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IN RE THE PRUDENTIAL INS. CO. OF AMERICA SALES PRA

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY


March 17, 1997

IN RE: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA SALES PRACTICES LITIGATION; THIS DOCUMENT RELATES TO: ALL ACTIONS

ALFRED M. WOLIN, U.S.D.J.

OPINION

[EDITOR'S NOTE: PART 3 OF 3. THIS DOCUMENT HAS BEEN SPLIT INTO MULTIPLE PARTS ON LEXIS TO ACCOMODATE ITS LARGE SIZE. EACH PART CONTAINS THE SAME LEXIS CITE.]

VOLUME 3

 VI. The Proposed Settlement Is Fair, Reasonable, and Adequate In Light of the Multifarious Factors that the Court Must Consider

 140. Federal Rule of Civil Procedure 23(e) provides that the Court must approve any class action settlement. See Fed. R. Civ. P. 23(e). The Court determines here that the Proposed Settlement is indeed fair, reasonable, and adequate and should be approved.

 141. This Court "cannot accept a settlement that the proponents have not shown to be fair, reasonable and adequate." GM Trucks, 55 F.3d at 785. At least nine factors must be assessed to determine whether a proposed settlement is fair reasonable, and adequate, and deserving of court approval under Federal Rule of Civil Procedure 23 (e):

 

(1) the complexity and duration of the litigation; (2) the reaction of the class to the settlement; (3) the stage of the proceedings; (4) the risks of establishing liability; (5) the risks of establishing damages; (6) the risks of maintaining a class action; (7) the ability of the defendants to withstand a greater judgment; (8) the range of reasonableness of the settlement in light of the best recovery; and (9) the range of reasonableness of the settlement in light of all the attendant risks of litigation.

 Id. (citing Girsh v. Jepson, 521 F.2d 153, 157 (3d Cir. 1975)) (hereinafter the "Girsh factors"); see also Lake, 900 F. Supp. at 732. This nine-factor test requires this Court to conduct both "a substantive inquiry into the terms of the settlement relative to the likely rewards of litigation" and "a procedural inquiry into the negotiation process." GM Trucks, 55 F.3d at 796. The Court must ensure that the case did not settle in the absence of sustained effort by class representatives sufficient to protect the interests of the class. Accordingly, the Court should consider also whether the parties completed sufficient discovery prior to settlement; the adequacy of settlement relief in light of the preliminary discovery; whether the settlement omits major causes of action or types of relief; and whether the parties negotiated simultaneously on attorneys' fees and class relief. See id., 55 F.3d at 806.

 142. The Third Circuit has observed that in assessing the fairness of a proposed settlement, the Court should be careful not to substitute its image of an ideal settlement for the compromising parties' views: "The evaluating court must, of course, guard against demanding too large a settlement based on its view of the merits of the litigation; after all, settlement is a compromise, a yielding of the highest hopes in exchange for certainty and resolution." Id., 55 F.3d at 806 (citations omitted); see also, e.g., Lake, 900 F. Supp. at 732 (observing that significant weight should be attributed to the belief of experienced counsel that settlement is in the best interest of the class (citing Austin v. Pennsylvania Dep't of Corrections, 876 F. Supp. 1437, 1472 (E.D. Pa. 1995)); Sommers v. Abraham Lincoln Fed. Sav. & Loan Ass'n, 79 F.R.D. 571, 576 (E.D. Pa. 1978); Fisher Bros. v. Cambridge-Lee Indus., Inc., 630 F. Supp. 482, 488 (E.D. Pa. 1985); Walsh v. Great Atl. & Pac., 96 F.R.D. 632 at 642-43.

 143. Thus, the issue is whether the settlement is adequate and reasonable, not whether one could conceive of a better settlement. See In re Domestic Air Transp. Antitrust Litig., 148 F.R.D. 297 at 305 (stating a court "may only approve or disapprove the settlement as presented. It may not rewrite the settlement as requested by numerous objectors"); Cotton v. Hinton, 559 F.2d 1326, 1331 (5th Cir. 1977) (in assessing fairness and reasonableness of settlement, the court is "not free to delete, modify or substitute certain provisions of the settlement") *fn58"

 A. The Proposed Settlement Provides Extraordinary Relief to Injured Policyholders

 144. Before embarking on a journey into an evaluation of the Proposed Settlement under the many criteria that this Court must consider, the Court must briefly explain why this proposed Settlement is so exceptional. The Proposed Settlement's combination of Basic Claim Relief and an individualized ADR process evolved from the settlements approved in New York Life, Index No. 94/127804, 1995 N.Y. Misc. LEXIS 652, and Michels v. Pheonix Home Life Ins. Co., Index No. 95/5318, slip op. (N.Y. Sup. Ct. Jan. 3, 1997). Courts, academic and industry experts, and various independent orqanizations have praised this settlement structure. In New York Life, the court found that "unlike some other class action settlements in which the value of the relief provided depended on highly contingent future purchases, the Class Relief here is tailored to meet the allegations of the Complaint and the specific insurance and investment needs of the Class Members." 1995 N.Y. Misc. LEXIS 652, at *78. The court in Phoenix Home Life, echoed these sentiments. See Phoenix Home Life, slip op., at 50 ("The ADR Process is a no-cost and efficient mechanism. It provides an independent forum for the resolution of individual claims, and its objective procedure and substantive criteria negotiated by the parties in advance eliminate concerns of bias."). Moreover, the CPR Institute for Dispute Resolution honored the architects of the New York Life settlement including the Co-Lead counsel of plaintiffs in this case, Milberg Weiss Bershad Hynes & Lerach. Weiss Supp. Aff. at P 32 and Ex. D.

 145. Additionally, insurance regulators from fifty states and the District of Columbia have endorsed the Settlement, forty-six of whom had endorsed an earlier and inferior settlement. The Proposed Settlement provides greater procedural safeguards and creates financial guarantees that neither the Task Force Plan nor the New York Life settlement contained.

 146. The Proposed Settlement benefits the class enormously. Relief is potentially unlimited--there is no cap. *fn59" The ADR process is fair and objective. And basic Claim Relief allows for remediation to individuals who choose not to partake of the ADR. The Proposed Settlement even provides Additional Remediation Amounts, the punitive damage counterpart to the Proposed Settlement, that will allow individual relief to exceed actual damages.

  147. Additionally, plaintiffs are not liable for attorneys' fees, litigation costs, and notice or administrative costs. *fn60" Prudential has agreed under the Proposed Settlement to bear the substantial expenses of sending Class Notice and implementing the Proposed Settlement. These costs include the costs of: printing and mailing more than eight million notices, publishing print notices in all fifty states and arranging multiple radio and television notices in all states, running the entire ADR process, and establishing the class action information center, toll-free "800" number, and operator staff (exceeding 1,000 operators) to respond to class member inquiries.

 148. Additionally, the Proposed Settlement permits class members to submit claims immediately after the Court's approval of the Settlement and issuance of its Final Order and Judgment. Because many class members are elderly or in ill health, the ability of class members to receive substantial relief sooner rather than later--possibly years later--militates in favor of the Proposed Settlement. In this light, the Proposed Settlement appears to be the best possible recovery.

 149. Because of these terms in particular, the Court finds that this settlement is extremely fair to the policyholders whom Prudential injured. The Court finds also that the Proposed Settlement is fair, reasonable, and adequate in light of the factors recently gathered in GM Trucks.

 B. The Complexity of this Action and the Likely Lengthy Duration of the Litigation Warrant Approval of the Proposed Settlement

 150. Courts consider the likely complexity and duration of litigation in evaluating the reasonableness of a settlement. See GM Trucks, 55 F.3d 768 at 812 (concluding that lengthy discovery and ardent opposition from the defendant with a plethora of pretrial motions were facts favoring settlement, which offered immediate benefits and would avoid delay and expense); Lake, 900 F. Supp. 726 at 732-33 (weighing in favor of settlement that due to the relative complexity of the issues involved and the amount of data that would need to be processed, the costs of litigating this matter through trial would likely be high" and, due to the thousands of class members involved, "the task of poring through the relevant records would clearly be a significant undertaking").

 151. Although litigation certainly would be manageable and would be superior to other means of adjudicating the controversy, the issue here is the extent to which the anticipated complexity and costs of proceeding to trial favor settlement. In this case, the anticipated complexity, costs, and time necessary to try this case greatly substantiate the fairness of the settlement.

 152. First, litigation of this case would raise some complex legal claims and defenses, which would include issues relating to conflicts of law, statutes of limitation, contract interpretation, statutory and common law fraud, causation, and damages. Some of these issues are discussed in this Court's opinion deciding Prudential's Rule 12(b)(6) motion. See In re Prudential Ins. Co. of Am. Sales Practices Litig., 1996 WL 392145 (D.N.J. May 10, 1996).

 153. Second, the litigation would raise also many complex factual issues. The litigation concerns Prudential's marketing and sale of various life insurance products. Litigation of plaintiffs' claims would entail proof concerning the practices and procedures of the agents and brokers and the interaction between the agents and brokers and Prudential's home office. In addition, the insurance products at issue are complex and would require actuarial and financial expert testimony to evaluate the assumptions underlying these products and the illustrations though which they were marketed to consumers. Litigation of plaintiffs' claims through trial would also entail extensive, time-consuming, and expensive proof of Prudential's internal procedures for establishing dividend scales, the quality and performance of Prudential's investment portfolio, and the decision-making processes relating to portfolio investments, dividend assumptions, and surplus determinations.

  154. Thus, were this action litigated to its conclusion, the litigation would be legally and factually complex and extremely expensive and time-consuming. Class Counsel would require months to consult with additional experts, to prepare trial memoranda, to prepare post-trial memoranda, and to take interlocutory and other appeals. Moreover, if tried, the trial would last for months and would not be completed for years. See, e.g., Weiss v. Mercedes-Benz, 899 F. Supp. at 1301, ("Given the crowded state of this Court's calendars, the case would not be tried prior to 1997. [opinion dated May 11, 1995] It is not unrealistic to predict that, if fully litigated, the present class action would not be concluded before the end of this decade. . . ."); Warner, 618 F. Supp. 735 at 745 ("Although much discovery has been conducted, much would remain if the parties were to go to trial.").

 155. In contrast to trying the case, the Proposed Settlement permits a prompt and efficient solution to plaintiffs' claims against prudential; the Proposed Settlement would afford plaintiffs relief months and perhaps years earlier than would be possible in a litigation environment. The Proposed Settlement provides that class members may begin submitting claims if and when the Court issues its Final Order and Judgment. Additional benefits would then be provided if and when the Proposed Settlement receives final appellate court approval. Accordingly, the likely complexity and duration of continuing the litigation weighs in favor of approving the Proposed Settlement.

 C. Class Reaction to the Proposed Settlement Has Been Overwhelmingly Favorable and Weighs in Favor of Class Approval

 156. The Court finds that the favorable reaction of the Class and the regulators weighs in favor of approving the Proposed Settlement. See Bell Atlantic Corp., 2 F.3d 1304 at 1313-14 n.15 (holding that small proportion of objectors constituted tacit consent to settlement); Stoetzner v. U.S. Steel Corp., 897 F.2d 115, 118-19 (3d Cir. 1990) (finding only twenty-nine objectors from 281-member class "strongly favors settlement"); Weiss v. Mercedez-Benz, 899 F. Supp. 1297 at 1301 (holding that "substantial silent consent weighs in favor of certification" where approximately 100 out of 30,000 class members objected or opted out of class).

 157. The Court recognizes that courts are reluctant to interpret a failure of class members to respond as a sign that these class members approve of the settlement. See GM Trucks, 55 F.3d 768 at 812 ("Even where there are no incentives or informational barriers to class opposition, the inference drawn from silence may be unwarranted."). But, in this case, that so little negative feedback was received after such an extensive notice and outreach program, weighs in favor of approving of the Proposed Settlement. Of over eight million class members, only about 300 have filed objections to the Proposed Settlement. Fiandaca Decl. P 11. Owners of 23,421 policies, or about 19,000 class members have opted out. *fn61" In terms of percentages, only .2 per cent of the class, less than one quarter of one percent, have criticized the Proposed Settlement or chosen not to participate in the class. Id. Thus, the numbers of class members who disapprove of the class action or the settlement are truly insignificant. And, the most vociferous objectors to the Proposed Settlement are a handful of litigants represented by counsel in cases that compete with or overlap the claims asserted in the Second Amended Complaint.

 158. The Court also finds as an extremely favorable indicator of class reaction, the fact that the insurance regulators in all fifty states and the District of Columbia have accepted the Proposed Settlement as fair and adequate. Thus, the regulators of all the states as representatives of their constituencies have indicated their complete approval of the Proposed Settlement.

 159. Consequently, although-the Court cannot assess class reaction by a mere numerical assessment, the numbers, in conjunction with the content of opt-outs and objections, and the support of regulators in all states weighs in favor of the Proposed Settlement.

 D. Approval of the Proposed Settlement at this Stage of the Proceedings Is Appropriate Because the Plaintiffs Have Completed Extensive Discovery and Settlement Now Would Save the Extensive Costs of Additional Discovery and Trial

 160. The Court also must consider the stage of the proceedings and the amount of discovery completed in assessing the fairness, reasonableness, and adequacy of the settlement. GM Trucks, 55 F.3d 768 at 813; Girsh, 521 F.2d at 157; In re Warner Communications Sec. Antitrust Litig., 618 F. Supp. 735 at 741. The Court must examine the stage of the proceedings to assess "the degree of case development that class counsel have accomplished prior to settlement." GM Trucks, 55 F.3d 768 at 813. This Court must determine whether counsel had an "adequate appreciation of the merits of the case before negotiating." Id. That appreciation may have been developed in the case at bar or "in some related proceeding."

 161. In the current case, counsel for plaintiffs and Prudential did not commence serious settlement discussions until 18 months of vigorous litigation had transpired. Ashinoff Aff. at P 3. Many motions had been argued and decided. *fn62" Id. Plaintiffs obtained voluminous discovery before settlement negotiations commenced and even more before negotiations concluded. *fn63" Ashinoff Aff. at PP 4, 8. Moreover, the parties had the benefit of the findings and results of the Task Force examination, which focused on many of the same issues raised in plaintiffs' complaints. See In re Beef Antitrust, 607 F.2d 167 at 180 (considering discovery in companion cases); In re Baldwin-United Corp., 105 F.R.D. 475 at 483 (finding that counsels' access to expert testimony and other evidence from parallel state court proceedings and public documents demonstrated that counsel tavailed themselves of all of these sources of information and conducted full adversarial negotiations"). By the end of July of 1996, the litigation had reached a point where counsel for both Prudential and plaintiffs could make an informed decision about the relative strengths and weaknesses of the case. Weiss Aff. at PP 104-05; Ashinoff Aff. at PP 3-5, 11.

 162. Consequently, the record reveals and this Court concludes that prior to signing the Settlement Agreement, the parties had reached a stage in the proceedings where they adequately understood the merits of the putative class action and could fairly, safely, and appropriately decide to settle the action. See Walsh v. Great Atl. & Pac., 96 F.R.D. 632 at 654.

 E. The Significant Risks Attendant to Plaintiffs' Ability to Establish Prudential's Liability and Damages Weigh In Favor of Approving the Proposed Settlement

 163. In assessing the fairness, reasonableness, and adequacy of the Proposed Settlement, the Court must also determine the risks of establishing liability and damages at trial. Girsh, 521 F.2d at 157; In re Warner Communications Sec. Litig., 618 F. Supp. 735 at 741. In this regard, the Weiss v. Mercedes-Benz Court observed that "the risks surrounding a trial on the merits are always considerable." 899 F. Supp. 1297 at 1301. And this case is no exception.

 164. On December 26, 1995, Prudential moved to dismiss plaintiffs' clams on various grounds, including statutes of limitations and the fact that many or all of plaintiffs' allegations allegedly were contradicted by written contracts or other writings. As a result of that motion, this Court dismissed many of plaintiffs' causes of action without prejudice and dismissed some class representatives' claims entirely.

 165. And plaintiffs are not in the clear. Many obstacles could prevent plaintiffs from recovering after trial:

 

the need to prove that class members were unaware, despite their receipt of written disclosures in policy forms and illustrations, that dividends or interest rates could fluctuate;

 

the need to prove that class members were unaware, despite their receipt of written disclosures in policy forms and illustrations, that they had purchased life insurance or that the cash value would not accumulate in a life insurance policy at the rate at which it would accumulate in other investment vehicles;

 

the need to prove that class members were unaware of the relative merits of using existing policy values to fund the purchase of new insurance policies;

 

the need to prove that class members were deceived by Prudential's methods for determining and illustrating dividends and interest rates;

 

the need to overcome Prudential's contention that plaintiffs' asserted contract rights are barred by the Parol Evidence Rule because they are contradicted by the unambiguous language of the policies that constitute their contracts with Prudential;

 

the need to overcome Prudential's contention that a one-year statute of limitations and threeyear statute of repose would bar the federal securities claims of most class members who purchased VAL policies;

 

the need to overcome Prudential's contention that the federal securities, common law fraud, and negligent misrepresentation claims are untenable because plaintiffs cannot demonstrate: that class members reasonably relied on oral statements contradicted by written materials, that Prudential intended to defraud Class Members, or that Prudential misrepresented present facts, rather than making unenforceable predictions of future performance; and

 

the need to overcome Prudential's contention that the unjust enrichment claim fails to state a claim because valid written contracts bind the parties.

 166. Additionally, another potential risk may be plaintiffs' necessary reliance on expert testimony to establish liability and damages; a jury's acceptance of expert testimony is far from certain, regardless of the expert's credentials. And, divergent expert testimony leads inevitably to a battle of the experts. See United States v. 412.93 Acres of Land, 455 F.2d 1242, 1247 (3d Cir. 1972) (observing "the jury . . . is under no obligation to accept as completely true the testimony of any expert witness. It may adopt as much of the testimony as appears sound, reject all of it, or adopt all of it."); Rubenstein v. Republic Nat'l Life Ins. Co., 74 F.R.D. 337, 345 (N.D. Tex. 1976); In re Warner Communications Sec. Litig., 618 F. Supp. 735 at 744 ("In this 'battle of the experts' it is virtually impossible to predict with any certainty which testimony would be credited . . . .").

 167. Indeed, some of the risks of a trial on the merits in this case have been demonstrated by the Key case in which an Alabama judge overturned the substantial jury verdict rendered against Prudential in the life insurance sales practice case involving similar allegations to those now at bar. See Key v. Prudential Ins. Co. of America, Civ. No. 93-479 (Al. Cir. Ct. Dec. 28, 1995).

 168. Because establishing liability at trial and prevailing on appeal is not, and never can be, guaranteed, and because the Proposed Settlement is certain and avoids many of the obstacles potentially implicated by a trial, on balance the risks of establishing liability weigh in favor of approving the settlement.

 F. The Risks of Maintaining this Class Action Through Trial Weigh in Favor of Approving the Proposed Settlement

 169. Plaintiffs risk also that this action would not proceed as a class action through the conclusion of the litigation. Under Rule 23, the Court may decertify a class at any time during the litigation. And Prudential has endeavored to reserve the right to challenge class certification in the event that the Proposed Settlement is not approved and will certainly endeavor to challenge class certification if this case goes to trial. Thus, although the Court finds that this case is manageable as a class action and that the class action device is the most appropriate means to adjudicate this controversy, as the case evolves, maintaining the class action may become unworkable and the Court may decertify the class. Accordingly, the risks of decertification weigh in favor of approving the Proposed Settlement.

 G. Prudential's Inability to Withstand a Greater Judgment Is a Factor Weighing in Favor of Approving the Proposed Settlement

 170. The Settlement is fair, reasonable, and adequate in light of Prudential's inability to withstand a much greater judgment. *fn64" See Weiss v. Mercedes-Benz, 899 F. Supp. 1297 at 1303. The value of the Proposed Settlement is extraordinary and Prudential's ability to withstand a greater judgment is a matter of concern.

 171. The objective value of the settlement is extraordinary. The Proposed Settlement is at the bare minimum worth $ 410 million -- experts have projected the value at between $ 1 billion and $ 2 billion. And there is no cap. Prudential must pay to remediate the claims of all of the claimants who allege that they have been misled; and many of these claimants will receive full or substantial remediation plus exemplary damages.

 172. There is evidence that a greater judgment likely would adversely affect Prudential's credit rating, which has already declined during these proceedings, and would, thereby, affect Prudential's ability to compete, its revenues, and its profitability. Class Counsel agreed to require Prudential to pay no greater minimum than $ 1.080 billion, because of the likely effect that a judgment far exceeding $ 1 billion would have on Prudential's credit rating and ability to conduct business. Weiss Aff. at P 214.

 173. And the fact that Prudential is a mutual insurance company also impacts on Prudential's ability to pay a greater judgment. Because Prudential is a mutual insurance company, policyholders who are not members of this class action may be indirectly negatively affected, in the form of reduced dividends.

 H. The Proposed Settlement is Reasonable in Light of the Best Possible Recovery and All of the Attendant Risks of Litigation

 174. The Court finds also that the Proposed Settlement is fair, reasonable, and adequate in light of the best possible recovery and the attendant risks of litigation. To estimate the best possible recovery for plaintiffs in the aggregate would be exceedingly speculative, and unnecessary here. In the present case, an individual's recovery exceeds the value of the best possible recovery discounted by the risks of litigation.

 175. If a plaintiff's case is clear from the available evidence, the plaintiff will be scored a "3" and receive a choice between full rescissionary or compensatory relief plus interest. Indeed, because this plaintiff need not pay any litigation costs or attorneys' fees and the plaintiff will receive recovery much more quickly than would be possible through litigation, this recovery is not only fair, it is exceptional.

 176. And if a plaintiff scores a "2," because the evidence on balance supports the claim, the plaintiff will receive 50% of the award that would be available with a score of "3," plus 100% of the interest on the claim. This plaintiff receives thus, 50% of damages, and need not pay litigation costs or attorneys' fees. And this plaintiff obtains more prompt relief than would be available through litigation. In sum, even where there is negligible evidence of wrongdoing, and where a plaintiff would not likely prevail after trial, the plaintiff receives an award equal to what a successful plaintiff would likely obtain after trial. The 50% award plus 100% interest is equivalent to a full award minus litigation costs, attorneys' fees, and the price of delay.

 177. Additionally, a class member who receives a score of "1," because the available evidence neither supports nor undermines the class member's claim, may obtain Basic Claim Relief, even though at trial this class member would not likely have recovered under the predominance of evidence standard. This relief, thus, is fair.

 178. Lastly, class members who choose Basic Claim Relief rather than participation in the ADR receive a value exceeding the value of the best possible recovery in litigation discounted by the risks of litigation. Class members who choose Easic Claim Relief either do not feel misled or do not desire to participate in the ADR process. These class members hence would not have pursued litigation and in essence receive valuable life insurance and investment options for the release of claims that they would not pursue.

 179. The Court finds, thus, that in this case the creative mix of the ADR process with the Basic Claim Relief options creates a settlement that benefits class members greatly more than litigation would. And, because class members who desired to pursue litigation, with its risks, in lieu of participation in the Proposed Settlement were permitted to optout, the Proposed Settlement is fair, reasonable, and adequate to all concerned.

 I. Plaintiffs Conducted Adequate Discovery Precedent to Agreeing to Settle

 180. This test captures the degree of case development that Class Counsel have accomplished prior to settlement. GM Trucks, 55 F.3d 768 at 813. Plaintiffs must take discovery sufficient to establish the strengths and weaknesses of their case. See Walsh v. Pittsburgh, 96 F.R.D. 632 at 654; In re Surgical Laser Technol. Sec. Litig., 1992 U.S. Dist. LEXIS 16724, at *3 (E.D. Pa. Oct. 29, 1992); cf. GM Trucks, 55 F.3d 768 at 814 (finding that settlement at inchoate stage of case where plaintiffs failed to depose potential valuable witness suggested inadequate discovery).

 181. Class Counsel here investigated all aspects of the allegations contained in the Second Amended Complaint. Plaintiffs reviewed and categorized approximately 1 million documents, 160 computer cassettes, 500 audio and video recordings, conducted hundreds of interviews with class members and current and former Prudential agents, and took twenty depositions. Weiss Aff. at PP 61-63, 72. And Class Counsel had access to, reviewed, and analyzed all of the discovery, and reports of the Task Force and Connecticut regulatory investigations. Indeed, the volume and substance of Class Counsel's knowledge of this case are unquestionably adequate to support this settlement.

 182. Krell complains that Class Counsel's swiftness compromised discovery. But plaintiffs on two separate occasions refused Prudential's overtures to settle the case because plaintiffs did not have sufficient discovery to evaluate their claims. Weiss Aff. at PP 49, 101-02. There is absolutely no support for Krell's assertion of inadequate discovery as the result of undue haste.

 183. Krell's argument that Class Counsel's use of informal discovery was inappropriate also fails. Informal discovery is perfectly adequate to substantiate claims See e.g., In re Corrugated Container Antitrust Litig., 643 F.2d 195 at 211; ("We are not compelled to hold that formal discovery was a necessary ticket to the bargaining table. Because the plaintiffs did have access to information, this case cannot be characterized as an instance of the unscrupulous leading the blind."). The use of informal discovery was especially appropriate in this case because the Court stayed plaintiffs' right to formal discovery for many months, and because informal discovery could provide the information that plaintiffs needed. Through informal discovery, plaintiffs obtained and evaluated thousands of pages of documents and conducted dozens of informal interviews. Weiss Aff. at P 64. For example, though Krell complains that plaintiffs did not formally depose John Cressman, a former Prudential auditor, plaintiffs were the first to locate and interview Cressman, in July 1996. Id. at P 74. Plaintiffs' completion of several lengthy interviews of Cressman, lasting a total of six hours, their review of the Helfrich memorandum, and their use of other informal discovery materially assisted plaintiffs in evaluating their claims. The propriety of plaintiffs' use of informal discovery, thus, is confirmed by the volumes of material information that plaintiffs required as a result of their efforts.

 184. Krell claims that plaintiffs should have obtained Prudential's audit reports. But plaintiffs assumed in their negotiations that those reports would support their worst suspicions and negotiated the punitive Additional Remediation Amount, on that basis. Weiss Aff. at PP 98-100. Thus, the absence of the audit reports is immaterial.

 J. The Proposed Settlement is Reasonable In Light of the Plaintiffs' Preliminary Discovery

 185. Plaintiffs' preliminary discovery lent to support to allegations of deceptive sales practices throughout the country. See supra commonality discussion. As discussed throughout, the Proposed Settlement provides full compensatory relief to any policyholder where the available evidences supports that policyholder's claim. The Proposed Settlement also provides through Basic Claim Relief very significant and relevant relief to policyholders who cannot establish that they were injured. The Court finds that the Proposed Settlement's relief provisions, as discussed throughout this Opinion, are adequate to account for plaintiffs' discovery of widespread deceptive sales practices.

 K. The Settlement Accounts for All Causes of Action and Types of Relief Sought in the Second Amended Complaint

 186. In the current case, both the ADR process and Basic Claim Relief meet the allegations in the complaint and are specifically tailored to remedy the harms identified in the complaint. The ADR provides fitting relief to policyholders injured by any deceptive sales practices that occurred during the Class Period because it allows full rescissionary or restitutionary relief for established claims and slightly lesser but still very substantial relief for claims less clear from the facts. Also, Basic Claim Relief provides appropriate relief to class members because Basic Claim Relief directly helps class members to meet their insurance or investment needs. Although the Proposed Settlement, as any settlement, prevents individual plaintiffs from obtaining exorbitant punitive damage awards, this observation suggests not a fault of the Proposed Settlement, but the reality, and benefit, of class action litigation, in which plaintiffs share in any punitive damages award. Thus, it is clear that the Proposed Settlement is tailored to meet the allegations of the Second Amended Complaint and that the Proposed Settlement remedies provide the relief sought in the Second Amended Complaint.

 L. The Parties Completed Negotiations of the Proposed Settlement Before Negotiating Attorneys' Fees and the Attorneys' Fee Agreement Is Legal and Proper

 187. The parties' negotiation of attorneys' fees was completely appropriate and followed the final settlement negotiations. *fn65" Plaintiffs' Counsel and Prudential did not negotiate attorneys' fees until after they had agreed on the appropriate relief and the Court had given its approval for the parties to discuss the fee issue. Weiss Aff. at P 225; Ashinoff Aff. at P 3.

 188. Krell objects to Prudential's agreement not to oppose an attorneys' fee award of up to a specified amount, as determined by the Court, but this procedure is entirely proper. See, e.g., Lake, 900 F. Supp. 726 at 734 (observing no impropriety in agreement, bargained for after settlement had been reached, that defendant would pay particular amount of attorney fees and any portion disapproved by the court would revert to defendant); New York Life, 1995 N.Y. Misc. LEXIS 652, at *89-96 (approving settlement and $ 22 million fee pursuant to separately negotiated agreement); 3 Newberg, § 15.34, at 15-98 to 15-99 (observing that negotiation of a fee agreement should not be discouraged).

 189. Krell also unjustifiably attacks the parties' agreement that Prudential would pay half of the attorneys' fees to Plaintiffs' Counsel prior to any appeal. If the Court approves the Proposed Settlement and awards fees, the parties could begin to implement the Proposed Settlement immediately and counsel could collect the entire fee immediately. Under the fee agreement, Plaintiffs' Counsel receive less than is their right, not more, and not a "loan" as Krell postulates. The Court finds no impropriety in this arrangement.

 M. Class Counsel's Approval of the Proposed Settlement Indicates Its Fairness

 190. The judgment of counsel also weighs in favor of approving the Settlement. See, e.g., Cotton, 559 F.2d 1326 at 1330 (court is "entitled to rely upon the judgment of experienced counsel for the parties"); Smith v. Vista Org., Ltd., 1991 WL 152612, at *5 (S.D.N.Y. July 30, 1991) (in appraising fairness of proposed settlement, view of experienced counsel favoring settlement is entitled to "considerable weight" (citations omitted)). In the current case, the Court credits the judgment of Plaintiffs' Counsel, all of whom are active, respected, and accomplished in this type of litigation. These counsel have indicated that in their protessional view and judgment the Proposed Settlement is both comprehensive and fair, and that it provides valuable and sufficient economic benefits to the Class. Weiss Aff. at P 197. The Court agrees.

 N. The Objectors' Panoply of Other Concerns Fall Under Their Own Weight

 

1. The Proposed Settlement Improves Upon the Task Force Plan

 191. Krell has mistakenly argued that the Task Force remediation program is superior to the Proposed Settlement. Krell Brief at 77-86. But the Proposed Settlement unequivocally and dramatically improves upon the Task Force Plan. *fn66" Weiss Aff. at PP 161-83; Hoyer Aff. at PP 9-16. Plaintiffs have repeatedly detailed the extensive improvements of the Proposed Settlement over the Task Force Plan. Weiss Aff. at PP 161-83; Weiss Supp. Aff. In addition, plaintiffs' actuarial expert has valued the improvements of the Settlement over the Task Force Plan at $ 1.123 billion. Hoyer Aff. at P 19. Indeed, the Proposed Settlement's substantial improvements over the Task Force Plan are confirmed by the fact that the insurance departments of all fifty states and the District of Columbia have endorsed the Proposed Settlement as a positive development for their citizens and as an improvement over the Task Force Plan that forty-five of the jurisdictions had previously adopted. Thus, the Court concludes that the Proposed Settlement substantially expands the relief to class members, and rejects Kre1l's contrary contention.

 192. After an ostensible "line by line analysis of the similarities and differences between the Task Force Plan and Settlement Plan," Krell concludes that plaintiffs' counsel obtained little, if anything, for the class." Krell Brief at 76. Krell's "line by line" analysis, however, rests entirely on two affidavits of his counsel's paralegal, S. Catherine Colder, whom the Court finds unqualified. Ms. Colder has no legal training, nor any professional expertise or qualifications for the substantive analysis that she undertakes. Colder Aff. at P 2. *fn67" The Court credits her analysis not one iota. *fn68" See Mars Steel Corp. v. Continental Ill. Nat'1 Bank & Trust Co., 834 F.2d 677, 684 (7th Cir. 1987) (observing that a trial court has discretion to exclude "conclusional testimony, of little value at best, that the settlement was inadequate, offered in the main by persons having financial or professional relationships with [the objectors]."

 193. Nevertheless, to ensure an adequate record in the event, or eventuality, of appeal, the Court will address Krell's professed concerns. Indeed, Krell's line by line analysis and, therefore, his conclusions defy even a cursory reading of the two plans.

 194. Krell claims that under the Task Force Plan, the Claim Team was "completely independent of any Prudential involvement" while the parallel provision in the Proposed Settlement permits Prudential to select the Claim Team, subject only to veto by the Regulatory Oversight Staff and Lead Counsel. Krell Brief at 81. Krell overstates this distinction. Both the Task Force Plan and the Proposed Settlement require the Claim Team to be "wholly independent of Prudential." Compare Task Force Plan., Ex. A-3, at 10, P II.J. with Stipulation of Settlement, Ex. C, at 10, P II.J. Under the Task Force Plan, as Krell quotes, the Claim Team must be "mutually agreeable to the Regulatory Oversight Staff and the Company." Krell Brief at 81 (citing Task Force Plan, Ex. A-3, at 10, P II.J). Under the Proposed Settlement, the Regulatory Oversight Staff and Lead Counsel must approve the Claim Team candidates proposed by Prudential. Stipulation of Settlement, Ex. C, at 10, P II.J. The plans do not materially differ on this issue. If the change has any effect, it is to afford the Regulatory Oversight Staff and Lead Counsel the final authority to select the Claim Team.

 195. Krell complains also that under the Task Force Plan a policyholder could request a rehearing of the Appeals Committee decision, the fourth level of review, if the policyholder believed that the appellate decision operated as a "manifest injustice," but under the Proposed Settlement only the Claimant Representative can make the "manifest injustice" determination. Krell Brief at 82. The Claimant Representative, however, provides another layer of protection to policyholders and has the requisite knowledge and experience to determine whether the appellate decision operated as a manifest injustice. The Claimant Representative is appointed by Lead Counsel and must be experienced in commercial dispute resolution or the life insurance industry. If there is any reasonable basis to believe that a manifest injustice has occurred, the Claimant Representative will request a re-hearing. And under the Proposed Settlement only, the policyholder may have another Representative to assist with the rehearing. Stipulation of Settlement, Ex. C, at 22, P V.C.5. A policyholder dissatisfied with a prior scoring decision might believe that he or she was inadequately represented initially and desire new representation.

 196. Kre1l argues that the Proposed Settlement is inferior to the Task Force Plan also because the Proposed Settlement would exclude privileged documents from consideration in the ADR process. Krell Brief at 79. Krell directs us to the underscored language concerning the assembly of claim files in the Proposed Settlement's ADR process:

 

The file for a particular Claim will contain copies of all documents transmitted to, or prepared or obtained by, the Claim Evaluation Staff with respect to the claim, including, without limitation, to the extent available in the Company's records (including the non-privileged Company documents . . . held by Defendants' Counsel), the following materials: .

 Stipulation of Settlement, Ex. C, at 5, P II.F (emphasis added). Krell errs because this language irrefutably expands the realm of records that may be searched for claim evaluation purposes. The corresponding Task Force Plan provision limited the search to records in Prudential's direct possession. Task Force Plan, Ex. A-3, at 4, P II.F. In negotiating the Proposed Settlement, the parties agreed to include records in the possession of Prudential's counsel. Only privileged documents, which would be nondiscoverable, are excluded from the claim file assembly process.

 197. Krell argues that the Proposed Settlement is inferior to the Task Force Plan also because the definition of "Interest Rate" has changed. Kre1l Brief at 77-78. According to Krell, the change in the definition has reduced benefits to class members. The parties to the Proposed Settlement changed the wording of the definition to clarify the calculation of interest as set forth in the Task Force Plan. The definition does not change the amount of interest that will be provided to policyholders. Compare Task Force Plan, Ex. A-1, at 5, P I.C. with Stipulation of Settlement, Ex. B, at 6, P I.C.

 198. Krell argues that a change in the way that "Agent Statements" are prepared "appears to substantially decrease the amount of evidence available to class members to prove their claims." Krell Brief at 80. The ADR process requires the Claim Evaluation Staff to request the selling agent to furnish an "Agent Statement" concerning the claim. *fn69" Stipulation of Settlement, Ex. C, at 6, P II.G.2. Under the Task Force Plan, an unsworn or unsigned agent statement is "Available Evidence." Task Force Plan, Ex. A-2, at 6, P II.G.2.b. Under the Proposed Settlement, unsworn or unsigned agent statements are not considered to be "Available Evidence." This change does not harm policyholders, however. Stipulation of Settlement, Ex. C, at 6, P II.G.2. First, although there may be less evidence under the new provision, there will not be less credible evidence; an unsworn and unsigned statement has no indicia of reliability. Second, where an agent refuses to cooperate by signing a statement, the class member's score is enhanced by one, regardless. Stipulation of Settlement, Ex. B, at 11, P I.F.1.d. Accordingly, Krell's complaint is unfounded.

 2. ADR Review Is Impartial

 199. Some objectors incorrectly argue that initial review of the ADR claims by the Claims Evaluation Staff is not sufficiently impartial because the Staff is comprised of Prudential employees. Fla. AG at 13-14; Beauvias at 18; Johnson at 23-24. The Claim Evaluation Staff consists of qualified professional administrative Prudential employees wholly independent of Prudential's marketing or sales functions. Stipulation of Settlement, Ex. B, at 4, P I.C. Moreover, the Staff does not include employees who have been agents or who have directly supported agents. Id. Additionally, many of the scoring factors are objective and not subject to interpretation. Id., Ex. B, at 16, P II.A. And the Staff has no incentive artificially to minimize ADR scores because the entire evaluation, review, and appeals process occurs at Prudential's expense. *fn70"

 200. Moreover, the ADR's multiple levels of review by undeniably impartial non-employees also ensures that the ADR process is impartial. The Claim Team, composed of individuals wholly independent of Prudential, reviews all scores of less than "3." The Claim Team then recommends an appropriate score to the Claims Review Staff. Later, the Appeals Committee may finally review the policyholder's claim. The argument that this process is not fair and impartial is untenable.

  3. The ADR Process is Simple

  201. Beauvias argues that the ADR process is "onerous," requires the submission of "endless forms," and forces a policyholder to challenge a decision in several forums before a final decision can be obtained. Beauvias at 17-18. Treadway argues that the Proposed Settlement is unfair because it "puts the initial onus on defrauded life insurance customers to initiate a mini-trial." Treadway at 4. The Florida AG had argued that the ADR process is too "bureaucratic" and "complicated." Fla. AG at 13. The Florida AG submitted a 46 page "flow chart" prepared by its expert to support the Florida AG contention that the ADR process is overly complicated. Oscher Report, Attach. B. Also, Krell submitted an elaborate flow-chart to show the purported complexity of the Proposed Settlement and its unfairness to class members. Colder Aff., Ex. E. These objectors are mistaken.

  202. The ADR process is uncomplicated. To participate in the ADR process, the policyholder need only check a box on the Election Form, complete the Claim Form provided, attach any available documentation, and return the information in postageprepaid envelopes. *fn71" Stipulation of Settlement, Ex. C. The available "800" number facilitates the process. Id., Ex. C, at 4, P II.D. Claimants need not appear personally. Nor need a claimant retain counsel, though a claimant is free to do so.

  203. Consequently, and contrary to the objectors' contentions, the ADR process is quite simple for policyholders. Policyholders are spared the burden and expense of typical litigation, while Prudential performs the enormous and costly administrative processes. Prudential has projected, in fact, that its administrative costs for the Proposed Settlement will substantially exceed $ 100 million. Meade Aff. at P 10.

  204. The Florida AG and Krell flow charts are grossly misleading because they attribute to the policyholder all calculations of the ADR process, the large majority of which do not involve policyholders. Prudential is correct in asserting that this approach is tantamount "to diagramming the internal operating system of a computer and arguing that a lay person cannot possibly use the machine." Pru. Reply at 19-20.

  205. At the Fairness Hearing, Ms. Chin stated that her father had received misinformation from an operator at the "800" number. February 24, 1997 Tr. at 153-54. Though over 500,000 calls were received at the 800 number, no other complaints have been registered regarding the number. Although an occasional blip in "800" service is extremely unfortunate, the occasion does not undermine the Proposed Settlement's fairness. The parties are devoting substantial resources to ensuring that all individuals who interact with class members regarding the settlement are appropriately trained and supervised.

  4. The ADR Process Provides Adequate Substantive Relief

  206. The ADR process provides each class member an opportunity to receive full compensatory or rescission based relief, plus an Additional Remediation Amount (the equivalent of exemplary relief or punitive damages). Class members may be entitled to this relief without purchasing any additional products from Prudential. There is no monetary cap or ceiling on the amount that Prudential may pay to each claimant or all claimants.

  207. The Florida DOI had submitted the opinion of Steven 5. Oscher of Oscher Consulting, P.A. in an effort to demonstrate that the Proposed Settlement is not valuable. Oscher Aff. Although the Florida DOI has since withdrawn the submission, the Court addresses Oscher's analysis because other objectors have incorporated his conclusions by reference. Oscher's conclusions are not persuasive because his assumptions are mistaken.

  208. For example, Oscher erroneously assumed a 4% interest rate. Id., Ex. A, at 4-5. This interest rate is substantially less than the Interest Rate under the Proposed Settlement. The Proposed Settlement calculates interest at a variable rate, the actual rate in effect between the date the policy was issued and the date of award, plus 1.5%. Stipulation of Settlement, Ex. B., at 6, P I.C. (defining "Interest Rate"). The applicable Interest Rate from 1982 through 1995 ranges from 5.04% to 9.97%. Weiss Supp. Aff. at P 54. Oscher concludes that his hypothetical claimant is not made whole in reliance on his own incorrect assumed rate.

  209. In addition, Oscher misstates the function of the Financial Guarantees. Oscher complains that there is no logical reason that the first 330,000 policyholders should receive a greater remediation amount than subsequent remediated policyholders. Oscher Aff., Executive Summary, at 6 & Ex. D. This statement reflects a misunderstanding of the Proposed Settlement. If there are more than 330,000 claims remediated, the Financial Guarantees do not benefit the first 330,000 claimants to the detriment of later claimants. Rather, as is clear from a careful reading of the Stipulation of Settlement, the difference between the amount actually spent and $ 780 million will be allocated proportionally to all claimants, not merely the first 330,000 remediated claims. Stipulation of Settlement at C.5.a. and Ex. B, at 39, VI ("Allocation of Additional Remediation Amount").

  210. Oscher also misunderstands Prudential's position in the ADR process. According to Oscher, the Financial Guarantee will result in Prudential skewing the scores of all claims exceeding the first 330,000. Oscher Aff., Executive Summary, at 5. The process is unquestionably designed, however, to prevent misscoring.

  5. The Proposed ADR Scoring Provisions Adequately Determine Whether Prudential Misled Individual Class Members

  211. The ADR procedures provide relief without regard to a policyholder's ability to establish materiality, causation, damages, or any other of the requirements that would apply in formal litigation. Nevertheless, California, the Florida AG, the Florida DOI, and Massachusetts argued that a score of "3" is too difficult to obtain. Cal. at 4-5; Fla. DOl at 6-8; Fla. AG at 13. Beauvias argues that the scoring system is "stacked" against individual class members. Beauvias at 17. *fn72" The Court finds, however, that the score of "3" is available to all claimants who establish that they are entitled to full relief.

  212. For example, a "3" will be awarded whenever the producing agent confirms the allegation that a misstatement occurred in connection with the underlying sale of insurance. *fn73" And if an agent refuses to cooperate in the ALR process, the policyholder's score will also be enhanced.

  213. Additionally, a "3" will be awarded whenever "Company Documentation" expressly supports the conclusion that a misstatement occurred. *fn74" "Company documentation" broadly includes correspondence from Prudential or its agents, policy illustrations, applications, and sales materials. Stipulation of Settlement, Ex. B, at 5, P I.C. The materials would encompass, for example, misleading vanishing premium illustrations, *fn75" retirement plan sales materials, and application materials reflecting replacement policy sales. These materials also would encompass commonplace handwritten notations confirming contemporaneous or prior misstatements.

  214. Also, the ADR procedures incorporate several factors, "positive considerations," that may increase a score of "2" to a "3." *fn76" These considerations may afford relief to a policyholder if any of several circumstances surrounded the sale of the policy at issue. For example, if the agent without authority executed the policyholder's signature on a transaction document, the claimant automatically will receive a score of "3." Additionally, a claimant who normally would score a "2" may score a "3" if, for example: (1) the agent used unauthorized or altered sales materials or illustrations in connection with the sale, (2) the agent was terminated or otherwise disciplined or fined due to improper sales practices; (3) the agent refused to cooperate with the claim investigation; (4) the sale or servicing of the policy violated applicable state or federal regulations; or (5) documents relevant to the claim have been improperly destroyed or removed. Stipulation of Settlement, Ex. B, at 9, P ID.

  215. In addition to understating a claimant's ability to score a "3," some of these objectors understate the quality of relief available to those who score a "2." Claimants awarded a "2" will receive compensatory relief equal to more than 50% of their actual damages, plus possibly a share of the Additional Remediation Amount. E.g., Id., Ex. B, at 19, P II.C.1.b. As Massachusetts has conceded, this is "meaningful relief." Mass. at 12. Moreover, this relief is not diminished by attorneys' fees or costs as would be the case in an ordinary civil proceeding. Absent the Proposed Settlement, the policyholders somehow able to secure representation on a contingent fee basis would pay 30% to 40% of their recovery, plus litigation costs, to their counsel.

  6. The ADR Process is an Appropriate Mechanism to Assess Whether Class Members Were Affected by Prudential's Deceptive Sales Practices

  216. Treadway objectors argue that there should be an independent audit to initiate and remediate claims, so that individual class members need not act to receive relief. Treadway Supp. at 3. According to the Treadway objectors, the victimized policyholder demographics--injured policyholders were often elderly or uneducated--mandate automatic remediation. Id. at 5. Treadway objectors argue that the need for an automatic auditing system also is supported by Prudential's deliberate destruction of damaging evidence. Id.

  217. Treadway errs. Courts widely have recognized that it is generally appropriate to require each class member to demonstrate his or her entitlement to relief under the ADR. See, e.g., Franks v. Kroger Co., 670 F.2d 71, 72-73 (6th Cir. 1982) (affirming employment action settlement requiring class members to prove they were subjected to discrimination before receiving relief); Carbone v. Gulf Oil Corp., No. 85-361, 1989 U.S. Dist. LEXIS 8805, at *5-10 (E.D. Pa. July 27, 1989) (approving settlement requiring claimants to submit substantiated proofs of claim demonstrating entitlement to relief).

  218. Moreover, the ADR process does in effect presume that claimants are entitled to relief unless Prudential proves otherwise. A policyholder will be entitled to no relief only where the evidence, on balance, shows that no misrepresentation occurred. Where evidence is evenly divided policyholders will receive a "1," which may in many cases be enhanced to a "2" by the positive considerations discussed above.

  219. And the Proposed Settlement must be assessed as a whole; the Court cannot extricate an individual provision from the plan. Plaintiffs achieved minimum guarantees, additional remediation amounts, and other benefits under the Proposed Settlement that may benefit policyholders more than the provisions that the objectors request.

  7. The ADR Process Adequately Identifies Churning Cases

  220. According to some objectors, the Proposed Settlement unfairly requires each class member to initiate and prove his or her right to compensation through the ADR Process. Treadway Supp. at 3-4. These objectors argue that Prudential policyholders who were churned should be identified objectively through an independent audit using the "exact match" system and should be automatically compensated. E.g., id. The Court rejects the argument that the "exact match" system is preferable to the ADR procedures. To presume that all of Prudential's financed sales were wrong, ignores the reality that financing can be in the best interest of the consumer. The consumer may desire to meet increased life insurance needs without any immediate cash outlay, for example. Lautzenheiser Aff. at P 3. Neither the "exact match" system, nor any presumption that a financed transaction is fraudulent, is an appropriate replacement for the ADR, which appropriately discerns whether a given transaction was improper and affords the affected policyholder adequate relief.

  221. The "exact match" system isolates all new policies issued for which the premiums equal the amount of disbursements from old policies where the disbursement was made within 90 days of the issuance of the new policy. Treadway Supp. at 4. This system can be used whether or not the original policy was from Prudential, because Prudential's files contain records of disbursements of both Prudential and non-Prudential policies. Id. at 4 n.3.

  222. The "exact match" system is unnecessary, because the ADR adequately remediates policyholders who believe that they were induced through deceptive sales practices to buy their policies. And the "exact match" system is inappropriate because it detects as "matches" replacement transactions that are not illegal, fraudulent, or otherwise improper. All states permit replacement sales to occur and experts agree that financed life insurance sales may be in the best interest of the policyholders. Lautzenheiser Aff. at PP 13-24. No states have prohibited financed insurance or replacement sales; nor have they found that these practice are misleading or improper per se. Id. at P 3. Rather, states have prescribed appropriate safeguards to ensure that policies are financed properly, with clear and complete disclosure, and in a manner that protects the consumer against fraud and misrepresentation. *fn77" Id. at P 14.

   223. Indeed, federal and state regulators, life insurance industry associations and consumer advocates have long recognized that financing or replacements may be in the best interest of a policyholder. Id. The laws only prohibit misleading or deceptive practices. Id. at PP 19-24. The Task Force, for example, found that when interest rates were high in the 1980s financing new policies with values from older policies may have been a sound financial decision for some policyowners:

  

When interest rates were high and universal life and "interest-sensitive" whole life products were being developed, the replacement of old life policies sold at rates based upon old mortality tables and offering low interest rates could have been viewed as a sound financial decision for many policyowners. These new products were designed to compete with banks, money market funds and newly founded life insurers that could offer new money interest rates that were at an all-time high.

  Task Force Report at 7. *fn78"

  224. Moreover, the ADR process is preferable to the "exact match" system, because the ADR process incorporates the actual protections afforded by state laws as they have existed over time. A violation of any state law or regulation applicable at the time of sale, whether replacement or otherwise, is deemed evidence that the policyholder was misled, and directly factors into the scoring of his or her claim. Stipulation of Settlement, Ex. B, at 11, P I.F.1.e (including as a positive consideration a violation of state insurance statutes or regulations). *fn79" Additionally, if the available evidence does not include executed forms required to be retained under state law, the Company is deemed to have violated applicable regulations and the claimant receives no less than the rescission remedy for a claim attaining a score of "2" without any deduction for term insurance costs. Id., Ex. C, at 10, P II.A.5.

  

8. The ADR Process Adequately Identifies Cases in Which Prudential Sold Life Insurance Policies as Investment Vehicles

  225. Objectors argue also that an "even premium/odd face amount" test should be used to detect life insurance policies sold as investment vehicles and to provide automatic relief to class members. Fla. DOI at 14-15; Treadway at 4. The "even premium/odd face amount" test is inferior to the current ADR process, however.

  226. According to these objectors, ordinary life insurance policies are sold to achieve a face value of even increments, e.g., $ 1,000 investments. Treadway at 4. The premium payments on these policies are calculated to achieve the desired face amount, and rarely result in premium payments equaling round numbers, i.e. multiples of $ 5. Id. The Florida DOI system detects policies for which premium payments are in unusually round numbers, such as $ 50, $ 55, or $ 75, and the face value of the policy is not in $ 1,000 increments. Id. Because people who desire to save often desire to save in multiples of $ 5, where an agent sells a policyholder a policy for investment purposes, according to these objectors, the agent begins with a round numbered monthly payment or premium, e.g., $ 25 per month, and then backtracks to determine the face value of the policy, which often involves dollars and cents, e.g., a face value of $ 65,243.23. Id. According to Treadway and the Florida DOI, locating so-called "even premium/odd face amount" policies is tantamount to locating insurance policies sold as an investment vehicle and qualifying polices should receive full relief. Id.; Fla. DOI at 14-17.

  227. But, there is no basis to presume that a policy having a face value that is not a multiple of $ 1,000 was sold as an investment and not a life insurance policy. Indeed, using the presumption would likely identify legitimate VAL sales, rather than solely improper transactions, because it was a common practice for Prudential representatives to work out an even premium schedule dictated by a client's ability to make regular payments. Fiandaca Decl. at P 8. And, this sort of premium-driven transaction often results in a policy having a face value that is not a multiple of $ 1,000. Id. Consequently, it would be unreasonable to impose the requested presumption on these Prudential transactions.

  228. The Court finds that the existing ADR provisions adequately identify transactions in which life insurance was sold as an investment plan. The ADR process weighs the available evidence, including policyholder statements, available documents, and agent complaint histories. These are more accurate indicia of whether a policyholder was misled than the proposed "even premium/odd face amount" test.

  229. Consequently, the Court rejects the argument that the ADR process should be replaced with the proffered "even premium/odd face amount" test.

  

9. The Proposed Presumptions for APP Claims Are Unnecessary and Inappropriate

  230. Massachusetts argued and Beauvias argues that beginning in 1984, Prudential improperly used the "Investment Generation Approach" ("IGA") to set the dividend scales that appeared in Prudential's illustrations without fully disclosing the implications of the IGA change in the illustrations. Mass. at 13-15; Beauvias at 8-10. Massachusetts argued that the ADR should include additional evidentiary considerations to increase a policyholder's score where these illustrations were used in a sale. Mass. at 13-15. Additionally, California proposed five additional factors that it believed should be considered in evaluating claims involving APP claims. Cal. at 10-11.

  231. The Court finds that the ADR process adequately addresses and remedies the damages flowing from Prudential's decision to adopt the IGA. First, if the class member was misled, the ADR scoring provisions will score the class member so that the class member will be entitled to significant relief. Second, the ADR damages formula adequately accounts for any losses stemming from Prudential's IGA. Vanishing premium scheme victims may obtain the difference between the premium payments and policy values illustrated at the time of sale and those that occurred in the wake of falling interest rates. Stipulation of Settlement, Ex. B, at 28-31, PP III.C.1.a, III.C.2.a. To the extent that claimants were paid dividends lower than those Prudential projected at sale, thus, they may recoup the resulting damages under the ADR process. Under any measure, this is fair and adequate relief.

  

10. No Additional Evidentiary Considerations Are Necessary

  232. As discussed above, the Proposed Settlement provides an extensive, non-exclusive list of Specific Evidentiary Considerations for each claim category. Several objectors argue that the Proposed Settlement must include additional factors. Massachusetts argues for additional Specific Evidentiary Considerations for each Claim-Specific Category. *fn80" Mass. at 14-16. Similarly, California argued for the addition of several Specific Evidentiary Considerations in the Abbreviated Payment Plan category. Cal. at 10-11. The Court finds the Proposed Settlement as it is to be fair and adequate.

  233. The existing lists of Specific Evidentiary Considerations, quite broad as they are, do not purport to be exclusive. They were incorporated into the agreement "to provide additional guidance to the Claim Evaluation Staff, the Claim Review Staff or the Appeals Committee, as the case may be, particularly in instances where there is an absence of Available Evidence of the alleged Misstatement, but where it appears that the Claimant was misled . . . . " Stipulation of Settlement, Ex. B, at 10, P I.F. The Considerations, thus, are illustrative of the matters to be considered in assessing a claim under the Claims Resolution Factors.

  234. Indeed, to catalogue each factor and consideration that could bear on a Claims Resolution Factor would be both impossible and undesirable. Those who review the claims must be given the flexibility to react to the facts as presented in determining whether a policyholder was misled.

  235. Consequently, the Court rejects the assertion that the Proposed Settlement's failure to include the detailed factors provided by several objectors makes the Proposed Settlement unfair.

  

11. Agent Conduct Is an Appropriate Talisman of Prudential's Wrongful Conduct

  236. Some objectors have argued that the Proposed Settlement's ADR process is flawed because it focuses on the agent's conduct, rather than on the conduct of Prudential management. The Court disagrees. It is completely appropriate for the ADR process to evaluate the agents' conduct, because that conduct was a conduit through which Prudential misled and injured the individual claimants. If this case were tried, the Court could find that legal presumptions were appropriate and that a focus on individual agent conduct would not be necessary. But this cognizance does not bespeak to the fairness of the ADR's approach.

  

12. A Presumption in Favor of the Policyholder Where the Policyholder's Statement Conflicts with an Agent's Statement Is Unnecessary and Undesirable

  237. One objector seeks a presumption in favor of the policyholder where the statements of the policyholder and agent conflict. Beauvias at 19. The Court finds that this presumption is unnecessary, because the ADR guidelines contain sufficient scoring mechanisms to address the veracity of policyholder and agent statements. The ADR Guidelines contain numerous scoring and evidentiary considerations to evaluate the veracity of policyholder and agent statements and to increase a claimant's score where the agent's credibility or conduct should be questioned, including where:

  

. the agent has been terminated for sales practices problems, Stipulation of Settlement, Ex. B, at 11, P I.F.1.c;

  

. the agent has been placed on probation for sales practices problems, id.;

  

. the agent was disciplined on more than one occasion for his sales practices, id.;

  

. the agent was fined or sanctioned by a regulatory body for his sales practices, id.;

  

. the agent failed to certify his statement under pains and penalties of perjury, id., Ex. C, at 6-7, P II.G.2.b.;

  

. the agent has a Complaint History, id., Ex. B, at 9, P I.D; or

  

. the agent has a pattern of financing activity, id., Ex. B, at 17, P II.B.1.a.

  The Court finds also that the requested presumption would be undesirable, because the presumption would encourage policyholders to submit claims where they were not misled; policyholders would know that only written documentation would overcome any of their allegations. Accordingly, this presumption must be rejected.

  

13. The Agent's Presence Before a Decisionmaker is Unnecessary to Adjudicate Class Members' Claims

  238. Beauvias argues that every claimant should "be entitled to have the agent appear at the examination and that the agent's failure to appear should automatically lead to an award of the highest score." Beauvias at 19. The Court disagrees. It would be unnecessary and unduly burdensome to require an agent to testify personally during the ADR process. The ADR process does not involve any live witness testimony. The process does provide that a written statement by the agent, signed under oath, should be obtained. Stipulation of Settlement, Ex. C, at 2, P I.D.1. The ADR process also provides that an existing agent's refusal to cooperate is a positive consideration in assessing a policyholder's claim. Id., Ex. B, at 11, P I.F.1.d. The Court finds, moreover, that it would be inappropriate to penalize Prudential for the failure of individual agents to appear where these agents no longer are employed by Prudential or subject to its direction or control. Thus, these ADR procedures are adequate.

  

14. The Complaint History Factor is Adequate

  239. A claimant automatically receives a minimum score of "2" if his or her agent has a "Complaint History." The Proposed Settlement initially defined Complaint History as three or more complaints, valid or invalid, relating to any sales practice category, that were made at any time through September 20, 1996. Stipulation of Settlement, Ex. B, at 9, P I.D. The Final Enhancements to which Prudential agreed on the eve before the Fairness Hearing extend that Complaint History cut-off date to February 1, 1997. *fn81" Stipulation Amendment. The cut-off date is fair.

  240. Extending the cut-off date further would not be necessary or desirable for several reasons. First, the February 1, 1997 cut-off date follows almost two years of continuous and intensive media scrutiny and widespread adverse publicity, which sensitized the general public to life insurance sales practice issues in general and Prudential's in particular, and which prompted policyholders to file numerous complaints (totalling 16,912 in 1996 alone through September 20). Pru. Reply at 33; Fiandaca Decl. at P 4. Second, the Complaint History is already an inflated figure because it includes both valid and invalid claims. Pru. Reply at 33. Third, all sales complaints are aggregated, even if they do not pertain to the type of claim at issue. Id. Fourth, the three-complaint threshold is very low because it covers complaints recorded over fourteen years. And fifth, Prudential had already agreed with plaintiffs to reduce the threshold from the six complaints specified in the Task Force Plan to three, which results in substantially more agents falling within the Complaint History category than under the Task Force Plan. Id.

  

15. The Proposed Settlement's Method of Assembling Associated Complaints is Adequate

  241. The Florida DOI contended that the Complaint History provision could not be implemented properly because Prudential's records are incomplete. Fla. DOI at 8-11. The Court finds, however, that Prudential's records amply identify complaints for Complaint History purposes. Barcafer Aff. at PP 2-3. Prudential has retrieved customer complaints from its regional and agency records, and has processed and input the data into a comprehensive database. Id.

  242. The Florida DOI argued that Prudential's complaint records are inadequate because many complaints have not been incorporated into the "official Prudential complaint system. Fla. DOI at 9-11. This complaint is unfounded, because Associated Complaints documentation is not limited to materials in Prudential's official complaint system. Stipulation of Settlement, Ex. B, at 3, P I.C. A customer complaint letter, for example, may constitute an Associated Complaint, regardless of whether the letter was filed with Prudential's headquarters. Id.

  243. The Florida DOI cited Cressman's criticism of Prudential's Complaint resolution process for the proposition that consideration of Associated Complaints is an inadequate measure of complaints against an agent. Fla. DOI at 9-10. Because an Associated Complaint need not be resolved in favor of the policyholder to be considered, however, the Florida DOI argument is without merit.

  244. Additionally, the Florida DOI argued that the measure of Associated Complaints is inadequate, because there is an inability to identify pre-1989 misconduct and a significant portion of the original pre-1992 complaint records have been destroyed. Fla. DOI at 10-11. Prudential insists, however, that its regional databases date back to 1985 or 1987, Barcafer Aff. P 2, and that all records were entered into its computerized system before destroying them, Hebel Supp Aff. P 34. And, despite plaintiffs' extensive investigation into Prudential's document destruction, plaintiffs have encountered no evidence that pertinent complaint records have been irretrievably lost or destroyed. Pls. Settl. Reply at 52 n.51.

  245. The Florida DOI argued also that early complaint logs do not describe complaints in a manner consistent with the claim-specific categories and that the inability to categorize these complaints will understate the number of complaints. Fla. DOI at 10-11. This criticism is unwarranted, however, because Prudential has agreed to count all claims against a particular agent regardless of whether they relate to a specific category.

  

16. Class Members Need Not Be Informed of Agents' Complaint Histories Prior to Choosing Relief

  246. The Texas DOI argued that prior to being required to choose between the ADR process and Basic Claim Relief, each participant should be informed of whether his or her agent has a Complaint History. *fn82" Tex. at 5. The Court disagrees entirely. It is not necessary to disseminate the Complaint History information before the election Period for policyholders to make informed decisions about whether to choose between the ADR process and Basic Claim Relief. Policyholders will know whether they were misled without Complaint History information because they have Personal knowledge of the sale and of the operation of their policies. Additionally, to distribute the list before the election Period would create an inappropriate de facto presumption that class members who bought policies from an agent with a Complaint History were misled. The presumption is inappropriate, of course, because not all class members who bought policies from agents with Complaint Histories were misled.

  

17. Unauthorized Execution as a Positive Consideration is Adequately Described and Effective

  247. California argued that the Proposed Settlement inadequately defines "unauthorized execution" as a positive consideration and California proffered detailed criteria to determine whether signatures are unauthorized. Cal. at 9-10. California argued also that the ADR guidelines should award an automatic "3" where a forgery is discovered in connection with a claim involving life insurance sold as an investment. Id. at 10. It appears that California request for an automatic "3" was resolved by one of Prudential's concessions in the Final Enhancements: Prudential agreed to add language to the Proposed Settlement to allow an automatic "3" for a forgery on any life insurance application. Stipulation Amendment at P 4.

  248. And the Court disagrees with the argument that additional criteria are necessary to determine whether there has been a forgery, and finds that the ADR guidelines in this respect are fair, reasonable, and adequate. The ADR guidelines provide that the score initially given a claim may be increased by one point if the agent executed the policyholder's signature on any transaction document without authorization. Stipulation of Settlement, Ex. B, at 10, P I.F.1.a. The Court does not believe that California's detailed criteria are necessary for a claim evaluator to determine whether a signature is unauthorized. The purpose of the positive considerations is to allow the claims evaluators to compensate a class member for being misled where there is an absence of available evidence:

  

The Positive Considerations and the Negative Considerations are to be reviewed in light of the totality of the facts and circumstances pertaining to the particular Claim. They are to provide additional guidance to the Claim Evaluation Staff, the Claim Review Staff or the Appeals Committee, as the case may be, particularly in instances where there is an absence of Available Evidence of the alleged Misstatement, but where it appears that the Claimant was misled as to any one or more of the itemized Claim Resolution Factors herein.

  Stipulation of Settlement, Ex. B, at 10, P I.F. The Court finds that the ALR criteria are adequate to allow a claim evaluator to determine whether a signature has been forged. *fn83"

  

18. The ADR Process Fairly Addresses Document Destruction

  249. Krell argues that the Proposed Settlement's document destruction provision does not apply to class members who would need the provision most. Krell Brief at 83-86. To prove his theory, Krell presents a hypothetical claim that he argues demonstrates the inability of a claimant to score a "3" where there has been document destruction. Id. A close look at Krell's hypothetical reveals its flaws and Krell's faulty conclusions.

  250. Krell hypothesizes that where (1) a class member relied on misstatements contained in company documentation; (2) the class member was shown the company documentation by an agent with a Complaint History; (3) it is clear that Prudential destroyed the documentation; and (4) the agent denies that he or she misled the policyholder, the class member would never score more than a "2." Id. at 84.

  251. Krell's conclusion is wrong: Krell's hypothetical class member would receive a "3" under either the original or the enhanced document destruction provisions. Under the original document destruction provision, the hypothetical class member would provisionally receive a score of "2" because the balance of available evidence, which includes the Claim Form, supports the claim. *fn84" The score would then be adjusted to a "3" based on the presence of any "positive considerations," which specifically include the destruction of company documentation. Stipulation of Settlement, Ex. B, at 11, P I.F.1.g. Thus, the class member in Krell's hypothetical could very well obtain a "3." Moreover, under the enhanced document destruction provisions, the hypothetical policyholder certainly scores a "3" because the documents that Krell hypothesized are clearly material to the claim under review and would have a known impact on the class member's file (because the class member relied on them at the time of sale). *fn85"

  

19. Policyholders Receive Adequate Representation in the ADR Process

  252. One objector argues that the ADR Process does not provide for enough policyholder representatives. Beauvias at 22-23. The Court finds that the ADR process provides adequate policyholder representation, with direct assistance to the claimant at every stage of the process. The ADR process provides a Claimant Representative to monitor and oversee the ADR Process. Stipulation of Settlement, Ex. C, at 13-14, P IV.A. The Claimant Representative may discuss individual claims with and make recommendations to the Claim Team, the Claim Review Staff, or the Representatives. Id. The ADR process also provides the Claimant Support Team to help policyholders learn about the ADR Process and how to submit claims. Id., Ex. C, at 4, P II.D. The ADR process provides the Claim Review Staff to respond to policyholder inquiries and advise policyholders regarding the processing and administration of their claims. Id., Ex. C, at 12-13, P III.A. And, if the claimant is dissatisfied with the remedy offered, he or she can pursue an appeal with the direct assistance of a policyholder representative (who is not the same individual as the Claimant Representative(s)). Id., Ex. C, at 19, P V.B.2.

  

20. The Time Periods Allocated to Each Step in the ADR Process Are Fair, Reasonable, and Adequate

  253. Beauvias argues that the time periods between steps of the ADR process are too short, to Prudential's benefit. Beauvias at 22. Beauvias recommends each step be extended by between three and six months. Id. The Court disagrees with Beauvias' suggestion, because the time frames presently incorporated in the settlement strike a balance between providing policyholders with sufficient time to pursue the ADR process and providing policyholders a swift recovery.

  254. In November of 1996, policyholders received an extensive package of information describing in detail the Proposed Settlement, the Task Force Plan, the enhancements included in the Proposed Settlement, and the types of claims and remedies included in the remediation plan. Stipulation of Settlement, Exs. F-1 to F-3; Meade Aff. at P 11. Prudential mailed additional packets to policyholders in 46 jurisdictions around February 1, 1997, to implement the Task Force Plan and describe the status of the Proposed Settlement. Fiandaca Decl. at P 9. Each Policyholder will have at least two and a half months (seventy-five days) simply to choose between filing an ADR claim and obtaining Basic Claim Relief and, if so, to return an Election Form. Stipulation of Settlement, Ex. C, at 9, P II.I.2.b(i). In addition, policyholders in the forty-six jurisdictions that adopted the Task Force Remediation Program have already received the February notice and have until June 1, 1997 to make an election. Ashinoff Supp. Aff. at P 3. Thus, these policyholders will have up to four months to make this decision. And, if a policyholder elects to file an ADR claim, he or she will then have up to three months to fill out a Claim Form. Stipulation of Settlement, Ex. C, at 9, P II.I.2.b(i). The Court finds that allotting class members between two to four months to fill out the Election Form and three months to fill out the Claim Form is fair, reasonable, and adequate under the circumstances.

  

21. The ADR Procedures Properly Consider as Undermining Evidence that a Class Member Received a Clear Written Disclaimer at the Time of Sale

  255. Massachusetts argues that the ADR incongruously allows scorers to rely on the disclaimers often printed on the last page of illustrations as "undermining evidence" but does not directly allow scorers to consider the first page of illustrations, which shows that premiums will become "$ 0" as "supporting evidence." Mass. at 12-13. Under the ADR Guidelines, however, if a policyholder received sales materials that stated clearly that dividends, investment returns, or interest crediting rates are not guaranteed and may change over time, or that described the operation of the APP, that evidence is considered undermining evidence where the statement was not solely that dividends were "not guaranteed" or "non-guaranteed." Stipulation of Settlement, Ex. B., at 9, P I.D.

  

22. This Court's Role in Allocating the Additional Remediation Amount Is Appropriate and Does Not Undermine the Ability of Class Members to Evaluate the Proposed Settlement's Fairness

  256. Objectors have argued that it is impossible to evaluate the settlement fairness without advance notice of the manner in which the Additional Remediation Amount will be allocated. The Court disagrees. Most of the Proposed Settlement benefits are clearly described. The Court's discretion to disperse the Additional Remediation Amount within the parameters defined by the Proposed Settlement does not undermine the ability of a class member to choose a form of relief. Stipulation of Settlement, Ex. B, at 39, P VI ("After the ADR process completion, the Court shall determine, at a hearing and upon notice, the method and allocation of the distribution of the Additional Remediation Amount among Claimants receiving relief in the ADR Process.").

  

23. Basic Claim Relief Is a Valuable Remedy

  257. The Court rejects several objectors' concerns that Basic Claim Relief has no value. Plaintiffs' expert, Robert L. Hoyer, projected that the Basic Claim Relief will provide benefits valued at nearly $ 800 million. Hoyer Aff. at PP 6, 16, and Exs. F1-F3, G1-G5, H1-H3. The Court rejects also the argument that if the cost of Basic Claim Relief to Prudential is low, then Basic Claim Relief is worthless to policyholders. The cost of the relief to Prudential is not the measure of class member benefit. The value of the relief to the Class, which may be substantial, is what matters. See New York Life, 1995 N.Y. Misc. LEXIS 652, at *60, No. 94/127804 (class members benefitted from settlement regardless of cost to defendant). The Court finds Basic Claim Relief will provide substantial value to policyholders who choose not to participate in the ADR process.

  258. The Court rejects also the novel contention that Basic Claim Relief is inadequate because class members must continue to do business with Prudential or because Basic Claim Relief is merely a marketing tool for Prudential. Objectors who prefer not to do business with Prudential may elect the ADR process or choose the Basic Claim Relief Mutual Fund Enhancement option. Similarly, those objectors who feel that Optional Premium Loans and Enhanced Value Policies create unacceptable risks may simply elect other forms of relief. The availability of these choices exemplifies the fairness of the Proposed Settlement in providing individually tailored relief to the entire Class.

  259. Additionally, the Court declines to follow the demands of Beauvias and others, who would prefer that claimants receive cash or other relief. The cash alternatives demanded by these objecting class members are available through the ADR process to those that satisfy the criteria of that process. Furthermore the desire of some class members for cash relief does not indicate that the Proposed Settlement's relief is inadequate. See New York Life, 1995 N.Y. Misc. LEXIS 652, at *54.

   260. The Court also rejects sundry objections to specific Basic Claim Relief provisions. For example, Johnson argues that the Optional Premium Loans ("OPL") offer nothing because policyholders can already obtain a loan against their policies at reduced rates. Johnson, Ex. 1 at 3. The interest rates offered on OPLs, however, are significantly lower than the rates policyholders would pay under their policies. Hangstrom Supp. Aff. at P 4. As the Task Force noted, "for policyholders who are experiencing a financial difficulty in meeting current premiums but do not feel they were misled, the Optional Premium Loans offer assistance." Task Force Report at 193.

  261. And Beauvias argues that OPLs may injure policyholders by putting them deeper into debt. Beauvias at 15-16. The Court disagrees. Because OPLs are available only to maintain existing coverage, there is little risk of increasing burdensome debt, and these loans may enable policyholders to maintain their desired coverage.

  262. Johnson complains that Enhanced Value Policies ("EVP") cannot be purchased with loans or rollovers from other policies. Johnson, Ex. 1, at 4. The EVP provides additional permanent death benefit coverage at no cost to the policyholder. Stipulation of Settlement, Ex. D, at 5, P III. The additional insurance is paid-up, has its own cash value, and will earn dividends. The Proposed Settlement does not permit loans and rollovers so as not to encourage policyholders who already have heavily loaned policies to buy additional insurance that they cannot afford. The Court does not find that the provision is unfair.

  263. Finally, Oscher had contended that Basic Claim Relief is designed to finance the cost of the ADR Program. Oscher Aff., Executive Summary, at 2-3. The products offered under Basic Claim Relief are either minimally profitable or unprofitable. Hangstrom Supp. Aff. at P 3. Prudential's expert anticipates that Basic Claim Relief will be a break-even proposition for the company, at best. Id. Moreover, any profit on Basic Claim Relief will be more than offset by the administrative costs of the Proposed Settlement, including its Basic Claim Relief component. Id.

  

24. The Settlement Does Not Discriminate Against Policyholders Who Cannot or Desire Not to Purchase Basic Claim Relief

  264. Several objectors conclusorily argue that the Proposed Settlement discriminates against policyholders who cannot afford class relief and policyholders who cannot meet the underwriting requirements of certain types of Basic Claim Relief. The Settlement in its entirety provides adequate relief to the class as a whole. Policyholders who cannot afford some Basic Claim Relief options, who cannot avail themselves of options because they do not meet certain underwriting requirements, or who do not desire to avail themselves of these options may choose to avail themselves of other available Basic Claim Relief options. And, more importantly, the ADR process is available to those who feel that they were misled. The Proposed Settlement does not discriminate against any policyholders at the expense of others.

  

25. The Proposed Release Is Fair and Appropriate

  265. Krell argues that the release is too broad, because it releases claims not pleaded in the Second Amended Complaint, but cites no authority to support the argument. Krell Brief at 36-39. And the Court disagrees with Krell's argument. First, even if there were a requirement that the release correspond to the Complaint, the requirement would be satisfied. The Complaint involves allegations relating to all wrongful conduct in the sale and treatment of life insurance policies. The release fairly corresponds to the allegations in the Complaint and to the relief provided by the Proposed Settlement. Second, two recent cases in the Third Circuit hold that releases may include all claims, including unpleaded claims that arise out of the same conduct alleged in the case. See Grimes v. Vitalink Communications Corp., 17 F.3d 1553, 1562-64 (3d Cir.), cert. denied, 513 U.S. 986, 130 L. Ed. 2d 393, 115 S. Ct. 480 (1994); Sandler Assocs., L.P. v. Bellsouth Corp., 818 F. Supp. 695, 704-05 (D. Del. 1993), aff'd, 26 F.3d 123 (3d Cir. 1994); accord Matsushita Elec. Indus. Co. v. Epstein, U.S. , 134 L. Ed. 2d 6, 116 S. Ct. 873, 883 (1996). Third, class members who did not wish to be bound by the release, could have opted out of the class. See New York Life, 1995 N.Y. Misc. LEXIS 652, at *70-71. For these reasons, the objection is meritless.

  266. Krell also incorrectly argues that releases improperly cover class members without current, cognizable claims against Prudential. Krell Brief at 39. Krell contends that because these class members have no justiciable case or controversy, their claims cannot be released. Id. The Court is not persuaded. Whether an individual class member has been damaged and has a cognizable claim is always uncertain, litigants often settle claims whose existence is uncertain, and the uncertainty of a claim does not bear on whether a case or controversy exists. See In re Asbestos Litig., 90 F.3d 963, 987 (5th Cir. 1996) (objection to class settlement on ground that it purported to release claims not presenting a case or controversy was mistaken; settlement did not purport to make a determination of "the validity or amount of individual personal injury claims" against defendant), petition for cert. filed, No. 96-1379 (Feb. 27, 1997). Class actions routinely include members who may or may not have suffered individualized damage. See, e.g., Weiss v. Mercedes Benz, 899 F. Supp. 1297 at 1298-99 (class of all who purchased a 1992 or 1993 Mercedes); In re Prudential Sec. Inc. Ltd. Partnerships Litig., 164 F.R.D. 362, 366 (S.D.N.Y.) (class of all purchasers of securities in question), aff'd, F.3d ,1996 U.S. App. LEXIS 33665, 1996 WL 739258 (2d Cir. 1996). Additionally, all class members have received adequate consideration for the releases--each class member has the right to participate in Basic Claim Relief or the ADR Process.

  267. Beauvias incorrectly argues that the release is not valid because "non-recovering" policyholders will receive no consideration for releasing their claims. Beauvias at 11. The settlement is designed to compensate all policyholders who were misled in purchasing financed insurance. That compensation undeniably constitutes consideration for the release of claims. Additionally, the consideration for the release includes the right of every class member to participate in the ADR Process or to obtain Basic Claim Relief. See, e.g., DiMartino v. City of Hartford, 636 F. Supp. 1241, 1249-50 (D. Conn. 1986) (finding participation in testing process to constitute adequate consideration).

  268. The Court rejects also Beauvias' objection to the release of claims against Prudential officers, directors, and agents. The need for finality on Prudential's part requires that any settlement include a release also as to individuals. A settlement with Prudential alone would lack finality because if dissatisfied policyholders sued Prudential agents, the agents would likely turn to Prudential for indemnity or contribution. See, e.g., New York Life, 1995 N.Y. Misc. LEXIS 652, at *71. Additionally, some former Prudential officers are named defendants here. The Court finds that the release of the individual parties is appropriate and does not render the Proposed Settlement unfair.

  

26. There Is No Basis to Appoint a Custodial Receiver or Special Fiscal Agent

  269. Treadway has argued that the Court should appoint for Prudential a receiver or a fiscal agent, but has failed to demonstrate sufficient legal basis for his argument. Treadway argues that the Court should appoint an independent individual to administer the remediation program because there has been fraudulent mismanagement and a gross abuse of trust. Treadway Supp. at 2, 11-12.

  270. To appoint a receiver is not a decision that courts take lightly, however. For example, the Second Circuit has held that the appointment of a receiver is an option to be exercised only sparingly. See Donovan v. Bierwirth, 680 F.2d 263, 276 (2d Cir.) ("the appointment of a receiver is a harsh remedy, not to be imposed without a showing of necessity"), cert. denied, 459 U.S. 1069, 74 L. Ed. 2d 631, 103 S. Ct. 488 (1982). Treadway has cited cases in which courts have appointed receivers where management's chronic fraud necessitated the ouster of corporate management or the preservation of assets for the benefit of investors or creditors; see also, S.E.C. v. Bowler, 427 F.2d 190, 190 (4th Cir. 1970) ("A receiver is . . . appropriate where necessary to protect the public interest and where it is obvious . . . that those who have inflicted serious detriment in the past must be ousted."); S.E.C. v. Keller Corp., 323 F.2d 397, 403 (7th Cir. 1963) (appointing trustee-receiver where corporation illegally operated as an unregistered investment company); Leone Indus. v. Associated Packaging, Inc., 795 F. Supp. 117, 120 (D.N.J. 1992) (observing that as a general rule "receivers are appointed only when the party seeking receivership has 'an equitable interest in the property to be seized or . . . judgments that cannot otherwise be satisfied'").

  271. Courts are also reluctant to appoint fiscal agents. Fiscal agents are generally appointed to monitor corporate record keeping or to prevent the erosion of assets on behalf of shareholders. See, e.g., S.E.C. v. Alan F. Hughes, Inc., 461 F.2d 974 (2d Cir. 1972) (appointing special fiscal agent to review corporate books and to report need for receiver to dissolve corporation); Ferguson v. Birrell, 190 F. Supp. 506, 511 (S.D.N.Y. 1961) (appointing fiscal agent to determine the propriety of corporate disbursements).

  272. Here, there is no evidence of any managerial problem at Prudential that would suggest the need for a receiver or fiscal agent; to the contrary, the Task Force concluded that Prudential's current sales program, designed to prevent a repeat of past mistakes, is an industry "model." Task Force Report at 216-18. Moreover, there is abundant evidence that the Proposed Settlement is designed to provide and will provide independent and objective remediation to class members. As discussed above, the Proposed Settlement provides extensive procedural safeguards to ensure that the Proposed Settlement is implemented as intended by Class Counsel and state regulators, and as Prudential agreed. These observations in conjunction with the lack of any persuasive argument by Treadway, cause the Court to decline to appoint the requested custodial receiver or special fiscal agent.

  

27. The Proposed Settlement Does Not Violate State Law

  273. Krell argues that the Proposed Settlement violates four types of state laws enacted for the purpose of regulating insurance: (1) regulations governing insurance advertising; (2) prohibitions on the mandatory arbitration of contractual insurance claims; (3) regulations governing the readability of insurance policies and forms; and (4) regulations governing the replacement of insurance policies. Krell Brief at 47-56. The Court finds that the Proposed Settlement does not violate state law, and the Court derives substantial comfort in its conclusions from the observation that insurance regulators of all fifty states have approved the Proposed Settlement as being in compliance with their laws.

  274. Krell incorrectly argues that the Settlement Agreement and the Class Notice "advertise" life insurance. Krell Brief at 47-48. But, the definition of "advertisement" under the model rule that Krell cites, expressly excludes "communications with policyholders other than material urging policyholders to purchase, increase, modify, reinstate or retain a policy." Krell Brief, Ex. B, National Association of Insurance Commissioners, Governing the Advertising of Life Insurance § 2A(2)(b). And the Class Notice and Proposed Settlement do not urge policyholders to purchase insurance policies. Rather, these communications inform the policyholders of their rights as class members and their rights under the Proposed Settlement. Because the Settlement Agreement and Class Notice are clearly not "advertisements," but litigation documents designed to inform policyholders of their rights in these proceedings, the regulations governing insurance advertising simply do not apply.

  275. Krell incorrectly argues also that the Proposed Settlement violates state law prohibitions on the arbitration of insurance claims. Krell Brief at 49. Krell argues that the Proposed Settlement's ADR procedures violate several state laws that exempt insurance contracts from the general rule that contractual agreements to arbitrate disputes are valid, binding, and irrevocable. Krell Brief at 49 and n.23. The argument fails because the ADR procedures do not constitute "arbitration" agreements. Here, unlike under a mandatory arbitration clause, policyholders choose whether to participate in the Proposed Settlement and then choose whether to participate in the ADR process. The ADR process is completely voluntary, while a contractual arbitration clause completely forecloses other remedies. There is no legitimate comparison.

  276. Also, Krell argues incorrectly that the Proposed Settlement and the Class Notice violate state laws governing the form, content, and readability of life insurance contracts and policy forms. Krell Brief at 50-54. The Proposed Settlement and the Class Notice are not life insurance contracts or policy forms and do not violate state laws pertaining to those documents. The Proposed Settlement is what it purports to be, a settlement. The Class Notice is a notice to the class about the pendency of this class action and the terms of the Proposed Settlement. Moreover, none of the regulators of the fifty states that have approved the settlement has expressed or embraced Krell's concerns. The Court finds that state laws governing the form, content, and readability of life insurance contracts and policy forms do not apply.

  

28. The McCarran-Ferguson Act Does Not Apply to the Proposed Settlement, Which Does Not Affect Policyholders' State Substantive State Law Rights

  277. Krell argues that the Proposed Settlement violates the McCarren Ferguson Act *fn86" because Rule 23(e) is an Act of Congress that here operates to "invalidate, impair or supersede" state laws "enacted for the purpose of regulating the business of insurance." Krell Brief at 56-58. This argument is absurd in this context. Even if the Federal Rules of Civil Procedure were an "Act of Congress," which they are not, *fn87" a consensual settlement between parties to a lawsuit could not invalidate, impair, or supersede substantive state laws. Indeed, the Proposed Settlement does not go so far as to violate state laws, as discussed above, let alone to supersede them.

  

29. The Rules Enabling Act Does Not Apply to the Proposed Settlement, Which Does Not Affect Policyholders' State Substantive State Law Rights

  278. Krell argues that the Court's approval of the Proposed Settlement would violate also the Rules Enabling Act, *fn88" because the Proposed Settlement would modify or abridge state law rights. Krell Brief at 56-57. Federal Rule of Civil Procedure 23(e) does not, however, "abridge, enlarge or modify" any substantive rights. The Rule requires that the district court approve any settlement between the parties to a class action. See Fed. R. Civ. P. 23(e). In other words, if the parties agree to compromise their rights, they must, thereafter, seek court approval. A court's approval of a voluntary settlement, by nature a compromise of rights, does not affect substantive state rights. The Court's act merely recognizes the parties' voluntary compromise of their rights. The requirement that the court must approve any settlement in the class action context, thus, does not abridge, enlarge, or modify any substantive rights.

  

30. This Court Properly Preliminarily Certified the Class for Settlement Purposes Only

  279. This Court's procedures in preliminarily certifying the class for settlement purposes were completely proper. According to the Manual on Complex Litigation, this Court's procedures have been completely appropriate:

  

Approval of class action settlements involves a two-step process. First, counsel submit the proposed terms of settlement and the court makes a preliminary fairness evaluation. In some cases this initial evaluation can be made on the basis of information already known to the court, supplemented as necessary by briefs, motions, or informal presentation by the settling parties.

  § 30.4 at 236-37. The Court has discretion to hear from counsel, the parties, and from attorneys who did not participate in the negotiations. See id. But, the Court is not required to do so. This Court clearly had an adequate record to make the determination of preliminary approval without holding a hearing.

  280. Krell complains that on October 28, 1996 this Court signed an order conditionally certifying the class for settlement purposes without holding a formal hearing. Krell also complains that the Court that day participated in an improper ex parte conference. Despite Krell's unfounded contentions that a conference occurred, there was no conference on that date. Rather, counsel delivered the Stipulation of Settlement and accompanying documents, and the Court later signed its Order. *fn89"

  

31. The Fairness Hearing Format Was Fair

  

a. The Opt-Out and Objection Period Was Sufficient

  281. Several objectors have contended that the December 19, 1996 opt-out deadline was scheduled too soon after the policyholders received the Class Notice. The Court disagrees. Courts have routinely approved of deadlines of between thirty and sixty days. See White v. National Football League, 41 F.3d 402, 408 (8th Cir. 1994), (finding that notice mailed "approximately one month prior to the first settlement hearing" was adequate notice), cert. denied, U.S. , 132 L. Ed. 2d 821, 115 S. Ct. 2569 (1995); Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1375 (9th Cir. 1993) (finding that notice mailed thirty-one days before deadline for objections and forty-five days prior to hearing was timely), cert. denied, 512 U.S. 1220, 129 L. Ed. 2d 834, 114 S. Ct. 2707 (1994); Marshall, 550 F.2d 1173 at 1178 (finding that notice mailed twenty-six days before deadline for opting out of settlement was adequate); Milstein v. Werner, 57 F.R.D. 515, 518 (S.D.N.Y. 1972) (notice mailed thirty-eight days before scheduled settlement hearing was adequate); see also generally 2 Newberg § 8.37, at 8-118 (observing that the bulk of notices incorporate intervals of between thirty and sixty days between the mailing or publishing of class notice and the deadline for the recipient to respond). In the present case, Class Notice was mailed by November 3, 1996 and objections and opt-outs were due by December 19, 1996. Thus, class members had approximately forty-five days to opt out of the class after receiving the Class Notice. This amount of time is unquestionably sufficient.

  

b. Objectors Had Sufficient Opportunity to Conduct Discovery to Prepare for the Fairness Hearing

  282. Krell wrongfully argues in his Supplemental Objection and supporting documents that his inability to complete discovery prejudiced his ability to participate in the Fairness Hearing. But, objectors have no absolute right to take independent discovery to prepare for a fairness hearing. See Bell Atl. Corp., 2 F.3d 1304 at 1314-15. An objector is entitled to establish a record, but the Court has discretion to employ the procedures that it perceives will best permit it to evaluate the fairness of the settlement. Krell's contention that he was entitled to additional discovery must be rejected for several reasons.

  283. First, Krell has had ample opportunity to review the discovery obtained by Plaintiffs' Counsel, see generally Weprin Aff. and attachs., yet Krell failed to use that discovery; Krell's counsel appears to have spent only three days reviewing discovery in the depository. Weprin Aff. at PP 7-8; see also Bell Atl. Corp., 2 F.3d 1304 at 1314-15 (objector's request for discovery denied where objector participated in action before Class Notice was sent and objector had adequate access to discovery generated by plaintiffs); City of Detroit v. Grinnell Corp., 495 F.2d 448, 463-64 n.9 (2d Cir. 1974) (denying discovery where objectors' counsel had spent just four days in the document depository).

  284. Second, Krell had sufficient time to respond. *fn90" Over two months transpired between the initial Class Notice and the date that all supplemental objections were to be submitted and no other class member has claimed that this ample time frame was inadequate. Krell managed to supply the Court with initial objections, with supplemental objections, and filed scads of baseless motions and affidavits in the interim. *fn91" Krell's counsel chose to dedicate his attention to filing a series of emergent motions and to preparing counsel and paralegal affidavits, rather than to pursuing the discovery available in plaintiffs' warehouses or to retaining experts to evaluate the adequacy of the Proposed Settlement. The Court will not delay relief to the Class, because of Krell's case management peculiarities.

  285. Third, Krell's objection that he lacked sufficient time to act is belied by the activities of other objectors. For instance, the Jewell & Moser firm had sufficient time to use the depository to review the records of 171 different clients, and to determine that the Proposed Settlement was fair, reasonable, and adequate. And the Florida AG (prior to withdrawing its objections) had time to commission and complete two extensive expert reports.

  286. Fourth, Krell focuses on legal issues, the development of which would not be facilitated by additional discovery. See Weinberger v. Kendrick, 698 F.2d 61, 79 (2d Cir. 1982) (no discovery for objector who does not present "cogent factual objections to the settlement"), cert. denied, 464 U.S. 818, 78 L. Ed. 2d 89, 104 S. Ct. 77 (1983). Krell attacks, for example, whether a nationwide class is appropriate, whether the requirements of Rule 23 have been met, and whether the Settlement is fair and reasonable.

  

c. Objectors Had No Absolute Right to Present and Cross Examine Witnesses at the Fairness Hearing, and Under the Circumstances, These Activities Were Inappropriate

  287. At a hearing on December 30, 1996, Krell's counsel stated that he wished to present the testimony of John Cressman and to cross-examine Prudential's experts at the Fairness Hearing. December 30, 1996 Tr. at 30-31. Krell argues that the Court's refusal to allow testimony and cross-examination at the Fairness Hearing made the hearing unfair. The Court disagrees. See generally Walsh v. Great Atl. and Pac., 726 F.2d 956 at (denying an evidentiary hearing because the facts were largely undisputed, the fairness of the settlement depended primarily upon an evaluation of the competing legal positions of the parties, and it was difficult to imagine what value an evidentiary hearing would have had).

  288. As the Court has noted, the Cressman testimony was already before the Court. December 30, 1996 Tr. at 31. And having experts testify would be redundant and wasteful of the Court's time because experts ordinarily testify in accordance with their written reports. Id. at 30. The Court suggested that objectors who wished to challenge the parties' experts file their own expert affidavits. Id. at 29. Krell had access to everything that the parties' experts reviewed in forming their conclusions, and Krell could have, but did not, retain an expert to review these materials and submit a contrary affidavit.

  

d. Krell and All Objectors Were Afforded an Adequate Opportunity to Present All of Their Factual and Legal Arguments

  289. At the Fairness Hearing, Krell's counsel and all objectors' counsel were afforded thirty minutes for oral argument. Moreover, in advance of the Fairness Hearing the Court granted Krell's application for the filing of an oversized brief. Whatever arguments Krell and any other objectors deemed important were placed before the Court through both their written and oral submissions.

  290. The Court allotted three full days for the Fairness Hearing and provided closed-circuit live video feed at four remote locations within the courthouse complex to accommodate an overflow of interested parties. The Fairness Hearing concluded on the first day allotted and only one remote location was partially filled. Because all objectors were permitted to observe and be heard, the Court is satisfied that the Fairness Hearing was what it purported to be: fair.

  CONCLUSION

  When Edmund Burke, the Irish statesman, orator, and author, said "The only thing necessary for the triumph of evil is for enough good men to do nothing," *fn92" he did not have The Prudential Insurance Company of America in mind. Yet, through deceptive sales practices, harm resulted. What distinguishes Burke's admonition from the facts of this case is that good people including Prudential, have done something and, through regulatory and judicial processes, have stemmed the tide of harm.

  Through this Opinion, the Court has explicitly demonstrated that the settlement is exceptionally fair, reasonable, and adequate, far exceeding the requirements of Federal Rule of Civil Procedure 23. While some, but only a few, naysayers object to this settlement in pursuit of their own parochial interests, the settlement, when viewed through the prism of reality, provides sufficient judicial comfort to merit the imprimatur of the Court. *fn93"

  An appropriate Order is attached.

  Dated: March 17, 1997

  ALFRED M. WOLIN, U.S.D.J.

  FINAL ORDER AND JUDGMENT

  Based upon the submissions of the parties referenced above and the full record before this Court, and upon this Court's Findings of Fact and Conclusions of Law as set forth above,

  It is on this 17th day of March, 1997

  ORDERED as follows:

  1. This Final Order and Judgment incorporates herein and makes a part hereof (i) the Stipulation of Settlement, and the release included therein, dated October 28, 1996, as amended as of February 22, 1997 (together, the "Stipulation of Settlement"), (ii) Exhibit B (Prudential Alternative Dispute Resolution Guidelines), Exhibit C (Manual of Procedures for Resolving Claims Under Prudential Alternative Dispute Resolution Guidelines), Exhibit D (Guidelines for Prudential Basic Claim Relief), Exhibit E (Hearing Order), Exhibit F (Cover Letter to Class Notice; Class Notice; Questions and Answers), Exhibit G (Summary Notice), Exhibit H (Claim Form), Exhibit I (Stipulation of Confidentiality) to the Stipulation of Settlement, (iii) this Court's January 24, 1997 Order denying Texas' motion to enforce its November 5, 1996 subpoena duces tecum, and (iv) this Court's February 3, 1997 Order regarding document destruction guidelines; provided, however, that the parties are hereby authorized to agree to and adopt such amendments and modifications to the Stipulation of Settlement and its implementing documents (including, without limitation, the Post-Settlement Notice materials and the ADR Manual) as (i) shall be consistent in all material respects with this Final Order and Judgment, (ii) do not limit the rights of class members, or (iii) permit for early implementation of the terms of the Settlement at the sole option of Prudential.

  2. A class for settlement purposes in accordance with In re General Motors Corp., 55 F.3d 768 (3d Cir.), cert. denied, 133 L. Ed. 2d 45, 116 S. Ct. 88 (1995), is hereby finally certified, consisting of: all persons who own or owned at termination an individual permanent whole life insurance policy issued by Prudential or any of its United States life insurance subsidiaries during the Class Period of January 1, 1982 through December 31, 1995 (the "Policy" or "Policies"), except as specifically described below ("Policyholders"), and have not timely excluded themselves from participating in the Settlement ("class members" or the "class") The Policyholders do not include the following persons or entities (unless such persons or entities are policyholders by virtue of their ownership interest in other Policies): (i) policyowners who were represented by counsel at the time they executed a document in connection with a settlement of a claim, action, lawsuit or proceeding, pending or threatened, that released Prudential with respect to such Policies; (ii) policyowners that are corporations, banks, trusts or non-natural entities, that purchased policies as corporate or trust-owned life insurance under which either (a) there are fifty or more separate insured individuals, or (b) the aggregate premium paid over an eight-year period, ending with the close of 1996 exceeds one million dollars; or (iii) policyowners who were issued policies in 1995 by Prudential Select Life Insurance Company of America. A list of those persons who have timely excluded their policies from the class has been filed with the Court under Seal, and is made a confidential part hereof.

  3. The terms and provisions of the Stipulation of Settlement, including all exhibits and supplemental exhibits thereto, are hereby fully and finally approved as fair, reasonable and adequate as to, and in the best interests of, each of the Settling Parties and the class members whose individual claims are hereby extinguished, except as to eligibility for relief provided by the Stipulation of Settlement; and the Settling Parties and class members are hereby directed to implement and consummate the Stipulation of Settlement according to its terms and provisions.

  4. The Settling Parties are hereby directed to mail Post-Settlement Notice materials in the form approved by the Court in its Order dated March 11, 1997.

  5. The Settling Parties are hereby directed to mail a separate notice to those class members who excluded themselves from the class prior to December 19, 1996: (a) explaining the enhancements to the Settlement, as reflected in the February 22, 1997 amendment to the Stipulation of Settlement, and (b) giving those policyholders seventy-five days from the mailing of said notice to elect to participate in the Settlement, as amended on February 22, 1997.

  6. The terms of the Stipulation of Settlement and of this Final Order and Judgment, including all exhibits and supplemental exhibits thereto, shall forever be binding on, and shall have res judicata and claim preclusive effect in all pending and future lawsuits maintained by or on behalf of, the plaintiffs and all other class members, as well as their heirs, executors and administrators, successors and assigns. All claims for compensatory or punitive damages on behalf of class members are hereby extinguished, except as provided for in the Stipulation of Settlement.

   7. The Release set forth in Section J of the Stipulation of Settlement is expressly incorporated herein in all respects and the effective date of the Release shall be the date of this Final Order and Judgment.

  8. All class members, and all persons acting on behalf of or in concert or participation with any class member, are hereby permanently enjoined from this day forward from filing, commencing, prosecuting, intervening, or participating in any lawsuit on behalf of any class member in any jurisdiction based on or relating to the facts and circumstances underlying the claims and causes of action in this lawsuit or the Released Transactions (as that term is defined in the Stipulation of Settlement). All persons receiving notice of this Order, including all class members, are hereby permanently enjoined from this day forward from bringing a class action on behalf of class members, seeking to certify a class which includes class members, or seeking damages of any sort either expressly or impliedly on behalf of class members, in any lawsuit, in any jurisdiction, based on or relating to the facts and circumstances underlying the claims and causes of action in this lawsuit or the Released Transactions (as that term is defined in the Stipulation of Settlement).

  9. Nothing in this Final Order and Judgment shall preclude any action to enforce the terms of the Stipulation of Settlement, nor shall anything in this Final Order and Judgment preclude plaintiffs or class members from participating in the ADR Process described in the Stipulation of Settlement.

  Because of the procedural context of the Opinion, and its focus on class certification and approval of the Proposed Settlement, non of th findings of fact are deemed to be final for purposes of issue preclusion in any other court of competent jurisdiction.

  10. Without in any way affecting the finality of this Final Order and Judgment, this Court hereby retains exclusive jurisdiction as to all matters relating to administration, consummation, enforcement and interpretation of the Stipulation of Settlement and of this Final Order and Judgment, and for any other necessary purpose.

  11. This class action, including all individual claims and class claims presented thereby, is hereby dismissed on the merits and with prejudice against the plaintiffs and all other class members, without costs to any party, except as otherwise provided herein.

  12. All prior restraints that tolled time limits to file appeals and stayed the right to file an appeal are dissolved.

  ALFRED M. WOLIN, U.S.D.J.

  APPENDIX A

  Plaintiffs' Class Action Counsel

  GOLDSTEIN LITE & DePALMA,

  Allyn Z. Lite, Esq.

  Joseph J. DePalma, Esq.

  Bruce D. Greenberg, Esq.

  Two Gateway Center, 12th Floor

  Newark, NJ 07102

  MILBERG WEISS BERSHAD HYNES & LERACH LLP

  Melvyn I. Weiss, Esq.

  Barry A. Weprin, Esq.

  Brad N. Friedman, Esq

  One Pennsylvania Plaza

  New York, NY 10119

  -and-

  John J. Stoia, Jr., Esq.

  Sharon T. Maier, Esq.,

  600 West Broadway

  1800 One America Plaza

  San Diego, CA94108

  MUCH SHELIST FREED DENENBERG AMENT BELL & RUBENSTEIN, P.C.

  Michael Hyman, Esq.

  Deborah S. Bussert, Esq.

  Ellyn M. Lansing, Esq.

  200 North LaSalle Street, Suite 2100

  Chicago, IL 60601-1095

  HOPKINS GOLDENBERG, P.C.

  Mark C. Goldenberg, Esq.

  Elizabeth V. Heller, Esq.

  2132 Bontoon Road

  Granite City, IL 62040

  ARNZEN PARRY & WENTZ, P.S.C.

  Ron Parry, Esq.

  Robert Sparks, Esq.

  128 E. Second Street

  Covington, KY 41012

   PERRY & WINDELS

  Paul Windels, III, Esq.

  150 Broadway

  New York, NY 10038

  BONNETT FAIRBOURN FRIEDMAN & BALINT, P.C.

  Andrew S. Friedman, Esq.

  Francis J. Balint, Jr., Esq.

  4041 N. Central Avenue - Suite 1100

  Phoenix, AZ 85012

  CANTILO MAISEL & HUBBARD, LLP

  Stephen L. Hubbard, Esq.

  Robert W. Biederman, Esq.

  1717 Main Street - Suite 3200

  Dallas, TX 75201

  Defendants' Counsel

  RIKER, DANZIG, SCHERER, HYLAND & PERRETTI

  Edward A. Zunz, Esq.

  Alan Kraus, Esq.

  Headquarters Plaza - One Speedwell Avenue

  Morristown, NJ 07962 (Attorneys for The Prudential Insurance Company of America)

  SONNENSCHEIN NATH & ROSENTHAL

  Reid L. Ashinoff, Esq.

  Michael H. Barr, Esq.

  John Grossbart, Esq.

  David C. Jacobson, Esq.

  Lorie A. Chaiten, Esq.

  Helen B. Kim, Esq.

  1221 Avenue of the Americas

  New York, NY 10020 (Attorneys for The Prudential Insurance Company of America)

  CRUMMY DEL DEO DOLAN GRIFFINGER & VECCHIONE, ESQS.

  John J. Gibbons, Esq.

  Guy Amoresano, Esq.

  One Riverfront Plaza

  Newark, NJ 07102-5497 (Attorneys for Defendant Robert Winters)

  LeBOEUF, LAMB, GREENE & MacRAE, ESQS.

  Frederick B. Lacey, Esq.

  One Riverfront Plaza

  Newark, NJ 07102 (Attorneys for Defendant Robert Beck)

  On Behalf of the New Jersey Department of Banking and Insurance

  DEPARTMENT OF BANKING AND INSURANCE

  Anita B. Kartalopoulos, Deputy Commissioner

  Division of Administration and Planning

  20 W. State Street, CN 325

  Trenton, NJ 08625-0325

  -and-

  OFFICE OF THE NEW JERSEY ATTORNEY GENERAL Karen Suter, Chief Deputy Attorney General

  Jennifer Fradel, Deputy Attorney General

  Department of Law and Public Safety

  Hughes Justice Complex

  25 W. Market Street

  Trenton, NJ 08625

  On Behalf of the Texas Department of Insurance

  OFFICE OF THE TEXAS ATTORNEY GENERAL

  David T. Mattax, Assistant Attorney General

  On Behalf of the Massachusetts Department of Insurance

  OFFICE OF THE MASSACHUSETTS ATTORNEY GENERAL

  Charles Harak, Assistant Attorney General

  Cynthia Martin, Assistant Attorney General

  Peter Leight, Assistant Attorney General

   On Behalf of the State of Florida and Florida Department of Insurance:

  OFFICE OF THE FLORIDA ATTORNEY GENERAL Keith P. Vanden Dooren, Assistant Attorney General

  Gary Betz, Assistant Attorney General

  OFFICE OF THE FLORIDA DEPARTMENT OF INSURANCE

  Douglas Shropshire, Esq.

  Attorneys for Objectors

  FLEMING, HOVENKAMP & GRAYSON, ESQS.

  Debra B. Hayes, Esq.

  Andres C. Pereira, Esq.

  (For Objector Beauvias)

  McCUSKER, ANSELMI, ROSEN & CANELLI, ESQS.

  Bruce Rosen, Esq.

  -and-

  KRISLOV & ASSOCIATES, LTD.

  Clint Krislov, Esq.

  William Bogot, Esq.

  (For Objectors Treadway, Parnell & Ginsberg)

  MALAKOFF, DOYLE & FINBERG, ESQS.

  Michael P. Malakoff, Esq.

  James Pietz, Esq.

  (For Objector Krell)

  RICHARD N. ROSENTHAL, ESQ.

  LYNDE SELDEN, ESQ.

  (For Objector Johnson)

  UNITED AUTO WORKERS LEGAL SERVICES

  Eric Aglow, Esq.

  (For Objector United Auto Workers)

  CAREY & DANSIZ, ESQS.

  T. Evan Schaeffer, Esq.

  (For Objectors Helton, Rodney Grady and Janet Grady)

  APPENDIX B

  The plaintiffs have submitted documents including the following:

  

. Memorandum of Law in Support of Final Approval of the Proposed Class Action Settlement ("Pls. Settl. Memo.");

  

. Memorandum of Law in Support of Plaintiffs' Motion for Class Certification for Settlement Purposes ("Pls. Certif. Memo.");

  

. Reply Memorandum in Support of Final Approval of the Proposed Class Action Settlement ("Pls. Settl. Reply");

  

. Reply Memorandum in Support of Class Certification ("Pls. Certif. Reply");

  

. Plaintiffs' Evidentiary Submission ("Pls. Evid. Sub.");

  

Joint Petition of Plaintiffs' Counsel for an Award of Attorneys' Fees and Reimbursement of Expenses and Plaintiffs' Memorandum of Law in Support of That Joint Petition;

  

. The Declaration of Professor H. Russell Bernard ("Bernard Decl.");

  

. The Affidavit of Robert W. Biederman ("Biederman Aff.");

  

. The Declaration of Professor Joel Cohen ("Cohen Decl.");

  

. The Supplemental Affidavit of Joel Cohen ("Cohen Supp. Aff.");

  

. The Declaration of Andrew S. Friedman ("Friedman Decl.");

  

. The Affidavit of Robert L. Hoyer ("Hoyer Aff.");

  

. The Reply Affidavit of Robert L. Hoyer ("Hoyer Supp. Aff.");

  

. The Declaration of Professor Samuel Issacharoff ("Issacharoff Decl.");

  

. The Declaration of Professor Arthur R. Miller ("Miller Decl.");

  

. The Affidavit of Dean John E. Sexton ("Sexton Aff.");

  

. The Declaration of John B. Torkelson ("Torkelson Decl.");

  

. The Affirmation of Georgene M. Vairo ("Vairo Affirm.");

  

. The Affidavit of Melvyn I. Weiss ("Weiss Aff.");

  

. The Appendix of Exhibits to the Weiss Aff. ("Weiss Aff. App.");

  

. The Supplemental Affidavit of Melvyn I. Weiss ("Weiss Supp. Aff."); and

  

. The Affidavit of Barry M. Weprin ("Weprin Aff.").

  Prudential submitted documents including the following:

  

. A Memorandum in Support of Class Action Settlement ("Pru. Mem.");

  

. A Reply Memorandum in Response to Objections to the Class Action Settlement ("Pru. Reply");

  

. An Appendix to Prudential's Memoranda In Support of the Class Action Settlement and in Response to Objections ("Pru. App.");

  

. The Affidavit of Reid L. Ashinoff, in Pru. App., Ex. 1 ("Ashinoff Aff.");

  

. The Supplemental Affidavit of Reid L. Ashinoff in Pru. App., Ex. 54 ("Ashinoff Supp. Aff."); Affidavit of Deborah Barcafer in Pru. App., Ex. 49 ("Barcafer Aff.");

  

. Affidavit of Deborah Bello-Monaco, in Pru. App., Ex. 50 ("Bello-Monaco Aff.");

  

. The Affidavit of Thomas Burke, in Pru. App., Ex. 10 ("Burke Aff.");

  

. The Declaration of Fred Fiandaca, in Pru. App., Ex. 46 ("Fiandaca Decl.");

  

. The Affidavit of Patricia L. Guinn, in Pru. App., Ex. 26 ("Guinn Aff.");

  

. Dale S. Hagstrom, "Analysis of Possible Profit and Loss to Prudential Arising From Benifits Made Available By the Proposed Settlement in MDL Docket No. 1061 (Milliman & Robertson, February 1997), in Pru. App., Ex 44 ("Hangstrom Analysis");

  

. The Affidavit of George J. Hebel, Jr., in Pru. App., Ex. 27 ("Hebel Aff.");

  

. The Affidavit of George J. Hebel, Jr., in Pru. App., Ex. 41 ("Hebel Supp. Aff.");

  

. The Affidavit of William J. Hegarty, in Pru. App., Ex. 9 ("Hegarty Aff.");

  

. The Supplemental Declaration of William J. Hegarty, Jr., in Pru. App., Ex. 53 ("Hegarty Supp. Decl.");

  

. The Affidavit of Barbara Lautzenheiser in Pru. App., Ex. 30 ("Lautzenheiser Aff.");

  

. The Affidavit of Daniel J. McCarthy, in Pru. App., Ex. 28 ("McCarthy Aff.");

  

. The Affidavit of Richard E. Meade, in Pru. App., Ex. 4 ("Meade Aff.");

  

. The Affidavit of Esther Mimes, in Pru. App., Ex. 8 ("Milnes Aff.");

  

. Letters from selected Prudential Policyholders who opted out of the Class, in Pru. App., Ex. 70.

  

. Millman and Robertson, "Replacement Fact Sheet" in Pru. App., Ex. 45 ("M&R Fact Sheet");

  

. Multi-State Life Insurance Task Force and Multi-State Market Conduct Examination of The Prudential Insurance Company of America, in Pru. App., Ex. 5 ("Task Force Report").

  

. Excerpts from the Deposition of James Tignanelli, in Pru. App., Ex. 19 ("Tignanelli Dep.");

  The state participants submitted, and later withdrew, documents including the following:

  

. Objection of the California Insurance Commissioner to Proposed Settlement ("Cal.");

  

. Statement of Objections of Lester A. Garringer, Jr., and Other Similarly Situated Florida Class Members to the Notice of Class Action, Proposed Settlement ("Fla. AG");

  

. Supplement to Statement of Objections of Lester A. Garringer, Jr., and Other Similarly Situated Florida Class Members to the Notice of Class Action, Proposed Settlement ("Fla. AG Supp.");

  

. Survey Concerning Prudential Insurance Company's Class Action Settlement Notice to Florida Policy Holders, in Fla. AG, Ex. C, Attach. B. ("Kerr & Downs Survey");

  

. Affidavit of Lester A. Garringer, Jr. ("Garringer Aff.")

  

. The Florida Department of Insurance Amicus Curiae Brief Regarding Proposed Class Action Settlement ("Fla. DOI");

  

. Florida Department of Insurance Supplement to Amicus Curiae Brief ("Fla. DOI Supp.");

  

. Florida Department of Insurance Appendix to Amicus Curiae Brief ("Fla. DOI App.");

  

. Affidavit of Stephen S. Oscher, in DOI App., Ex. D ("Oscher Aff.")

  

. Objections of the Massachusetts Attorney General and Commissioner of Insurance to the Proposed Class Action Settlement ("Mass.");

  

. Supplemental Objections of the Massachusetts Attorney General and Commissioner of Insurance ("Mass. Supp."); and

  

. Objection of the Texas Department of Insurance to Proposed Settlement and Motion for Order Enforcing Subpoena Duces Tecum ("Tex.").

  The objectors submitted documents including the following:

  

. A Motion and Memorandum of Law Filed by Objector Brent A. Beauvias In Opposition to the Proposed Settlement ("Beauvias");

  

. Objector Richard Johnson's Memorandum of Points and Authorities in Support of Opposition to the Settlement Agreement ("Johnson");

  

. A Supplement to Objector Richard Johnson's Objections and Points and Authorities In Opposition to the Settlement Agreement ("Johnson Supp.");

  

. Objections to Fairness, Reasonableness and Adequacy of Proposed Settlement and Award of Attorneys' Fees and Expenses by Richard Krell and Over 20 Other Individual Policyholders ("Krell");

  

. Brief in Support of Objections to the Proposed Settlement by Policyholders Represented by Malakoff Doyle & Finberg, P.C. ("Krell Brief");

  

. Supplemental Objections to Fairness, Reasonableness and Adequacy of Proposed Settlement and Award of Attorneys' Fees and Expenses by Richard Krell et al. ("Krell Supp. Obj."); Affidavit of S. Catherine Colder by Krell ("Colder Aff.") Affidavit of James M. Pietz in Support of Krell Objectors Regarding Attempts to Obtain Discovery Through Lead Counsel and Identifying Internal Documents Relating to Prudential's Ability to Identify Policyowners Subject to Replacement ("Pietz Aff.")

  

. Objections to Proposed Settlement and Notice of Intention to Appear and Appearance by Counsel and Request for Leave to Intervene of Sherry Lynn Treadway, Nancy Parnell, and Edward Ginsberg ("Treadway");

  

. Objectors Treadway's, Parnell's and Ginsberg's Supplementary Memorandum In Support of Objection to Proposed Settlement ("Treadway Supp.").

  

. Objection to Deadline for Exclusion in Class Action Settlement Notice by UAW-GM ("UAW-GM");

  

. Supplemental Objection of Class Members Represented by UAW-GM Legal Services Plan and Request for Discovery by Class Members of Their Files ("UAW-GM Supp.")

  The Court also has considered the proposed findings of fact and conclusions of law submitted by plaintiffs, Prudential, intervenor Richard Johnson, objector Beauvias, the Krell objectors, and objectors Treadway, Parnell, and Ginsberg.

   APPENDIX C GEORGINE VS. PRUDENTIAL GEORGINE PRUDENTIAL "Futures" claimants lacking present No "futures" claimants. All class injuries or knowledge of exposure members sustained actual, present injuries Mass toxic tort Commerical dispute Personal injury damages Economic damages Only one common issue identified Multitude of common issues susceptible to class-wide proof Lack of any case-dispositive common Central primary common issues and issues or defenses potentially case-dispositive common defenses Class members not ascertainable or Class members ascertainable from subject to notice Prudential's records and subject to notice Limited settlement fund with Unlimited relief available under damage caps ADR Conflicts among "future" exposure No conflict among class members only claimants, "exposure" only claimants and "medical" claimants due to differences between nature of claims and relief available No common federal claim Common federal claim Insuperable variations among Potentially applicable laws grouped states' laws. No effort or ability int manageable patterns per School to categorize Asbestos Nine defendants raising separate One defendant raising uniform defenses defenses Impossible obstacles to trial. No Trial manageable through jury effort or ability to demonstrate instructions, special verdicts, manageability interrogatories, sub-classes and other case management techniques. Adequacy of representation No hint of collusion or inadequate compromised by specter of representation. Case hotly contested collusion. Case filed from outset, protracted negotiations simultaneously with pre-packaged long after inception of litigation settlement. against backdrop of Task Force investigation. Adequacy of representation No representation of individual compromised by conflicts of plaintiffs by class counsel and no interest. Parallel settlements of parallel settlement of individual individual actions in which class cases. counsel represented individual plaintiffs. Ineffective notice and opt-out Full notice and effective opt-out right for futures right Individual claims involve All class members' claims arise from radically different factual and alleged common course of conduct and legal issues involve similar legal and factual issues Individual plaintiffs harmed in All class members harmed in similar different ways with different ways with similar results results Large individual claims -- death Modest individual claims - small or serious injury economic losses No typicality due to conflicts and Class representatives' claims typical. complex differences among class No conflict with other class members. members Personal injury damages subjective Economic damages objective and and not quantifiable quantifiable No structural protections to ADR provides structural protections, protect unique individual interests allocation standards and cost-free individual representation


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