Opinion ID: 755571
Heading Depth: 1
Heading Rank: 7

Heading: the fairness of the proposed settlement

Text: Even if it has satisfied the requirements for certification under Rule 23, a class action cannot be settled without the approval of the court and a determination that the proposed settlement is fair, reasonable and adequate. 59 G.M. Trucks, 55 F.3d at 785. Rule 23(e) imposes on the trial judge the duty of protecting absentees, which is executed by the court's assuring the settlement represents adequate compensation for the release of the class claims. Id. at 805 (citations omitted). In deciding the fairness of a proposed settlement, we have said that [t]he evaluating court must, of course, guard against demanding too large a settlement based on its view of the merits of the litigation; after all, settlement is a compromise, a yielding of the highest hopes in exchange for certainty and resolution. Id. at 806 (citations omitted). At the same time, we have noted that cases such as this, where the parties simultaneously seek certification and settlement approval, require courts to be even more scrupulous than usual when they examine the fairness of the proposed settlement. Id. at 805. This heightened standard is designed to ensure that class counsel has demonstrated sustained advocacy throughout the course of the proceedings and has protected the interests of all class members. Id. at 806. The decision of whether to approve a proposed settlement of a class action is left to the sound discretion of the district court. Girsh v. Jepson, 521 F.2d 153, 156 (3d Cir.1975). Because of the district court's proximity to the parties and to the nuances of the litigation, we accord great weight to the court's factual findings. Bell Atlantic Corp. v. Bolger, 2 F.3d 1304, 1305-6 (3d Cir.1993) (citing Ace Heating & Plumbing Co. v. Crane Co., 453 F.2d 30, 34 (3d Cir.1971)). As the district court recognized, our decision in Girsh sets out appropriate factors to be considered when determining the fairness of a proposed settlement. Those factors are: (1) the complexity, expense and likely duration of the litigation ...; (2) the reaction of the class to the settlement ...; (3) the stage of the proceedings and the amount of discovery completed ...; (4) the risks of establishing liability ...; (5) the risks of establishing damages ...; (6) the risks of maintaining the class action through trial ...; (7) the ability of the defendants to withstand a greater judgment; (8) the range of reasonableness of the settlement fund in light of the best possible recovery ...; (9) the range of reasonableness of the settlement fund to a possible recovery in light of all the attendant risks of litigation.... Girsh, 521 F.2d at 157 (quoting City of Detroit v. Grinnell Corp., 495 F.2d 448, 463 (2d Cir.1974)) (the Girsh factors). The court examined each of these factors and found the Proposed Settlement is indeed fair, reasonable, and adequate and should be approved. Fairness Opinion, 962 F.Supp. at 534. In addition to the Girsh analysis, the district court offered other reasons for its conclusion that the settlement was fair and reasonable. Describing the proposed settlement as exceptional, the court noted the settlement's structure was based on the class action settlements approved in Willson v. New York Life Ins. Co., No. 94-127804, 1995 N.Y. Misc. LEXIS 652 (N.Y.Sup.Ct. Feb. 1, 1996), aff'd, 228 A.D.2d 368, 644 N.Y.S.2d 617 (1st Dept.), and Michaels v. Pheonix Home Life Ins. Co., No. 95-5318, 1997 N.Y. Misc. LEXIS 171 (N.Y.Sup.Ct. Jan. 3, 1997), both of which received the praise of [c]ourts, academic and industry experts, and various independent organizations. Fairness Opinion, 962 F.Supp. at 535. The court also relied on the expertise of the insurance regulators from the fifty states and the District of Columbia, all of whom endorsed the settlement. The court found the terms of the settlement benefit[ ] the class enormously, emphasizing the uncapped nature of the relief, the fairness of the ADR process, and the availability of Basic Claim Relief to those class members who either elect not to participate in the ADR process or who cannot demonstrate they have a compensable claim. The court found this relief was enhanced by the inclusion of Additional Remediation Amounts, which it described as the punitive damage counterpart to the Proposed Settlement, and by Prudential's agreement to pay all attorneys' fees and costs associated with the settlement. Id. at 535-36. Finally, the court emphasized the settlement provided class members the opportunity to file claims immediately after court approval of the settlement, rather than waiting through what no doubt would be protracted litigation. Id. at 536. Krell raises several challenges to the district court's fairness determination. 60 First, Krell claims the district court applied several of the Girsh factors improperly, and in some cases not at all, and that it erred by not creating a separate subclass to address replacement claims. Krell Brief at 43-50. Second, he contends the district court's fairness determination violated the McCarran-Ferguson Act and the Rules Enabling Act by altering the substantive contractual and statutory insurance rights of the class. Id. at 36-40. Finally, Krell alleges the certification and fairness proceedings lacked due process. Id. at 40-42.
Although Krell has not directly challenged the court's analysis with respect to each of the nine Girsh factors, we will examine each of them in turn.
Citing the myriad complex legal and factual issues which would arise at trial, the district court found the anticipated complexity, costs, and time necessary to try this case greatly substantiate the fairness of the settlement. Fairness Opinion, 962 F.Supp. at 536. The court found that litigation would require expensive and time consuming discovery, would necessitate the use of several expert witnesses, and would not be completed for years. Consequently, the court concluded this factor weighed in favor of settlement. We agree. Examining the sheer magnitude of the proposed settlement class as well as the complexity of the issues raised, we conclude the trial of this class action would be a long, arduous process requiring great expenditures of time and money on behalf of both the parties and the court. The prospect of such a massive undertaking clearly counsels in favor of settlement. 61
This factor attempts to gauge whether members of the class support the settlement. Although the response rate in a 23(b)(3) class action is relevant to the fairness determination, see, e.g., Bell Atlantic, 2 F.3d at 1313 n. 15 (3d Cir., 1993); Shlensky v. Dorsey, 574 F.2d 131, 148 (3d Cir.1978), a combination of observations about the practical realities of class actions has led a number of courts to be considerably more cautious about inferring support from a small number of objectors to a sophisticated settlement. G.M. Trucks, 55 F.3d at 812 (citation omitted). The district court found that, of the 8 million policyholders to whom Prudential sent the class notice, approximately 19,000 policyholders or 0.2 per cent of the class opted out. 62 The court also noted that approximately 300 policyholders filed objections to the settlement. The court found the small percentage of opt outs and objectors was truly insignificant, and noted that the most vociferous objectors to the Proposed Settlement are a handful of litigants represented by counsel in cases that compete with or overlap the claims asserted in the Second Amended Complaint. Fairness Opinion, 962 F.Supp. at 537. Consequently, the court concluded the limited number of objections filed also weighed in favor of approving the settlement. Id. at 537-38. We see no abuse of discretion. While we do not read too much into the low rate of response, we believe the district court properly analyzed this factor. 63 3. The stage of the proceedings and amount of discovery completed The parties must have an adequate appreciation of the merits of the case before negotiating. G.M. Trucks, 55 F.3d at 813. To ensure that a proposed settlement is the product of informed negotiations, there should be an inquiry into the type and amount of discovery the parties have undertaken. Krell contends that class counsel's discovery was insufficient to support the proposed settlement, claiming that Lead Counsel's pre-settlement discovery consisted only of 70 boxes of documents received in August 1996 pursuant to informal letter requests, and a number of meetings with Prudential's chairman, Arthur Ryan. Krell questions how Lead Counsel could have been in second stage settlement negotiations before receiving Prudential's production of over 1 million documents, videotapes, audio tapes and computer tapes in mid-August. Finally, Krell contends there was no vigorous, adversarial discovery because virtually all of Prudential's discovery obligations were stayed between October 1995 and September 10, 1996, and the parties didn't agree on a free exchange of information until August 20, 1996, only a few weeks before the proposed settlement was announced. The district court found that counsel for plaintiffs and Prudential did not commence serious settlement discussions until 18 months of vigorous litigation had transpired, noting the parties had filed and argued a multitude of motions, including consolidation motions, jurisdictional motions, motions to stay competing class actions, case management motions, and Prudential's motion to dismiss under F.R.C.P. 12(b)(6). Fairness Opinion, 962 F.Supp. at 538 n. 62. In addition to its in-court efforts, the district court concluded that class counsel's pursuit of discovery also supported the settlement. The court found class counsel reviewed a multitude of documents provided by Prudential, 64 conducted its own interviews with hundreds of current and former Prudential employees, took twenty depositions, and had access to all of the materials collected by the Task Force. Id. at 541. The district court also found class counsel took sufficient time to review the discovery materials it collected, noting that class counsel refused to discuss settlement on two separate occasions because it believed it needed further discovery. Id. (citing Weiss Aff. pp 49, 101-02.) Finally, the court found class counsels' use of informal discovery was especially appropriate in this case because the Court stayed plaintiffs' right to formal discovery for many months, and because informal discovery could provide the information that plaintiffs needed. Id. at 542. Based on the foregoing, the district court concluded the volume and substance of Class Counsel's knowledge of this case are unquestionably adequate to support this settlement. Id. at 541. We see no error here. 4. The risks of establishing liability and damages The fourth and fifth Girsh factors survey the possible risks of litigation in order to balance the likelihood of success and the potential damage award if the case were taken to trial against the benefits of an immediate settlement. Examining plaintiffs' ability to establish liability and damages at trial, the court concluded the risks of establishing liability weigh in favor of approving the settlement. Id. at 540. We believe the district court properly examined the risks faced by the putative class. The court found plaintiffs would face a difficult burden at trial demonstrating, inter alia, (1) class members were deceived by Prudential's written disclosures and illustrations; (2) their contract claims were not barred by the parol evidence rule because they conflict with the unambiguous language in the insurance contracts; (3) the necessary reliance to support their federal securities claims; and (4) their federal securities claims were not barred by the one year statute of limitations and the three year statute of repose. Id. at 539. As further evidence of the barriers facing plaintiffs, the district court took notice of a similar life insurance sales practice case in Alabama state court in which the judge overturned a substantial jury verdict against Prudential. Id. (citing Key v. Prudential Ins. Co. of America, Civ. No. 93-479 (Al.Cir.Ct. Dec. 28, 1995)). We believe the district court offered substantial reasons for its findings.
Krell argues the district court failed to consider separately the likelihood of success at trial for those class members who alleged replacement claims, contending those claims require a lesser degree of proof and may be established by an objective review of the documents in Prudential's files. Both Prudential and Lead Counsel contend that replacement policyholders faced similar burdens to those of other Class Members in establishing liability and damages against Prudential. 65 Prudential Brief at 35. The district court did not believe that replacement claims are easier to prove and therefore required separate consideration. Fairness Opinion, 962 F.Supp. at 522. We agree. Krell offers no authority or analysis to support this blanket assertion. In addition, the findings of the Multi-State Task Force undermine Krell's argument. The primary focus of the Multi-State Task Force was the practice known as churning or twisting, which it defined as the sale of any policy based upon incomplete or misleading comparisons. Task Force Report at 35. According to the Multi-State Task Force Report, the transactions most frequently the subject of churning or twisting complaints were financed sales and abbreviated payment plans. Replacement transactions are a subcategory of financed sales in which at least 25% of an existing policy's value is used to fund the purchase of a new policy. Id. (citing the current NAIC Replacement Life Insurance and Annuities Model regulation, adopted in 1984). The Task Force Report makes clear that none of these types of sales, financed, replacement or abbreviated pay, is in violation of the replacement regulation if properly done. Id. at 36 (emphasis omitted). It also notes that, during the late 1970s and early 1980's, the previous industry-wide disinclination for replacement sales began to give way. In 1978, for example, the National Association of Insurance Commissioners modified its model replacement regulations to reflect the growing acceptance of replacement sales, provided those sales were accompanied by necessary information and disclosure to allow consumers to make an informed choice. 66 Id. at 39-40. Turning to its examination of Prudential, the Task Force acknowledged its goal was to determine whether during the sale of new policies, those involving financing or replacement, consumers were adequately advised of the potential failings of the new policies or the funding basis on which they were sold. Id. at 45. The Report notes that although all of the required disclosure forms may have been completed and filed by Prudential, [o]ne must look beyond the required forms to determine whether or not presentations were accurate and not misleading. Id. In its discussion of the remediation protocol, the Task Force explained the documentation received from Prudential did not always support the consumer's assertion, and consequently [w]hat was or was not agreed upon at the time of sale became a question of fact. Id. at 189; see also id. at 191 (noting that while some replacements may have been appropriate ... misrepresentation is never appropriate, and thus the challenge is to distinguish appropriate replacement activity.)Consequently, it appears that misrepresentation, rather than compliance with bookkeeping requirements, was the primary concern of the Task Force examination of Prudential's replacement sales. As the Task Force Report states, it is incorrect to assume that in any and every case where a replacement was not identified or the regulatory requirements were not met, the policyholder did not understand the transaction or that it was not properly explained. Id. at 17. We also find it significant that the state insurance regulators who crafted the initial Task Force Report did not incorporate a lesser burden of proof or otherwise distinguish replacement claims from other types of claims. 67 Consequently, we believe the district court properly considered the role of replacement claims when analyzing the fourth and fifth Girsh factors. 68 5. The risks of maintaining the class action through trial Under Rule 23, a district court may decertify or modify a class at any time during the litigation if it proves to be unmanageable. In re School Asbestos Litigation, 789 F.2d at 1011 (3d Cir.1986); G.M. Trucks, 55 F.3d at 815. In this instance, the district court concluded that although this case is manageable as a class action and [ ] the class action device is the most appropriate means to adjudicate this controversy, as the case evolves, maintaining the class action may become unworkable and require decertification. Fairness Opinion, 962 F.Supp. at 540. The court also noted Prudential had sought to preserve its objections to class certification, and would likely contest certification if the case proceeded to trial. Consequently, the court concluded that there was a risk the case might eventually be decertified, all of which weighed in favor of settlement. Although we agree with the district court's analysis and find there was some risk of decertification which supports settlement, we pause to comment on the application of this factor in settlement-only class actions following the Supreme Court's decision in Amchem. Because the district court always possesses the authority to decertify or modify a class that proves unmanageable, examination of this factor in the standard class action would appear to be perfunctory. There will always be a risk or possibility of decertification, and consequently the court can always claim this factor weighs in favor of settlement. The test becomes even more toothless after Amchem. The Supreme Court in Amchem held a district court could take settlement into consideration when deciding whether to certify a class, and that, [c]onfronted with a request for settlement-only class certification, a district court need not inquire whether the case, if tried, would present intractable management problems ... for the proposal is that there be no trial. 521 U.S. at ----, 117 S.Ct. at 2248. It would seem, therefore, that after Amchem the manageability inquiry in settlement-only class actions may not be significant. 6. The ability of the defendants to withstand a greater judgment The district court found Prudential's ability to withstand a greater judgment is a matter of concern. 69 Fairness Opinion, 962 F.Supp. at 540. Noting that the settlement was valued between $1 billion and $2 billion, the court found a larger judgment could negatively impact Prudential's declining credit rating. 70 Id. The court also expressed concern that, because Prudential is a mutual insurer, non-class member policyholders could conceivably be adversely affected by an excessive settlement in the form of lower dividends. Id. Krell claims the district court erred by finding that Prudential could not withstand a greater judgment because neither Lead Counsel nor Prudential submitted any reliable evidence of the true value of the ADR relief. Krell Brief at 50. Krell speculates that even the $410 million minimum is inaccurate because it does not account for profits, if any generated by Basic Claim Relief. We see no error here. As the district court noted, the value of the proposed settlement is difficult to determine because both the compensatory relief available under the ADR and the additional relief available through Basic Claim Relief are uncapped. The parties' experts offered valuations between $1 and $2 billion, with an absolute minimum of $410 million. While these numbers are imprecise, they are a sufficient basis for the district court to decide whether Prudential could withstand a greater judgment. In addition, Prudential's credit rating during the course of the litigation may be an appropriate indicator, among others, for the court's consideration, and its decline would support the court's analysis. 7. The range of reasonableness of the settlement fund in light of the best possible recovery and all the attendant risks of litigation The last two Girsh factors ask whether the settlement is reasonable in light of the best possible recovery and the risks the parties would face if the case went to trial. In order to assess the reasonableness of a proposed settlement seeking monetary relief, the present value of the damages plaintiffs would likely recover if successful, appropriately discounted for the risk of not prevailing, should be compared with the amount of the proposed settlement. G.M. Trucks, 55 F.3d at 806 (quoting Manual for Complex Litigation 2d § 30.44, at 252). On appeal, Krell argues the district court declined to address this issue, instead finding the analysis unnecessary because all injured policyholders would receive full compensatory relief. Krell has mischaracterized the district court's opinion. The district court applied the final two Girsh factors, although it did not attempt to reduce its analysis to a concrete formula. The district court found that calculating the best possible recovery for the class in the aggregate would be exceedingly speculative, and in this instance such a calculation was unnecessary because the reasonableness of the settlement could be fairly judged. The court instead examined the nature of the settlement and the range of possible outcomes for those participating in either the ADR process or Basic Claim Relief, and concluded that an individual's recovery exceeds the value of the best possible recovery discounted by the risks of litigation. Fairness Opinion, 962 F.Supp. at 540. For example, the court found class members who have clear claims against Prudential will receive scores of 3 and will receive a choice between full rescissionary or compensatory relief plus interest. Thus they will receive full compensation without paying attorneys fees and without undue delay. 71 The court concluded this relief is not only fair, it is exceptional. Id. at 540-41. Those class members who received a score of 2--where the evidence on balance supports the claim--would receive 50% of their damages without having to pay litigation costs or fees, an award the court concluded was equivalent to what the claimant would have received at trial. Id. at 541 (The 50% award plus 100% interest is equivalent to a full award minus litigation costs, attorneys' fees, and the price of delay.). The court also found the settlement was fair for those receiving a score of 1 in the ADR process and for those electing Basic Claim Relief--those who would not have had a claim or not elected to bring one--because the Basic Claim Relief recovery is greater than what they would have gotten at trial. 72 Id. We believe the district court adequately addressed these factors and agree its examination accounts appropriately for the nuances of this Proposed Settlement. Id. at 535 n. 58. As the court noted, both the structure of the settlement and the uncapped nature of the relief provided make it difficult to determine accurately the actual value of the settlement. Consequently, the traditional calculus suggested by the Manual for Complex Litigation 2d and adopted by this Court in G.M. Trucks cannot be applied to this case. But we cannot find the district court abused its discretion when it found that the remedies available under the proposed settlement provided extraordinary relief. When balanced against the best possible recovery and the risks of taking this case to trial, these remedies weighed in favor of the proposed settlement. It is worth noting that since Girsh was decided in 1975, there has been a sea-change in the nature of class actions, especially with respect to mass torts. In this regard, it may be useful to expand the traditional Girsh factors to include, when appropriate, these factors among others: the maturity of the underlying substantive issues, as measured by experience in adjudicating individual actions, the development of scientific knowledge, the extent of discovery on the merits, and other factors that bear on the ability to assess the probable outcome of a trial on the merits of liability and individual damages; the existence and probable outcome of claims by other classes and subclasses; the comparison between the results achieved by the settlement for individual class or subclass members and the results achieved--or likely to be achieved--for other claimants; whether class or subclass members are accorded the right to opt out of the settlement; whether any provisions for attorneys' fees are reasonable; and whether the procedure for processing individual claims under the settlement is fair and reasonable. 73 Of these factors, the only one relevant here is the fairness and reasonableness of the ADR procedure. See also discussion supra § V.D.

Krell argues the proposed settlement violates the Rules Enabling Act 74 and the McCarran-Ferguson Act 75 because it would alter policyholders' past and future substantive contractual and statutory insurance rights. Krell Brief at 36. The district court rejected both arguments. First, the court found the McCarran-Ferguson Act does not apply to an agreement between private parties. Fairness Opinion, 962 F.Supp. at 561. Second, the court found approval of a settlement under Rule 23 merely recognizes the parties' voluntary compromise of their rights and does not itself affect their substantive state law rights. 76 Id. at 561-62. For the reasons outlined by the district court, we agree the proposed settlement in this case does not violate either the McCarran-Ferguson Act or the Rules Enabling Act. 77
Krell alleges the district court deprived him of fundamental due process by denying him the opportunity to take necessary discovery. Krell Brief at 40-42. Krell contends additional discovery was essential because class counsel's own discovery was inadequate, and the district court's denial of Krell's requests for settlement and fee related discovery 78 resulted in an erroneous assessment of the fairness of the settlement. Krell complains his discovery attempts were hampered by the court order requiring all discovery requests be served on Prudential through Lead Counsel. According to Krell, Lead Counsel refused Krell's requests both prior and subsequent to signing the settlement agreement in September 1996, and excluded him from the free exchange of documents. Krell also requested cross-examination of affiants supporting the settlement, depositions from the named plaintiffs with respect to jurisdiction and adequacy of representation, and other document discovery. 79 Objectors are entitled to an opportunity to develop a record in support of [their] contentions by means of cross-examination and argument to the court. Greenfield v. Villager Indus., Inc., 483 F.2d 824, 833 (3d Cir.1973). There is no dispute Krell was given the opportunity to present his arguments to the court during the fairness hearing. In addition, the district court found Krell had ample opportunity to avail himself of the substantial discovery provided to Lead Counsel but failed to do so, and that additional discovery was unnecessary because Krell focused primarily on legal issues. Fairness Opinion, 962 F.Supp. at 563. We believe the district court acted well within its discretion here. Faced with the prospect of immense discovery requests, the district court attempted to exert some control over the discovery process. Krell cannot impute to the court his own failure to avail himself of the opportunity to review the discovery in this case.
The final issue we address with respect to fairness relates to the category of other sales claims. Krell raises two arguments in opposition to this broad category of claims. First, Krell contends that the other claims were improperly added at the last minute to secure an all-encompassing release for Prudential. Second, Krell contends the notice provided under the settlement did not adequately explain the category to absentee members, and consequently millions of policyholders would inadvertently waive their right to recover for Prudential's fraudulent acts.
According to Krell, the class definition was at the last minute expanded to release nearly 8 million additional policyholders not included in the class pled only 3 days earlier. Krell Brief at 4. 80 In addition to the previously-noted ramifications of this expansion with respect to the Rule 23 certification prerequisites, Krell also contends the release of these claims is improper because it exceeds the scope of the class complaint. Prudential and Lead Counsel counter that the certified class is actually smaller than the putative class defined in plaintiffs' initial pleadings and that the Task Force remediation plan also included an other claims category. As Lead Counsel explains, plaintiffs have contended from the outset that Prudential's common course of deceptive conduct extended beyond the churning, vanishing premium, and investment sales tactics and permeated its product design, agent training and oversight, sales activities, and dividend, expense and investment practices. Lead Counsel Brief at 20. The settling parties maintain that, even if such claims were not included in the Second Amended Consolidated Complaint, those claims could still be released because they arose from the conduct alleged in the Complaint. The district court held the release was not unfairly broad, finding it generally corresponded with the allegations in the Second Amended Consolidated Complaint. The court also found that releases may include all claims, including unpleaded claims that arise out of the same conduct alleged in the case. 81 Fairness Opinion, 962 F.Supp. at 558 (citing Grimes v. Vitalink Communications Corp., 17 F.3d 1553, 1563 (3d Cir.), cert. denied, 513 U.S. 986, 115 S.Ct. 480, 130 L.Ed.2d 393 (1994); Sandler Assocs., L.P. v. Bellsouth Corp., 818 F.Supp. 695, 704-05 (D.Del.1993), aff'd, 26 F.3d 123 (3d Cir.1994)). The crux of the plaintiffs' complaint was that Prudential engaged in a common scheme of deceptive sales practices. Although the Second Amended Consolidated Complaint specifically lists three types of deceptive sales claims--the churning, vanishing premium and investment plan claims--other allegations address conduct which supports the common scheme theory and which does not fall neatly within the three enumerated categories. See supra note 11. Therefore, we agree with the district court the other claims were properly released. 82 While it is essential to protect the interests of absentee class members, we believe the claims of the absentees here are adequately incorporated in the terms of the settlement. The category of other claims are part and parcel of the common scheme which underlies plaintiffs' entire case, and are separately addressed in the procedural guidelines which forms the basis for the ADR process. Finally, the settling parties have represented that the settlement does not release unknown claims relating to the servicing or administration of class members' policies, but is limited to claims relating to the actual sale of insurance policies. 83 Lead Counsel Brief at 62-63. Consequently, we believe the other claims were appropriately included in the release.
Rule 23 of the Federal Rules of Civil Procedure contains two distinct notice provisions. Rule 23(c)(2) requires notice be given to all potential members of a Rule 23(b)(3) class informing them of the existence of the class action, the requirements for opting out of the class and/or entering an appearance with the court, and the applicability of any final judgment to all members who do not opt out of the class. 84 Rule 23(e) requires all members of the class be notified of the terms of any proposed settlement. 85 The Rule 23(e) notice is designed to summarize the litigation and the settlement and to apprise class members of the right and opportunity to inspect the complete settlement documents, papers, and pleadings filed in the litigation. 2 Newberg on Class Actions § 8.32 at 8-109. In this instance, the parties prepared a joint notice, combining the information required by Rules 23(c)(2) and 23(e). The district court's October 28, 1996 order required the settling parties to mail individual notice 86 to the last known address of the over 8 million present and former policyholders who comprised the putative class. 87 In addition, the Order required the parties to publish notice in the national editions of The New York Times, The Wall Street Journal, USA Today and The Newark Star Ledger. 88 Prudential went even further, publishing notice in the largest circulating newspaper in each of the fifty states and the District of Columbia. Fairness Opinion, 962 F.Supp. at 495. The notices were published over a three day period, from November 20, 1996 until November 22, 1996. 89 The district court described the notice and outreach program as unparalleled and found the comprehensive notice program in this case far exceeded the requirements of Rule 23 and due process. Id. at 526. The district court also examined and rejected various objections to the form and content of the notice. Id. at 528-34. We agree with the district court's assessment of the scope of the outreach program. 90 Providing individual notice to over 8 million class members is a daunting task, and no doubt an expensive one. In addition, the combination of individual and publication notice, combined with the unsolicited news coverage the settlement received, greatly increased the possibility that Prudential will ultimately compensate a greater number of injured policyholders than would otherwise have been possible. 91 The parties also provided additional notices to the class, each designed to update the parties as to their rights and obligations under the settlement. 92 We agree with the district court that the notice provided all of the required information concerning the class members' right and obligations under the settlement. It detailed the procedures for opting out, entering an appearance, and filing objections, and notified the policyholders that if they did not opt out of the class they would be bound by the settlement if approved. It explained the ADR process and Basic Claim Relief available to the class, provided the text of the release, and provided notification that all related documents were available for public inspection. Finally, it explained the nature of the claims covered under the settlement, and provided an 800 number through which class members could obtain information and make further inquiries. The fact that approximately 1.8 million inquiries have already been processed through the 800 number supports the conclusion that the class notice was effective. The only legitimate concern raised with respect to the notice provided relates to the category of other claims. After a careful review of the record, we hold the notice provided with respect to the category of other claims provided sufficient information to apprise the class of the scope of the allegations against Prudential. While this catch-all category is by its nature difficult to describe, we believe the class notice makes clear that additional claims which do not fit neatly into one of the other three categories may nonetheless be remedied through the ADR process. The third page of the cover letter to the class notice specifically sets forth the four categories of sales claims--financed insurance, abbreviated payment, investment plan, and other improper sales practices. The types of relief available for each of the four categories of claims are clearly listed on pages 10-11 of the Notice of Class Action, Proposed Settlement, Settlement Hearing And Right To Appear. 93 The four categories of claims are also listed in the question-and-answer pamphlet included with the Class Notice. Compared to the first three categories of claims, which require some understanding of insurance policies, the catch-all category of other improper sales practices is arguably easier for the uninformed layman to comprehend, and may in fact encourage class members to respond to the Class Notice. Consequently, we believe the notice provided to the absentee class members in this case supports the district court's finding that the settlement is fair and reasonable.
As we have noted, a review of the Girsh factors strongly supports the district court's conclusion that the proposed settlement is fair and reasonable. In addition, the parties have fully satisfied the notice requirements of Rule 23, and provided the class with both individual and publication notice regarding the terms of the settlement. There are also other facets of the settlement which counsel in favor of its approval. First, we are impressed with the nature and extent of the relief provided under the settlement. The ADR process provides an efficient and individually tailored approach to the remediation of claims. Rather than offering 8 million class members a small refund or a coupon towards the purchase of other policies (which we believe would have failed the fairness evaluation), the ADR process responds to the individual claims of the class and provides compensation based on the harm they have suffered. As a result, the potential class recovery is uncapped, a fact which weighs strongly in favor of the settlement. Second, we are also impressed with the procedural safeguards created by the settlement. The four tier review process, in which the first and third levels of review are conducted by Prudential employees and the second and fourth levels are conducted by independent reviewers selected by class counsel, provide assurance that the ADR process will accurately assess and compensate the claims of injured class members. Third, we are mindful of the external indicia of fairness which attach to this settlement. In particular, we are cognizant that the original framework of this settlement resulted from the efforts of the Multi-State Task Force. The involvement of the various state insurance regulators, with their vast experience and expertise, provides great support in favor of the fairness of the settlement. In addition, we are impressed by the seal of approval this settlement has received from the insurance regulators of each of the 50 states and the District of Columbia. Fourth, that Prudential will bear all administrative costs associated with the remediation process and will pay class counsel's fees and costs weighs in favor of the settlement. By agreeing to cover these expenses, Prudential has ensured that the administrative and legal costs of the settlement will not diminish the class recovery. Based on the foregoing, we conclude that the district court's finding that the proposed settlement was fair, reasonable and adequate was well within its sound discretion.