NJ Judge Approves $69M Partial Settlement

A federal judge in Newark, NJ, has approved a $69 million settlement in a class action accusing leading insurance brokers of conspiring with carriers to manipulate the market.

In a separate decision in the same case, In re Insurance Brokerage Antitrust Litigation, 04-Civ.-5184, MDL No. 1663, U.S. District Judge Garrett Brown Jr. also awarded $19 million in legal fees, costs and incentive payments.

The decisions, both on Feb. 23, resolved a big chunk of the litigation, in which the plaintiffs claim that the brokers violated antitrust and racketeering laws by taking part in a scheme to rig bids for insurance policies and steer customers to certain carriers in return for payments or kickbacks.

The money will be paid by Marsh & McLennan Cos. and several related brokerage and investment consulting entities, including Marsh Inc., Marsh USA Inc. and Mercer Inc. Of the $69.02 million, $62 million is designated for class plaintiffs, with up to $5 million of that amount to be used for claims by state officials on behalf of policyholders who are potential members of the class. The remaining $7 million is allocated to resolve nonclass member “tag-along” actions.

The Ruling

Judge Brown found all nine factors in Girsh v. Jepson , 521 F.3d 153 (3d Cir. 1975), weighed in favor of approving the deal, especially those relating to the complexity, expense and duration of the litigation, reaction of the class, stage of the proceeding and risks of litigating. The class, approved by Judge Brown for purpose of the settlement, has two parts.

The first consists of individuals or entities who dealt directly with Marsh & McLennan or an affiliate in obtaining insurance brokerage or other services related to buying or renewing insurance or reinsurance between Aug. 26, 1994, and Sept. 1, 2005.

The other part ' referred to as the “conspiracy class” by one of the lead plaintiffs' counsel, Bryan Clobes of Cafferty Faucher of Philadelphia ' is made up of those who dealt with another of the dozens of broker-defendants during the same period. Clobes estimates the direct class members number around 400,000 and the conspiracy class is in the millions.

History

The litigation began in 2004 in various district courts and was consolidated in New Jersey in 2005.

On Aug. 31, 2007, Judge Brown granted a motion to dismiss the antitrust claims and followed on Sept. 28, 2007, with a dismissal of the RICO claims. He decided he would not exercise supplemental jurisdiction over state law claims.

The plaintiffs appealed the dismissal of the antitrust and RICO claims. Last June, the appeal was withdrawn as to the Marsh defendants so they could settle.

Of the roughly $19 million in fees and expenses Judge Brown approved on Tuesday, $12.2 million will go to class counsel, about 50 law firms that spent almost 420,000 hours on the case with a blended hourly rate of $378 and a lodestar of more than $158 million. They will also get $2 million for their expenses and $320,000 for incentive awards to the 32 named plaintiffs.

The other $4.5 million will go for fees and expenses in a class action pending in New York Supreme Court, In re Marsh & McLennan Contingent Commission Litigation, No. 603711/2004.

Of that amount, $4.48 million will go to legal fees and $22,000 to litigation costs. Kirby McInerney of New York, the firm handling the New York action, says it took the case on a contingent basis and spent more than 4,300 hours on it with an hourly rate of $496 and a $2.16 million lodestar. The lawyers claim they did not start to negotiate the fees until after they reached agreement on what the class would receive.

Mary Pat Gallagher is a reporter for the New Jersey Law Journal, an Incisive Media sister publication of this newsletter.

A federal judge in Newark, NJ, has approved a $69 million settlement in a class action accusing leading insurance brokers of conspiring with carriers to manipulate the market.

In a separate decision in the same case, In re Insurance Brokerage Antitrust Litigation, 04-Civ.-5184, MDL No. 1663, U.S. District Judge Garrett Brown Jr. also awarded $19 million in legal fees, costs and incentive payments.

The decisions, both on Feb. 23, resolved a big chunk of the litigation, in which the plaintiffs claim that the brokers violated antitrust and racketeering laws by taking part in a scheme to rig bids for insurance policies and steer customers to certain carriers in return for payments or kickbacks.

The money will be paid by Marsh & McLennan Cos. and several related brokerage and investment consulting entities, including Marsh Inc., Marsh USA Inc. and Mercer Inc. Of the $69.02 million, $62 million is designated for class plaintiffs, with up to $5 million of that amount to be used for claims by state officials on behalf of policyholders who are potential members of the class. The remaining $7 million is allocated to resolve nonclass member “tag-along” actions.

The Ruling

Judge Brown found all nine factors in Girsh v. Jepson , 521 F.3d 153 (3d Cir. 1975), weighed in favor of approving the deal, especially those relating to the complexity, expense and duration of the litigation, reaction of the class, stage of the proceeding and risks of litigating. The class, approved by Judge Brown for purpose of the settlement, has two parts.

The first consists of individuals or entities who dealt directly with Marsh & McLennan or an affiliate in obtaining insurance brokerage or other services related to buying or renewing insurance or reinsurance between Aug. 26, 1994, and Sept. 1, 2005.

The other part ' referred to as the “conspiracy class” by one of the lead plaintiffs' counsel, Bryan Clobes of Cafferty Faucher of Philadelphia ' is made up of those who dealt with another of the dozens of broker-defendants during the same period. Clobes estimates the direct class members number around 400,000 and the conspiracy class is in the millions.

History

The litigation began in 2004 in various district courts and was consolidated in New Jersey in 2005.

On Aug. 31, 2007, Judge Brown granted a motion to dismiss the antitrust claims and followed on Sept. 28, 2007, with a dismissal of the RICO claims. He decided he would not exercise supplemental jurisdiction over state law claims.

The plaintiffs appealed the dismissal of the antitrust and RICO claims. Last June, the appeal was withdrawn as to the Marsh defendants so they could settle.

Of the roughly $19 million in fees and expenses Judge Brown approved on Tuesday, $12.2 million will go to class counsel, about 50 law firms that spent almost 420,000 hours on the case with a blended hourly rate of $378 and a lodestar of more than $158 million. They will also get $2 million for their expenses and $320,000 for incentive awards to the 32 named plaintiffs.

The other $4.5 million will go for fees and expenses in a class action pending in New York Supreme Court, In re Marsh & McLennan Contingent Commission Litigation, No. 603711/2004.

Of that amount, $4.48 million will go to legal fees and $22,000 to litigation costs. Kirby McInerney of New York, the firm handling the New York action, says it took the case on a contingent basis and spent more than 4,300 hours on it with an hourly rate of $496 and a $2.16 million lodestar. The lawyers claim they did not start to negotiate the fees until after they reached agreement on what the class would receive.

Mary Pat Gallagher is a reporter for the New Jersey Law Journal, an Incisive Media sister publication of this newsletter.