Disability Law

Spencer v. Hartford - 10

By Patrick Hindert

United States District Judge Janet C. Hall has approved a $72.5 million preliminary settlement of the Spencer v. Hartford structured settlement class action lawsuit impacting thousands of persons who received Hartford Insurance structured settlements from January 1, 1997 to June 7, 2010.

Highlights of the June 7, 2010 court order and related settlement documents filed with the United States District Court in Bridgeport, Connecticut:

Court Order

• Reasons why the court approved the preliminary settlement:
  • Arms length negotiations by experienced counsel;
  • Almost five years of hard-fought litigation;
  • Full investigation and discovery of claims and defenses;
  • Proposed settlement is "fair, reasonable and adequate" to all members of the settlement class.
• Court maintains one class with two subclasses for "cost" and "value" plaintiffs.
• Court finds the requirements for class certification have been satisfied.
• Court approves named plaintiffs as class representatives and finds the class representatives have and will fairly and adequately protect the interests of the settlement class.
• Court approves named plaintiff attorneys as class counsel for the settlement class.
• Notice program:
  • Court finds, orders and approves contents of and plans for dissemination of notices to the settlement class.
  • Notice components:
    • First class U.S mail notice;
    • Toll-free telephone number;
    • Election to opt back in;
    • Publication notice - including a settlement website.
• Court finds there is no need for an additional opt-out program and permits withdrawals for prior opt-outs.
• Court orders Hartford to fulfill its obligations under the Class Action Fairness Act of 2005 (CAFA) whereby defendants must:
  
  • Notify the United States Attorney General and State Insurance Commissioners of class action settlements; and
  • Send copies of complaints; notice of any judicial hearings; opt-out previously available and expired; proposed settlement; reasonable estimate of number of class members; any judicial opinions.
• Court approves the Garden City Group Inc. to administer the Settlement Notice Plan and claims process.
• Court authorizes class counsel to establish an escrow account for the settlement fund which will become a 468B Qualified Settlement Fund (QSF) following final court approval scheduled for September 21, 2010.
• Court orders Hartford to pay $72.5 million into the settlement fund within 30 days of its preliminary settlement order. Hartford is entitled to interest earned by the settlement fund until final settlement approval.
• Court requires all settlement fund disbursements to be authorized by the settlement agreement and approved by the court.
• Between preliminary and final approval, court approves class counsel access to the settlement fund to pay:
  • taxes of settlement fund;
  • costs and expenses related to Hartford interest payments;
  • notice and administration costs.
• Court approves payment of 33 1/3 % class counsel attorney fees (plus costs and expenses) paid within 14 days of court approval of final settlement.
• Court schedules a Fairness Hearing on September 21, 2010 for potential final approval.
• At the Fairness Hearing, the court will determine whether:
  • The settlement is fair, reasonable and adequate and should be approved;
  • The proposed plan of allocation of the net settlement fund among the Settlement Class members should be approved;
  • The court should approve proposed attorney fees and expenses;
  • Incentive awards should be approved for class representatives;
  • Final judgment should be entered.

Settlement Documents

• Previous case history:
  • October 31, 2005 - plaintiffs commence legal action;
  • March 10, 2009 - court certifies a trial class consisting to two subclasses;
  • October 14, 2009 - Second Circuit denies Hartford's pretrial appeal;
  • January 14, 2010 - court approves a notice program that has since been effectuated;
  • March 5, 2010 - court issues its pretrial schedule and sets a trial date beginning September 27, 2010.
• In addition to direct settlement discussions, the parties utilized David Geronemus of JAMS to mediate the dispute:
  • Two full-day mediation sessions on February 16, 2010 and April 16, 2010;
  • The parties reached a settlement (term sheet) on April 16 which was subsequently memorialized into the settlement agreement.
• Proposed schedule of events:
  • Mail notice;
  • Publication notice;
  • Deadline for objections;
  • Deadline for briefs and materials in support of the final approval of the settlement;
  • Deadline for briefs and materials in support of application for attorney fees and expenses and incentive awards for named plaintiffs;
  • Deadline for responses to objections, and supplemental papers respecting final approval of the settlement, attorney fees and expenses and incentive awards;
  • Fairness hearing - September 21, 2010.
• Plaintiffs' allegations:
  • Hartford violated Racketeer Influenced and Corrupt Organizations Act (RICO) and committed common law fraud in structuring its settlements.
  • Hartford's structured settlements were priced so Hartford retained 15% of the value of the structured settlements.
  • Hartford misrepresentations included explicit or implicit reference to the:
    • Cost of the annuity or structured settlement or portion of the settlement being structured; and/or
    • Value of the annuity or structured settlement or portion of the settlement being structured.
• Hartford's response:
  • Hartford denies plaintiffs' allegations of unlawful or wrongful conduct, and denies that any conduct challenged by plaintiffs caused any damage whatsoever.
  • Settlement shall not be "construed to be an admission or evidence of any violation of any statute or law or of any liability or wrongdoing by the Hartford or the truth of the [Plaintiffs'] allegations"
• Reasons for settlement:
  • Plaintiffs want to avoid the "uncertainties and vagaries of ...complex litigation";
  • In Hartford's best interests "to avoid litigation risk and uncertainty, further expense, inconvenience, and the distraction of protracted litigation and interference with ongoing business operations".
• Gross settlement payment of $72.5 million represents 4.5% of each premium dollar Hartford used to purchase structured settlement annuities.
• Example: for a class member who structured $100,000, the gross recovery (before attorney fees and expenses) is expected to be $4500.
• Named plaintiffs - on behalf of themselves and all others similarly situated:
  • Oshonya Spencer
  • Charles Strickland
  • Douglas McDuffie
• Plaintiff attorneys - approved as class counsel:
  • Silver Golub & Teitell
    • David S. Golub
    • Jonathan M. Levine
  • Berger & Montague
    • Peter R. Kahana
    • Steven L. Bloch
  • Zuckerman Spaeder
    • Carl S. Kravitz
    • Caroline E. Reynolds
  • Risk Law Firm - Richard B. Risk
• Released parties include:
  • Defendants:
    • The Hartford Financial Services Group, Inc.
    • Hartford Life, Inc.
    • Hartford Life Insurance Company
    • Hartford Accident and Indemnity Company
    • Hartford Casualty Insurance Company
    • Hartford Insurance Company of the Midwest
    • Hartford Fire Insurance Company
  • Plus other parties including Hartford structured settlement attorneys, brokers and agents and any third parties acting on behalf of Hartford in the structured settlement transactions.
• Hartford agrees to provide class counsel with identification information for each class member.
• Huntington Bank will serve as escrow agent, subject to an escrow agreement, of the settlement fund to be named "The Hartford Structured Settlement Litigation Fund".

For complete S2KM reporting and commentary about Spencer v. Hartford, see S2KM's structured settlement wiki.

Full post as published by Beyond Structured Settlements on June 08, 2010 (boomark / email).