Opinion ID: 1357701
Heading Depth: 2
Heading Rank: 2

Heading: The Gallagher Settlement

Text: In December 2004, the Gallagher Defendants were added to the class action litigation. [12] The Gallagher Defendants were also subject to ongoing investigations by state attorneys general and state insurance departments for possible anticompetitive activities. On May 18, 2005, the Gallagher Defendants, whose principal place of business and headquarters are located in Illinois, entered into an Assurance of Voluntary Compliance with the Attorney General of Illinois and the Director of the Illinois Division of Insurance, and a Stipulation and Consent Order with the Director of the Illinois Division of Insurance. Under the terms of these agreements, the Gallagher Defendants voluntarily implemented various business reforms and transferred $26,962,500 into a fund from which amounts were distributed to certain qualifying Gallagher customers. [13] In April 2005, the Gallagher Defendants began settlement agreement negotiations with the plaintiffs and, more than a year and a half later, on December 29, 2006, the parties entered into a Stipulation of Settlement (Gallagher Settlement Agreement). Several amendments to the Gallagher Settlement Agreement were filed in the following months, one of which included the submission of a Plan of Allocation. The proposed Gallagher Settlement Agreement called for the creation of a $28,000,000 settlement fund to be paid to insureds who fell within the definition of the Settlement Class and was intended to resolve all claims that have been, or could have been, asserted in this action by Plaintiffs against the Gallagher Defendants. The Settlement Class was defined as all individuals or entities who purchase[d] or renew [ed] commercial insurance, or reinsurance thereof, obtained through engaging the services of the Gallagher Defendants or any Broker Defendant during the class period, and all individuals or entities that were employers providing employee benefits insurance and employees receiving employee benefits insurance through an employer sponsored plan that was obtained through the Gallagher Defendants or any Broker Defendant during the class period. (Gallagher App. 409-10.) For purposes of allocation, the Settlement Class was divided into six separate claimant groups: Commercial Class members who purchased or renewed commercial insurance either through a Gallagher Entity (`Commercial Direct Claimants') or a Commercial Broker Defendant (`Commercial Conspiracy Claimants'), Employer members of the Employee Benefits Class who purchased or renewed employee benefits insurance either through a Gallagher Entity (`Employer Direct Claimants') or an Employee Benefit Broker Defendant (`Employer Conspiracy Claimants'), and all Employee members of the Employee Benefits Class who purchased or renewed employee benefits insurance either through a Gallagher Entity (`Employee Direct Claimants') or through an Employee Benefits Broker Defendant (`Employee Conspiracy Claimants'). Thus the claimant groups were categorized based on the type of insurance involved and whether the insurance was purchased through the Gallagher Defendants or another Broker Defendant. Under the Plan of Allocation, the fund was to be distributed among the claimant groups as follows: 68% to Commercial Direct Claimants, 13.2% to Commercial Conspiracy Claimants, 3.6% to Employer Direct Claimants, 0.5% to Employer Conspiracy Claimants, 13.3% to Employee Direct Claimants, and 1.4% to Employee Conspiracy Claimants. In addition to establishing a settlement fund, the proposed Gallagher Settlement Agreement also required the Gallagher Defendants to make certain changes to their alleged business practicessuch as prohibitions on accepting contingent compensation, pay to play arrangements, bid rigging arrangements, reinsurance leveraging, and inappropriate use of wholesale insurance brokersand to make certain disclosures to customers and implement certain training for its employees. The Gallagher Defendants also agreed to pay the administration and distribution costs associated with the Gallagher Settlement Agreement. On April 13, 2007, the District Court entered an order preliminarily certifying the Settlement Class and preliminarily approving the Gallagher Settlement Agreement. The District Court set June 29, 2007 as the deadline for the filing of exclusions and objections to the proposed Gallagher Settlement Agreement and scheduled a fairness hearing for July 24, 2007. Pursuant to the District Court's order, the administrator mailed notice of the proposed Gallagher Settlement Agreement to over 288,000 potential Settlement Class Members and also published notice of the Gallagher Settlement Agreement twice in The New York Times, The Wall Street Journal, and USA Today, once in Business Insurance Magazine and Risk Management Magazine, and once in the newspaper with the largest circulation in each of the fifty states and the District of Columbia. The administrator also established a website and toll-free hotline to provide material relevant to the proposed Gallagher Settlement Agreement. Only two Settlement Class Members filed objections to the Gallagher Settlement Agreement. [14] The objections pertained to the amount of the settlement, requirements of the settlement claim form, the allocation of the settlement, and whether the requirements of class certification were satisfied. One of the two objectors, appellant Van Enterpriseswho also objected to the Zurich Settlement failed to appear at the fairness hearing despite having filed a Notice of Intention to Appear. The District Court issued an order on September 4, 2007, granting the Gallagher Defendants' and plaintiffs' motion for final approval of the settlement and dismissing the Gallagher Defendants from the litigation with prejudice, determining that all of the objections lacked merit and concluding that the Settlement Class could be certified and the Gallagher Settlement Agreement could be approved consistent with the Rule 23 requirements. [15] In re Ins. Brokerage Antitrust Litig., 2007 WL 2589950 (D.N.J. Sept.4, 2007) (Gallagher Settlement Final Approval Opinion). Separately, the Gallagher Defendants agreed to pay up to $8,885,000 for Class Counsel's attorneys' fees, litigation expenses, and incentive awards for each of the twenty-five named plaintiffs. These fees were not to be deducted from the $28,000,000 settlement fund. No party objected to the petition for fees, and the District Court approved it. Van Enterprises filed a timely notice of appeal from the District Court's order granting the motion for final approval of the settlement (07-3687) and is the only objector that remains in this appeal.