Bernard McCormack v. American Equity Investment Life Insurance Company et al

Filing 239

FINDINGS AND ORDER PRELIMINARILY APPROVING CLASS SETTLEMENT, DIRECTING ISSUANCE OF NOTICE TO THE CLASS, AND SETTING OF FAIRNESS HEARING by Judge Christina A. Snyder: It is hereby ORDERED AND DECREED AS FOLLOWS: Plaintiffs' Motion for Preliminary Approval 236 is GRANTED. The Court preliminarily approves the proposed Settlement. The Nationwide Class, as defined in Paragraph 41 of the Settlement Agreement, is preliminarily certified for settlement purposes only. The California Class, as defi ned in Paragraph 16 of the Settlement Agreement, is preliminarily certified for settlement purposes only. The Court appoints the law firms of: (a) Bonnett, Fairbourn, Friedman & Balint, P.C.; (b) Robbins Geller Rudman & Dowd LLP; (c) Barrack Rodos & Bacine; (d) Finkelstein & Krinsk; (e) the Evans Law Firm; (f) James Hoyer Newcomer & Smiljanich, P.A.; and (g) Hagens Berman Sobol Shapiro LLP as Class Counsel. For settlement purposes only, the Court appoints Bernard McCormack, Gary Anagnostis in hi s capacity as successor co-trustee of the Anagnostis Family Trust and as coexecutor for the Estate of Gust Anagnostis, Robert Anagnostis in his capacity as successor co-trustee of the Anagnostis Family Trust and as co-executor for the Estate of Gust Anagnostis, Sharon Schipiour in her capacity as trustee of the Regina Bush Trust and executrix for the Estate of Mrs. Regina Bush, and the Estate of Lenice Mathews, by and through Executrix Mary Ann McLean and George Miller, individually as the Class Representatives. hearing (the "Fairness Hearing") will be held on 1/27/2014 10:00 AM before Judge Christina A. Snyder. The Court appoints Garden City Group as the Administrator to implement the terms of the Settlement Agreement. All procee dings in the Action are stayed until further order of the Court, except as may be necessary to implement the proposed Settlement or to comply with the terms of the Settlement Agreement. All proceedings in the Action are stayed until further order of the Court, except as may be necessary to implement the proposed Settlement or to comply with the terms of the Settlement Agreement. See document for details. (gk)

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O 1 2 3 4 5 6 7 8 9 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION 10 11 12 In re AMERICAN EQUITY ANNUITY ) ) PRACTICES AND SALES ) 13 LITIGATION ) ) 14 ) This Document Relates To: ) 15 ) ALL ACTIONS. ) ) 16 17 18 19 20 21 22 23 24 25 26 27 28 844901_1 Master File No. CV-05-6735-CAS(MANx) CLASS ACTION FINDINGS AND ORDER PRELIMINARILY APPROVING CLASS SETTLEMENT, DIRECTING ISSUANCE OF NOTICE TO THE CLASS, AND SETTING OF FAIRNESS HEARING The motion of Plaintiffs Bernard McCormack, Gary Anagnostis in his capacity 1 2 as successor co-trustee of the Anagnostis Family Trust and as co-executor for the 3 Estate of Gust Anagnostis, Robert Anagnostis in his capacity as successor co-trustee 4 of the Anagnostis Family Trust and as co-executor for the Estate of Gust Anagnostis, 5 Sharon Schipiour in her capacity as trustee of the Regina Bush Trust and executrix for 6 the Estate of Mrs. Regina Bush, and the Estate of Lenice Mathews, by and through 7 Executrix Mary Ann McLean and George Miller, individually and on behalf of the 8 Class as defined in the Settlement Agreement (collectively, “Plaintiffs”), for 9 preliminary approval of the proposed class action Settlement reached with Defendants 10 American Equity Investment Life Insurance Company and American Equity 11 Investment Service Company (collectively “American Equity”) came on for hearing 12 before this Court on ______________________, 2013. Laura Geist, Esq. and Fletcher 13 Alford, Esq. appeared as attorneys for American Equity, and Andrew Friedman, Esq. 14 appeared as attorney for Plaintiffs. After considering the Settlement Agreement, the 15 moving papers, arguments of counsel and all other matters presented to the Court, the 16 Court finds that: 1. 17 There are two operative complaints: Bernard McCormack v. American 18 Equity Inv. Life Ins. Co. et al., CV05-6735-CAS (MANx) (C.D. Cal.), filed on 19 September 13, 2005, on behalf of himself and all persons in certain states; and Gust 20 Anagnostis et al. v. American Equity Inv. Life Ins. Co., CV06-388-CAS (MANx) 21 (C.D. Cal.), filed on January 20, 2006, on behalf of a nationwide class of seniors 22 (collectively, “the Action”). Plaintiffs allege violations of civil RICO, elder abuse, 23 unlawful, deceptive and unfair business practices, unfair, deceptive and misleading 24 advertising, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, 25 fraud, fraudulent misrepresentation, negligent misrepresentation, fraudulent 26 inducement, civil conspiracy, unjust enrichment, and imposition of a constructive 27 trust. 28 844901_1 -1- 2. 1 American Equity expressly denies any and all wrongdoing alleged in the 2 pleadings and Plaintiffs’ other filings, and does not admit or concede any actual or 3 potential fault, wrongdoing, or liability in connection with any facts or claims that 4 have been or could have been alleged against it in the Action. American Equity has 5 agreed to the proposed Settlement to avoid further costs of litigation. American 6 Equity believes the evidence is very clear that it does not unfairly target seniors, that 7 its Annuities have no undisclosed loads, that it did not break any laws or any terms of 8 its Annuities, and that its Annuities are appropriate products for many consumers. 9 American Equity contends that Plaintiffs’ allegations do not state a cause of action 10 and are not sustainable as a matter of law. In addition, American Equity contends that 11 Plaintiffs would be unable to prove the elements of the causes of action at trial, and 12 that this would be fatal to both individual and class claims. In this regard, American 13 Equity contends that it would be inappropriate to certify a litigation class in this 14 matter, in part due to the manageability and superiority problems inherent in 15 presenting the case in a trial involving thousands of individualized sales. 3. 16 The proposed Settlement resulted from numerous arm’s-length mediation 17 sessions and was concluded only after Plaintiffs and American Equity conducted their 18 own investigations and evaluations of the factual and legal issues raised by Plaintiffs’ 19 claims, as well as American Equity’s defenses. 4. 20 Plaintiffs and Class Counsel have agreed to settle the Action after 21 considering such factors as: (a) the benefits to Plaintiffs and the Class provided by the 22 Settlement Agreement; (b) the risks and uncertainty of litigation, especially in 23 complex actions such as this, as well as the difficulties and delays inherent in such 24 litigation, and (c) the desirability of consummating the Settlement Agreement in order 25 to provide relief to Plaintiffs and the Class. American Equity considers it desirable for 26 this Action to be settled and dismissed because the proposed Settlement will finally 27 put Plaintiffs’ claims and the underlying matters to rest. American Equity is also 28 entering into this Settlement Agreement to avoid the expense, burden, inconvenience, 844901_1 -2- 1 and inherent risk of litigation and the concomitant disruption of its business 2 operations. 5. 3 The Parties have entered into a Settlement Agreement previously filed 4 with this Court. All defined terms in this Order shall have the same meanings as in 5 the Settlement Agreement. 6. 6 The Court has reviewed the Settlement Agreement (and all the 7 attachments thereto) and determined the proposed Settlement to be fair, reasonable, 8 adequate and within the range of possible approval. The proposed Settlement does not 9 improperly grant preferential treatment to the Class Representatives or any segment of 10 the Class. The proposed Settlement is sufficient to warrant sending notice to the 11 Class. The procedures for establishing and administering the benefits provided by the 12 proposed Settlement and for notice of the proposed Settlement, exclusion from the 13 proposed Settlement, and objections to the proposed Settlement are fair, reasonable, 14 and in the best interests of the Class. 7. 15 Based on Plaintiffs’ motion, the Memorandum of Points and Authorities, 16 the Settlement Agreement, and all supporting exhibits and attachments, the Court 17 preliminarily certifies the Class, as defined in Paragraph 22(a), including the 18 Nationwide Class defined in Paragraph 41 and the California Class defined in 19 Paragraph 16 of the Settlement Agreement, pursuant to Rule 23(a) and 23(b)(3) for 20 settlement purposes (“the proposed Settlement Class”). The Court hereby finds for 21 settlement purposes that: (a) 22 the numerosity requirement of Rule 23(a)(1) is satisfied because 23 the proposed Settlement Class comprised of more than ______ Owners of over _____ 24 Annuities satisfies the requirement that a class be sufficiently numerous such that 25 joinder of all members is impractical; (b) 26 the commonality requirement of Rule 23(a)(2) is satisfied, for 27 settlement purposes, because American Equity products owned by the various 28 proposed Settlement Class members have some similar elements; 844901_1 -3- (c) 1 the typicality requirement of Rule 23(a)(3) is satisfied, for 2 settlement purposes, because the products provided to Plaintiffs were similar to those 3 provided to members of the proposed Settlement Class; (d) 4 the adequacy requirement of Rule 23(a)(4) is satisfied, for 5 settlement purposes, because: (i) Class Counsel are qualified and competent to 6 prosecute the Action vigorously; (ii) Plaintiffs’ interests are not antagonistic to the 7 interests of the proposed Settlement Class; and (iii) Class Counsel and Plaintiffs have 8 fairly and adequately protected the interests of the proposed Settlement Class; and (e) 9 the predominance and superiority requirements of Rule 23(b)(3) 10 are satisfied, for settlement purposes, because, if the proposed Settlement is approved, 11 there will be no further litigation or trial and the proposed Settlement is structured in a 12 manner that would provide uniform relief to similarly-situated members of the 13 proposed Settlement Class, which is superior to litigation of the claims individually. (f) 14 The above findings are made with respect to the Settlement only 15 and do not necessarily reflect the Court’s views as to the very different question of 16 whether this action can or should be certified as a class for litigation purposes; nor do 17 these findings in any way prejudice American Equity’s right to oppose class 18 certification should the proposed Settlement not be finally approved. 8. 19 The Court has reviewed the notice provisions of Section VIII of the 20 Settlement Agreement, and the Class Notice Package, including the Class Notice and 21 the Claim Form attached to the Settlement Agreement as Exhibits B and C. The Court 22 has determined that mailing the Class Notice Package to the last known addresses of 23 the proposed Settlement Class: 24 (a) constitutes the best practicable notice under the circumstances; 25 (b) is reasonably calculated to apprise the members of the proposed 26 Settlement Class of the pendency of the Action and of their right to object to or 27 exclude themselves from the proposed Settlement; 28 844901_1 -4- (c) 1 is reasonable and constitutes due, adequate, and sufficient notice to 2 all persons entitled to receive notice; and (d) 3 meets all applicable requirements of Rule 23 of the Federal Rules 4 of Civil Procedure, the United States Constitution, and its Amendments. 5 Accordingly, it is hereby ORDERED AND DECREED AS FOLLOWS: 6 1. The Motion for Preliminary Approval is GRANTED. The Court 7 preliminarily approves the proposed Settlement. All defined terms in the foregoing 8 findings and this Order shall have the same meanings as in the Settlement Agreement, 9 unless otherwise defined in this Order. 2. 10 The Nationwide Class, as defined in Paragraph 41 of the Settlement 11 Agreement, is preliminarily certified for settlement purposes only. 3. 12 The California Class, as defined in Paragraph 16 of the Settlement 13 Agreement, is preliminarily certified for settlement purposes only. 4. 14 The Court appoints the law firms of: (a) Bonnett, Fairbourn, Friedman & 15 Balint, P.C.; (b) Robbins Geller Rudman & Dowd LLP; (c) Barrack Rodos & Bacine; 16 (d) Finkelstein & Krinsk; (e) the Evans Law Firm; (f) James Hoyer Newcomer & 17 Smiljanich, P.A.; and (g) Hagens Berman Sobol Shapiro LLP as Class Counsel. For 18 settlement purposes only, the Court appoints Bernard McCormack, Gary Anagnostis 19 in his capacity as successor co-trustee of the Anagnostis Family Trust and as co20 executor for the Estate of Gust Anagnostis, Robert Anagnostis in his capacity as 21 successor co-trustee of the Anagnostis Family Trust and as co-executor for the Estate 22 of Gust Anagnostis, Sharon Schipiour in her capacity as trustee of the Regina Bush 23 Trust and executrix for the Estate of Mrs. Regina Bush, and the Estate of Lenice 24 Mathews, by and through Executrix Mary Ann McLean and George Miller, 25 individually as the Class Representatives. 26 27 28 844901_1 -5- 1 5. A hearing (the “Fairness Hearing”) will be held on January 27, 2014 at 2 10:00 a.m. before the undersigned in the United States District Court for the Central 3 District of California, Western Division, to consider the fairness, reasonableness, and 4 adequacy of the proposed Settlement and whether it should be finally approved by the 5 Court. 6. 6 The Court approves the proposed Class Notice Package and the plan for 7 giving notice. 7. 8 American Equity and Class Counsel are authorized to: (a) 9 establish the means necessary to administer the proposed 10 Settlement, in accordance with the terms of the Settlement Agreement; and (b) 11 retain an Administrator to help administer the proposed Settlement, 12 including the notice provisions. 8. 13 The Court appoints Garden City Group as the Administrator to 14 implement the terms of the Settlement Agreement. 9. 15 The Administrator shall mail the Class Notice Package to each member 16 of the proposed Settlement Class by first-class mail, postage prepaid, to his or her last 17 known address no later than 21 days after entry of this Order, as described in the 18 Settlement Agreement. 10. 19 The Administrator shall file proof of the mailing of the Class Notice 20 Packages at or before the Fairness Hearing. 11. 21 Class Counsel shall file their petition for approval of Class Counsel’s fees 22 and expenses no later than ____ days prior to the Fairness Hearing. 12. 23 American Equity is prohibited from communicating with members of the 24 proposed Settlement Class about the Action or the Settlement, but American Equity is 25 not precluded from: 26 27 28 844901_1 -6- (a) 1 speaking to members of the proposed Settlement Class in the 2 ordinary course of American Equity’s business, provided that if such members ask 3 American Equity for information or advice regarding the Action or the Settlement, 4 American Equity shall direct such members to contact the Administrator or Class 5 Counsel; or (b) 6 communicating with agents and employees of American Equity or 7 communicating with its auditors, rating agencies, insurance commissioners, regulators 8 or similar reporting organizations or governmental entities regarding the impact and/or 9 administration of the Settlement. 13. 10 Each member of the proposed Settlement Class who wishes to exclude 11 himself or herself from the proposed Settlement Class must submit an appropriate, 12 timely written request for exclusion, postmarked no later than 45 days after mailing of 13 the Class Notice Package and addressed to the Administrator at the address provided 14 in the Class Notice. 14. 15 Any member of the proposed Settlement Class who does not submit a 16 timely, written request for exclusion shall be bound by all proceedings, orders, and 17 judgments in the Action, even if such member has previously initiated or subsequently 18 initiates individual litigation or other proceedings against American Equity relating to 19 Annuities issued during the Class Period. 15. 20 Each member of the proposed Settlement Class who wishes to object to 21 the fairness, reasonableness, or adequacy of the Settlement Agreement, the proposed 22 Settlement, or to the award of attorney’s fees and expenses, shall serve on Bonnett, 23 Fairbourn, Friedman & Balint, P.C. and American Equity Counsel, and file with the 24 Court, no later than 45 days after mailing of the Class Notice Package, a statement of 25 the objection, as well as the specific reasons, if any, for each objection, including any 26 legal support the proposed Settlement Class member wishes to bring to the Court’s 27 attention and any evidence the member wishes to introduce in support of his or her 28 objection, or be forever barred from separately objecting. 844901_1 -7- 16. 1 Any attorney hired by a proposed Settlement Class member at the 2 member’s expense for the purpose of objecting to the Settlement Agreement, the 3 proposed Settlement, or the award of attorney’s fees and expenses, shall file with the 4 Clerk of the Court and deliver to Bonnett, Fairbourn, Friedman & Balint, P.C., and 5 American Equity Counsel a notice of appearance no later than 45 days after mailing of 6 the Class Notice Package or as the Court otherwise may direct. 17. 7 Any proposed Settlement Class member who files and serves a written 8 objection and who intends to make an appearance at the Fairness hearing, either in 9 person or through personal counsel hired at the member’s expense, shall deliver to 10 Bonnett, Fairbourn, Friedman & Balint, P.C., and American Equity Counsel, and file 11 with the Court no later than 45 days after mailing of the Class Notice Package a notice 12 of intention to appear at the Fairness Hearing. 18. 13 The Administrator shall rent one or more post-office boxes to be used for 14 receiving requests for exclusion, claim forms, and other communications from the 15 proposed Settlement Class. 19. 16 American Equity Counsel and Class Counsel shall promptly furnish each 17 other with copies of any and all objections or written requests for exclusion that might 18 come into their possession that are not otherwise provided by the Administrator. 20. 19 All proceedings in the Action are stayed until further order of the Court, 20 except as may be necessary to implement the proposed Settlement or to comply with 21 the terms of the Settlement Agreement. Further, pending the Court’s final 22 determination of whether the proposed Settlement will be approved, each and every 23 member of the proposed Settlement Class who has not excluded himself or herself 24 from the Settlement, the member’s representatives, and/or all persons in active concert 25 or participation with such members are barred and enjoined from filing, commencing, 26 prosecuting, maintaining, intervening in, participating in, conducting, or continuing, 27 as class members or otherwise, any action, including without limitation a class action 28 (including by seeking to amend a pending complaint to include class allegations or by 844901_1 -8- 1 seeking class certification in a pending action in any jurisdiction), in any federal court, 2 any state court, or any other tribunal or forum of any kind, and from receiving any 3 benefits from any lawsuit, administrative or regulatory proceeding or order in any 4 jurisdiction, arising out of, based on, or relating to the claims, causes of actions, facts, 5 and/or circumstances alleged in the Action and/or the Released Claims. 21. 6 This order shall become null and void, and shall be without prejudice to 7 the rights of the Parties, all of whom shall be restored to their respective positions 8 existing immediately before this Court entered this Order, if: (a) the proposed 9 Settlement is not finally approved by the Court, or does not become final, pursuant to 10 the terms of the Settlement Agreement; or (b) the Settlement is terminated in 11 accordance with the terms of the Settlement Agreement or does not become effective 12 as required by the terms of the Settlement Agreement for any other reason. In such 13 event, the Settlement Agreement shall become null and void and be of no further force 14 and effect, and neither the Settlement Agreement nor this Order, shall be used or 15 referred to for any purpose whatsoever. 22. 16 In no event shall the Settlement Agreement, any of its provisions, or any 17 negotiations, statements, or proceedings relating to it be offered as, received as, used 18 as, or deemed to be evidence in the Action, any other action, or in any other 19 proceeding, except in a proceeding to enforce the Settlement Agreement. Without 20 limiting the foregoing, neither the Settlement Agreement nor any related negotiations, 21 statements, or proceedings shall be offered as, used as, or deemed to be evidence or an 22 admission or concession by any person of, any matter, including but not limited to any 23 liability or wrongdoing on the part of American Equity or as evidence of the 24 appropriateness of certification of any class. 23. 25 The Court reserves the right to continue the Fairness Hearing without 26 further written notice to the proposed Settlement Class, but will notify counsel for the 27 Parties and any objectors or their counsel who have timely filed a notice of intention 28 to appear in these proceedings. Unless the Court specifically orders otherwise, any 844901_1 -9- 1 such continuance shall not be interpreted to expand or change any deadlines contained 2 in this Order or the Settlement Agreement. 3 4 IT IS SO ORDERED. 5 DATED: September 16, 2013 6 ____________________________________ THE HON. CHRISTINA A. SNYDER UNITED STATES DISTRICT JUDGE 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 844901_1 - 10 -