Bacchi v. Massachusetts Mutual Life Insurance Company

Filing 308

Judge Denise J. Casper: ORDER entered. MEMORANDUM AND ORDER - The Court GRANTS final approval to the class settlement, CERTIFIES the class under Fed. R. Civ. P. 23(b)(3) for the purposes of the settlement, D. 294, and AWARDS $9,375,000 in attorneys' fees and $1,533,575.85 in unreimbursed litigation expenses to class counsel and an incentive award of $3,000 to Bacchi, D. 264.(Hourihan, Lisa)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
__________________________________________
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)
KAREN L. BACCHI,
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Plaintiff,
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v.
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Civil Action No. 12-11280-DJC
)
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY,
)
)
Defendant.
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)
__________________________________________)

ORDER OF FINAL APPROVAL OF CLASS ACTION SETTLEMENT,
CERTIFICATION OF THE CLASS FOR SETTLEMENT PURPOSES
AND FEE AWARDS
CASPER, J.
I.

November 8, 2017

Introduction
After having preliminarily certified the class in this case pursuant to Fed. R. Civ. P. 23 and

having preliminarily approved the class action settlement, D. 240, this Court conducted a final
fairness hearing on July 27, 2017. D. 301, 302. As noticed, the final hearing was for the purpose
of determining whether the Court should grant final approval to the class action settlement and the
attorneys’ fees and expenses and any incentive award to the named plaintiff, Karen L. Bacchi
(“Bacchi”). D. 240 at 3. Before and at the hearing, the Court received objections from certain
class members, the majority of which concerned, at base, the proposed award of attorneys’ fees to
class counsel. For the reasons summarized in D. 240 and further below, the Court GRANTS final
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certification of the class for settlement purposes under Fed. R. Civ. P. 23(e) and final approval of
the settlement, D. 294, and AWARDS attorneys’ fees and expenses sought by class counsel and
the incentive award sought for Bacchi, D. 264.
II.

Procedural History
Over five years ago, Bacchi brought this action Defendant Massachusetts Mutual Life

Insurance Company (“MassMutual”) on behalf of a purported class of similarly situated
MassMutual policyholders asserting claims regarding MassMutual’s safety fund calculation,
alleging that the company retained monies that it should have distributed to policyholders as
dividends. D. 1, 35. After several years of hard fought litigation between the parties and a
mediation that resulted in the proposed settlement, the Court preliminarily granted approval of that
settlement agreement and certification of the class for this purpose, approved the procedure for
providing notice to the class of same and scheduling a hearing for consideration of the final
approval of the settlement and determination of any fee awards. D. 240.
III.

Class Certification
For all of the reasons previously stated in the Court’s Order of preliminary approval, D.

240, and on the record at the March 29, 2017 hearing regarding same, D. 242 at 8-10, I certify the
proposed Settlement Class pursuant to Fed. R. Civ. P. 23(b)(3) as defined in D. 240, ¶ 3.
IV.

Final Approval of Settlement under Fed. R. Civ. P. 23(e)(2)
For all of the reasons previously stated in the Court’s Order of preliminary approval, D.

240, and on the record at the March 29, 2017 hearing regarding same, D. 242 at 8-10, and further
addressed here, I find that the proposed settlement is fair, reasonable and adequate as required
under Rule 23(e)(2).

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The Settlement is a Mediated Resolution After Extensive Litigation. As the Court has
previously noted, D. 242 at 8, this settlement came as the result of the parties’ mediation after a
significant period of litigation in this case. The course of that litigation involved approximately
two years in which the parties completed both fact and expert discovery. D. 296 at 11. Although
the Court (Tauro, J.) had previously denied MassMutual’s motion to dismiss, D. 35, it had
MassMutual’s motion for summary judgment under advisement, D. 224, at the time that the parties
asked the Court to stay any further action on that matter in light of the fact that parties were in the
midst of attempting resolve the matter through mediation, D. 230, 231, which resulted in the
proposed class settlement now before the Court, D. 235.
The Parties Reached This Settlement at Arm’s Length Negotiations. As the Court has also
previously noted, this proposed settlement comes as the result of arm’s length negotiations
between experienced and competent counsel for both parties. It also comes after a formal
mediation before a neutral mediator in December 2016. D. 295 at ¶ 9; D. 265-1 at ¶ 25. Even
after this mediation, the parties, on behalf of their respective parties continued to negotiate a
settlement that resulted in the settlement that was proposed to the Court initially in March 2017,
id.; D. 235, and remained subject to the final approval, after class notice was provided, that the
Court now provides.
This Settlement Avoids the Risk of No Recovery for A Large Class. Any favorable outcome
for the class in this case on the merits was, at best, unclear.

See D. 296 at 10-11.

As

aforementioned, MassMutual’s motion for summary judgment remained pending and, as
Plaintiffs’ counsel points out, a recent amendment of the Massachusetts safety fund law allowed
an insurer, such as MassMutual, to retain a surplus of up to 20% of its reserve, a figure which the
defendant did not exceed here, D. 296 at 11, and which may have likely put another obstacle in

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Bacchi’s path otherwise to obtaining the relief that she sought on behalf on the class. Moreover,
the proposed settlement achieves some positive results for the class. The settlement provides for
a common fund of $37.5 million for class members, MassMutual will continue for at least ten
years to provide safety fund calculations to the Massachusetts Division of Insurance and
MassMutual will pay the costs and expenses for administrating and distributing the settlement
funds to class members (an expense that Plaintiffs estimate to exceed $3 million). Id. at 11; D.
235 at 17-20; D. 265 at 12. The distribution of the common fund to each class member will be
based on a pro rata amount of dividends received over the class period, provided that such pro
rata share is greater than or equal to one dollar. D. 235 at 17.1
The Objections of a Small Number of Class Members Does Not Warrant Rejection of the
Settlement. The vast majority of the class registered no objections to the proposed settlement. The
total objections received from class members did not exceed approximately 35, D. 296 at 14; D.
296-1; D. 293; D. 302 at 41-42, representing a very small percentage of the approximate 2.71
million class members. Moreover, having considered all of the objections filed by class members,
the Court concludes that none of the objections warrant rejection of the proposed settlement. The
Court has not attempted to repeat every objection here, but does summarize the general categories
of these objections.
First, to the extent that some of the class members objected because they contend that
MassMutual was not culpable and that the Plaintiffs’ claims are frivolous, the Court rejects such
objections where Plaintiffs asserted legal claims that survived MassMutual’s motion to dismiss

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To extent that any class members objected on the grounds that the benefit to the class
members was not sufficiently defined, D. 293-2, or the de minimis threshold of one dollar was
inappropriate, D. 244, 283, the Court rejects those objections. See Hill v. State Street Corp., No.
09-cv-12146, 2015 WL 127728, at *12 (D. Mass. January 8, 2015) and cases cited.
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and although the ability for Plaintiffs to prevail on the merits of the claims was uncertain, there
was risk (and certainly, increased litigation costs) to MassMutual if this case had not settled and
had proceeded through resolution by summary judgment or at trial.
Second, disagreements about the legal mechanism of using a class action to pursue these
claims, presenting such civil claims in a judicial forum and not a regulatory one (or, alternatively,
as criminal charges) or requiring the mailing of objections (as is standard procedure in class
settlement review processes, see D. 296 at 22), does not bear great weight as to whether this
specific settlement is fair, reasonable and adequate and does not compel the Court to reject the
proposed settlement.
Third, to the extent that some objectors contend that the settlement amount is too small,
the Court does not agree given the uncertainty that Plaintiffs faced of no recovery whatsoever if
the parties had not settled and had continued to litigate. See In re Lupron Mktg. & Sales Practices
Litig., 228 F.R.D. 75, 97-98 (D. Mass. 2005). The Court also considered the objections by some
members, see, e.g., D. 244, 266, that the size of the common fund that MassMutual has to pay as
a result of the settlement will adversely affect MassMutual and, ultimately, its policyholders
including class members. However, as both parties have asserted at different junctures in this case,
MassMutual maintains a sufficient capital ratio and continues to hold the statutorily mandated
reserves and surplus assets, D. 205 ¶ 5; 295 ¶ 15, and there is nothing to suggest that this state of
affairs will be materially changed by its funding of the common fund here.
Fourth, to the extent some class members objected to the scope of the release of claims
of the class members, D. 282, 283, the Court concludes that such release is appropriate as
consideration of the settlement achieved, particularly when the definition of “Released Claims”
includes limitations including but not limited to that such claims shall “arise out of or in any way

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relate to the subject matter of the Action and have been, or could have been asserted in the Action
or any court or forum . . . concerning in any respect, MassMutual’s compliance with M.G.L. c.
175, §§ 1401 or 141” and where there is a specific exclusion for “the certified class claims currently
pending in the [Chavez action], currently pending in the Superior Court for the County of Los
Angeles, California.” D. 235 at 7-8.2
Fifth, to extent that a number of the class members objected to the proposed award of
attorneys’ fees to class counsel, either in and of itself or as by comparison to the likely pro rata
share that any class member would likely receive, the Court declines to reject the settlement on
this basis, but returns to this issue in the determination of the attorneys’ fees award as discussed
below. The settlement agreement itself only capped any attorneys’ fees award that class counsel
could seek at 25% of the “Cash Settlement Amount” (i.e., the common fund of $37.5 million), but
otherwise left the determination of the appropriate attorneys’ fee award to the Court. D. 235 at 16.
V.

Attorneys’ Fees and Expenses for Class Counsel
Class counsel seeks an award of $9,375,000 in attorneys’ fees, $1,533,575.85 in

unreimbursed litigation expenses and an incentive award of $3,000 to the named plaintiff. D. 264
at 1; D. 298 at 2. The attorneys’ fees, which represents 25% of the Cash Settlement Amount, and
expenses shall come from the Cash Settlement Amount. D. 35 at 16.
A.

Attorneys’ Fees

As required by Fed. R. Civ. P. 23(h), the Court may award reasonable attorney’s fees and
costs to class counsel. The First Circuit has recognized that “the prevailing praxis” for such

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This “carveout” of claims in the Chavez class action was the subject of some discussion
at the July 27th hearing when counsel for the named plaintiff in that matter appeared to confirm
that the carveout for the claims in the Chavez class action from “Released Claims” here means
what it says and that MassMutual would honor that part of the settlement agreement. D. 302 at 421; see D. 274, 291.
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determination is the “percentage of fund” approach when awarding fees to class counsel, In re
Thirteen Appeals, 56 F.3d 295, 307 (1st Cir. 1995), but given the availability of the lodestar
approach as an alternative approach, id., a court may also, in its discretion, consider a “lodestar
cross check” to gauge the reasonableness of any percentage of fund award. See In re Lupron, No.
01-cv-10861-RGS, 2005 WL 2006833, at *6 (D. Mass. August 17, 2005).
Although the First Circuit has not set a presumptive benchmark for percentage of fund
awards, other courts in the Circuit have noted that such benchmark has been between twenty to
thirty-five percent. See Mazola v. May Dept. Stores Co., No. 97-cv-10872-NG, 1999 WL
1261312, at *4 (D. Mass. January 27, 1999); In re Neurontin Mktg. & Sales Practices Litig., 58 F.
Supp. 3d 167, 172 (D. Mass. 2014). In assessing whether the attorney fee award sought here by
class counsel, at 25% of the common fund, is reasonable, the Court has considered the factors that
courts have generally weighed in making such determinations, Roberts v. TJX Co., Inc., 2016 WL
8677312, at *10 (D. Mass. September 30, 2016) (citing In re Relafen Antitrust Litig., 231 F.R.D.
52, 79 (D. Mass. 2006); In re Tyco, 535 F. Supp. 2d 249, 266 (D.N.H. 2007); In re Lupron, 2005
WL 2006833, at *3), and does so now in turn.
First, as previously noted above, the size of the common fund is substantial and even with
the subtraction of attorneys’ fees will benefit a large class of policyholders, who, as result of the
Rule 23 mechanism and representation by Bacchi, the class representative, and class counsel, did
not have to initiate or participate in the litigation to have their pro rata share of the common fund
as established under the terms of the settlement.
Second, as also noted above, this case involved extensive litigation over a course of years
and involved disputes between the parties at the outset (in the form of MassMutual’s motion to
dismiss), numerous battles during the course of discovery and full-throated opposition to

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MassMutual’s motion for summary judgment that remained pending at the time that the parties
undertook to resolve this case by mediation, short of further time, effort and money that continued
litigation may have taken. Moreover, the cost/benefit analysis of the putative class continuing this
litigation to a resolution on the merits was unclear where the risk of non-recovery either upon
resolution of summary judgment or at trial loomed.
Third, skilled and experienced class counsel brought this case on behalf of Bacchi and the
putative class on a contingency fee basis. D. 265-1 at 18. That is, they bore all of the costs and
expenses of bringing this action regarding complex claims against a well-financed and well
represented defendant, MassMutual, through years of litigation as well as the risk of adverse
judgment. Certainly, courts have considered whether the contingency fee structure and percentage
of fund approach to attorneys’ fee awards have served to incentivize class counsel to agree to early
settlements on sub-optimal terms for the class, but with large fee awards to themselves. See
Roberts, 2016 WL 8677312, at *12; Sakiko Fujiwara v. Sushi Yasuda, Ltd, 58 F. Supp. 3d 424,
429-30 (S.D.N.Y. 2014). Certainly, this was the point that a number of objections from class
members have registered to the attorneys’ fee award sought here. See, e.g., D. 244, 248, 250, 251,
258, 266, 268, 275, 280, 285, D. 302 at 41-42. The proper alignment of risk and benefits between
class counsel and the class, however, depends largely upon the facts and circumstances of the
specific case and the terms of the proposed settlement. Unlike in other cases, the settlement
reached here came not early in the case, but after extensive discovery and on the heels of a
summary judgment motion when presumably counsel on both sides, class counsel and counsel for
MassMutual, understood the strengths and weaknesses of their positions and the risk of proceeding
to resolutions on the merits of the claims. Also, unlike other cases, whatever the size of an
individual class member’s award, the class member need not claim such award, as the settlement

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provides that MassMutual shall credit or pay such shares automatically within thirty days and
forty-two days, respectively, of the effective date of the settlement. D. 235 at 18-19. That is, this
is not a situation in which class counsel will get its fee award and class members who do not
register claims will not gain the benefit of the settlement. Compare Roberts, 2016 WL 8677312
at *11. Moreover, any shares that cannot be paid to class members (e.g., because they cannot be
located or fail to deposit or cash a check tendered to them) will not revert to MassMutual (that
agreed not to object to class counsel’s request for attorney’s fees that did not exceed 25% of the
common fund, D. 235 at 16), but shall be paid in equal shares to charities identified in the
settlement agreement. Lastly, this is not a case in which class counsel seeks an award at the higher
end of the benchmark for percentage of fund awards (one-third or more), but 25%, on the lower
end of those benchmarks.
Fifth, the Court has considered the objections, approximately seventeen, to the attorneys’
fee award, that were registered by some class members. See, e.g., D. 244, 248, 250, 251, 258, 266,
268, 275, 280, 285, 293-1, 302 at 41-42. Although the number of these objections was a small
percentage of the full class, those that were registered were strenuous in their opposition to the
amount of the attorneys’ fee award sought here. Some of these objections reflected concern about
unaligned incentives between class counsel and the purported class, as addressed above. Some
objections appeared to take issue with the notion of contingency fee structures in class actions in
general, which, as suggested above, the Court rejects as a basis here for rejecting the proposed
award. Finally, a number of the objections objected that the attorneys’ fees award in total was
excessive and unfair when viewed in comparison to the average $22.02 payout that the parties
estimate for each of the 2.7 million class members. See, e.g., D. 248, 250. Although the Court
understands why individual class members would make the comparison of any attorneys’ fees

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award to any individual recovery that they each might each receive, the appropriate focus for the
Court’s analysis is on a comparison to the recovery as a class as a whole. See In re Tyco, 535 F.
Supp. 2d at 265. Class certification under Rule 23(b)(3) for settlement purposes, which is
appropriate here, allows for recovery for a class, that among other things, is too numerous to
proceed on such claims against MassMutual alone and it would not be feasible for any class
member(s) to do so on their own, particularly where any individual recovery would pale in
comparison to the costs of individual litigation.

Moreover, under the percentage of fund

calculation, the relative size of the attorneys’ fees award reflects not just the upfront cost and risk
that class counsel undertook and maintained during the course of this litigation, but the size of the
common fund that they recovered on the behalf of the sizable number of class members. See
Mokover v. Neco Enterprises, Inc., 785 F. Supp. 1083, 1087 (D.R.I. 1992) (noting that with the
percentage of fund approach, “the size of a common fund is an objective yardstick by which the
benefit conferred upon the class can be measured”).
Sixth, the Court has considered the lodestar cross check as to the reasonableness of the
percentage of fund award sought here. The lodestar check here amounts to 1.31, D. 265 at 25, at
the lower end of multipliers reflected in other cases (see, e.g., In re Relafen, 231 F.R.D. at 82
(noting that multipliers have ranged from 1.0 to 4.0 and concluding that a multiplier of 2.02 was
appropriate)) and is supported by the submission by class counsel. D. 265-1 at 14-16. While the
lodestar approach may be more imperfect as a sole measure of the reasonableness of a fee award,
the Court considered it here in conjunction with the other considerations that it has explained above
and finds that it lends support to the award that class counsel seeks here.
Finally, as to public policy considerations, those weigh in favor of approving the fee award
sought here. Although the Court recognizes that “the public has no particular interest in whether

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or not lawyers are paid a fee for bringing class actions,” In re Lupron, 2005 WL 2006833, at *6,
there is a public interest in having experienced counsel undertake the risk of pursuing litigation
regarding the dividends distributed to the several million policyholders in the class and achieving
a benefit for them that might not otherwise have been achieved.
B.

Litigation Expenses

As to the litigation expenses of $1,533,575.85 that class counsel seeks here, the Court has
reviewed the submission supporting same. D. 265-1 at 16, 29-30; D. 265-2 at 4, 8; D. 265-3 at 4,
8. This Court cannot say that such expenses, either in whole or in any particular part, are
unreasonable, particularly given the course of contested litigation, the need to defend against
dispositive motions at two junctures, conduct extensive discovery and the required engagement of
experts given the complexity of the claims and defenses here. D. 265-1 at ¶¶ 34-37. Accordingly,
the Court shall grant this award of costs.
VI.

Incentive Award to Named Plaintiff
There was at least one objection to the proposed incentive award to Bacchi as the named

plaintiff. D. 244. Such awards, however, are customary and appropriate in recognition of a named
plaintiff who has served, as is the case here, as the class representative through extensive litigation
and has assisted class counsel, by, among other things, obtaining critical documents, reviewing
filings and otherwise assisting class counsel in the prosecution of this case. See D. 265-1 at ¶ 23.
Moreover, the $3000 award sought here is reasonable and more modest than awards sought in
other matters. See, e.g., In re Relafen, 231 F.R.D. at 82 (awarding $8,000 for each named
consumer); Scovil v. Fedex Ground Package Sys., Inc., No 10-cv-515-DBH, 2014 WL 1057079,
at *7-8 (D. Me. March 14, 2014) (noting a range of incentive awards in other cases and approving

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incentive awards from $15,000 to $20,000 to the various named plaintiffs). Accordingly, the Court
grants the incentive award in the amount of $3000 to Bacchi.
VII.

Conclusion
For the reasons discussed above, the Court GRANTS final approval to the class settlement,

CERTIFIES the class under Fed. R. Civ. P. 23(b)(3) for the purposes of the settlement, D. 294,
and AWARDS $9,375,000 in attorneys’ fees and $1,533,575.85 in unreimbursed litigation
expenses to class counsel and an incentive award of $3,000 to Bacchi, D. 264.
So Ordered.
/s/ Denise J. Casper
United States District Judge

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