In re Ins. Brokerage Antitrust Litig.

IN RE INSURANCE BROKERAGE ANTITRUST LITIGATION APPLIES TO ALL ACTIONS.

MDL No. 1663

Civil Action No. 04-5184 (CCC)

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

Dated: March 30, 2012

FOR PUBLICATION

OPINION

CECCHI, District Judge.

This matter comes before the Court upon Plaintiffs' Motion for Final Approval of the proposed Settlement Agreement¹ and Class Counsel's Motion for attorney fees, reimbursement of expenses, and service award payments to the named Plaintiffs. Signum, LLC ("Signum"), a Tag-Along party to this multidistrict litigation, also filed a Motion for Injunctive Relief and Protective Order. The Court conducted a Fairness Hearing on September 14. 2011. Now, having considered the arguments by all parties to this matter, including the objectors, the Court sets forth its findings below.²

I. BACKGROUND

This matter involves several class actions filed by Plaintiffs in 2004 against various insurance companies and broker firms. Plaintiffs allege violations of federal antitrust laws, the Racketeer Influenced and Corrupt Organizations Act ("RICO"), various state statutes and common law. The class actions were consolidated by the Judicial Panel on MultidistrictLitigation into MDL 1663, In Re Insurance Brokerage Antitrust Litigation, and transferred to the District of New Jersey for coordinated pretrial proceedings. Pursuant to the Court's Orders, the law firms of Miller Faucher and Cafferty LLP (now Cafferty Faucher LLP) and Whatley, Drake & Kallas, LLC were appointed Class Counsel for Plaintiffs.

In August 2005, Plaintiffs filed a First Consolidated Amended Commercial Class Action Complaint. On November 29, 2005, Defendants filed various motions to dismiss. On October 3, 2006, Judge Faith S. Hochberg dismissed Plaintiffs' federal antitrust and RICO claims and required Plaintiffs to file a "Supplemental Statement of Particularity" and an Amended RICO Case Statement. (Opinion, dated October 3, 2006.) Plaintiffs filed the required pleadings, adding a Council of Insurance Agents & Brokers-based ("CIAB") RICO claim. On December 21, 2006, Defendants once again moved to dismiss. On April 5, 2007, Chief Judge Garrett E. Brown, Jr. ("Judge Brown") granted Defendants' dismissal motions and ordered Plaintiffs to re-plead their antitrust and RICO claims. See In re Ins. Brokerage Antitrust Litig., MDL No. 1663, 2007 WL 1062980 (D. N.J. Apr. 5, 2007) and In re Ins. Brokerage Antitrust Litig., MDL No. 1663, 2007 WL 1100449 (D. N.J. Apr. 5, 2007).

On May 22, 2007, Plaintiffs filed a Second Amended Complaint, Revised Statement of Particularity and a Third Amended RICO Case Statement. Judge Brown dismissed Plaintiffs' federal antitrust and RICO claims. (Opinions, dated August 31, 2007 and September 28, 2007.) Judge Brown also declined to exercise supplemental jurisdiction over Plaintiffs' state law claims. (Id.) On appeal, the Third Circuit reversed the: (1) dismissal of Plaintiffs' federal antitrust claim against certain insurer Defendants relating to an alleged Marsh-Brokered Excess Casualty Insurance conspiracy; (2) dismissal of the RICO claim based on an alleged Marsh-centered commercial enterprise (with respect to the same insurer Defendants); and (3) dismissal of theRICO claim based on the alleged CIAB enterprise (with respect to the Defendant brokers). In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 383 (3d Cir. 2010). The Third Circuit also vacated judge Brown's decision not to exercise supplemental jurisdiction over Plaintiffs' state law claims. The Third Circuit affirmed the dismissals in all other respects and remanded the remaining claims. In late 2010, Defendants filed various motions to dismiss the remanded claims. Id. On June 20, 2011, Judge Brown administratively terminated Defendants' motions to dismiss. (Order, dated June 20, 2011.) On October 21, 2011, Defendants re-filed their motions to dismiss.

The parties engaged in a settlement mediation process, under the auspices of former federal Judge Layn Phillips, and submitted to the Court a Settlement Agreement for preliminary approval in May 2011. The Court had previously approved three related settlements in this action, in an aggregate amount of $218,825,769.42, with the Zurich, Gallagher and Marsh Defendants (the "Zurich Settlement," "Marsh Settlement" and "Gallagher Settlement," respectively). In re Ins. Brokerage Antitrust Litig, 579 F.3d 241 (3d Cir. 2009). The approvals of the Zurich and Gallagher Settlements were affirmed by the Third Circuit. Id The appellants in the Marsh Settlement appeal dismissed their appeal. (Pls.' Mot. Br. at 1.)

On June 28, 2011, Judge Brown entered an Order preliminarily approving the proposed settlement and preliminarily certifying a class for settlement purposes (the "Preliminary Approval Order"). (Order, dated June 28, 2011.) Class Counsel filed an application for an award of attorney fees and reimbursement of litigation expenses. Class Counsel also applied for service awards for each named Plaintiff.

In June 2011, this MDL was transferred to this Judge. (Order Transferring Case to Judge Claire C. Cecchi. dated June 27, 2011.) On September 6, 2011, Plaintiffs filed their Motion forFinal Approval of the Proposed Settlement. In response thereto, the Court received objections and requests for exclusion from the Settlement.

This Court held a Fairness Hearing on September 14, 2011. Having considered the arguments and submissions in support of and in opposition to the preliminarily-approved Settlement Agreement, and having conducted the Fairness Hearing as required by Fed. R. Civ. P. 23(e)(2), the Court grants Plaintiffs' Motion for Final Approval of the Settlement Agreement, certifies the Settlement Class for purposes of settlement only, and approves the requested attorney fee award, service awards, and reimbursement of litigation expenses. The Court also denies Signum's Request for a Preliminary Injunction and Protective Order.

II. TERMS OF SETTLEMENT

With some exceptions, the Settlement Class consists of "all persons and entities that, during the period from January 1, 1998 through December 31, 2004, inclusive, purchased commercial insurance policies from any of the Insurer Defendants through any of the Broker Defendants, or from another insurer after soliciting insurance policy quotes or indications from any of the Insurer Defendants through any of the Broker Defendants." (Settlement Agreement at 6.)

The Settling Defendants deposited a settlement payment totaling $41 million into an interest-bearing account (the "Settlement Fund") that is being administered pursuant to an escrow agreement. (Pls.' Mot. Br. at 6.) The costs of implementing and administering the Settlement Agreement have been paid from the Settlement Fund.

According to the Settlement Agreement's Plan of Allocation (Settlement Agreement, Ex. 7), all Settlement Class members who purchased excess casualty insurance policies from AIG, AXIS, Fireman's Fund, Liberty Mutual Travelers and XL, or any subsidiaries or affiliates ofthese entities, through Marsh & McLennan Companies, Inc. or any of its subsidiaries or affiliates (the "Excess Casualty Claimants"), will receive 85% of the Settlement Fund. (Id.)³ The remaining 15% of the Settlement Fund will be used to fund a cy pres award that will be divided between "Consumer Action" and the "Public Entity Risk Institute," two charitable organizations that serve the interests of Settlement Class members. (Pls.' Mot. Br. at 7.) Consumer Action is focused on individual consumers and small businesses. The Public Entity Risk Institute is focused on public entities, municipalities, and non-profit organizations. (Fairness Hearing Tr. 23-24.) Both entities indicate that they will use the cy pres funds for educational purposes or to fund other organizations that will benefit insurance policyholders. (Id.)

Class Counsel filed an application for an award of attorney fees in the amount of $10.25 million, which is approximately 25% of the Settlement Fund, and for reimbursement of litigation expenses in the amount of $394,192.76. (Plaintiffs' Motion for Attorney Fees, Reimbursement of Expenses and Service Award Payments to Named Plaintiffs.) Class Counsel also applied for service awards of $5,000 for each named Plaintiff. Plaintiffs seek to have the attorney fees, litigation expenses, and service awards paid solely from the Settlement Escrow Account. (Pls.' Mot. Br. at 6.)

III. NOTICE

The names and addresses of the Settlement Class members were obtained through a reasonable search by the Settling Insurer Defendants of their records relating to commercialinsurance placed from January 1. 1998 through December 31, 2004. (Settlement Agreement at 15.)

Notice of the Settlement was disseminated to the Settlement Class as follows: (1) "Long Form Postcards" were sent to the Excess Casualty Claimants (WL, Ex. 3); (2) "Short Form Postcards" were sent to Settlement Class members who are not Excess Casualty Claimants (Id., Ex. 4); (3) a "Detailed Notice" (Id., Exhibit 5) was posted on the website www.insurancebrokeragesettement.com and Class Counsel's firm websites; and (4) a "Publication Notice" (Id., Ex. 6) was published two times in all editions of The New York Times, The Wall Street Journal, USA Today, and Business Insurance, and one time in RM. Magazine. All notices were mailed by August 4, 2011. (Pls.' Mot. Br. at 9-10.)

The Notices explained that any Settlement Class members desiring to be excluded from or object to the fairness, reasonableness or adequacy of the Settlement Agreement, Plan of Allocation, or any terms of the Settlement Agreement should file their requests for exclusion or objections no later than fifteen days before the Fairness Hearing. (Preliminary Approval Order at 16-19.) There are eighty requests for exclusion from the Settlement Class. (Daniel Coggeshall Deck) Seven objections were initially filed to the Settlement Agreement, one of which was later withdrawn and another was filed only as an alternative to...