Opinion ID: 755571
Heading Depth: 3
Heading Rank: 2

Heading: Adverse Effect on Class Members

Text: Krell also claims the district court failed to consider the negative financial impact the settlement would have on class members. According to this argument, class members, who as policyholders have an equity interest in Prudential's surplus, are harmed because the settlement will decrease that surplus. Krell Brief at 67-68. The district rejected this argument, finding the payment of attorneys' fees would not have a negative financial impact on class members. The court reasoned that any such payment of fees may come from the proceeds of director and officer liability insurance or from Prudential's capital surplus ... [and] will not necessarily affect policyholders' future dividends and interest payments on their policies. Fee Opinion, 962 F.Supp. at 589 n. 40. Krell points to no record evidence to demonstrate the settlement would have a detrimental effect on the dividends of Prudential policyholders. Krell cites only to Exhibit G of his fee discovery motion, dated December 11, 1996, which contains the affidavit of Professor David F. Babbel of The Wharton School of the University of Pennsylvania, originally filed in connection with the Phoenix Home Life Mutual Insurance Company litigation in New York state court. Although Professor Babbel's affidavit explains that compensation paid by a mutual insurer to a hypothetical class comprised of the insurer's policyholders may result in a reduction in dividends paid to the policyholders, or a reduction in the surplus that backs the claims of the policy owners against the firm, Babbel Aff. p 9, he concludes the proposed settlement 115 [took] advantage of the financial strength and economies of scale available to the mutual insurer and overcame the concerns for the policy owners' equity interest. Babbel Aff. p 11. We see no error here.