O'Hern v. Vida Longevity Fund, L.P.

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TIMOTHY O'HERN, et al., Individually and on Behalf of All Others Similarly Situated, Plaintiffs, v. VIDA LONGEVITY FUND, LP, et al., Defendants.

C. A. No. 21-402-SRF

United States District Court, D. Delaware

May 2, 2023

MEMORANDUM OPINION

SHERRY R. FALTON, UNITED STATES MAGISTRATE JUDGE.

Plaintiffs Timothy O'Hem, Semyon Rodkin, and Dominic Cardinale (“Plaintiffs”) bring this action on behalf of themselves and all other similarly situated individuals against the Vida Longevity Fund, LP (“VLF” or the “Fund”), an open-ended investment fund that uses money raised from investors to purchase life settlements. On March 19, 2021, Plaintiffs filed a class action complaint against VLF and defendants Vida Management I, LLC; Capital Management, LLC; Vida Capital, Inc.; and Jeffrey R. Serra (collectively, “Defendants”), alleging that VLF misled investors by attributing its declining performance to one-time or extrinsic events. (D.1.1)

The court granted preliminary certification of the settlement class and preliminary approval of the settlement on November 21, 2022. (D.I. 31) Presently before the court is Plaintiffs' uncontested motion for final approval of class action settlement and plan of allocation (D.I. 35), and the motion of Rosea Scarlato LLC (“Class Counsel”) for an award of attorneys' fees, payment of expenses, and for incentive awards (D.I. 36). For the reasons that follow, the court grants final certification of the settlement class, approves the settlement agreement, and awards attorneys' fees, expenses, and incentive awards as detailed below.

I. BACKGROUND

Plaintiffs invested in the VLF, which bought life insurance policies at a discount with the goal of producing annualized returns of 8-12% and a return of capital with low volatility. (D.I. 1 at ¶ 3) The VLF achieved the targeted rate of return from its inception though 2017, but its performance began to decline in 2018. (Id. at ¶ 4) The class action complaint alleges that the VLF misled investors by attributing its deteriorating performance to one-time or extrinsic events. (Id. at ¶ 5) At the close of the third quarter in 2020, the VLF disclosed that its losses were caused by weaknesses in its internal processes and procedures used to evaluate and price the VLF's investments. (Id.) Plaintiffs allege that the failure to disclose these weaknesses and the material conflicts of interests of its founder, Jeffrey Serra amounted to violations of the Texas Securities Act. (Id.)

After Plaintiffs filed this action on March 19, 2021, the VLF's financial performance began to improve, generating positive returns under new owners and management. (D.I. 35 at 2) The parties engaged in mediation on October 14,2021, and they reached an agreement in principle on January 5,2022. (Id. at 2-3) On July 8, 2022, the parties entered into a stipulation setting forth the negotiated terms of the proposed settlement. (D.I. 30, Ex. 2) The proposed settlement requires Defendants to pay $1.4 million to satisfy Plaintiffs' claims in exchange for a release of class claims. (Id., Ex. 2 at Ex. B at ¶ 22) The stipulation allowed Plaintiffs to conduct due diligence discovery before submitting the proposed settlement to the court for final approval. (Id., Ex. 2 at 19-20)

Plaintiffs reviewed an extensive number of documents produced by Defendants during discovery and, on September 12,2022 informed Defendants that they intended to proceed with the settlement. (D.I. 37 at ¶¶ 16-20) On November 21,2022, the court preliminarily certified the settlement class and granted preliminary approval of the proposed settlement agreement. (D.I. 31)

The record before the court confirms that Plaintiffs have fully complied with the court's order preliminarily approving the proposed settlement. (D.I. 37 at ¶ 24) The court-appointed claims administrator, Strategic Claims Services (“SCS”) disseminated the Postcard Notice to 5,765 prospective class members, and the Summary Notice was published via Globe Newswire on the internet on January 30,2023. (Id., Ex. 4 at ¶¶ 4-7) A small percentage of the Postcard Notices were returned as undeliverable, and SCS mailed Postcard Notices to forwarding addresses when such addresses were available. (D.I. 46 at ¶ 4) SCS estimates that approximately 94% of the class received the Postcard Notice. (Id.)

To date, SCS has not received any objections or requests for exclusion from the class. (D.I. 37, Ex. 4 at ¶ 10) Likewise, no prospective class member has objected to the request for attorneys' fees or expenses. (Id. at ¶¶ 67-68)

The net settlement amount, after deduction of taxes, notice and administrative expenses, and attorneys' fees and expenses from the allocated amount of $1.4 million, is to be distributed to all class members on a pro rata basis. (D.I. 37, Ex. 4 at Ex. C at ¶¶ 40-45) The settlement agreement provides that Plaintiffs' counsel will apply for an award of attorneys' fees in an amount not to exceed 30% of the settlement amount, and the amount of expenses paid or incurred shall not exceed $50,000. (Id., Ex. 4 at Ex. C at ¶ 62) Incentive awards for Plaintiffs shall not exceed $30,000 total, or $10,000 per Plaintiff. (Id.)

II. CLASS CERTIFICATION

Under Rule 23 of the Federal Rules of Civil Procedure, the court must engage in a two-step analysis to determine whether to certify a class action for settlement purposes. First, the court must determine whether Plaintiffs have satisfied the prerequisites of numerosity, commonality, typicality, and adequacy of representation as required under Rule 23(a). If the Rule 23(a) criteria are satisfied, the court next considers whether the predominance and superiority requirements of Rule 23(b) are met.

The court conducted an analysis regarding settlement class certification under Rule 23 at the preliminary certification stage, and no material facts have changed since the preliminary certification. (D.I. 31) The proposed class is defined as “all persons and entities who, during the Class Period [from January 1, 2017 through March 19, 2021], purchased or otherwise acquired VLF Interests, either directly, or indirectly through Life Assets Trust S.A. Compartments VII and/or VIII, pursuant to an offering of those partnership interests.” (D.I. 30, Ex. 2 at § LA. 1213) These objective and administratively feasible criteria for class membership render the proposed class ascertainable.

A. Rule 23(a) Requirements

The four prerequisites under Rule 23(a) are: “(1) numerosity: the class is so numerous that joinder of all members is impracticable; (2) commonality: there are questions of law or fact that are common to the class; (3) typicality: the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) adequacy of representation: the representative parties will fairly and adequately protect the interests of the class.” Schuler v. Medicines Co., 2016 WL 3457218, at *3 (D.N.J. June 24, 2016).

1. Numerosity

There is no minimum number of individuals necessary for certification of a class, and a prospective class that includes more than forty members will generally satisfy the numerosity requirement. See Stewart v. Abraham, 275 F.3d 220,226-27 (3d Cir. 2001). Here, there are 5,765 class members who will receive payment under the terms of the settlement agreement. (D.I. 37, Ex. 4 at ¶ 4) Thus, the numerosity requirement is satisfied here.

2. Commonality

“The commonality requirement will be satisfied if the named plaintiffs share at least one question of fact or law with the grievances of the prospective class.” Stewart, 275 F.3d at 227 (internal citations and quotation marks omitted). “Commonality requires the plaintiff to demonstrate that the class members have suffered the same injury,” such that the “determination of [the common contention's] truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” WalMart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011). The commonality requirement is satisfied in this case because there are common questions of law and fact, such as whether Defendants made material misrepresentations and omissions about VLF's underwriting and risk assessment procedures. (D.I. 1 at ¶¶ 40-43, 50)

3. Typicality

“The typicality requirement is designed to align the interests of the class and the class representatives so that the latter will work to benefit the entire class through the pursuit of their own goals.” Barnes v. Am. Tobacco Co., 161 F.3d 127,141 (3d Cir. 1998). “If the claims of the named plaintiffs and class members involve the same conduct by the defendant, typicality is established...In re Ins. Brokerage Antitrust Litig., 297 F.R.D. 136,149 (D.N.J. 2013). The typicality requirement is satisfied even if class members do not have identical claims or underlying factual circumstances, so long as the claims arise from the same practice or course of conduct or are based on the same legal theory. In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, 148 F.3d 283, 311-12 (3d Cir. 1998).

Plaintiffs' claims arise out of the same alleged misrepresentations and omissions by Defendants. The claims are based on Defendants' alleged misrepresentations and failure to disclose material information about weaknesses in VLF's internal processes and procedures used to evaluate and price the VLF's investments, as well as the existence of material conflicts of interest. (D.I. 1 at ¶ 5) Because Plaintiffs allege the same course of conduct and seek the same type of relief, the interests of the class members are sufficiently aligned to satisfy the typicality requirement.

4. Adequacy of representation

To determine the adequacy of class representation, the court must consider the ability of both the named p...