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March 17, 1997






 I. This Court Has Subject Matter Jurisdiction Over Plaintiffs' Claims Against Prudential

 1. After full consideration of the arguments presented and the applicable law, the Court finds that its exercise of subject matter jurisdiction over this case is appropriate. *fn30" The Court asserts both federal question and federal diversity jurisdiction over the entire action.


A. This Court Unquestionably Has Federal Question Jurisdiction Over this Action

 2. Plaintiffs allege, and this Court agrees, that the Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. §§ 1331 and 1337, and has supplemental jurisdiction under 28 U.S.C. § 1367. Second Am. Compl. at P 2. Plaintiffs allege claims under Section 10(b) of the Securities Exchange Act of 1934 (15 U.S.C. §§ 78j(b) and 78t(a)) and under Rule 10b-5 promulgated thereunder by the Securities and Exchange Commission (17 C.F.R. § 240.10b-5) and common law claims. Second Am. Compl. at P 1.

 3. Specifically, named plaintiff Martin Dorfner asserts claims against Prudential and the individual defendants under Sections 10(b) and 20(a) of the Securities Exchange of 1934 and for violation of Rule 10b-5. Second Am. Compl. at PP 1, 130-45, 181-96. Martin Dorfner alleges that, as a part of Prudential's scheme to defraud life insurance policyholders, Prudential sold him a VAL policy in violation of federal securities laws using fraudulent sales practices in violation of various state laws.

 4. This Court has jurisdiction over Dorfner's federal securities claims, and the federal securities claims of other similarly situated plaintiffs, under 28 U.S.C. §§ 1331 and 1337. Indeed, there is no dispute that the Court has exclusive "federal question" subject matter jurisdiction over plaintiffs' federal securities fraud claims under 15 U.S.C. § 78aa and 28 U.S.C. § 1331. Plaintiffs' federal securities laws claims are more than just "colorable;" they survived Prudential's motion to dismiss. May 10, 1996 Order cf. Growth Horizons, Inc. v. Delaware County, 983 F.2d 1277, 1280-81 (3d Cir. 1993) (dismissal for lack of subject matter jurisdiction is appropriate only if the right claimed is so "insubstantial, implausible, foreclosed by prior decisions of this Court, or otherwise completely devoid of merit as not to involve a federal controversy") (quoting Kulick v. Pocono Downs Racing Ass'n, Inc., 816 F.2d 895, 899 (3d Cir. 1987)).

 5. This Court has jurisdiction also over the remaining claims of these class members and the other class members in this action, because all of the claims are part of the same "case or controversy under Article III of the United States Constitution," and, therefore, the additional claims are within this Court's supplemental jurisdiction pursuant to 28 U.S.C. § 1367. *fn31" Under section 1367, the Court has supplemental jurisdiction over all claims that are so closely related that they form part of the same case or controversy under Article III. Id. This is true even where the claims involve additional parties. Id.

 6. Claims are "so closely related" that they form part of the "same case or controversy" if the claims share "significant factual elements." See HB Gen. Corp. v. Manchester Partners, L.P., 95 F.3d 1185, 1198 (3d Cir. 1996); Sinclair v. Soniform, Inc., 935 F.2d 599, 603 (3d Cir. 1991) ("Claims are part of the same constitutional case if they derive from a common nucleus of operative fact . . . . '") (quoting United Mine Workers v. Gibbs, 383 U.S. 715, 725, 16 L. Ed. 2d 218, 86 S. Ct. 1130 (1966)).

 7. Here, the state law claims are part of the same case or controversy as the federal claims because the claims are inextricably factually intertwined. *fn32" Dorfner and others allege that Prudential sold its VAL policies in violation of federal laws through the financing mechanisms and other deceptive sales practices that comprise plaintiffs' state law claims. All the claims are premised upon a common course of conduct by Prudential; all relate to the same alleged companywide development and implementation of the patently fraudulent sales techniques. *fn33" See Palmer v. Hosp. Auth. of Randolph County, 22 F.3d 1559, 1563-64 (11th Cir. 1994) ("same case or controversy" satisfied where claims related to the same course of events, and would involve the same witnesses, presentation of the same evidence, and determination of the same, or very similar, facts); cf. In re IGI Sec. Litig., 122 F.R.D. 451, 461 (D.N.J. 1988) (pendent state law negligent misrepresentation claim certified when claims presented essentially same issues asserted by federal securities law claims).

 8. Where the original federal jurisdiction claim would proceed to trial absent settlement, as is true in this case, to promote judicial economy and the convenience of and fairness to the parties, the district court should exercise jurisdiction over state claims based on the same nucleus of operative facts unless there exists some substantial countervailing consideration. See Lancaster, 45 F.3d at 788; Sparks v. Hershey, 661 F.2d 30, 33-34 (3d Cir. 1981) ("This is especially true where it is desirable to avoid the possibility of duplicating the recovery of damages."). Because there are no substantial countervailing considerations, the Court will exercise its discretion to take jurisdiction over the entire case. *fn34" See Growth Horizons, 983 F.2d at 1285 n.14 (noting that section 1367 "states that federal courts shall exercise supplemental jurisdiction over pendent claims arising out of the same case or controversy and may decline to exercise jurisdiction if all federal claims are dismissed") (emphasis in original); Stehney v. Perry, 101 F.3d 925, 939 (3d Cir. 1996) (decision to exercise supplemental jurisdiction is committed to district court's jurisdiction).

 9. Accordingly, the Court unquestionably has supplemental jurisdiction over the entire dispute and the Proposed Settlement and will exercise its jurisdiction. See, e.g., Bell Atl. Corp. v. Bolger, 2 F.3d 1304, 1305 (3d Cir. 1993) (subject matter jurisdiction in nationwide class settlement of federal and state law claims premised on 15 U.S.C. § 78aa, 28 U.S.C. § 1331, and 28 U.S.C. § 1367).

 B. The Court Also Has Diversity Jurisdiction Over this Action

 10. Plaintiffs allege that this Court has subject matter jurisdiction over this action also pursuant to 28 U.S.C. § 1332, and the Court agrees. Second Am. Compl. at P 3. The named plaintiffs and defendants are citizens of diverse states. Id. Plaintiffs allege that each named plaintiff meets the $ 50,000 amount in controversy requirement because each plaintiff lost more than $ 50,000 exclusive of interest and costs in "insurance coverage, premiums paid, dividends and/or interest income and accumulated cash values." Id. Plaintiffs allege that each meets the $ 50,000 threshold also because of the punitive damages and attorneys fees requested, in which each plaintiff allegedly has an undivided interest. Id.

 11. Section 1332 of title 28 provides that this Court has jurisdiction over civil actions between citizens of different states where the amount in controversy exceeds the sum of $ 50,000 exclusive of interest and costs. 28 U.S.C. § 1332; see Packard v. Provident Nat'l Bank, 994 F.2d 1039, 1044 (3d Cir.), cert. denied, 510 U.S. 964, 126 L. Ed. 2d 373, 114 S. Ct. 440 (1993). In a class action suit, diversity between citizens requires that there must be complete diversity between the named representatives of the class and the defendants. See In re School Asbestos Litig., 921 F.2d 1310 at 1317 (observing that only named plaintiff must be diverse to establish diversity). The objectors do not dispute that the diversity of citizenship requirement is satisfied.

 12. The parties contest, however, whether this action satisfies the amount in controversy requirement. Objectors contend that plaintiffs fail to satisfy the amount in controversy requirement for a class action because each member's claim must and cannot satisfy the jurisdictional minimum. The party asserting federal subject matter jurisdiction must demonstrate that the amount in controversy requirement is satisfied. See Packard, 994 F.2d at 1045. The face of the complaint determines jurisdiction if the claim appears to be made in good faith: "The rule governing dismissal for want of jurisdiction in cases brought in the federal court is that . . . the sum claimed by the plaintiff controls if the claim is apparently made in good faith." See id. at 1045-46 (citing St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89, 82 L. Ed. 845, 58 S. Ct. 586 (1938)). If the Court finds to a "legal certainty" that the threshold amount is not met, then this Court must reject federal diversity jurisdiction. See St. Paul Mercury Indem. Co., 303 U.S. at 290; see also Columbia Gas Transmission Corp. v. Tarbuck, 62 F.3d 538, 541 (3d Cir. 1995) ("dismissal is appropriate only if the federal court is certain that the jurisdictional amount cannot be met"); Suber v. Chrysler Corp., 104 F.3d 578, 583 (3d Cir.) (same), amended by, F.3d , 1997 WL 76128 (Feb. 18, 1997). Members of a class may not aggregate their claims to reach the $ 50,000 amount in controversy requirement. See Zahn v. International Paper Co., 414 U.S. 291 at 301, 38 L. Ed. 2d 511, 94 S. Ct. 505; Packard 994 F.2d at 1045 (citing Snyder v. Harris, 394 U.S. 332, 338, 22 L. Ed. 2d 319, 89 S. Ct. 1053).

 13. Where plaintiffs seek equitable relief pertaining to the enforcement of insurance policies, the face value of the policy is the measure of the amount in controversy. While Krell contends that the measure should be the cash surrender value or some other figure, *fn35" courts have uniformly held that, where the validity of the policy is at issue, the proper measure is the face value. See, e.g., Bell v. Preferred Life Assurance Soc'y, 320 U.S. 238, 240, 88 L. Ed. 15, 64 S. Ct. 5 (1943) ($ 1,000 face value of insurance certificate, not the $ 202 in premiums, satisfied amount in controversy requirement in action concerning certificate purchased as a result of fraudulent misrepresentations); Stephenson v. Equitable Life Assurance Soc'y, 92 F.2d 406, 410 (4th Cir. 1937) (life insurance face value, plus value of double indemnity feature, was amount in controversy in suit seeking declaratory relief restoring policy to force); Guardian Life Ins. Co. of America v. Muniz, 101 F.3d 93, 94 (11th Cir. 1996) (face value of policy, not loan value, cash surrender value, or paid-up value of polices, was amount in controversy in insurer's action seeking cancellation of life insurance policies); New York Life Ins. Co. v. Swift, 38 F.2d 175, 176-77 (5th Cir. 1930) (same).

 14. The Supreme Court had held that each member of a class action must meet the amount in controversy requirement to establish diversity jurisdiction. Zahn v. International Paper Co., 414 U.S. 291, 301, 38 L. Ed. 2d 511, 94 S. Ct. 505 (1973); Snyder v. Harris, 394 U.S. 332, 338, 22 L. Ed. 2d 319, 89 S. Ct. 1053 (1969). But, plaintiffs no longer have to comply with the Zahn rule because Zahn was effectively overruled by 28 U.S.C. § 1367. *fn36" Only the named plaintiff must satisfy the jurisdictional amount in controversy requirement. Although the Third Circuit has not yet addressed the issue, see, e.g., Packard, 994 F.2d at 1045-46 n.9, a plain reading of section 1367(a) clearly permits the exercise of supplemental jurisdiction over class plaintiffs' claims that do not meet the amount in controversy requirement. See In re Abbott Labs, 51 F.3d 524, 529 (5th Cir. 1995) (holding that a plain reading of section 1367 overrules Zahn); Deep v. Manufacturers Life Ins. Co., 944 F. Supp. 358, 363 (D.N.J. 1996) (same); Vairo Affirm. (observing that plain meaning of section 1367 supports finding that section 1367 overruled Zahn); see also Stromberg Metal Works v. Press Mechanical, Inc., 77 F.3d 928, 930 (7th Cir. 1996) (holding that by its plain meaning section 1367 overrules Clark v. Paul Gray, Inc., 306 U.S. 583, 83 L. Ed. 1001, 59 S. Ct. 744 (1939), in which the Supreme Court held in a non-class action case that each plaintiff's claim must satisfy the amount in controversy requirement); Gandolfo v. U-Haul International, Inc., 1996 U.S. Dist. LEXIS 20736, Civ. No. 95-4393, at 5 (D.N.J. Dec. 19, 1996) (holding that district court can exercise supplemental jurisdiction over a co-plaintiff' claim that fails to meet the amount in controversy requirement); Lindsay v. Kvortek, 865 F. Supp. 264, 276 (W.D. Pa. 1994) (same).

 15. Section 1367(a) authorizes the exercise of supplemental jurisdiction over class members' claims that fail to meet the amount in controversy requirement, because section 1367(a) unequivocally confers jurisdiction on the district court over "all other claims that are so related to the claims in the action within such original jurisdiction that they form part of the came case or controversy." See, e.g., In re Abbott Labs, 51 F.3d 524, 528-29; Stromberg, 77 F.3d at 931. Class members' claims that may fail to meet the amount in controversy requirement certainly form part of the same "case or controversy" as the class members' claims that meet the threshold amount.

 16. Moreover, section 1367(b) disallows 1367(a) supplemental jurisdiction over claims founded solely on diversity and joined by certain Rules, specifically Federal Rules of Civil Procedure 14, 19, 20, and 24; Federal Rule of Civil Procedure 23, however, is not among the enumerated exceptions. Under the maxim expressio unius est exclusio alterius, the presence of these exclusions and the absence of Rule 23 on the list confirms the propriety of the exercise of supplemental jurisdiction in a Rule 23 class action case over plaintiffs' claims that may fail to meet the jurisdictional threshold amount.

 17. The Court is not persuaded by the reasoning of the courts that have refused to exercise supplemental jurisdiction over class members' claims where a named plaintiff has satisfied the amount in controversy requirement, see, e.g., DeCastro v. AWACS, Inc., 935 F. Supp. 541, 547 (D.N.J. 1996) (refusing to exercise jurisdiction where named plaintiffs failed to satisfy threshold amount in controversy); Garcia v. General Motors Corp., 910 F. Supp. 160, 164 (D.N.J. 1995) ("To date, Zahn and Packard remain good law in the Third Circuit. Accordingly, GMC must establish that each of the Putative Plaintiffs meets the amount-in-controversy requirement."); In re Potash Antitrust Litig., 866 F. Supp. 406 (D. Minn. 1994) (summarizing pro-Zahn and anti-Zahn cases). Maintaining that they are bound by Zahn, these courts rely on the legislative history of section 1367 to suggest that section 1367 did not overrule Zahn: "The section is not intended to affect the jurisdictional requirements of 28 U.S.C. § 1332 in diversity-only class actions, as those requirements were interpreted prior to Finley. " H.R. Rep. No. 101-734, 101st Cong., 2d Sess. 29, 76-77 (1990), reprinted in 1990 U.S.S.C.A.N. 6802, 6875.

 18. But, because the plain language of the statute is clear and the legislative history that these cases quote conflicts with the facial meaning of the statute, the Court cannot consider that history. See City of Chicago v. Environmental Defense Fund, 511 U.S. 328, 114 S. Ct. 1588, 128 L. Ed. 2d 302 (1994); West Virginia Univ. Hosp., Inc. v. Casey, 499 U.S. 83, 98-99, 113 L. Ed. 2d 68, 111 S. Ct. 1138 (1991); In re Continental Airlines, Inc., 932 F.2d 282, 287 (3d Cir. 1991). Moreover, less frequently cited legislative history of section 1367 demonstrates that the Federal Courts Study Committee ("FCSC"), which recommended the enactment of section 1367 to Congress, informed Congress that Zahn made little sense from a policy standpoint. Vairo Affirm. at 3 (citing 1 FCSC Working Papers And Subcommittee Reports 560, 561 n.33 (1990)). Indeed, the FCSC proposal, which is "fairly similar to the statutory language ultimately adopted," advised Congress to overrule Zahn. Vairo Affirm. at 3.

 19. In this case, the named plaintiffs have alleged claims exceeding $ 50,000 each. The Second Amended Complaint states that "each Plaintiff lost more than $ 50,000 (exclusive of interest and costs) in insurance coverage, premiums paid, dividends and/or interest income and accumulated cash values . . . ." Second Am. Compl. at P 3. *fn37" Furthermore, the face value of the policies alone for each of the named plaintiffs exceeds $ 50,000. Mrs. Nicholson alleges that she purchased a $ 100,000 policy from Prudential as a result of Prudential's common deceptive scheme. Second Am. Compl. at P 13. The Kuchases complain that they purchased $ 100,000 and $ 80,000 policies as a result of the scheme. Second Am. Compl. at PP 15-16. Mr. Gassman argues that he was persuaded to contribute the funds of his $ 20,000 Certificate of Deposit into a variable appreciable life policy with a face value of $ 150,000. Second Am. Compl. at PP 161-64.

 20. Alternatively, even if the face value of the policy were not determinative of the amount in controversy, the Court clearly has jurisdiction over Ms. Nicholson's claims and supplemental jurisdiction over the remaining claims under section 1367. Ms. Nicholson lost over $ 100,000 in actual death benefits. Ms. Nicholson expressly alleges that, due to Prudential's wrongful conduct, upon the death of her husband in August 1994, the $ 130,376 in insurance coverage that she expected from the Prudential life insurance policies sold to her had dwindled to $ 22,514.43. Second Am. Compl. at P 118.

 21. Krell's challenges to plaintiffs' ability to satisfy the amount in controversy requirement are legally incorrect and Krell fails to establish that, to a "legal certainty," the named plaintiffs' claims fail to exceed $ 50,000. *fn38" Krell argues that the amount in controversy requirement is not satisfied because policyholders are likely to recover only several thousand dollars in compensatory damages and because the total damages requested in the Second Amended Complaint substantially exceed Prudential's net worth and could not be awarded. Krell Brief at 26. A judgment or settlement for less than the jurisdictional amount does not indicate a failure to meet the amount in controversy requirement for purposes of establishing diversity jurisdiction. See, e.g., Suber, 104 F.3d at 583 ("Once a good faith pleading of the amount in controversy vests the district court with diversity jurisdiction, the court retains jurisdiction even if the plaintiff cannot ultimately prove all of the counts of the complaint or does not actually recover damages in excess of $ 50,000.") (citation omitted). Therefore, the Court rejects Krell's arguments, because whether the amount in controversy is satisfied turns on plaintiffs' allegations in the complaint and not on the defendant's financial condition or on the ultimate resolution of plaintiffs' claims. See Packard, 994 F.2d at 1045-46 (citation omitted).

 22. Consequently, because plaintiffs' allegations satisfy the amount in controversy and because it does not appear to a legal certainty that the claim is really for less than the jurisdictional amount, the Court finds also that it has subject matter jurisdiction over plaintiffs' claims by virtue of its diversity jurisdiction.

 II. The Court's Jurisdiction over Plaintiffs' Claims Does Not Violate the Article III Case or Controversy Requirement

 23. This case presents a "case or controversy" under Article III of the United States Constitution. The underlying tenents of the "case or controversy" requirement are ripeness and standing. "Standing focuses on whether the type of injury alleged is qualitatively sufficient to fulfill the requirements of Article III and whether the plaintiff has personally suffered that harm, whereas ripeness centers on whether that injury has occurred yet." Presbytery of N.J. of Orthodox Presbyterian Church v. Florio, 40 F.3d 1454, 1462 (3d Cir. 1994) (quoting Erwin Chemerinsky, Federal Jurisdiction 99 (1989)). The presence of an Article III "case or controversy" is determined vis-a-vis the named parties. See Allee v. Medrano, 416 U.S. 802, 40 L. Ed. 2d 566, 94 S. Ct. 2191 (1974) (class members need not individually demonstrate standing); see generally Herbert Newberg & Alba Conte, Newberg on Class Actions § 2.05, at 2-29 (3d ed. 1992) ["Newberg"] ("Once threshold individual standing by the class representative is met, a proper party to raise a particular issue is before the court, and there remains no further separate class standing requirement in the constitutional sense").

 24. While Krell concedes that each named plaintiff has alleged a cognizable claim against Prudential that gives rise to a "case or controversy," Krell raises novel variations on the case or controversy theme. Krell Brief at 39-41. First, Krell mistakenly argues that because the class is defined to include all Prudential policyholders from 1982 to 1995, some of these policyholders may not have been injured by Prudential and, therefore, this entire case does not constitute a "case or controversy." Krell again presents no authority, and the Court is aware of none, for the notion that the Court has no jurisdiction over this action merely because some class members may not currently assert a claim. The current class definition is similar to many commonly accepted definitions. The current class is akin, for example, to those used in securities fraud class action cases, which commonly define a class to include all purchasers of the defendant company's common stock during a specified period of time. See, e.g., Green v. Wolf Corp., 406 F.2d 291, 299 (2d Cir. 1968), cert. denied, 395 U.S. 977, 23 L. Ed. 2d 766, 89 S. Ct. 2131 (1969). The current class also bears resemblance to a class defined to include all purchasers of a specific product, the court having deferred the issue of whether individuals have suffered injury and what those injuries are to a subsequent procedure. See, e.g., In re School Asbestos Litig., 104 F.R.D. 422, 424, 433-34 (E.D. Pa. 1984), aff'd in pertinent part, 789 F.2d 996, 998-99, 1008-11 (3d Cir. 1986) (certifying Rule 23(b)(3) opt-out class of "essentially all public school districts and private schools in the nation"). Indeed, class action experts encourage plaintiffs to define a class in similar objective terms, without regard to the merits of the claim or the specific relief sought. See 2 Newberg, § 6.14, at 6-61; Manual for Complex litigation § 30.14 (3d ed. 1995).

 25. Second, in his Supplemental Objection, Krell raises a new "case or controversy" argument. He contends that any "case or controversy" ceases upon Court approval of the Proposed Settlement, depriving the Court of continuing jurisdiction to determine the method to allocate settlement funds such as the Additional Remediation Amount. Krell Supp. Obj. at 3. It is well settled, however, that this Court may retain jurisdiction to supervise the fulfillment of the Proposed Settlement, even after a final judgment has been entered and the appeal period has expired. See, e.g., Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 114 S. Ct. 1673, 1676-77, 128 L. Ed. 2d 391 (1994) (a district court's explicit retention of jurisdiction over a settlement agreement, or its incorporation of that agreement into its final order, satisfies any jurisdictional concerns); Georgine v. Amchem Prods., Inc., 157 F.R.D. 246, 336 (E.D. Pa. 1994) (district court expressly retained jurisdiction over settlement), vacated on other grounds by, 83 F.3d 610 (3d Cir.), cert. granted sub nom., Amchem Prods. v. Windsor, U.S. , 136 L. Ed. 2d 297, 117 S. Ct. 379 (1996); 2 Newberg § 11.33, at 11-67 (and numerous authorities cited therein).

 III. The Court Has Personal Jurisdiction over All Plaintiffs, Present and Absent

 26. This Court has personal jurisdiction over all class members. A court acquires personal jurisdiction over absent class members after class notice has been sent and potential class members have been given the opportunity to exclude themselves from the class. See Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 811-12, 86 L. Ed. 2d 628, 105 S. Ct. 2965 (1985); Carlough v. Amchem Prods., Inc., 10 F.3d 189, 199 (3d Cir. 1993). In this case, over eight million policyholders received individual and publication notice of the proposed class action in the first week of November of 1996 and had until December 19, 1996 to opt out. The policyholders who have not excluded themselves from the class are deemed to have implicitly consented to this Court's jurisdiction. See Shutts, 472 U.S. 797 at 812, 86 L. Ed. 2d 628, 105 S. Ct. 2965; Carlough, 10 F.3d 189 at 199.

 27. Krell cites Phillips Petroleum for the proposition that a class action defendant cannot assert a res judicata defense against absent class members if the district court enters a class action judgment without proper personal jurisdiction over an absent party. Krell Supp. Obj. at 2. Krell's observation is axiomatic, but irrelevant. As is his style, Krell does not reason an argument, but expects the Court to extrapolate Krell's intended meaning. *fn39" The Court gathers that Krell impliedly argues that this Court has no personal jurisdiction over absent plaintiffs. But, as, discussed previously, the Court clearly has personal jurisdiction over absent individual plaintiffs. Because Krell has offered absolutely no support for the argument, and the Court is not aware of any, the Court rejects the argument.

 IV. The Predominance of Common Factual and Legal Issues, the Adequacy of Class Counsel and Class Representatives, and the Superiority of the Class Action Device as a Tool to Resolve the Current Controversy Require Class Certification

 28. Class certification "enables courts to treat common claims together, obviating the need for repeated adjudications of the same issues." General Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 783 (3d Cir.), ["GM Trucks"], cert. denied, U.S. , 133 L. Ed. 2d 45, 116 S. Ct. 88 (1995). The class action device achieves also other very important objectives: "the protection of the defendant from inconsistent obligations, the protection of the interests of absentees, the provision of a convenient and economical means for disposing of similar lawsuits, and the facilitation of the spreading of litigation costs among numerous claimants with similar claims." Id. at 783-84 (quoting United States Parole Comm'n v. Geraghty, 445 U.S. 388, 402-03, 63 L. Ed. 2d 479, 100 S. Ct. 1202 (1980)). The last goal has particular significance because without spreading litigation costs many injured individuals will be unable to obtain relief: "When it is not economically feasible to obtain relief within the traditional framework of a multiplicity of small individual suits for damages, aggrieved persons may be without any effective redress unless they may employ the class action device." Id. 55 F.3d 768 at 784 (citation omitted).

 29. Courts increasingly have used the class action device in cases, such as this one, in which a class of policyholders has sued an insurance company for misrepresentations in the sale of insurance policies and benefit plans. See, e.g., Reserve Life Ins. Co. v. Kirkland, 917 S.W.2d 836 (Tex. App. 1996); Janicik v. Prudential Ins. Co. of America, 305 Pa. Super. 120, 451 A.2d 451 (Pa. Super. Ct. 1982). And several courts have certified classes of policyholders suing insurance companies other than Prudential in cases involving deceptive sales practices identical to those that the plaintiffs now allege Prudential has committed. See, e.g., Willson v. New York Life Ins. Co., 1995 N.Y. Misc. LEXIS 652, No. 94/127804, (N.Y. Sup. Ct. July 31, 1995) (certifying settlement class in vanishing premium case), aff'd 644 N.Y.S.2d 617, 228 A.D.2d 368 (1996); Goshen v. Mutual Life Ins. Co. of New York, No. 95-600466 (N.Y. Sup. Ct. June 7, 1996) (certifying class in case involving both vanishing premium and churning allegations).

  A. The Proposed Settlement Class Must Be Certified as if The Case Were to Be Tried

 30. Federal Rule of Civil Procedure 23 allows the Court to certify a class for settlement purposes only. GM Trucks, 55 F.3d at 778. A settlement class is "a device whereby the court postpones the formal certification procedure until the parties have successfully negotiated a settlement, thus allowing a defendant to explore settlement without conceding any of its arguments against certification." Id. at 786. The settlement class is an "extremely valuable" device to dispose of major and complex class actions. See id. Despite the absence of statutory guidance for settlement classes, courts have routinely established temporary classes for settlement purposes only. See id. (gathering authority).

 31. In certifying a class for settlement purposes, the Court must abide by the ordinary Rule 23 requirements: "Rule 23 permits courts to achieve the significant benefits created by settlement classes so long as these courts abide by all of the fundaments of the Rule." See id. 55 F.3d at 778 (holding that Rule 23(a) requirements must be satisfied as if class were to litigate its claims); see also Georgine, 83 F.3d 610 at 617 (holding that Rule 23(b) requirements must be satisfied as if class were to litigate its claims). Thus, a settlement class must satisfy the Rule 23(a) requirements of numerosity, commonality, typicality, and adequacy of representation and the Rule 23(b) requirements. See GM Trucks, 55 F.3d at 778. In this case, because the settlement proponents seek to certify the class under Rule 23(b)(3), the class must satisfy this provision's superiority and predominance standards. See id.

 32. The Court must consider the propriety of certification as if the case were to go to trial: "Despite the possibility that settlement-only class actions might serve the 'useful purpose of ridding the courts' of the 'albatross[]' represented by mass tort actions, the rule in this circuit is that settlement class certification is not permissible unless the case would have been 'triable in class form.'" Georgine, 83 F.3d 610 at 625 (citing GM Trucks, 55 F.3d at 799-800). Moreover, the Third Circuit has held that this Court cannot consider the Proposed Settlement's possible amelioration of the Court's manageability concerns. See id. 83 F.3d at 625-26.

 33. The Court must enumerate findings of fact to establish each of the Rule 23 requisites. See id. Although the Court may look beyond the pleadings to determine whether a motion for class certification should be granted, the Court should not resolve the merits of the plaintiffs' claims. Kahan v. Rosenstiel, 424 F.2d 161, 169 (3d Cir.), cert. denied, 398 U.S. 950, 26 L. Ed. 2d 290, 90 S. Ct. 1870 (1970) ("whether there is a proper class does not depend on the existence of a cause of action"); Gunter v. Ridgewood Energy Corp., 164 F.R.D. 391 (D.N.J. 1996). In a borderline case, the Court should allow class certification: "the interests of justice require that in a doubtful case . . . any error, if there is to be one, should be committed in favor of allowing a class action." Eisenberg v. Gagnon, 766 F.2d 770, 785 (3d Cir.) (citations omitted), cert. denied, 474 U.S. 946, 88 L. Ed. 2d 290, 106 S. Ct. 342, 106 S. Ct. 343 (1985); see Walsh v. Pittsburgh Press Co., 160 F.R.D. 527, 529 (W.D. Pa. 1994) ["Walsh v. Pittsburgh"] (citing Hoffman Elec. Inc. v. Emerson Elec. Co., 754 F. Supp. 1070, 1075 (W.D. Pa. 1991)).

 B. The Objectors Have Standing Both to Attack the Propriety of Class Certification and to Attack the Proposed Settlement

 34. The Court rejects Plaintiffs' argument that the objectors have no standing to attack class certification. Plaintiffs have argued in their Reply Memorandum in Support of Class Certification that this Court should be skeptical of the objectors' attacks on class certification. Plaintiffs' Cert. Reply at pp. 1-3. Plaintiffs argue that the objectors, having had an opportunity to opt out and having chosen not to do so, cannot now oppose the existence of the class. Id. According to plaintiffs, upon receiving Class Notice, policyholders had two options: (1) they could opt out of the Class to pursue their individual claims, or (2) they could remain in the Class and accept or object only to the fairness and adequacy of the Proposed Settlement. Id. But, the Third Circuit has routinely allowed objectors to object to the propriety of class certification where a combined notice informed the policyholders of both the class action and the Proposed Settlement. See, e.g., Georgine, 83 F.3d 610 at 622 (addressing objectors' concerns regarding class certification); GM Trucks, 55 F.3d at 804-05 (same).

 35. In this case, the Court approved a combined notice, i.e., to provide notice of the class action as required by Rule 23(c)(2) and to provide notice of the terms of settlement as required by Rule 23(e). *fn40" The purpose of class action notice is to allow a class member to choose whether to participate in the class action. Upon receiving Rule 23(b)(3) class action notice, a class member can opt out of the class if the class member prefers not to participate. See Rule 23(c)(2) ("the notice shall advise each member that . . . the Court will exclude the member from the class if the member so requests").

 36. Plaintiffs observe that after receiving class notice in the ordinary case, a would-be class member cannot refuse to opt out and later object to class certification. Plaintiffs argue that through declining to opt out, the class member has in essence consented to the propriety of class certification. Courts have held, for example, that a decision not to opt out of a class should foreclose attacks on whether the class has adequate representation. See, e.g., Shore v. Parklane Hosiery Co., Inc., 606 F.2d 354, 357-58 (2d Cir. 1979) (observing that right to opt-out of the proposed settlement protects class members' interests from alleged inadequate representation); see also Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1378 (9th Cir. 1993) (holding that the failure to opt-out precluded challenge to adequate representation based upon purported conflicts of interest between subclasses), cert. denied, 512 U.S. 1220, 129 L. Ed. 2d 834, 114 S. Ct. 2707 (1994).

 37. The purpose of the notice of settlement is to allow a class member who has consented to class certification to object, if necessary, to any proposed settlement. See 2 Newberg § 11.55, at 11-132 ("Any party to the settlement proceeding has standing to object to the proposed settlement.").

 38. While plaintiffs argue that the objectors have no standing to challenge, in addition to the settlement terms, the propriety of class certification, the Court disagrees. Following plaintiffs' logic, no class member would ever be able to challenge the propriety of class certification and the Court would be denied the advantage of access to adverse perspectives. But, under Georgine, the Court must evaluate the propriety of class certification before contemplating the fairness of the settlement. Because the objectors' concerns may help crystallize issues affecting the propriety of class certification, the Court should consider these concerns in its class certification inquiry.

 39. It seems counterintuitive that a class member who questions the propriety of class certification would desire to participate in the class action. It may even seem, as plaintiffs suggest, that the class member who does so is at best disingenuous. *fn41" Because the Court refuses to opine on the objectors' motives, and because it is theoretically possible that an objector may desire both to participate in the class and to challenge certification, the Court will permit the objectors to challenge the class certification elements. *fn42"

  C. The Prudential Life Insurance Sales Practices Class Action Satisfies Federal Rules of Civil Procedure 23(a) *fn43" and 23(b)(3) *fn44"


1. The Estimated Eight Million Policyholders Satisfy the Numerosity Requirement

 40. The proposed class must be comprised of members that are so numerous that "joinder of all members is impracticable." Fed. R. Civ. P. 23(a)(1); see In re ORFA Sec. Litig., 654 F. Supp. 1449, 1464 (D.N.J. 1987). To meet the numerosity requirement, class representatives must demonstrate only that "common sense" suggests that it would be difficult or inconvenient to join all class members. Lerch v. Citizens First Bancorp, Inc., 144 F.R.D. 247, 250 (D.N.J. 1992). The Court may consider the geographical dispersion of class members. Eisenberg, 766 F.2d at 785-86 (holding numerosity requirement to be satisfied where putative securities fraud class consisted of "more than 90 geographically dispersed plaintiffs"). "To be sure, when the class is very large--for example, numbering in the hundreds--joinder will be impracticable; but in most cases, the number that will, in itself, satisfy the Rule 23(a)(1) prerequisite should be much lower." 1 Newberg § 3.05, at 3-25.

 41. In this case, the numerosity requirement unquestionably is satisfied. Potential class members are dispersed throughout the United States and number in excess of eight million. Common sense suggests that it would be at best extremely inconvenient to join all class members. While Beauvias argues that this class is too large, super-numerosity is not inconsistent with requirements of Rule 23(a)(1). See, e.g., General Tel. Co. of the N.W., Inc. v. EEOC, 446 U.S. 318, 330, 64 L. Ed. 2d 319, 100 S. Ct. 1698 (1980) (finding that the numerosity requirement is fact specific and proposes no absolute limitations). Rather, Beauvias' concern may implicate "superiority" issues and the Court will discuss Beauvias' concern in that context.


2. Prudential's Orchestrated Sales Presentations, the Plaintiffs' Common Legal Theories, Prudential's Common Defenses, and Other Common Issues Undoubtedly Satisfy the Commonality and Predominance Requirements

 42. In Rule 23(b)(3) class actions, courts often apply the Rule 23(a)(2) commonality requirement and the 23(b)(3) predominance tests together. 1 Newberg § 3.13, at 3-71. And the Third Circuit follows this approach. See Georgine, 83 F.3d 610 at 626. For the class action device to be appropriate, there must be "questions of law or fact common to the class." Fed. R. Civ. P. 23(a)(2). This requirement is satisfied "if the named plaintiffs share at least one question of fact or law with the grievances of the prospective class." Baby Neal v. Casey, 43 F.3d 48, 56 (3d Cir. 1994) (citation omitted). The commonality requirement is "easily met," because it is satisfied by the presence of a single common issue. 1 Newberg § 3.10, at 3-50 to 3-52. And for a class certified under Rule 23(b)(3), the Court must find that these common questions "predominate." To evaluate predominance, the Court must determine whether the efficiencies gained by class resolution of the common issues are outweighed by individual issues presented for adjudication. See generally Newberg § 4.25, at 4-81 to 4-86. The Third Circuit has observed that even a few common issues may satisfy the predominance requirement where the resolution of these issues greatly will advance the litigation:


There may be cases in which class resolution of one issue or a small group of them will so advance the litigation that they may fairly be said to predominate. Resolution of common issues need not guarantee a conclusive finding on liability . . . nor is it a disqualification that damages must be assessed on an individual basis.

 In re Sch. Asbestos Litig., 789 F.2d 996, 1010 (3d Cir.) (citations omitted), cert. denied, 479 U.S. 852, 93 L. Ed. 2d 117, 107 S. Ct. 182, and by, 479 U.S. 915, 93 L. Ed. 2d 291, 107 S. Ct. 318 (1986).

 43. Where many purchasers allegedly have been defrauded over time by similar misrepresentations, or by a common scheme to which alleged non-disclosures related, courts have found that the purchasers have a common interest in determining whether the defendant's course of conduct is actionable. See, e.g., Blackie v. Barrack, 524 F.2d 891, 902 (9th Cir. 1975) (gathering authority), cert. denied, 429 U.S. 816, 50 L. Ed. 2d 75, 97 S. Ct. 57 (1976); Lerch, 144 F.R.D. at 252 (finding predominance requirements satisfied where defendant's challenged activity was a common course of conduct); In re Western Union Sec. Litig., 120 F.R.D. 629, 637 (D.N.J. 1988) (same); see also Seidman v. American Mobile Sys., Inc., 157 F.R.D. 354, 366 (E.D. Pa. 1994) (finding plaintiffs' allegations of defendant's single, ongoing course of fraudulent behavior satisfied commonality and predominance requirements); Zinberg v. Washington Bancorp, Inc., 138 F.R.D. 397, 410 (D.N.J. 1990) ("Where all class members are united in their desire to establish the defendants' complicity and liability, individual issues, if they exist, are secondary.") The Third Circuit has implicitly endorsed this approach in reversing the district court for denying certification in Eisenberg. See 766 F.2d 770 at 786 (declaring that the presence of individual questions does not preclude a finding that predominance requirements are satisfied).

 44. Thus, courts frequently find allegations that the defendant engaged in a common course of conduct to satisfy the commonality and predominance requirements. See, e.g., Seidman, 157 F.R.D. at 360; In re Data Access Sys. Sec. Litig., 103 F.R.D. 130, 142 (D.N.J. 1984) (finding requirements met where there were common questions whether corporation's financial statements and prospectus contained material misrepresentations or omissions); Shankroff v. Advest, Inc., 112 F.R.D. 190, 193 (S.D.N.Y. 1986) ("Since plaintiff's allegations focus on overall managerial decisions which affected all [of defendant's] clients, questions of oral representations or individual reliance do not overwhelm the issues common to the class."); 1 Newberg § 3.10, at 3-51 ("When the party opposing the class has engaged in some course of conduct that affects a group of persons and gives rise to a cause of action, one or more of the elements of that cause of action will be common to all of the persons affected.").

 45. Here, the commonality and predominance requirements are satisfied because not one, but many issues are common to all of the plaintiffs' claims. Miller Decl. at PP 12-13. All of plaintiffs' claims stem from Prudential's alleged common course of conduct. Particularly, all plaintiffs allege that Prudential encouraged or otherwise permitted fraudulent sales practices. *fn45" Although individual class members purchased their policies independently, Prudential allegedly induced them to do so through sales presentations containing standardized, coordinated, and uniformly deceptive sales representations and omissions.


a. Plaintiffs Must Establish Many Common Factual Issues to Establish Liability

 46. It is readily apparent that class members will have to establish many of the same factual allegations to establish liability. Plaintiffs must establish, for example:


. Prudential's common course of conduct,


. Prudential's development of the sales presentations and materials, and artificial inflation and maintenance of dividend scales,


. Prudential's sale of replacement policies by material omission,


. Prudential's sale of vanishing premium policies by material omission,


. Prudential's sale of policies by misrepresenting the policies as investment or retirement plans,


. Prudential's failure to train or supervise agents,


. Prudential's unwillingness to prevent deceptive sales practices, and


. Prudential's scienter.

 47. The MDL Panel recognized the predominance of common factual issues in its Transfer Order:


The Panel finds that these twelve actions involve common questions of fact, and that centralization . . . will serve the convenience of the parties and witnesses and promote the just and efficient conduct of the litigation. Regardless of the nature of the plaintiff parties, all actions involve allegations that deceptive life insurance sales practices occurred or were encouraged as a [sic] result of some larger scheme or schemes organized by Prudential.


Centralization . . . is necessary in order to eliminate duplicative discovery, prevent inconsistent pretrial rulings . . ., and conserve the resources of the parties, their counsel and the judiciary.

 August 3, 1995 Transfer Order at 1-2.


b. Plaintiffs Must Establish Many Common Legal Issues to Establish Liability

 48. Class members will have to establish many of the same legal issues. These include, for example:


. whether policyholder reliance may be presumed by virtue of omissions or affirmative misrepresentations in Prudential's sales presentations,


whether Prudential's offer to finance a policyholder's purchase of a policy constitutes an enforceable financing contract distinct from the policy itself,


. whether Prudential breached the financing contract,


. whether Prudential breached an obligation of good faith and fair dealing implied in the policy contract or the financing contract,


. whether constructive trust principles apply to premium payments obtained by Prudential through deceptive sales presentation,


. whether compensatory damages of all claims asserted on behalf of class members can be objectively quantified on a classwide basis, and


. whether punitive damages should be imposed on Prudential.


c. Prudential's Affirmative Defenses Add Common Is sues to this Class Action

 49. In this case Prudential's affirmative defenses would satisfy, even without the commonality of plaintiffs' claims, the Rule 23 commonality requirement. And these defenses add to the predominance of common issues under Federal Rule of Civil Procedure 23(b)(3). Courts often have held that affirmative defenses raise common issues that are appropriately tried using the class action device. See, e.g., In re "Agent Orange" Prod. Liab. Litig., 100 F.R.D. 718, 723 (E.D.N.Y. 1983) ("Certification would be justified if only to prevent relitigating [affirmative] defenses over and over."), aff'd, 818 F.2d 145 (2d Cir. 1987), cert. denied, 484 U.S. 1004, 98 L. Ed. 2d 647, 108 S. Ct. 695 (1988).

 50. In this case, Prudential asserts several defenses common to the claims of most plaintiffs. For example, Prudential asserts strong statutes of limitation and laches defenses. Additionally, Prudential asserts that plaintiffs fail to establish reliance.

 51. Furthermore, the determination of some of Prudential's affirmative defenses has become a very important common issue for the plaintiffs. In its motion to stay or dismiss the litigation under the doctrines of primary jurisdiction and abstention, Prudential asserted several defenses that are equally applicable to all class members. Prudential asserted that the Court should: (1) dismiss Plaintiffs' state law claims based on the doctrine of primary jurisdiction, (2) dismiss Plaintiffs' state law claims based on the Burford abstention doctrine, and (3) dismiss Plaintiffs' state law claims as mooted, precluded, or otherwise limited by the Task Force Plan. Because this Court denied Prudential's motion, all class members now share an interest in: (1) defending the Court's ruling against a motion for reconsideration or an appeal by Prudential, and (2) obtaining class certification so that this issue will become res judicata in favor of the class.


d. Prudential's Document Destruction Is an Extremely Pervasive Issue Common to Class Members

 52. Prudential's persistent destruction of relevant documents also is a common issue weighing in favor of predominance. As documented in earlier orders of this Court, see, e.g., January 6, 1997 and February 3, 1997 Orders, the appropriate remedy for document destruction is an extremely important common issue, which should be resolved in a single action to ensure an appropriate and uniform remedy.


e. Prudential's Fraudulent Concealment of Its Misrepresentations and Misdeeds Is an Issue Common to Class Members

 53. Similarly, class plaintiffs' allegation that Prudential fraudulently concealed its misrepresentations and omissions creates a common issue fulfilling the commonality requirement. Courts often have found that a common issue of fraudulent concealment satisfies the commonality requirement. See, e.g., Abramovitz v. Ahern, 96 F.R.D. 208, 218 (D. Conn. 1982). In Abramovitz, for example, the Court found the commonality requirement was satisfied, because, in part, the issue whether fraudulent concealment would toll the statute of limitations was common to all class members. See id. And in the current case, plaintiffs must establish (1) whether Prudential employed systematic affirmative steps following the sale of policies to conceal its wrongful conduct from plaintiff class members; and (2) whether Prudential permitted or failed to prevent the destruction of documents that would have been relevant to Plaintiffs' claims. These issues represent other common issues weighing in favor of the predominance finding.


f. The Agents' Use of Identical Oral Misrepresentations Weighs in Favor of the Finding of Predominance of Common Issues

  54. In this case, Prudential agents' use of uniform oral misrepresentations based on Prudential training and uniform sales materials warrants a finding of predominance. Allegations of a common scheme of deception may indicate predominance, even where the scheme is implemented through oral misrepresentations by sales agents. See, e.g., In re Am. Continental Corp./Lincoln Sav. & Loan Sec. Litig., 140 F.R.D. 425, 430-31 (D. Ariz. 1992); Davis v. Avco Corp., 371 F. Supp. 782, 792 (N.D. Ohio 1974) (certifying class claiming a pyramid investment scheme where plaintiffs alleged that defendants' agents made similar misrepresentations despite "individual variations" in the alleged misrepresentations); In re Baldwin-United Corp. Litig., 122 F.R.D. 424, 427 (S.D.N.Y. 1986) (certifying class where defendant's alleged wrongful conduct occurred at the management level and observing that "even proof of a material variance among the representations will not defeat the class if certain omissions, inferred from their absence in the [sales] literature, were common to all").

  55. One indicator of a scheme of common deception is that the oral representations were substantially similar. See Grainger v. State Sec. Life Ins. Co., 547 F.2d 303, 307-08 (5th Cir. 1977), ("The key concept in determining the propriety of class action treatment is the existence or nonexistence of material variations in the alleged misrepresentations."), cert. denied, 436 U.S. 932, 56 L. Ed. 2d 777, 98 S. Ct. 2832 (1978); see also Heastie v. Community Bank of Greater Peoria, 125 F.R.D. 669 (N.D. Ill. 1989) (issue of what representations and disclosures were made could be a common one); Shankroff, 112 F.R.D. at 193 ("Since plaintiff's allegations focus on overall managerial decisions which affected all [defendant's] clients, questions of oral representations or individual reliance do not overwhelm the issues common to the class.); McMahon Books, Inc. v. Willow Grove Assocs., 108 F.R.D. 32, 37-38 (E.D. Pa. 1985) (observing that oral representations that appear similar or derived from the same "sales pitch" would support a predominance finding); In re Am. Continental Corp., 140 F.R.D. 425 at 430 ("Although the representations made to the bond purchasers in this case were not identical, they were sufficiently uniform to warrant class treatment."); contrast Martin v. Dahlberg, Inc., 156 F.R.D. 207, 216 (N.D. Cal. 1994) (distinguishing factually In re Am. Continental Corp., Heastie, and McMahon Books and finding lack of predominance because no evidence of "even a somewhat standardized sales pitch").

  56. Another indication of a common scheme to deceive is the existence of uniform written materials on which the oral representations were based. See, e.g., Kirkpatrick v. J.C. Bradford & Co., 827 F.2d 718, 724-25 (11th Cir. 1987) (observing that where oral communications are based on and consistent with, deceptive written materials, the fact that individual brokers provided information through oral communications does not preclude class certification), cert. denied, 485 U.S. 959, 99 L. Ed. 2d 421, 108 S. Ct. 1220 (1988); Sharp v. Coopers & Lybrand, 70 F.R.D. 544, 548 (E.D. Pa, 1976), aff'd, 649 F.2d 175 (3d Cir. 1981), cert. denied, 455 U.S. 938, 71 L. Ed. 2d 648, 102 S. Ct. 1427 (1982); see also In re Home-Stake Prod. Co. Sec. Litig., 76 F.R.D. 351, 368-69 (N.D. Okla. 1977); Mulcahey v. Petrofunds, Inc., 79 F.R.D. 272, 279 (S.D. Tex. 1978); Shankroff, 112 F.R.D. at 193; contrast Martin, 156 F.R.D. at 216 (finding no evidence of a "fixed set of written materials").


(1) Prudential Agents' Oral Misrepresentations Were Uniform Throughout the Country

  57. In this case, the oral component of the fraudulent sales presentations did not vary appreciably among class members. Bernard Decl. at P 23. Plaintiffs' allegations and the evidence presented to the Court demonstrate that throughout the country, Prudential agents uniformly misled class members with virtually identical oral misrepresentations.

  58. For example, policyholder complaints demonstrate that throughout the country Prudential uniformly misrepresented to class members that APP policy premiums would vanish and that existing policy values could be used to fund replacement policies without any additional out-of-pocket premium obligations. Task Force Report at 51-52. Also, Prudential audits revealed early in the Class Period that agents committed uniform, deceptive sales practices throughout the country. Second Am. Compl. at PP 79-88; Weiss Aff. at PP 71-74. In 1982 and 1983, for example, internal auditor John Cressman found rampant churning activities in various Prudential locations. Second Am. Compl. at P 84; Weiss Aff. at P 74. In response to these findings, Cressman created a system to detect churning. Second Am. Compl. at P 85; Weiss Aff. at P 74. When Prudential tested this system in other cities, the churning declined and sales plummeted--a strong indication of the prevalence of churning activity at these dispersed locations. Weiss Aff. at P 74.

  59. In addition to customer complaints and Prudential audits, many state regulatory investigations into Prudential's conduct indicate that Prudential's deceptive sales practices were uniform. The Task Force concluded that the fraudulent sales practices "were not isolated to any one region of the country." Task Force Report at 14. The Task Force found also that policyholder complaints regarding financed insurance and vanishing premium policies increased since 1990 in "every region" of the country. Id. at 223.


(2) To Create Consistent Oral Sales Presentations, Prudential Trained Its Agents and Provided Its Agents with Uniform Sales Materials

  60. The agents' oral presentations were uniform because: (1) Prudential trained its agents uniformly; and (2) Prudential required its agents to use uniform sales materials.

  61. First, Prudential extensively trained its agents to make uniform sales presentations. See, e.g., Connecticut Report at 65 ("There is evidence that sales managers taught new agents how to identify and use cash values and dividends to pay for new policies, misled policyholders during sales presentations, and even encouraged veteran agents to churn."); Pls. Evid. Sub., 3-8 at 421 (Affidavit of Ronald II. Ward, June 27, 1995) ("I have in my possession training tapes, slides and sales materials in which The Prudential's executives and registered representatives made what I now believe to be misleading statements of material fact about features, returns and product identification."); id., C-1 at 455 (Deposition Transcript of James C. Helfrich, August 16, 1996) (agent said "we were trained to do it this way"); id., C-7 at 487 (Transcript of D. Rinsky, September 19, 1996) (discussing training processes); id., H-1 at 808 (Memorandum by James C. Helfrich, November 18, 1992) ("Due to the way that agents were previously educated by management in the sale of insurance . . ., it appears that many, if not most, new agents were taught to sell insurance through financing mechanisms."). Prudential even provided its agents with scripts. See, e.g., Pls. Evid. Sub., C-7 at 487-88 (Transcript of D. Rinsky, September 19, 1996) ("So the scripts, questions and answers, detailed training materials and then repetition, certainly, is another important part of the training process."); C-8 at 500 (Transcript of E. Dare, September 18, 1996) ("We have scripts for training new representatives on how to present different things."). A memorandum authored by James Helfrich, Prudential's Director of Consumer Affairs and Marketing Practices, warned senior Prudential management that Prudential agents were being taught to sell insurance through churning mechanisms and that agents were rewarded for their churning with high commissions:


Due to the way that agents were previously educated by management in the sale of insurance (especially in areas such as Ohio), it appears that many, if not most, new agents were taught to sell insurance through financing mechanisms.


* * *


Fluctuating dividend scales and complex use of loan values and the eventual impact of these financing transactions on insurance plans was mostly negative and not clearly understood by the consuming public. Consequently, as dividends decreased and as ill-conceived and miscalculated loan transactions started to cause many "financed" programs to fail or to not meet expectations, an attendant increase in complaints on all levels (regulatory, executive, home office, field, etc.) resulted.


* * *


In the past, the common response when agents were questioned as to why they used financed or abbreviated pay mechanisms for selling insurance has been: "That's the way we were trained." I think we have to admit that this response is so common and consistent that, in fact, that was the primary, or only, way many of these agents were trained to sell insurance. In all candor, it was an easy, appealing way to generate commissions. . . .

  Pls. Evid. Sub., H-1 (emphasis added).

  62. Second, Prudential's requirement that agents use pre-approved written marketing materials, which contained identical misrepresentations and omissions, further guaranteed the consistency of accompanying oral misrepresentations. Prudential specifically prohibited agents from using advertising or marketing materials that Prudential had not approved. Second Am. Compl. at P 23; Pls. Evid. Sub., E-1 (document entitled "Approved PRUCO Materials"). Prudential required all sales presentations, policy illustrations, computer hardware and software used to generate sales materials, and other information used to sell insurance products to be pre-approved by Prudential. Second Am. Compl. at P 22. Additionally, Prudential supplied its agents with pre-approved materials, including product brochures, pre-call letters, computer-based selling and illustrations systems, seminar materials, and newspaper advertisements. Second Am. Compl. at P 22. And Prudential required standardized materials to market securities such as the VAL policies. Second Am. Compl. at P 24; Pls. Evid. Sub., E-1 at 677 (Index of Pruco Direct Nail Letters and Ads, Including VAL Letters).


g. Plaintiffs' Claims that May Entail Establishing Reliance Do Not Undermine the Predominance of Common Issues

  63. Some objectors have mistakenly argued that the need for individual plaintiffs to prove reliance for their fraud based claims undermines the predominance of common issues. The Court rejects the argument. Indeed, courts generally reject the argument that the issue of reliance undermines the predominance of common issues because reliance is an issue secondary to establishing the fact of the defendant's liability: "Challenges based on . . . reliance have usually been rejected and will not bar predominance satisfaction because [reliance pertains] to the right of a Class Member to recover in contrast to underlying common issues of the defendant's liability." 1 Newberg § 4.26, at 4-104. Where all class members must establish the defendant's complicity and liability, thus, the individual issues are secondary and the class should be certified. See In re IGI Sec. Litig., 122 F.R.D. 451 at 460. Even if many of the plaintiffs' claims involved a reliance element, thus, common issues would predominate.

  64. But in this case most of the plaintiffs' claims do not even involve a reliance element. Plaintiffs' claims for breach of contract, breach of implied obligation of good faith and fair dealing, negligence, negligent training and supervision, and unjust enrichment do not involve reliance. An individual issue with respect to one element of a small portion of plaintiffs' claims does not outweigh the multitude of issues common to the remaining elements and claims.

  65. And plaintiffs' fraud-based claims stem largely from misleading omissions, Second Am. Compl. at PP 43, 58-59, for which reliance may generally be presumed. For example, under the Securities Exchange Act section 10(b), individual reliance is presumed if the defendant's omission is material. See Affiliated Ute Citizens of Utah v. United Sates, 406 U.S. 128, 152-54, 31 L. Ed. 2d 741, 92 S. Ct. 1456 (1972) [hereinafter Ute Citizens] (holding that reliance on a material omission may be presumed in a Rule 10b-5 case); see also, e.g., Hoxworth v. Blinder, Robinson & Co., 980 F.2d 912, 924 (3d Cir 1992) (holding that plaintiffs were entitled to the Ute Citizens presumption of reliance); Sharp, 70 F.R.D. at 547 ("One of the two exceptions to the reliance requirement arises when the defendant fails to disclose material facts which it has a duty to disclose (nondisclosure)."); In re LILCO Sec. Litig., 111 F.R.D. 663, 668-69 (E.D.N.Y. 1986) ("With respect to federal securities claims under § 10(b) and Rule 10b-5, issues of individual reliance are largely irrelevant [to class certification] because reliance is presumed if the statement or omission is material."); In re United Energy Corp. Solar Power Modules Tax Shelter Invs. Sec. Litig., 122 F.R.D. 251, 254-55 (C.D. Cal. 1988) (holding that Ute Citizens applied to permit certification of hybrid misrepresentation/omission claims because the court could not predict which theory would prevail before resolution of merits). In addition, reliance may be presumed for fraud-based common law claims when the alleged omissions and misrepresentations are uniform and material and the class members acted in a manner consistent with reliance. See, e.g., Vasquez v. Superior Ct. of San Joaquin County, 4 Cal. 3d 800, 484 P.2d 964, 972-73, 94 Cal. Rptr. 796 (Cal. 1971) (holding that where material misrepresentations are made to class members an inference of reliance arises to the entire class). Accordingly, because reliance is an element only in some of plaintiffs' claims, and because reliance may be presumed, reliance does not undermine the predominance of common issues.


h. Individual Damages Do Not Undermine the Predominance of Common Issues

  66. Individual damage issues do not defeat an otherwise valid class certification attempt. See Baby Neal, 43 F.3d at 57 (finding that individual damages determinations did not undermine commonality finding); Bogosian v. Gulf Oil Corp., 561 F.2d 434, 456 (3d Cir. 1977) ("It has been commonly recognized that the necessity for calculation of damages on an individual basis should not preclude class determination when common issues which determine liability predominate."), cert. denied, 434 U.S. 1086, 55 L. Ed. 2d 791, 98 S. Ct. 1280 (1978); Gunter, 164 F.R.D. at 399; Walsh v. Pittsburgh, 160 F.R.D. at 531 (finding predominance met where issue of individual damages was "largely a matter of mathematical calculation").

  67. In this case, the Court would employ one of several methodologies to allow the parties to present classwide damages evidence at trial. *fn46" Pls. Certif. Memo, Case Management App. at 16-24. One approach would be to present expert testimony estimating the aggregate amount of damages sustained by the class. See In re Sugar Indus. Antitrust Litig., 73 F.R.D. 322, 351-54 (E.D. Pa. 1976) ("Sugar Indus."). Another approach would be to allow the jury to determine, with the assistance of expert testimony, a formula that would later be applied to individual class members to compute damages during the claims allocation process. Id. Thus, there are many available means to address individual damages that would allow the Court to adjudicate fairly and efficiently the many issues common to the plaintiffs while allowing a fair resolution also of the individual damages issues.


i. Objectors' Arguments that Common Issues Do Not Predominate Are Unpersuasive

  68. Beauvias incorrectly argues that the predominance of common issues is refuted by Prudential's contention that a global inference of improper sales practices is improper and insistence that any claim must be assessed individually. Prudential claims, for example, that "incidents of improper activity likely constituted only a fraction of the financed and APP sales discussed in the Report." Prudential's Response to Report of the Multi-State Life Insurance Task Force and Multi-State Market Conduct Examination in Pru. App., Vol. II, Ex. 6. Prudential's interpretations of the issues in this class action do not, however, control; Prudential may be incorrect and plaintiffs may be entitled to various presumptions of reliance. Additionally, however, the logically prior issue whether a presumption should apply is itself a common issue.

  69. Krell argues that common questions cannot predominate for those injured by "other improper sales practices" because the Court cannot discern what common and individual questions would be for these class members. Krell's argument is creative, but unpersuasive. Plaintiffs have alleged that Prudential defrauded customers through systematically deceptive sales practices. The "other improper sales practices" clearly involve the same issues--Prudential's intent and knowledge, for example.


j. Common Issues Overwhelmingly Predominate the Individual Issues in this Case

  70. The Court finds that Rule 23's commonality and predominance requirements are satisfied because the plaintiffs' allegations and evidentiary submissions establish the multiplicity of common issues discussed above and that these common issues dramatically outweigh the potential individual issues, also discussed above.


3. The Plaintiff Representatives' Claims Are Typical of Those of the Other Class Members

  71. Rule 23 requires also that the named plaintiffs' claims be typical of those of the class at large. In the words of the Supreme Court: "the typicality requirement is said to limit the class claims to those fairly encompassed by the named plaintiffs' claims." General Tel. Co., 446 U.S. at 330. The typicality inquiry assesses whether the action can be efficiently maintained as a class action and whether the named plaintiffs have incentives aligned with those of absent class members to ensure that the absentees' interests are protected. See Baby Neal, 43 F.3d at 57-58; Eisenberg, 766 F.2d at 786; Weiss v. York Hosp., 745 F.2d 786, 809-10 n.36 (3d Cir. 1984), cert. denied, 470 U.S. 1060, 84 L. Ed. 2d 836, 105 S. Ct. 1777 (1985). The plaintiff with claims typical of the class benefits the class by pursuing self-interest: "[A] plaintiff with typical claims will pursue his or her own self-interest in the litigation and in so doing will advance the interests of the class members, which are aligned with those of the representative." 1 Newberg § 3.13, at 3-75. The named plaintiffs' claims should not be "markedly different" from those of the class. See Baby Neal, 43 F.3d at 57.

  72. Typicality lies where there is a strong similarity of legal theories, see id. at 58, or where the claims of the class representatives and the class members arise from the same alleged course of conduct by the defendant, see Eisenberg, 766 F.2d at 786; Walsh v. Pittsburgh, 160 F.R.D. at 530; Gunter, 164 F.R.D. at 395-96; In re Western Union Sec. Litig., 120 F.R.D. at 634. Wrongful conduct that aggrieves both the named plaintiffs and the putative class members is sufficient to satisfy the typicality requirement despite varying fact patterns underlying the individual claims. See Baby Neal, 43 F.3d at 58 ("Indeed, even relatively pronounced factual differences will generally not preclude a finding of typicality where there is a strong similarity of legal theories."); see also In re IGI Sec. Litig., 122 F.R.D. 451 at 456 ("It is defendants' course of conduct, in this case the release to the press of the allegedly fraudulent and misleading statements, upon which the court must focus in determining typicality."). Under these circumstances, factual differences do not preclude a typicality finding. See, e.g., Eisenberg, 766 F.2d at 786.

  73. In this case, typicality is clearly fulfilled. All of the named plaintiffs allege that Prudential maintained a scheme to defraud policyholders. Specifically, plaintiff Nicholson asserts churning, vanishing premium, and investment plan claims; plaintiff Dorfner asserts churning and vanishing premium claims; plaintiffs Kuchases assert churning and investment plan claims; and plaintiff Gassman asserts vanishing premium and investment plan claims. The absent class members purportedly were subjected to the same scheme and deceptive sales practices as these representatives. And because there is a prominent guiding thread through all of the plaintiffs' claims--Prudential's scheme to defraud--this action can be efficiently maintained as a class action and the class representatives will adequately protect the interest of absentees.

  74. Krell wrongfully alleges that the class fails for lack of typicality because no class representative claims to have been injured by "other improper sales practices." The Supreme Court has set forth factors that class plaintiffs must demonstrate to show that their claims are typical of a broader set of claims alleged. See General Tel. v. Falcon, 457 U.S. 147, 72 L. Ed. 2d 740, 102 S. Ct. 2364 (1982). The named plaintiff must be part of the class, possess the same interest as the other class members, and suffer the same injury as other class members. See id. at 156. Where the named plaintiff alleges multiple claims on behalf of the class, that plaintiff must possess the same injury and suffer the same generic type of harm as other class members. See id. at 159. The injury need not necessarily arise from identical factual circumstances that gave rise to the injuries of class members. See Grasty v. Amalgamated Clothing & Textile Workers Union, 828 F.2d 123, 131 (3d Cir. 1987) (holding typicality satisfied where named plaintiffs did not share all of the claims of the class but the claims alleged appeared to stem from a single course of conduct by which the defendant failed to represent its members fairly and effectively), cert. denied, 484 U.S. 1042, 98 L. Ed. 2d 860, 108 S. Ct. 773 (1988). In the instant case, class members injured by "other fraudulent sales practices" have suffered the same injury--they are victims of Prudential's deception--and have suffered the same generic type of harm--they have economic damages--as the named plaintiffs. The fact that the Proposed Settlement covers claims concerning "other fraudulent sales practices" occurring during the Class Period where no class representative claims to be injured by "other fraudulent sales practices" does not undermine typicality.


4. Class Counsel and the Class Representatives Adequately Represent the Class

  75. Rule 23(a) requires, lastly, adequacy of representation: "the representative parties [must] fairly and adequately protect the interests of the class." There are two factors: (1) the plaintiff's attorney must be qualified, experienced, and generally able to conduct the proposed litigation, and (2) the plaintiff must not have interests antagonistic to those of the class. See Hoxworth, 980 F.2d at 923 (citations omitted); see also In re Western Union Sec. Litig., 120 F.R.D. at 635. The party challenging representation bears the burden to prove that representation is not adequate. See Walsh v. Pittsburgh, 160 F.R.D. at 530; In re Data Access Sys. Sec. Litig., 103 F.R.D. at 140.


a. Class Counsel Adequately Represent the Class

  76. The vigorous prosecution requirement ordinarily equates to the competence and experience of Class Counsel. Grasty, 828 F.2d 123 at 129 ("'vigorous prosecution' must be measured in terms of the efficiency and legal acuity of the class representative rather than the number or length of papers filed."). In the context of proceedings to certify a class for settlement purposes only, the Third Circuit has observed that the terms of a proposed settlement may demonstrate whether representation by counsel is adequate. See Georgine, 83 F.3d 610 at 630 (finding that class conflict prevented finding of adequate representation and observing that settlement demonstrated class conflict because settlement made recovery determinations on which class member interests were at odds).


(1) Class Counsel Are Extremely Qualified

  77. In this case, there is no doubt that Class Counsel have prosecuted the interests of the class members with the utmost vigor and expertise. Plaintiffs' team of legal counsel is comprised of preeminent class action attorneys from throughout the country, many of whom have been qualified as lead counsel in other nationwide class actions. Weiss Aff. at P 52; New York Life, 1995 N.Y. Misc. LEXIS 652, at *28; In re Prudential Sec. Inc. Ltd. Partnerships Litig., 163 F.R.D. 200, 208 (S.D.N.Y. 1995). Indeed, Plaintiffs' Counsel have a long and successful track record in litigating and trying major class action cases. Weiss Aff. at P 254.


(2) Class Counsel Also Are Extremely Committed to the Class and All Class Members and Are Unhampered By Any Conflicts of interest or Separate Inventories of Cases

  78. Counsel who have separate inventories of cases, may compromise class representation. See Georgine, 83 F.3d 610 at 622. In this case Class Counsel have no inventories of cases outside the current action and have the fullest commitment to ensuring that class members receive the maximum benefits available.

  79. Also, counsel who negotiate their fee arrangements while continuing to negotiate for class relief may not adequately represent the class because of their pecuniary interest in obtaining a large fee. See GM Trucks, 55 F.3d at 801 ("Even honorable counsel--like Class Counsel here--may be compromised by the possibility of a large fee."). In this case, this Court did not authorize Class Counsel's fee negotiations until after all provisions in the Settlement Agreement were complete and Class Counsel and Prudential did not commence any fee negotiations until after this Court authorized them. Class Counsel's fee agreement with Prudential, thus, did not compromise Counsel's ability to negotiate relief on behalf of the class.

   80. Krell argues that Class Counsel abandoned crucial discovery when the fee was being negotiated, raising serious "red flags" about the Proposed Settlement and the adequacy of lead counsel. Krell Brief at 65. Krell attempts to divert the Court with a red herring. Discovery in this case was extremely substantial, and Class Counsel negotiated as if Prudential's conduct were the worst imagined.


(3) The Value of the Proposed Settlement to All Class Members Demonstrates that Class Counsel's Representation is Adequate

  81. In this litigation, Class Counsel have demonstrated their skills in developing the monumental settlement currently proposed. Foremost, Class Counsel helped first to achieve the Task Force Remediation Plan, and later achieved the enhancements that form the present Settlement Agreement between Prudential and the Class. Weiss Aff. at PP 23-27, 117-29. Then, upon discovering evidence of widespread document destruction, Class Counsel investigated the document destruction and negotiated additional class benefits in light of the document destruction episodes. January 6, 1997 and February 3, 1997 Orders. Class Counsel avidly have promoted the plaintiffs' interests and have thereby afforded the class highly satisfactory significant material benefits.


(4) Class Counsel Vigorously Have Represented the Class Throughout These Proceedings

  82. Moreover, even without the substantive achievements of the Proposed Settlement, Class Counsel have shined throughout these proceedings. Class Counsel adroitly represented class members when counsel briefed and argued plaintiffs' interests in a host of pretrial motions: motions to dismiss, motions to stay the proceedings, a motion to abstain, and motions to stay discovery. Weiss Aff. at PP 52-59. Even after the Court stayed formal discovery at Prudential's request, Plaintiffs' Counsel undertook an intensive private investigation and informal discovery, developing, with this Court's approval, a method to interview former Prudential agents. Id. at PP 60-64. And, once this Court lifted the stay, Plaintiffs' Counsel conducted massive document discovery and depositions. Id. at PP 85-100. Counsel for plaintiffs have, thus far, reviewed over one million pages of documents, 160 computer disks, and 500 videotapes and audio tapes, and have conducted numerous depositions and interviews of Prudential witnesses. Id. at PP 85-97.

  83. Krell criticizes the fact that Class Counsel valued speed in resolving this case. But a swift resolution of this case is important to afford policyholders, many of whom are ill or elderly, meaningful relief. And speed did not jeopardize class relief. Plaintiffs' counsel engaged in extremely adversarial pretrial motion practice and voluminous discovery. Class representation has not been compromised by Class Counsel's sound and swift effort to resolve plaintiffs' claims.


b. The Plaintiff Representatives Adequately Represent the Class

  84. Class certification requires also that the class representatives represent adequately the interests of the class. Although it is not necessary for the putative class representatives' claims to be identical to those of absent class members, due process precludes certification if the named plaintiffs possess potentially conflicting interests that may impair the vigorous prosecution of the class claims. In re Baldwin-United Corp. Litig., 122 F.R.D. 424 at 428. Where class members have conflicting interests, each group must receive its own representation; it is not sufficient that the named representatives' claims are representative of other class members. See Georgine, 83 F.3d 610 at 631 ("presently injured class representatives cannot adequately represent the future plaintiffs' interests and vice versa"); GM Trucks 55 F.2d at 801 ("We must be concerned that the individual owners had no incentive to maximize the recovery of the government entities; they could skew the terms of the settlement to their own benefit."); contrast Halderman v. Pennhurst State Sch. & Hosp., 612 F.2d 84, 109-110 (3d Cir. 1979) (possible disagreement among class members as to appropriate relief is no bar to certification at the liability stage), rev'd on other grounds, 451 U.S. 1, 67 L. Ed. 2d 694, 101 S. Ct. 1531 (1981); Link v. Mercedes-Benz, 788 F.2d 918, 929 (3d Cir. 1986) (holding in suit against manufacturers and dealers for price fixing or repairs that fact that class members obtained repairs from different dealerships did not create antagonism to preclude finding of adequate representation).

  85. In this case, the named plaintiffs unquestionably well represent the class. The named policyholders who were defrauded share the same incentive as absent policyholders who were defrauded to establish the alleged fraud and to maximize the overall recovery. Weiss Aff. at P 252; see also Weiss v. York Hosp., 745 F.2d at 811; New York Life, 1995 N.Y. Misc. LEXIS 652, at *29 (holding representation adequate where policyholders represented mix of characteristics representative of the mix found in the class itself). And, there are no disparate interests to impair plaintiffs' incentive to prosecute fully all aspects of their claims against Prudential. All plaintiffs have an interest in establishing Prudential's knowledge and orchestration of the scheme to defraud life insurance consumers. All plaintiffs share an interest in obtaining relief commensurate with individual injury and in securing a punitive damages claim against Prudential. Against this backdrop, individual factual variations between plaintiffs' claims do not divide the class.

  86. Also, the Proposed Settlement confirms that class representatives provide adequate representation to absent class members and that there are no conflicts between class members. Under the Proposed Settlement, each claimant may obtain relief based on whether the available evidence demonstrates that he or she was injured. Additionally, relief is uncapped, allowing all class members to be compensated for their losses without the risk that some victims will deplete the defendant's funds at the expense of other victims.

  87. Some objectors have argued that policyholders who acquired their policies on different dates are antagonistic toward each other. Differences in the dates that a policy was acquired are irrelevant, however. See In re Baldwin-United Corp. Litig., 122 F.R.D. 424 at 428. In In re Baldwin, for example, the court rejected the argument that plaintiffs who purchased early in the Class Period had no incentive to prove the facts relevant to a purported fraud committed on a subsequent purchaser. See id. ("All class members stand or fall on the issue whether material information was misrepresented or withheld from [product] purchasers, and the Court believes that the named plaintiffs will pursue this issue vigorously.") The facts surrounding Prudential's sales practices employed early in the Class Period are similar to those surrounding later sales practices. Additionally, the primacy of the issue of Prudential's scheme to defraud dwarfs any potential differences between class members created by timing. Consequently, there is no class antagonism based on policy purchase date differences.

  88. Some objectors have argued that there is intra-class antagonism because of a conflict between presently injured plaintiffs and "futures claimants," as was a problem affecting class certification in Georgine. Krell, citing Georgine, argues also that "other sales practices" claimants may have valuable future claims, concerning their existing contracts, that will be forever released in this Proposed Settlement and that class representatives cannot represent these class members. Krell's argument is without merit. All class members including those with "other sales practices" claims are presently injured. If any misrepresentation or fraud occurred in the sale of a life insurance policy to a class member during the Class Period, the resultant injury now exists. Even if a policyholder was not aware prior to receiving the Class Notice that he or she had been injured, the policyholder now knows about his or her injuries by virtue of the Class Notice. Additionally, Prudential is creating an "800" number to provide the policy information necessary to enable a policyholder to determine the extent of any injury due to fraudulent sales practices that occurred during the Class Period. *fn47" Thus, all class members are injured now, if at all, and there are no "futures claimants."

  89. According to Krell, there is a conflict also between replacement policyholders and non-replacement policyholders. Krell states that Lead Counsel traded the "very substantial claims of the replacement policyholders to obtain additional relief for the other class members." Krell Brief at 6. Krell explains that Class Counsel traded valuable replacement claims for the financial guarantees. Krell bases his argument on the incorrect assumption that illegal replacements are easily demonstrated by the policyholder's underwriting file at Prudential, while vanishing premium and investment claims are based on potentially conflicting oral testimony of policyholders and agents. Id.

  90. The Court disagrees with Krell's assertion that there is a conflict between replacement and non-replacement policyholders. First, the claims of replacement policyholders are not stronger then non-replacement claims. There will often be significant documentation to support both vanishing premium sales and investment plan sales. For example, vanishing premium sales often were accompanied by fraudulent illustrations and investment plan sales were accompanied by sales material that failed to disclose that the product offered was life insurance. Second, the Proposed Settlement treats all claims equally. Any policyholder, regardless of the fraudulent sales practice alleged, is entitled to full compensatory relief if the policyholder demonstrates a right to relief. Class Counsel did not allocate relief to some plaintiffs while denying relief to others. Thus, Krell's allegation that the Proposed Settlement compromises replacement policyholder rights for the benefit of other claimants proves untrue.


5. The Class Action Device Is Superior to Any Other Means to Adjudicate this Controversy

  91. The final class certification factor that must be discussed, Rule 23(b)(3) requires that "a class action [be] superior to other available methods for the fair and efficient adjudication of the controversy." The Rule provides four nonexclusive factors to aid the Court in a superiority determination: (1) the interest of individual members of the class in individually controlling the prosecution of the action; (2) the extent of litigation commenced elsewhere by class members; (3) the desirability of concentrating claims in a given forum; and (4) the management difficulties likely to be encountered in pursuing the class action. In this case, considering these and other factors, the class action is not only the superior method for adjudicating this controversy, it affords the vast majority of class members the only practical avenue of redress.


a. There Are No Other Sensible Means to Adjudicate this Controversy

  92. Before reaching Rule 23(b)(3)'s enumerated factors, the Court observes that Rule 23(b)(3)'s superiority requirement compares class actions to other available methods to adjudicate the controversy. When the claims of class members are small, denial of class certification would effectively deprive these class members of judicial redress, a strong indication that the class action is the superior means of adjudication:


For that segment of the class with small individual claims, the costs of litigation and lack of notice would mean that small or unsophisticated claimants would go unprotected. It must be remembered that Rule 23(b)(3)'s superiority requirement expressly compares class actions "to other available methods for the fair and efficient adjudication of the controversy. " . . . When the claims of the class members are all, denial of a class action would effectively exclude them from judicial redress.

  1 Newberg § 4.27, at 4-107 to 4-109 (emphasis in original). The class action device may allow plaintiffs "to pool claims which would be uneconomical to litigate individually." Phillips Petroleum Co., 472 U.S. at 809; see MacNeal v. Columbine Exploration Corp., 123 F.R.D. 181, 187-88 (E.D. Pa. 1988) (holding that class action was superior to individual suits where class members had relatively small interests and might not have the wherewithal to bring suit to protect their individual rights).

  93. Additionally, as a class increases in size, there become fewer methods to adjudicate the controversy. As the case becomes larger and more geographically dispersed, the traditional alternatives of joinder, consolidation, and intervention will be impracticable. See 1 Newberg § 4.33, at 4-136 to 4-137.

  94. In this case, most class members' individual compensatory damages claims are relatively modest, leaving individual class members with little ability to litigate their claims against Prudential independently. Weiss Aff. at P 261. The majority of class members in this case own relatively modest life insurance policies with death benefits averaging $ 35,000. Id. Also, the class includes over eight million members from throughout the country, making joinder, consolidation, and intervention impracticable. Consequently, there appear to be no other available means to adjudicate this controversy and the class action device appears the only rational avenue of redress for many class members.


b. Individual Plaintiffs Have Little Interest in Controlling the Prosecution of Separate Actions

  95. Rule 23(b)(3) indicates that the first factor is "the interest of members of the class in individually controlling the prosecution or defense of separate actions." The test is whether the interest of most class members in conducting separate lawsuits is so strong as to require denial of class certification. See, e.g., McClendon v. Continental Group, Inc., 113 F.R.D. 39, 45 (D.N.J. 1986) (holding class action to be superior adjudication method where individual class members had no interest in controlling prosecution of individual actions).

  96. Here, class members have little incentive or ability to prosecute their claims against Prudential individually. See 7A Charles A. Wright, Arthur R. Miller & Mary K. Kane, Federal Practice and Procedure § 1779, at 557 (1986) (observing that "a group composed of consumers or small investors typically will be unable to pursue their claims on an individual basis because the cost of doing so exceeds any recovery they might secure"); Sala v. National R.R. Passenger Corp., 120 F.R.D. 494, 500 (E.D. Pa. 1988); Cumberland Farms, Inc. v. Browning-Ferris Indus., Inc., 120 F.R.D. 642, 648 (E.D. Pa. 1988) (holding that class action was superior to alternatives where many individuals were injured, but no one person may have been damaged to the degree requisite to institute independent litigation). The class is estimated to encompass millions of Prudential policyholders located throughout the United States. Because Prudential markets to middle-income consumers, most class members cannot afford to pursue individual litigation. Weiss Aff. at P 261. The average death benefit payable on a class member owned insurance policy totals $ 35,000. Id. Thus, compensatory damages suffered by a typical class member are insubstantial, and it is unlikely that many class members would be able to locate attorneys to litigate their individual claims for a contingent-fee. Id.

  97. Also, the proportionately small number of policyholder suits now pending against Prudential confirms that class members lack a compelling interest individually to control the prosecution of separate actions. See, e.g., Bentkowski v. Marfuerza Compania Maritima, S.A., 70 F.R.D. 401, 405 n.10 (E.D. Pa. 1976) (observing that "dearth" of other suits suggested lack of interest in individual control). As of recently, there were approximately 200 separate policyholder suits pending against Prudential nationally. Miller Decl. at P 14. In relation to the total population of class members, these action represent less than six one-thousandths of one percent of all class members.

  98. And, although the number of individual actions pending against Prudential, approximately 200, indicates little incentive to individually litigate when measured against the over eight million class members, the individual actions are numerous enough in absolute terms to serve as a significant strain on the judicial system. Id. These factors weigh heavily in favor of granting class certification.


c. The Number of Actions Pending Elsewhere Weighs in Favor of Finding the Class Action Mechanism Superior

  99. Rule 23(b)(3) indicates as the second factor "the extent and nature of any litigation concerning the controversy already commenced by or against members of the class." The existence of other actions may indicate either that there are other methods to adjudicate the controversy or that class certification is superior:


The existence of other suits by class members may suggest an interest in individual litigation. On the other hand, the existence of other suits may indicate that a class action is needed. Class actions are intended in part to eliminate the waste of judicial resources caused by duplicative individual actions. A class action will ordinarily be superior to repetitive individual suits.

  1 Newberg § 4.30, at 4-121; see, e.g., Shamberg v. Ahlstrom, 111 F.R.D. 689, 699 (D.N.J. 1986) (holding that class action was superior to other methods of adjudication, including multiplicity of duplicative individual lawsuits).

  100. Here, the existence of other actions weighs in favor of certifying the class. First, the number of individual actions is inconsequential in light of the number of potential class members. See McLendon, 113 F.R.D. at 45. This suggests little individual interest in prosecuting actions against Prudential. Second, the sheer number of actions, although proportionally few, indicates that a class action is necessary to eliminate the waste of judicial resources caused by duplicative individual actions. Third, the individual actions will not adjudicate the controversy that underlies this class action litigation; rather, each would only resolve the individual claims of a minute portion of the class.


d. To Concentrate this Litigation in New Jersey Is Desirable

  101. Rule 23(b)(3) indicates that the third factor to be considered in assessing whether the class action device is superior to other means of adjudication is "the desirability or undesirability of concentrating the litigation of the claims in the particular forum." The factor emphasizes the desirability of the forum selected, not the desirability of claims concentration generally. See 1 Newberg § 4.31, at 4-123; Bentkowski, 70 F.R.D. at 405 (holding that when majority of class lived in New Jersey, Maryland, Pennsylvania, and Virginia, the Eastern District of Pennsylvania was a desirable forum).

  102. In this case, plaintiffs' claims are appropriately concentrated in New Jersey. Prudential's principal place of business is in New Jersey and most potential upper echelon managerial witnesses are located in New Jersey. As the MDL Panel observed, plaintiffs' allegation of Prudential's common scheme, in particular, indicates that the District of New Jersey is the most appropriate forum for this litigation:


Particularly in light of plaintiffs' allegations of company-wide schemes (supposedly emanating from these headquarters), significant discovery of Prudential documents and employees is likely to occur there. We also note that the New Jersey forum is not just the choice of New Jersey litigants. Plaintiffs in several other of the constituent actions state that they support or do not oppose centralization in the District of New Jersey.

  August 3, 1995 Transfer Order at 2. Indeed, there is no more appropriate forum for this controversy.


e. Although Managing this Case Will Be Challenging, No Anticipated Difficulties Render this Action Unmanageable

  103. Rule 23(b)(3) indicates last that the Court should consider "the difficulties likely to be encountered in the management of a class action" to determine whether the class action mechanism is superior to other means of adjudicating the case. Manageability "encompasses the whole range of practical problems that may render the class action format inappropriate for a particular suit." Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 40 L. Ed. 2d 732, 94 S. Ct. 2140 (1974).

  104. The Court must query not whether there will be any manageability problems, but whether reasonably foreseeable difficulties render some other method of adjudication superior to class certification. See 1 Newberg § 4.3, at 4-125 ("It is only when such difficulties make a class action less fair and efficient than some other method, such as individual interventions or consolidation of individual lawsuits, that a class action is improper."). When courts and counsel work together to manage increasingly complex and large-scale litigation, "experience . . . shows that visions of unmanageabilty soon disappear." Sugar Indus., 73 F.R.D. at 357. Moreover, most courts hold that manageability difficulties cannot support denial of class certification when no other practical litigation alternative exists. See, e.g., Brown v. Cameron-Brown Co., 92 F.R.D. 32, 49 (E.D. Va. 1981) (certifying class where common questions predominated and there was no other effective way to try the case); see also 1 Newberg § 4.32, at 4-130 to 4-131 ("As has been noted with the predominance test, Rule 23(b)(3) permits a class denial for lack of superiority only when other available methods for the fair and efficient adjudication of the controversy actually exist.").

  105. Indeed, the successful resolution through trial of extremely large and complex classes bodes well for the manageability of even the biggest and most complex actions:


Cases that have certified large classes illustrate the size and complexity of classes that have been upheld. Decisions denying classes under similar circumstances should be of limited value as precedent, because they are based on speculation at the outset of the suit that the action will prove unmanageable, while the cases cited show otherwise.

  1 Newberg § 4.33, at 4-139.

  106. Here, the Court has carefully considered the choice of law issues that confront the Court and concludes that these choice of law issues do not render this class action unmanageable. Plaintiffs have demonstrated, consistent with the approach endorsed in School Asbestos and cited with approval in Georgine, that any state-by-state variations in the governing legal standards are manageable. Issacharoff Decl.; Issacharoff Decl., Apps. B & C. Plaintiffs have submitted a series of charts setting forth comprehensive analyses of the various states' laws potentially applicable to their common law claims for fraud, breach of contract, implied obligations of good faith and fair dealing, negligence, and negligent misrepresentation. Issacharoff Decl., App. B. These charts compare state-by-state the elements of the claims alleged in the Second Amended Complaint with citations to the pertinent authorities in each of the fifty states--the same approach used in the School Asbestos litigation. The elements of these common law claims are substantially similar and any differences fall into a limited number of predictable patterns. Issacharoff Decl. at P 22 ("Any variations among legal standards [of the state laws] are neither particularly great nor insuperable to the certification of a litigation class. To the extent that such variations exist, they could be readily handled by instructions and structured questions to the jury and, if necessary, appropriate subclasses."). Thus, plaintiffs' claims can be grouped into a manageable number of categories accommodating any variations in the elements of the potentially applicable states' laws. *fn48" And, the Court finds that a manageable number of jury instructions could be fashioned to comport with the elements of the common law claims in the many jurisdictions. *fn49"

  107. Additionally, the Court finds that any difficulties that may arise during the discovery, pre-trial, or trial stage of this litigation may be effectively managed through traditional procedural techniques such as special interrogatories, special verdict forms, sub-classes, or sequenced trial phases. See GM Trucks, 55 F.3d at 815; In re Kirschner Med. Corp. Sec. Litig., 139 F.R.D. 74, 83 (D. Md. 1991). The record establishes that plaintiffs can offer classwide proof of liability and damages:


[Plaintiffs'] allegations, by themselves, place this litigation well within the ambit of a certifiable Rule 23(b)(3) class, because they clearly allege both the existence and predominance of common issues and demonstrate the superiority of aggregate adjudication. . . . Plaintiffs have made a record that they can offer classwide evidence with respect to both liability and damages. That showing further confirms predominance of common issues and the manageability of the case through the remainder of the pretrial and trial phases.

  Miller Decl. at P 13.

  108. In sum, with effective case management this class action will obtain the benefits of efficiency and fairness, the Court finds that the superiority requirement is met. *fn50"

  V. The Class Notice and Supplemental Materials Fulfill the Notice Requirements of Federal Rules of Civil Procedure 23(c)(2) and 23(e)

  109. The Class Notice was adequate, comprehensive, and timely. Notice here was a combined notice to inform class members both of the existence of a class action, as required by Rule 23(c)(2), *fn51" and the substance of the Proposed Settlement, as required by Rule 23(e). See, e.g., Greenfield v. Villager Indus., Inc., 483 F.2d 824, 826 (3d Cir. 1973); Carlough v. Amchem Prod., Inc., 158 F.R.D. 314 at 324. The combined Class Notice must meet the requirements of both Rule 23(c)(2) and Rule 23(e). See Carlough, 158 F.R.D. at 324-25 ("The requirements of Rule 23(c)(2) are stricter than the requirements of Rule 23(e) and arguably stricter than the due process clause.").

  110. The Court finds that the contents of the individual and publication notices provided class members the information necessary to make an informed and intelligent decision whether to participate in the class and whether to object to the Proposed Settlement. Indeed, the comprehensive notice program in this case far exceeded the requirements of Rule 23 and due process.

  111. Federal Rule of Civil Procedure 23(c)(2) affords the right to opt out of a Rule 23(b)(3) class and requires that the parties send a notice to inform class members of this option. See Fed. R. Civ. P. 23(c)(2). Rule 23(c)(2) also requires that the notice indicate that the judgment will bind all class members who do not opt out and that any member who does not opt out may appear through counsel. See id. Rule 23(c)(2) notice must be "the best practicable notice under the circumstances, including individual notice to all members who can be identified through reasonable effort." Fed. R. Civ. P. 23(c)(2); Zimmer Paper Prods, Inc. v. Berger & Montague, P.C., 758 F.2d 86, 90 (3d Cir.), cert. denied, 474 U.S. 902, 88 L. Ed. 2d 227, 106 S. Ct. 228 (1985).

  112, Notice of a proposed settlement under Rule 23(e) must inform class members (1) of the nature of the pending litigation, (2) of the settlement's general terms, (3) that complete information is available from the court files, and (4) that any class member may appear and be heard at the Fairness Hearing. See 2 Newberg § 8.32, at 8-103. The Court must consider both the notice's mode of dissemination and its content to assess whether the notice was sufficient. The nature and extent of Rule 23(e) class notice of a proposed settlement lies squarely within the discretion of the trial judge. See Zimmer Paper Prods., Inc., 758 F.2d at 90 (observing that Rule 23(e) commits the form of the notice to the court's discretion); Walsh v. Great Atl. & Pac. Tea Co., 96 F.R.D. 632, 642-43 (D.N.J.) (same) ["Walsh v. Great Atl. & Pac."], aff'd, 726 F.2d 956, 962 (3d Cir. 1983) (same); see also Grunin, 513 F.2d at 120-21 ("The mechanics of the notice process are left to the discretion of the court subject only to the broad 'reasonableness' standards imposed by due process.").

  113. Rule 23(e) notice is designed to be only "a summary of the litigation and the settlement [and] it is crucial to apprise class members of the right and opportunity to inspect the complete settlement documents, papers, and pleadings filed in the litigation." See 2 Newberg § 8.32, at 8-109; see also Grunin v. International House of Pancakes, 513 F.2d 114, 122 (8th Cir.) ("Class members are not expected to rely upon the notices as a complete source of settlement information"), cert. denied, 423 U.S. 864, 46 L. Ed. 2d 93, 96 S. Ct. 124 (1975). The notice need not be unduly specific. See 2 Newberg § 11.53, at 11-130 (citing In re "Agent Orange" Prods. Liab. Litig., 818 F.2d 145, 170 (2d Cir. 1987) (holding that settlement notice that failed to detail a distribution plan was not inadequate), cert. denied, 484 U.S. 1004, 98 L. Ed. 2d 647, 108 S. Ct. 695 (1988)). The notice need not include the entire settlement agreement. See Grunin, 513 F.2d at 122; Carlough, 158 F.R.D. 314 at 332. Nor need the notice indicate arguments in favor of and against the proposed settlement. See Greenspun v. Bogan, 492 F.2d 375, 382 (1st Cir. 1974). The notice of the Proposed Settlement, to satisfy both Rule 23(e) requirements and constitutional due process protections, need only be reasonably calculated, under all of the circumstances, to apprise interested parties of the pendency of the settlement proposed and to afford them an opportunity to present their objections. See, e.g., Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314-15, 94 L. Ed. 865, 70 S. Ct. 652 (1950) ("An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity present their objections."); Marshall v. Holiday Magic, Inc., 550 F.2d 1173, 1177 (9th Cir. 1977) ("Notice in a class suit must present a fair recital of the subject matter and proposed terms and [give] an opportunity to be heard to all class members.").

  114. No objector has challenged the mode of dissemination. Nor could any objector due so. Dissemination of the Class Notice in this case has been extraordinary. Where possible, each individual class member received individual notice. And the Class Notice was published in major newspapers throughout the country. *fn52" Indeed, the dissemination of the Class Notice was ideal. See, e.g., Grunin, 513 F.2d at 121 (stating that individualized notice by mail is the best notice practicable in the class action context); In re Chambers Dev. Sec. Litig., 912 F. Supp. 822, 836 (W.D. Pa. 1995) (holding that actual notice by mail in conjunction with published notice was best possible notice satisfying Rule 23(c)).

  115. And the content of the Class Notice in this case clearly satisfies all of the necessary requirements. The Class Notice indicates the nature of the pending litigation. Stipulation of Settlement, Ex. F-2, at 4-7. The Class Notice indicates that any class member may opt out. Id. at 2, 4. The Class Notice indicates that any class member who declines to opt out will be bound by the final judgment. Id. at 4. The Class Notice indicates the general terms of the settlement. Id. at 7-15. The Class Notice indicates that complete information is available in the Court files. Id. at 18-19. And the Class Notice indicates that any class member may appear and be heard at the hearing at the specified date, time, and place. *fn53" Id. at 18.

  116. Several objectors have challenged the content of the Class Notice and the Supplemental Materials. These objections are unmeritorious. Certainly none of them indicates that this Court somehow abused its discretion in approving the form of notice. See, e.g., In re "Agent Orange" Prod. Liab. Litig., 818 F.2d at 169 (holding that minor discrepancies were immaterial where essential goal of the notice requirement, notice of suit and opportunity to consult counsel, was accomplished); In re Four Seasons Sec. Laws Litig., 525 F.2d 500, 503 (10th Cir. 1975) (holding that notice apprised class members sufficiently of information that notice was intended under the Rule to convey).

  117. Though the Court will address all of the objections that can be gleaned from the often profuse ramblings of several of the objectors, the Court pauses to observe the tension involved in drafting an appropriate class action notice. On the one hand, the notice must be readable. Objectors have, for example, criticized the length of the Class Notice, arguing that policyholders cannot manage the extensive information provided. And, on the other hand, the parties must be careful to include the requisite core information. Objectors have complained also that the Class Notice fails to indicate nuances of the Proposed Settlement. The Court is mindful of the dichotomy and will assess the objectors' various grievances to ensure that neither the accuracy nor the readability of the Class Notice has been compromised. The Court has discretion to approve a wide range of possible notices, however, each of which would strike an appropriate balance between inclusiveness and brevity.

  A. The Class Notice Adequately Describes the Allegations of the Complaint

  118. Johnson complains that the Class Notice fails to adequately to describe the allegations of the Second Amended Complaint, the defenses Prudential may have, or to assess the strength of plaintiffs' claims. Johnson at 25. But, the Class Notice includes a general description, in plain English, of plaintiffs' allegations in the Second Amended Complaint, as well as Prudential's position in response to plaintiffs' claims. Stipulation of Settlement, Ex. F-2 at 5-6. And any class member who so desired could review all of the pleadings in the case, as the Class Notice clearly advised. Id., Ex. F-2, at 18. The Class Notice thus complies with Rule 23. See Gold Strike Stamp Co. v. Christensen, 436 F.2d 791, 799 (10th Cir. 1970) (Rule 23 does not require the Class Notice to include "all the various causes of action, theories of recovery and defenses alleged in the complaints and answers").

   B. The Class Notice Adequately Advises Class Members of the Consequences of Deciding Not to Opt Out

  119. Johnson argues that the Class Notice fails to advise class members of the rights and claims they will forego if they do not opt out. Johnson at 25. This assertion is belied by the Class Notice, which clearly advises class members, in plain English and bold typeface, that "Prudential will be released from all claims that have been or could have been asserted by Class Members" if the Proposed Settlement is approved. Stipulation of Settlement, Ex. F-2, at 16. The Class Notice further advises class members that the paragraph concerning the release is very important "because it will affect your rights if you remain in the Class." Id. Thus, the Class Notice clearly and accurately states the consequences of not opting out of the class.

  C. The Class Notice Need Not Describe Parallel State Court Proceedings or All Potential State Law Causes of Action

  120. Johnson complains also that the Class Notice should have identified each state class action currently pending. Johnson at 25. Similarly, Krell contends that the Class Notice should have apprised class members of alleged state law violations that are not even asserted in the Second Amended Complaint. Krell Brief at 55. Both objections misinterpret the law: The Third Circuit and others have repeatedly ruled that notice of a proposed settlement need not include information about parallel state court proceedings. See, e.g., Bell Atlantic Corp., 2 F.3d at 1317-18 (notice need not describe objector's parallel state court litigation or its relative merit); In re Corrugated Container Antitrust Litig., 643 F.2d 195, 224 (5th Cir. 1981) (same), cert. denied, 456 U.S. 998, 73 L. Ed. 2d 1294, 102 S. Ct. 2283 (1982). And if proceedings asserting state law claims need not be included, the Class Notice need not describe possible state law claims that have not been asserted against Prudential. *fn54"

  D. The Class Notice Need Not Identify Objectors to the Proposed Settlement

  Some objectors complain that the Class Notice should have advised class members that some states, such as Florida, had objected to the Proposed Settlement. Krell Brief at 48. Others argue that the Class Notice should have indicated that some state class actions have attempted to remove themselves from the Settlement. Johnson at 25. But the law is again clear that no notice of these occurrences is appropriate: the Class Notice need not inform class members that various parties or entities have objected to the proposed settlement. See, e.g., Maywalt v. Parker & Parsley Petroleum Co., 67 F.3d 1072, 1079 (2d Cir. 1995).

  E. The Class Notice Accurately Describes the Interaction Between the Task Force Plan and the Proposed Settlement

  121. Johnson claims that the Class Notice fails to state that if policyholders opt out, they will not be entitled to relief under the Task Force Plan. Johnson at 27. This claim is based on the false premise that opt-outs will not be entitled to relief under the Task Force Plan. To the contrary, the Class Notice accurately advises that the Task Force Plan will be offered on February 1, 1997, to residents of those states that accepted the Task Force Plan whether or not the Proposed Settlement had been approved at that time. Stipulation of Settlement, Ex. F-2, at 21-22. The notices and election forms to select between ADR and Basic Claim Relief under the Task Force Plan were mailed by February 1, 1997 to policyholder residents of the 46 jurisdictions that have accepted the Task Force Plan, regardless of whether those policyholders have opted out of the Class settlement. Indeed, a special notice went to policyholders who live in these states and who excluded themselves from the Class. That notice specifically explains that those policyholders are entitled to relief under the Task Force Plan.

  F. The Class Notice Adequately Indicates Class Members' Waiver of Their Right to a Jury Trial

  122. Krell complains that the Class Notice fails to indicate that through participating in the Proposed Settlement, a class member waives the right to a jury trial for individual claims against Prudential. Krell Brief at 41. Krell, in keeping with his modus operandi, cites no authority in support of his objection, and his objection is spurious. First, the Class Notice explicitly informs class members that the Proposed Settlement releases Prudential for all causes of action or claims for damage. Stipulation of Settlement, Ex. F-2, at 16-17. Additionally, the settlement release is attached in whole to the Class Notice as Appendix A. Second, the Class Notice explicitly informs class members also that, absent exclusion, a class member cannot pursue his or her own lawsuit against Prudential for claims covered by the class action. Id., Ex. F-2, at 2. Third, the Class Notice explicitly informs class members also of the alternative forms of relief available under the Proposed Settlement, none of which suggest the availability or preservation of a right to a jury trial.

  G. The Class Notice Adequately Indicates Prudential's Agreement Not to Oppose Attorneys' Fees

  123. Krell argues that the Class Notice does not adequately inform policyholders that Prudential "agreed not to oppose" Plaintiffs' request for an award of attorneys' fees. Krell admits that the Stipulation of Settlement explicitly states that: "Defendants agree not to oppose an application for award of attorneys' fees not to exceed a total of $ 90 million. . . ." Krell Brief at 43 (quoting Stipulation of Settlement, P K). Krell's argument fails, because there is no authority requiring that Prudential's agreement not to oppose attorneys' fees be repeated in the Class Notice. The Class Notice need not include the entire contents of the Proposed Settlement and all class members have access to the Stipulation of Settlement, itself.

  124. Krell indicates that the Class Notice fails also because it falsely advised class members that Prudential, not policyholders, would pay plaintiffs' attorneys' fees. Krell Brief at 41. The Court disagrees. The Class Notice indicates that "class members will not be required to pay any portion of plaintiff's attorneys' fee." Stipulation of Settlement, Ex. F-2, at 23. This statement is not misleading to policyholders. Policyholders will not contribute out-of-pocket for attorneys' fees. And attorneys' fees will not be paid out of the benefits allocated to policyholders under the ADR or Basic Claim Relief.

  125. The fact that Prudential is a mutual insurance company, and that future dividends may be impacted by Prudential's payment to attorneys, does not undermine the validity of the statement that "class members will not be required to pay any portion of plaintiff's attorneys' fee." *fn55" Most importantly, conceding for the sake of argument only that Prudential's payment of plaintiffs' attorneys' fees would impact existing policyholders, there is no requirement that the information be in the class notice. Any hypothetical collateral effect on existing policyholders would not represent the type of core information that is required in a Rule 23(e) notice. Moreover, it is far from clear that there would be any impact on dividend payments from Prudential's payment of plaintiffs' attorneys' fees. Non-company sources such as directors' and officers' liability insurance policies covering the Prudential officers named in the Second Amended Complaint may cover the attorneys' fees. And even if Prudential does pay the attorneys' fees, it is not clear that this payment will impact policyholder benefits. See generally, Lee R. Russ & Thomas F. Segalla, Couch on Insurance § 80:53 (3d ed. 1996) (indicating that a member of a mutual life insurance company is entitled to dividends only after discretionary ascertainment and apportionment of divisible surplus by board of directors) Furthermore, the cost of continued litigation would potentially exceed the attorneys' fees at issue here and would have a greater impact on policyholder interests in Prudential than would the attorneys' fees agreement at issue.

  H. The Class Notice Was Not Required to Include an "Opt-Out Form"

  126. Objector Beauvias argues that the parties should have included an "opt-out form" in the Class Notice "for the convenience of the policyholders." *fn56" Beauvias at 12. Courts have often refused to allow an opt-out form to be included with a class notice, however, because the approach creates more confusion than it remedies. See, e.g., In re Domestic Air Transp. Antitrust Litig., 141 F.R.D. at 553-54 (finding that inclusion of opt-out form would confuse class members after considering expert testimony that in cases in which notice included both claim and opt-out forms, class members inadvertently completed both forms); Roberts v. Heim, 130 F.R.D. 416, 423 (N.D. Cal. 1988) (observing that on balance "a separate form will engender confusion and encourage investors to unwittingly opt out of the class"); see also 2 Newberg § 8.21, at 8-70. And, in this case, the Class Notice clearly describes the steps to opt out, which are extremely simple. Stipulation of Settlement, Ex. F-2, at 17. Additionally, because Beauvias is the only objector to complain of the lack of an opt-out form, and because 19,000 class members managed to opt out, the Court finds that the Class Notice was adequate in this respect.

  I. The Class Notice Was Not Required to Include individual Policy Illustrations

  127. Beauvias argues also that the Class Notice of the Proposed Settlement should have included both: (1) recreated copies of the illustrations that were shown to each policyholder and (2) a current, in-force policy illustration for comparison. Beauvias at 13. The Court disagrees. Beauvias does not cite, and this Court is unaware of, any authority requiring the level of individualized information that Beauvias demands. It appears quite frankly that Beauvias' suggestion is not only unprecedented, but also preposterous. Recreating millions of policy illustrations, even if it could be accomplished, and even if it were palpably desirable, would be unduly burdensome, costly, and wasteful.

  J. The Class Notice Adequately Informed Policyholders About the Information Considered in the ADR Process and Need Not Have Informed Policyholders Individually of Available Evidence

  128. Texas argued that the Class Notice was faulty, because it provided "no method for Policyholders to determine what evidence exists in his or her particular case." *fn57" Tex. at 3. Texas argued that policyholders should be provided information concerning "sales practices complaints against the agent who sold the policy and, with respect to Financed Insurance claims, the extent to which the agent engaged in financial transactions." Id. at 5. Texas cited no precedent for the creation of such an individualized notice. And particularizing the notice to the individual level, in this case of more than ten million policies, would unduly complicate that Class Notice dissemination, if even individualization were possible. Moreover, Prudential has agreed to create an "800" number to supply policyholders the information that they need to make reasoned choices about relief. The Court addresses the substance of Texas's concern, that policyholders should have access to Complaint History information before choosing relief, in the Court's evaluation of the Proposed Settlement terms.

  K. The Class Notice is Not "Cumbersome" or Inadequate to Alert Policyholders

  129. The Florida AG had argued that the Class Notice and Supplemental Materials are "cumbersome." Fla. AG at 8. And the Florida DOI had asserted that the Class Notice and Supplemental Materials could not alert "currently oblivious policyholders" to the possibility that they may have had a claim. Fla. DOI at 18. As discussed above, however, there must be a careful balance between arriving at an appropriate Class Notice length and ensuring sufficient information. The Class Notice here, in conjunction with the Supplemental Materials, struck an appropriate balance between brevity and descriptiveness.

  130. The Florida AG argued also that the Class Notice and supplemental materials are "simply incomprehensible to the vast majority of policyholders." Fla. AG at 15. The Florida AG provided details of a survey that purports to indicate that recipients do not recall receiving the Class Notice, are unaware of the pertinent deadlines, and did not understand how to exclude themselves, or that they could object. As Professor Cohen describes in his supplemental affidavit, these findings are meaningless, because the survey contains irreparable flaws. Cohen Supp. Aff. at P 16. The Florida Survey fails to comply with the minimum professional standards governing the design, execution, and reporting of survey research. Id. Foremost, the Federal Judicial Center's Reference Guide on Survey Research indicates that a court cannot evaluate survey evidence without specific information, which the Florida AG did not provide:


. a definition of the target population;


. a definition of the population actually sampled;


. a description of the sample design, including the method of selecting respondents, the method of interview, and the number of callbacks;


. a description of the result of sample implementation, including: the number of potential respondents contacted, the number not reached, the number of refusals, the number of incomplete interviews, the number of noneligibles, and the number of completed interviews;


. a copy of interview questions, questionnaire, and the interview directions; and


. a copy of any interview instructions, validation results, and the codebook.

  131. The only information that Kerr & Downs provided addressing these issues is in paragraph 3 of Professor Downs' affidavit. The paragraph indicates that Kerr & Downs systematically and randomly sampled 600 Florida class members and contacted them by phone to ask them "a number of questions related to the Notice and its contents." But this information is wholly inadequate for the Court to assess the reliability of the survey. The Court rejects the survey in its entirety.

  132. Even if the survey were not flawed, Florida's conclusion that the Class Notice was inadequate is far from clear from the Florida AG's findings. For example, the survey demonstrates that of those who recall receiving the Class Notice and Supplemental Materials: 82% knew what the package was about; 7100 read the booklet concerning the Proposed Settlement; and 71% knew what to do if they had questions. These findings, even though developed through Florida's flawed study, indicate that a great majority of those who received the Class Notice could comprehend it.

  133. The Florida DOI argued that those who are unaware that they have a claim "will have no incentive to review" the Class Notice and Supplemental Materials. Yet, the best way to reach these policyholders is through individual notice of the class action and of the right to participate or opt out. The Class Notice tells policyholders that their so-called "vanishing premium" obligations may not vanish, that their "free" policies may not be free, and that their "investments" may be mere life insurance policies. Additionally, the clear title of the Class Notice: "OFFICIAL NOTICE FROM THE UNITED STATES DISTRICT COURT" reasonably alerts recipients of the importance of the contents, diminishing the likelihood that the notice would be tossed as junk mail.

  L. The Class Notice Adequately Indicated the Deadline to File Objections or Opt Out

  134. The Class Notice clearly, and in bold print, sets forth the pertinent deadlines. Stipulation of Settlement, Ex. F-1, at 4. Objectors Burnette and the Florida AG have observed that the Class Notice states that objections must be received by December 19, 1996, and that the Supplemental Materials indicate that the objections need only be postmarked by that date. This minor discrepancy does not undermine the adequacy of the Class Notice because the Court has considered all objections and respected all opt-outs that were filed by either date.

  M. The Class Notice Fairly Describes Basic Claim Relief and Alternative Dispute Resolution Provisions

  135. The Florida AG and Florida DOI argued that the Supplemental Materials steer potential claimants from the ADR process towards Basic Claim Relief. Fla. AG at 10-11; Fla. DOI at 22-23. Also Texas argued that the Class Notice's statement that if a policyholder chose the ADR Process the policyholder might not recover anything would induce injured policyholders to accept Basic Claim Relief. Tex. at 2-3.

  136. Even a cursory review of the Class Notice and Supplemental Materials reveals that the ADR is overall more prominent a remedy than Basic Claim Relief and that no "steering" occurs. Stipulation of Settlement, Exs. F-1 to F-3. For example, the ADR relief is the first form of relief described in the Class Notice, in the Cover Letter, in the Statement of Eligibility, and in the Questions & Answers materials.

  137. These states argued also that the Class Notice's statement that "no relief will be afforded to policyholders whose claims are undermined" by the available evidence (i.e., scored as a "0"), steered policyholders to Basic Claim Relief. The argument fails because: (1) the statement is true; (2) the statement must be disclosed because it is integral to the Proposed Settlement and to a policyholder's decision whether to choose the ADR or Basic Claim Relief; and (3) if a policyholder realistically believes that he or she was not mislead and that the evidence will show that he or she was not misled, the policyholder should not choose the ADR process. The above statement does not "steer"; it informs!

  N. Objections that Ostensibly Attack the Class Notice But Really Concern Proposed Settlement Terms Will Be Addressed in the Context of the Proposed Settlement's Fairness

  138. Objectors criticize the Class Notice also for describing accurately the terms of the Proposed Settlement, because the objectors find fault with these terms. For example, the Florida AG and Florida DOI argued that the Class Notice was misleading because Basic Claim Relief has no significant value to policyholders. Fla. AG at 10-12; Fla. DOI at 22. The Class Notice, however, describes clearly and accurately the components of Basic Claim Relief. Stipulation of Settlement, Ex. F-2, at 12-15. The Florida AG and Florida DOI argued also that the Supplemental Materials' discussion of the "impartial" ADR decision-maker is misleading because the Proposed Settlement's Claim Evaluation Staff is insufficiently "impartial." Fla. AG at 13; Fla. DOI at 23. The Class Notice, however, describes clearly and accurately the precise composition of the ADR panels. Stipulation of Settlement, Ex. F-2, at 9-10. The Court evaluates these criticisms in considering the fairness of the Proposed Settlement, because the Class Notice accurately reflects the Proposed Settlement's provisions.

  O. Considering All of the Circumstances, Class Notice in the Present Case Comports with Rule 23 and with Due Process

  139. For the above reasons, the Court finds that the combination of individual and publication notice in this action was the most effective and best notice practicable under all circumstances and constituted due, adequate, and reasonable notice to all class members, satisfying the requirements of due process, Federal Rule of Civil Procedure 23, and the Rules of this Court. The Court finds also that the Class Notice, the Summary Notice, the Election Form, the ADR Claim Form, and the post-settlement notice methodology set forth in the Stipulation of Settlement are reasonably calculated, under all the circumstances, to apprise class members of their rights pursuant to the settlement and that these materials satisfy the requirements of due process, Federal Rule of Civil Procedure 23, and the Rules of this Court.

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