving as plaintiffs' class counsel have "successfully prosecuted numerous antitrust actions," and that the individual attorneys representing these firms, Edith Kallas and Bryan Clobes, are "clearly well qualified and experienced class action attorneys who have been involved in similar … litigation around the country."
The court next addresses the question of whether the class action also comports with the requirements of Rule 23(b). Under 23(b)(3), the court must find both that "the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy." The class action in this case readily meets these requirements of predominance and superiority.
Because the named plaintiffs have satisfied all of the requirements of Fed. R. Civ. P. 23, the court certifies the proposed class for purposes of this settlement and approves the settlement agreement. The court also grants the applications of class counsel for attorney fees, reimbursement of expenses and incentive award payments.