Arnold v. State Farm Fire & Cas. Co.

1

ANNIE ARNOLD, individually, and on behalf of all others similarly situated, Plaintiff, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant.

CIV. ACT. No. 2:17-cv-148-TFM-C

United States District Court, S.D. Alabama, Northern Division

October 4, 2022

MEMORANDUM OPINION AND ORDER

TERRY F. MOORER UNITED STATES DISTRICT JUDGE

Before the Court is Plaintiffs' Unopposed Motion for Final Approval of Class Settlement (Doc. 202, filed 9/16/22) accompanied by the brief in support (Doc. 203) and evidentiary support (Docs. 200, 204). Also before the Court is Class Counsel's Motion for Attorneys' Fees Litigation Costs, and Request for Service Awards pursuant to Federal Rule of Civil Procedure 23(e)(2). See Doc 201. Plaintiff Annie Arnold (“Named Plaintiff”) additional class representatives Bobby Abney, Tina Daniel and Kenneth Scruggs (“Additional Class Representatives”), individually and on behalf of themselves and the Class as defined herein, and Defendant State Farm Fire and Casualty Company (“State Farm” or “Defendant”), have agreed, subject to Court approval, to settle this litigation pursuant to the terms and conditions stated in the Stipulation of Settlement (the “Stipulation” or the “Settlement”) filed with the Court on February 9, 2022. See Doc. 196.

On April 25, 2022, the Court granted preliminary approval of the Agreement pursuant to Rule 23(e)(1)(B). See Doc. 199. Class Notice was issued in accordance with the preliminary approval order, and on September 23, 2022, the Court held a final approval hearing on the motions.

The Court has considered the Eleventh Circuit's seven factors for evaluation of a class action settlement and all the Rule 23(e)(2) factors applicable to the potential approval of the Settlement. The Court independently evaluated the Court record, the Settlement, Class Counsel's Motions, and the responses and lack of responses to the class notice by the class members. The Court finds and holds as follows:

I. FINDINGS OF FACT

1. Named Plaintiff initiated this action on March 8, 2017, asserting a single claim for breach of contract on behalf of herself and a putative class of State Farm policyholders who made structural damage insurance claims for damage to Alabama properties. State Farm timely removed the action to this Court on April 7, 2017. See Doc. 1. Named Plaintiff claims that State Farm improperly applied depreciation to the estimated cost of labor and other non-material costs necessary to complete repairs to insured property when it calculated and issued actual cash value (“ACV”) claim payments to her and other class members for structural damage losses incurred under their property insurance policies. State Farm has denied, and still denies, any liability, wrongdoing, and damages with respect to the matters alleged in the Complaint.

2. After litigation between the Parties and arms-length negotiations between Class Counsel and State Farm's counsel, the Parties reached a settlement that provides substantial benefits to the Settlement Class, in return for a release and dismissal with prejudice of all claims against State Farm. The Settlement was reached after the Parties had engaged in extensive and lengthy negotiations and four mediation sessions before a neutral third-party mediator, George M. Van Tassel, Jr., of Upchurch Watson White & Max. During the negotiations, and in accordance with the highest ethical standards for class action settlement negotiations, settlement relief to the class members was agreed to prior to negotiations concerning any potential award of attorneys' fees, litigation expenses, or service awards. At the time of settlement negotiations, and after years of litigation, Class Counsel was therefore well positioned to evaluate the benefits of the Settlement, taking into account the expense, risk, and uncertainty of trial and protracted appeal thereafter with respect to numerous difficult questions of law and fact.

3. Named Plaintiff, the Additional Class Representatives, and State Farm executed the Stipulation of Settlement and exhibits thereto on January 20, 2022 (collectively, the “Stipulation”). See Doc. 196-1.

4. The Stipulation is hereby incorporated by reference in this Memorandum Opinion and Order, and the definitions and terms set forth in the Stipulation are hereby adopted and incorporated into and will have the same meanings in this Memorandum Opinion and Order.

5. On April 25, 2022, the Court entered its Order Preliminary Approving Class Settlement (“Preliminary Approval Order”), preliminarily approving the Stipulation, preliminarily certifying the settlement Class for settlement purposes, and scheduling a hearing for September 23, 2022, at 9:30 a.m. to consider final approval of the Proposed Settlement and other actions described in the Preliminary Approval Order and the Stipulation (“Final Approval Hearing”). See Doc. 199.

6. This Court previously certified a litigation class of policyholders (Doc. 178). As part of its Preliminary Approval Order, the Court conditionally certified the same defined class for settlement purposes (“Settlement Class”), again defined as follows:

[A]ll persons and entities insured under a State Farm structural damage policy who made: (1) a structural damage claim for property located in the State of Alabama with a date of loss on or after March 8, 2011, but before August 3, 2017; and (2) which resulted in an actual cash value payment during the class period from which “non-material depreciation” was withheld from the policyholder; or which would have resulted in an actual cash value payment but for the withholding of “non-material depreciation” causing the loss to drop below the applicable deductible.

Excluded from the Class are: (1) all claims arising under policies with State Farm coverage form WH-2101 or endorsement form FE-3650, or any other policy form expressly permitting the “depreciation” of “labor” within the text of the policy form; (2) all persons and entities that received actual cash value payments from State Farm that exhausted the applicable limits of insurance as shown on the declarations page; (3) State Farm and its affiliates, officers, and directors; (4) members of the judiciary and their staff to whom this Action is assigned; and (5) Class Counsel.

7. On September 16, 2022, Named Plaintiff and Additional Class Representatives moved the Court for Final Approval of the terms of the Proposed Settlement and for the entry of a final order and judgment. In support, Named Plaintiff and Additional Class Representatives submitted, inter alia, evidence showing: the dissemination and adequacy of the Class Notice and Claim Form; the dissemination of the reminder Postcard Notice; the establishment of an automated toll-free telephone number and Settlement Website; the names of potential Class Members who, per the terms of the Stipulation, submitted a timely and proper request for exclusion from the Settlement Class; the arms-length nature of the negotiation of the Stipulation; and the fairness, reasonableness, and adequacy of the Stipulation. In support of the Motion for Final Approval, Named Plaintiff and Additional Class Representatives submitted a Brief in Support, setting forth extensive argument and authority along with various exhibits attached thereto.

8. In addition, on August 10, 2022, Class Counsel submitted their Unopposed Motion for Attorneys' Fees and Litigation Costs and Request for Service Awards (Doc. 201), which included evidence as to the fairness and reasonableness of those requests, as well as extensive argument and authority. Class Counsel noted their opinion that the state of the law on service awards was unsettled and cited Johnson v. NPAS Sols. LLC, 975 F.3d 1244 (11th Cir. 2020), reh'g en banc denied 43 F.4th 1138 (11th Cir. Aug. 3, 2022). The Settlement Agreement contemplates service awards to the Named Plaintiff and Additional Class Representatives, but is separate from the relief made to available to the Class. Johnson does make it clear that the Eleventh Circuit found that “incentive” or “service” awards which compensate class representatives solely for their time and efforts in commencing and prosecuting a class action lawsuit are not permitted.

9. On September 16, 2022, State Farm filed its Memorandum of Law in Support of Final Approval of Class Action Settlement. See Doc. 205. State Farm set forth in its Memorandum extensive argument and authority supporting final approval of the proposed Settlement, including its view that the Settlement is especially fair, reasonable, and adequate given State Farm's assessment of the strength of State Farm's defenses as to both liability and damages.

10. Named Plaintiff offered at the Final Approval Hearing the following evidence in support of the Motion for Final Approval and Class Counsel's Motion for Attorneys' Fees and Litigation Costs and Request for Service Awards:

Exhibit No.

Description

A

Declaration of Erik D. Peterson

B

Declaration of J. Brandon McWherter

C

Declaration of T. Joseph Snodgrass

D Declaration of David P. Martin

The Court admits Exhibits A-D into evidence for all purposes. The Court also admits the Declaration of Kimberly K. Ness Regarding Settlement Administration (Doc 204). Kimberly K. Ness is the Director of JND Legal Administration LLC which served as the Administrator in this litigation.

11. The Parties and the Settlement Administrator (JND Legal Administration) have satisfactorily demonstrated that the Class Notice and Claim Form was mailed, that the Postcard Notice was mailed, and that an automated toll-free telephone number and Settlement Website were established in accordance with the Stipulation and Preliminary Approval Order.

12. The Court further finds that all notices concerning the Settlement...