Opinion ID: 2993618
Heading Depth: 2
Heading Rank: 2

Heading: real or substantial benefit of the settlement

Text: In considering an application for approval of a class action settlement, a district court must assess whether the proposed settlement is “fair, reasonable, and adequate.” 4 For example, the objectors claim that, in arguing that the settlement offered no benefit to the class members and in asking for “further investigation” or discovery to “develop a record in support of their contentions,” they were actually arguing that the standards we articulated in Girsh v. Jepson, 521 F.2d 153 (3d Cir. 1975), and In re Prudential Insurance Co. of America Sales Practices Litigation, 148 F.3d 283 (3d Cir. 1998), for determining the fairness of a class action settlement were inadequate to address the unique realities of a non-pecuniary settlement. That is obviously incorrect and the objectors concede as much. (Cf. Reply Br. at 19 (“Nor were Objectors required to request the district court deviate from the current standard established by the Third Circuit in order to preserve the issue for appeal, as that is beyond the authority of a district court … .”).) The objectors also argue that they preserved the contention that we should adopt a formalized briefing schedule similar to that used in other circuits when they requested – and received – permission to file a supplemental objection after the final motion for approval was filed. That is also incorrect, and the argument ignores the reality that the objectors had received all of the settlement approval papers prior to the final fairness hearings and had an opportunity to file a supplemental response to the approval papers, which they chose not to do. Accordingly, even if the argument were not waived, which it has been, the objectors cannot now be heard to complain about the lack of an opportunity that they in fact had. 6 Fed. R. Civ. P. 23(e)(2); accord Ehrheart v. Verizon Wireless, 609 F.3d 590, 592 (3d Cir. 2010). “[T]here is an overriding public interest in settling class action litigation, and it should therefore be encouraged.” In re Warfarin Sodium Antitrust Litig., 391 F.3d 516, 535 (3d Cir. 2004). Thus, when evaluating a settlement, a court should be “hesitant to undo an agreement that has resolved a hard-fought, multi-year litigation.” In re Baby Prods. Antitrust Litig., 708 F.3d 163, 175 (3d Cir. 2013). When evaluating such a settlement, a court must consider the factors set forth in Girsh v. Jepson: (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 the 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. 521 F.2d 153, 157 (3d Cir. 1975) (internal quotation marks and ellipses omitted). The objectors do not argue that the District Court’s thorough discussion of the Girsh factors was flawed. Instead, they complain that the District Court erred in approving the settlement because the settlement did not offer a real or substantial benefit to the class. Specifically, they argue that the settlement required the class to relinquish $10 billion in claims in order to receive exclusively non-pecuniary relief – the discontinuation of Ingenix and TOR – which it claims it would have received anyway, as Horizon was planning on discontinuing those databases regardless of the outcome of the litigation. We disagree. 7 First, as the District Court noted, the $10 billion damages calculation comes from the plaintiffs’ expert report, which, at the time of settlement, was the subject of a Daubert challenge, and was calculated using a model that the District Court had rejected in a similar case. Placed in that context, the likelihood of the plaintiffs actually recovering any portion of that damages calculation was dubious. Second, as the District Court rightly noted, a settlement can be fair without involving pecuniary relief. Cf. Bell Atl. Corp. v. Bolger, 2 F.3d 1304, 1311 (3d Cir. 1993) (“[N]onpecuniary benefits to the corporation may support a settlement. …”).5 Indeed, Rule 23(b)(2) contemplates injunctive relief. Further, the objectors’ claim that Horizon would have discontinued using Ingenix anyway is speculative.6 And, the objectors ignore that the settlement also secured an end to the use of TOR and gained various transparency reforms sought by the class, including updates and revisions to Horizon plan language, member handbooks, and marketing materials. 5 See also Zimmerman v. Bell, 800 F.2d 386, 391 (4th Cir. 1986) (nonmonetary derivative settlement relief adequate when it provided guidelines for “future management responses to tender offers and takeover bids”); Maher v. Zapata Corp., 714 F.2d 436, 466 (5th Cir. 1983) (nonmonetary relief adequate settlement relief); cf. Mills v. Electric AutoLite Co., 396 U.S. 375, 391-92 (1970) (nonmonetary recovery on merits does not preclude award of fees). 6 Specifically, the objectors point to the following as evidence that Ingenix’s days were numbered, notwithstanding the settlement at issue here: (1) that the New York Attorney General settled a lawsuit in New York state, one of the terms of which was that Ingenix would no longer be used there; (2) that, after settlement was reached here, Horizon’s newsletter announced the end of Ingenix; and (3) that, again, after settlement was reached here, regulatory entities in New Jersey proposed ending Ingenix’s use. 8 Insofar as the objectors complain that discontinuing Ingenix and TOR may not necessarily benefit the class because some members may actually receive lower payments with a more accurate system, their argument is perplexing. Horizon subscribers are entitled to an accurate reimbursement that comports with the terms of their benefit plans, not a windfall that could result from overcompensation by using a flawed database. It is evident that the objectors have not shown any errors in the District Court’s approval of the settlement – a settlement which, particularly in light of the considerable risk of failure to the plaintiffs, is fair, reasonable, and adequate.