Antitrust Law Daily Wrap Up, ANTITRUST—D.N.J.: Last settlement in insurance brokerage antitrust litigation approved, (Aug 2, 2013)

By Jeffrey May, J.D.

The federal district court in Newark, New Jersey, has approved the fifth and final settlement in long-running class action litigation against insurers and insurance brokers alleging industry-wide conspiracies in violation of antitrust laws and the Racketeer Influenced and Corrupt Organizations Act. The $10.5 million settlement, resolving claims brought on behalf of a class of purchasers of excess casualty or commercial umbrella insurance policies against ACE Limited, Chubb Corporation, and Munich Re and their affiliated entities, resolved the original MDL class action in its entirety (In Re: Insurance Brokerage Antitrust Litigation, August 1, 2013, Cecchi, C.).

The settlement was “fair, reasonable, and adequate” under Federal Rule of Civil Procedure 23(e), according to the court. Based on nine factors identified by the Third Circuit in Girsh v. Jepson, 521 F.2d 153, 156 (3d Cir. 1975) for reviewing class action settlements, final approval was appropriate. The court concluded that each of these nine factors weighed in favor of approval:

(1) the complexity, expense and likely duration of the litigation;

(2) the reaction of the class to the settlement;

(3) the stage of the proceedings and the amount of discovery completed;

(4) the risks of establishing liability;

(5) the risks of establishing damages;

(6) the risks of maintaining the class action through the trial;

(7) the ability of the defendants to withstand a greater judgment;

(8) the range of reasonableness of the settlement fund in light of the best possible recovery; and

(9) the range of reasonableness of the settlement fund to a possible recovery in light of all the attendant risks of litigation.

The settlement represented “a reasonable and adequate result for the Settlement Class considering the substantial risks Plaintiffs face and the immediate benefits provided by the Settlement,” in the court's view. There were no objections to approval of the settlement.

Class Certification

For purposes of approving the settlement, the court certified the class of approximately 20,000 insurance purchasers. In considering whether the requirements of Rule 23(b) were satisfied, the court explained that the claims of both the named plaintiffs and the absent class members arose "from the same set of facts regarding the alleged collusive and anti-competitive behavior." Because it would not be economically feasible for the settlement class members to seek individual redress, the superiority of class action litigation was demonstrated.

Attorney Fees, Costs

Despite an objection to the attorney fees request, the court approved an application for an award of attorney fees in the amount of $3.465 million, which was 33% of the settlement fund. The court also approved the request for reimbursement of over $1 million in litigation expenses. In addition, each of the eight named plaintiffs was granted an incentive award in the amount of $1,000.

The case is MDL No. 1663, Civil Action No. 04-5184 (CCC).

Attorneys: Ellen Meriwether (Cafferty Clobes Meriwether & Sprengel LLP) and Edith Kallas (Whatley Kallas, LLC) for Plaintiffs. H. Lee Godfrey (Susman Godfrey LLP) for ACE Limited. Henry Weisburg (Shearman & Sterling LLP) for Munich Reinsurance Co.

Companies: ACE Limited; Chubb Corp.; Munich Reinsurance Co.

Cases: Antitrust RICO NewJerseyNews