Edward Asner v. The Sag-Aftra Health Fund

JS-6 [7] 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA [11] EDWARD ASNER, et al., Case No. 2:20-cv-10914-CAS-JEMx [12] Plaintiffs, 13 CLASS ACTION vs. [14] THE SAG-AFTRA HEALTH FUND, FINAL ORDER APPROVING 15 et al., CLASS ACTION SETTLEMENT 16 Defendants. AND JUDGMENT [DKT. 158] [17] Judge: Hon. Christina A. Snyder [19] 20 On January 1, 2017, the Screen Actors Guild-Health Plan (the “SAG Health 21 Plan”) merged with the American Federation of Television and Radio Artists Health 22 Plan (the “AFTRA Health Plan”) to create the SAG-AFTRA Health Plan (the 23 “Plan”). This case arises from the aftermath of the August 2020 amendments (the 24 “Amendments”) to the Plan, which were implemented to cut costs by changing the 25 Plan’s benefit structure and eligibility requirements. As a result, many Plan 26 participants lost coverage. 27 /// 1 Plaintiffs are participants and beneficiaries of the Plan and individuals that 2 qualified for coverage under the Plan between January 1, 2017, and May 3, 2023 3 (the “Settlement Class”). On December 1, 2020, plaintiffs filed this class action 4 against the trustees of the SAG Health Plan and the SAG-AFTRA Health Plan (the 5 “Trustees”) pursuant to the Employee Retirement Income Security Act of 1974, 29 6 U.S.C. § 1001 , et seq. (“ERISA”) alleging breaches of fiduciary duties. The Trustees 7 dispute these claims. 8 On April 10, 2023, plaintiffs submitted an unopposed motion for preliminary 9 approval of class settlement along with a proposed settlement notice (the “Settlement 10 Notice”). Dkt. 127, 128-1. 11 On May 3, 2023, the Court granted plaintiffs’ motion for preliminary approval 12 of class settlement (the “Preliminary Approval Order”), approved a plan for 13 dissemination of the Settlement Notice, and set a Fairness Hearing for September 14 11, 2023. Dkt. 134. 15 On July 12, 2023, plaintiffs submitted a motion for final approval of (1) a final 16 Settlement Agreement, (2) attorneys’ fees, (3) expense reimbursement, and (4) 17 service awards for class representatives (the “Final Approval Motion”). Dkt. 141. 18 Defendants have opposed only the request for attorneys’ fees. Dkt. 149 (“Opp.”). 19 On September 11, 2023, the Court held the Fairness Hearing. Dkt. 156. The 20 Court has considered: (i) the Final Approval Motion; (ii) the extensive memoranda 21 of points and authorities submitted in support; (iii) the declarations and exhibits 22 submitted in support; (iv) defendants’ opposition to class counsel’s motion for 23 attorneys’ fees; (v) the Settlement Agreement itself; (vi) the entire record in this 24 proceeding, including but not limited to the points and authorities, declarations, and 25 exhibits submitted in support of preliminary approval of the settlement; (vii) the 26 form and manner of the Settlement Notice provided to the Settlement Class; (viii) 27 two objections to the settlement, one of which was not intended as a request to reject 1 the settlement; (ix) the arguments advanced by all objectors and the responses 2 provided by class counsel regarding each of the objections; (x) the absence of any 3 objection or response by any state attorneys general, nor insurance officials from any 4 state, after they were provided with notices required by the Class Action Fairness 5 Act of 2005, 28 U.S.C. § 1715 ; (xi) the oral presentation by both class counsel and 6 defendants’ counsel at the Fairness Hearing; (xii) the oral remarks by class member 7 Jan Hoag at the Fairness Hearing; (xiii) this Court’s observations while presiding 8 over this action and similar actions; and (xiv) the relevant law. 9 Based upon the foregoing considerations, the Court hereby ORDERS that the 10 Final Approval Motion be GRANTED on the terms set forth in this Final Approval 11 Order. 12 I. BACKGROUND. 13 A. Pre-Amendments. 14 In 2017, the SAG Health Plan and the AFTRA Health Plan merged to form 15 the Plan. Dkt. 46 at 3. 16 From 2017-2020, participants could qualify for coverage under the Plan in 17 several ways.1 Id. First, participants could receive active coverage through “Earned 18 Eligibility” i.e., by meeting certain earnings thresholds. Dkt. 46 at 4. As a general 19 matter, performers earn both “sessional earnings” (wages earned for services 20 performed on a certain day) and “residual earnings” (compensation for prior work 21 that is exhibited at a later point in time). Dkt. 46 at 3. Before the Amendments, 22 performers could count both types of earnings towards the earned-eligibility 23 threshold if they had at least $1 in sessional earnings for that year (the “Dollar 24 Sessional Rule”). Dkt. 141 at 1. [25] 26 1 These benefits were subject to change. The Plan provided that future benefits “are 27 not promised, vested or guaranteed,” and reserved the right to “reduce, modify or discontinue benefits or the qualification rules for benefits at any time.” Dkt. 46 at 5. 1 Second, participants that did not have enough earnings to meet the earned2 eligibility threshold could still qualify for coverage if they met the “Age & Service” 3 eligibility rule requirements. Dkt. 47 at 295. The Age & Service qualification 4 applied to performers age 40 and older with at least 10 retiree health credits. Id. 5 Third, participants that did not have any sessional earnings could still qualify 6 for insurance coverage secondary to Medicare if they had the requisite residual 7 earnings. Dkt. 46 at 4-5. 8 Finally, performers who were at least 65 years old (“Senior Performers”) and 9 receiving a pension (and their dependents and surviving spouses) could qualify for 10 secondary insurance coverage through “Senior Performer Coverage” if they accrued 11 a certain number of years of vested pension credit. Dkt. 43 at 51. 12 B. Post-Amendments. 13 On August 12, 2020, the Plan announced several important changes to the 14 Plan’s benefit structure and eligibility requirements, citing increases in health costs 15 and projected loss of contributions during the pandemic. Dkt. 46 at 5. 16 Some changes affected all participants, including: collapsing the two benefit 17 levels into one; requiring spouses to take their own employer’s health coverage as 18 their primary coverage; raising participant premiums; combining the medical and 19 hospital out-of-network deductibles; and eliminating the out-of-network out-of20 pocket maximum. Id. 21 Other changes affected Senior Performers specifically. First, the 22 Amendments eliminated the Dollar Sessional Rule for Senior Performers who were 23 taking pension. Dkt. 141 at 8. As a result, participants in this group could no longer 24 count residual earnings towards the earned-eligibility threshold, even though such 25 earnings were still used to calculate employer contributions. Dkt. 43 at 86; dkt. 46 26 at 6. [27] 1 Second, the Amendments replaced “Senior Performer Coverage” with a 2 newly-created Reimbursement Account Plan (the “HRA Plan”). Dkt. 46 at 6. Senior 3 Performers, and their age 65+ spouses and surviving spouses, would no longer 4 receive secondary coverage from the Plan; instead, they would receive either $240 5 or $1,140 per year from the HRA Plan to help cover the cost of obtaining 6 replacement coverage. Dkt. 141 at 3. 7 Plaintiffs allege there were additional detrimental changes, including changes 8 to the Age & Service eligibility criteria, base earnings years, and benefit periods. 9 Dkt. 43 at ¶ 89-91. 10 II. SETTLEMENT AGREEMENT 11 A. Definitions. 12 The capitalized terms used in this Final Approval Order shall have the 13 meanings and/or definitions given to them in the Settlement Agreement [Dkt. 12814 1], or if not defined therein, the meanings and/or definitions given to them in this 15 Final Approval Order. 16 B. Incorporation of Documents. 17 This Final Approval Order incorporates and makes a part hereof: 18 (a) the Settlement Agreement (including the exhibits thereto); and 19 (b) the Court’s findings and conclusions contained in its Preliminary 20 Approval Order. 21 C. Jurisdiction and Venue. 22 The Court has personal jurisdiction over the Parties and the Settlement Class 23 Members. The Court has subject matter jurisdiction over this case pursuant to 29 24 U.S.C. § 1132 (e)(1) including, without limitation, jurisdiction to approve the 25 Settlement, to settle and release all claims alleged in the action and all claims 26 released by the Settlement, to adjudicate the objections submitted to the proposed [27] 1 Settlement by Settlement Class Members, and to dismiss the case with prejudice. 2 Venue in this District is appropriate pursuant to 28 U.S.C. § 1391 . 3 D. Definition of the Class and Settlement Class Members. 4 The Settlement Class hereby certified by the Court is defined as: 5 All individuals who (i) were enrolled in health coverage under the Plan 6 at any time during the Class Period, (ii) were notified that they qualified 7 for health coverage under the Plan for any time during the Class Period, 8 and/or (iii) qualified or had qualified as a Senior Performer as of the 9 beginning of or during the Class Period, but excluding the Trustee 10 Defendants. 11 “The Plan” means the SAG-AFTRA Health Plan. The Class Period is the 12 period from January 1, 2017 through and including May 3, 2023, i.e., the date the 13 Court issued the Preliminary Approval Order. Dkt. 128-1 at ¶ 2.13; Dkt. 134. 14 “Senior Performer” means an individual who meets the definition of “Senior 15 Performer” under Article I, Section 1.1(v) of the HRA Plan. Dkt. 128-1 ex. 8. The 16 HRA Plan defines “Senior Performer” as any individual who satisfies the following 17 eligibility requirements: 18 (1) A former participant in the Active Plan who has satisfied the following 19 requirements as of their attainment of age 65 or thereafter: 20 (i) Completed 20 Retiree Health Credits; and 21 (ii) Commenced receipt of a pension from the SAG-Producers Pension 22 Plan or the AFTRA Retirement Fund. 23 (2) A former participant in the SAG-Producers Health Plan or the AFTRA 24 Health Plan who has satisfied the following requirements as of their 25 attainment of age 65 or thereafter, and who, as of January 1, 2017: 26 (i) had attained age 55; [27] 1 (ii) commenced receipt of a pension from the SAG-Producers Pension 2 Plan or AFTRA Retirement Fund; and 3 (iii) had at least 15 qualifying years under the AFTRA Health Plan or 4 at least 15 pension credits under the SAG-Producers Pension Plan. 5 (3) A former participant in the AFTRA Health Plan who has satisfied the 6 following requirements as of their attainment of age 65: 7 (i) was born on or before January 1, 1943; and 8 (ii) has at least 10 qualifying years under the AFTRA Health Plan. 9 (4) A former participant in the AFTRA Health Plan who has satisfied the 10 following requirements as of their attainment of age 65: 11 (i) was born before December 1, 1937 and, as of December 1, 1992; 12 (ii) was vested in a regular annuity based on at least 10 years of credit 13 under the AFTRA Retirement Plan (including at least five base years in 14 which covered earnings were at least $2,000 or more); or 15 (iii) met the requirements in effect at that time for retiree coverage 16 under the AFTRA Health Plan. 17 (5) A former participant in the SAG-Producers Health Plan who has satisfied 18 the following requirements as of their attainment of age 65: 19 (i) had at least 10 pension credits under the SAG-Producers Pension 20 Plan as of December 31, 2001; and 21 (ii) was at least age 55 as of December 31, 2002. 22 (6) An Occupational Disability Pensioner under the SAG-Producers Pension 23 Plan who has at least 15 Retiree Health Credits earned under the SAG-AFTRA 24 Health Plan and/or the SAG-Producers Health Plan. Occupational Disability 25 Pensioners may not count any AFTRA Health Plan qualifying years as Retiree 26 Health Credits for this purpose. 27 /// 1 E. Settlement Terms. 2 Plaintiffs have submitted an unopposed motion for final approval of class 3 settlement. The proposed settlement has several parts. 4 First, the settlement creates a $15 million cash fund (the “Gross Settlement 5 Fund”) to provide immediate compensation to participants age 65+, as well as their 6 age 65+ spouses and surviving spouses, who lost coverage in 2021 and 2022 because 7 of the Amendments. The Plan and the Defendants’ insurers will each pay $7.5 8 million into this fund, from which attorneys’ fees and service awards will be 9 deducted. The remainder will be divided among four groups: 10 1. $4,400 for Senior Performers and their age 65+ spouses who lost active 11 coverage in 2021 due to the elimination of the Dollar Sessional Rule; 12 2. $2,200 for Senior Performers and their age 65+ spouses who lost active 13 coverage in 2021 due to the elimination of the Age & Service rules and/or 14 raising of the earnings eligibility thresholds; 15 3. $1,100 for Senior Performers and their 65+ spouses who first lost active 16 coverage in 2022 due to the Amendments; and 17 4. $400 for participants age 65+ who lost secondary coverage in 2021 due to 18 the Amendments. 19 Eligible participants will not need to submit a claim; instead, payments will 20 be automatically allocated into eligible class members’ HRA accounts or paid via 21 check. Dkt. 128-1 at 90. 22 Second, the Plan will provide up to $700,000 in annual HRA allocations to 23 the accounts of qualifying members who became ineligible for coverage because of 24 the elimination of the Dollar Sessional Rule. The aggregate amount of HRA 25 allocations in each year will be equal to one-half of the aggregate contributions made 26 to the Plan with respect to the qualifying members’ residual earnings up to a cap of 27 $125,000 in earnings. Dkt. 151-1. While the actual amount disbursed will vary each 1 year, the parties predict that annual payments will range from approximately $438 2 to $4375 per qualifying performer. Dkt. 141 at 16. In 2023, total payments could 3 potentially reach over $625,000 with an average payment of $1,600 per qualifying 4 participant. Id. However, it appears likely, based on the submissions of the parties, 5 that the total payments in 2023 will be substantially less than $625,000. 6 The settlement also provides for other non-monetary relief, including 7 mandatory disclosures regarding proposed changes to the Plan, engagement with a 8 cost consultant, additional time for seniors to use sessional earnings to qualify for 9 coverage, and other enhanced disclosures. Dkt. 141 at 17-18. 10 F. Objections to the Proposed Settlement. 11 Two class members filed letters regarding the settlement. Dkt. 155-1. In the 12 letter submitted by Jan Hoag (the “Hoag Letter”), Ms. Hoag raised concerns over 13 whether she would receive a payment of $4,400 or $2,200 under the settlement 14 terms. Id. Additionally, she provided a list of recommendations for changes that 15 defendants could have implemented to improve the financial health of the Plan. Id. 16 After speaking with plaintiffs’ counsel, Ms. Hoag expressed that “it was not her 17 intent[] to ask the Court to reject the Settlement.” Dkt. 155 at 2. Therefore, the 18 Court does not construe the Hoag Letter as an objection to the settlement. 19 Class member Jimmy Hawkins filed two letters. In his first letter (“Hawkins 20 Letter #1”), Mr. Hawkins argues that the settlement should include “an exception 21 for those members who waived their residuals back in 1960,” and that these members 22 should continue to receive lifetime coverage under the Plan. Dkt. 155-2. In 23 response, plaintiffs’ counsel noted that this class action only alleged breach of 24 fiduciary claims rather than breach of contract, and that the defendants had the 25 contractual right to modify the Plan requirements at any time. Dkt. 155 at 8. In his 26 second letter (“Hawkins Letter #2”), Mr. Hawkins re-iterated his request for a 27 carveout for the “1960 membership class.” Dkt. 157-1 ex. 1. Plaintiffs’ counsel 1 filed an additional response noting that “[w]hile Plaintiffs and Class Counsel 2 appreciate the sacrifices made by Mr. Hawkins and many other class members, both 3 before and after the 1960 SAG strike . . . there is no basis to carve out or provide 4 special treatment to SAG performers who worked sessional before 1960.” Dkt. 1575 1. The Court has noted Mr. Hawkins’ limited objection in considering the fairness 6 and adequacy of the proposed settlement. 7 G. Notices Pursuant to 28 U.S.C. § 1715 . 8 The Court finds that, based on the requirements of the settlement agreement 9 and the declarations submitted in support of final settlement approval, all notices and 10 requirements of the Class Action Fairness Act of 2005, 28 U.S.C. § 1715 , have been 11 satisfied. More than ninety (90) days have passed since the service of the foregoing 12 notices. Dkt. 140. No written objection or response to the Settlement was filed by 13 any federal or state official, including any recipient of the foregoing notices. Id. No 14 federal or state official, including any recipient of the foregoing notices, appeared or 15 requested to appear at the Fairness Hearing. 16 H. Legal Standard. 17 The Court may only approve a settlement class after finding the settlement is 18 “fair, reasonable, and adequate.” Fed. R. Civ. Pro. 23(e)(2). In doing so, the Court 19 must consider whether: 20 (A) the class representatives and class counsel have adequately represented 21 the class; 22 (B) the proposal was negotiated at arm’s length; 23 (C) the relief provided for the class is adequate, taking into account: 24 (i) the costs, risks, and delay of trial and appeal; 25 (ii) the effectiveness of any proposed method of distributing relief to 26 the class, including the method of processing class-member claims; [27] 1 (iii) the terms of any proposed award of attorney’s fees, including 2 timing of payment; and 3 (iv) any agreement required to be identified under Rule 23(e)(3); and 4 (D) the proposal treats class members equitably relative to each other. [5] Id. 6 “The purpose of the [modern] Rule 23(e)(2) is [to] establish a consistent set 7 of approval factors to be applied uniformly in every circuit, without displacing the 8 various lists of additional approval factors the circuit courts have created over the 9 past several decades.” Zamora Jordan v. Nationstar Mortg., LLC, No. 2:14-CV10 0175-TOR, 2019 WL 1966112 , at *2 (E.D. Wash. May 2, 2019). Factors that the 11 Ninth Circuit has typically considered include (1) the strength of plaintiffs’ case; (2) 12 the risk, expense, complexity, and likely duration of further litigation; (3) the risk of 13 maintaining class action status throughout the trial; (4) the amount offered in 14 settlement; (5) the extent of discovery completed and the stage of the proceedings; 15 and (6) the experience and views of counsel. Hanlon v. Chrysler Corp., 150 F.3d 16 1011, 1026 (9th Cir. 1998); Churchill Vill., L.L.C. v. Gen. Elec., 361 F.3d 566 , 575 17 (9th Cir. 2004). 18 I. Findings and Conclusions. 19 The Court finds that fair and adequate notice of class members’ right to object 20 to the settlement and to appear at the Fairness Hearing in support of such an objection 21 has been provided in the form and manner required by the Settlement Agreement, 22 the Court’s preliminary approval of class settlement, the requirements of due 23 process, Rule 23, and any other applicable law. In particular, the Court finds that 24 the Class Notice provided the best practicable notice of Settlement Class Members’ 25 rights and options and of the binding effect of the orders and Judgment in this case, 26 whether favorable or unfavorable, on all Settlement Class Members. The Settlement 27 Notice was posted on the Settlement Website and either mailed or emailed to Class 1 Members on July 12, 2023, as directed by the Court’s Preliminary Approval Order. 2 Dkt. 128-1; Dkt 134 ¶ 8. 3 The absence of objections to the Settlement by almost all class members 4 strongly supports approval. See, e.g., Feist v. Petco Animal Supplies, Inc., No. 3:165 cv-01369-H-MSB, 2018 WL 6040801 , at *5 (S.D. Cal. Nov. 16, 2018) (“[T]he 6 absence of a large number of objections to a proposed class action settlement raises 7 a strong presumption that the terms of a proposed class settlement action are 8 favorable to the class members.”) (quoting Nat’l Rural Telecomms. Coop. v. 9 DIRECTV, Inc., 221 F.R.D. 523, 529 (C.D. Cal. 2004)); In re Omnivision Techs., 10 Inc., 559 F. Supp. 2d 1036, 1043 (N.D. Cal. 2008) (same; three objections out of 11 approximately 57,000 class members). In response to the Class Notice, objections 12 were filed by two Class Members. One of the objectors, Ms. Hoag, subsequently 13 clarified that “it was not her intent[] to ask the Court to reject the Settlement.” Dkt. 14 155 at 2. The objections submitted by Mr. Hawkins did not argue that the settlement 15 was unfair to the class as a whole but only that there should be a carveout for class 16 members who originally waived their residuals in 1960. As class counsel noted in 17 response, the record does not reveal a legal basis for creating such a carveout. Thus, 18 this objection is overruled. 19 Based on its familiarity with the nature of the case, the record, the procedural 20 history, the parties, and the work of their counsel, the Court finds that the Settlement 21 was not the product of collusion and lacks any indicia of unfairness. The Court finds 22 the Settlement is fair, reasonable, and adequate to the Settlement Class considering 23 the complexity, expense, and likely duration of the case, and the risks involved in 24 establishing liability, damages, and in maintaining this case through trial and appeal. 25 The Court finds that the Settlement represents a fair and complete resolution of all 26 claims asserted in a representative capacity on behalf of the class and will fully and 27 finally resolve all such claims. 1 The Settlement delivers adequate relief by providing substantial cash 2 payments and other monetary benefits to Settlement Class Members. Pursuant to 3 the Settlement Agreement, the Plan agreed to create a $15 million Gross Settlement 4 Fund for Senior Performers that lost coverage because of the Amendments, and to 5 provide up to $700,000 in annual HRA allocations to qualifying class members over 6 the next eight years. The monetary relief will be distributed automatically to the 7 Settlement Class via either HRA account or check; Settlement Class Members are 8 not required to fill out a claim form to receive benefits. 9 In addition to all the foregoing monetary settlement benefits, the Settlement 10 also includes prospective relief that will benefit Settlement Class Members now and 11 into the future, which is set forth in Part 11 of the Settlement Agreement. Such relief 12 includes mandatory disclosure requirements, mandated retention of a Cost 13 Consultant, amendments to the Plan regarding the time period of sessional earnings 14 used to calculate coverage, and notice of Additional Credited Earnings 15 Opportunities. 16 The Court has considered the realistic range of outcomes in this matter, 17 including the amount Plaintiffs might receive if they prevailed at trial, the strength 18 and weaknesses of the case, the novelty and number of the complex legal issues 19 involved, the risk that Plaintiffs would receive less than the relief afforded by the 20 Settlement Agreement or recover nothing at trial, and the risk of a reversal of any 21 judgment. The Settlement is well within a range of reasonableness, even when 22 considering the value of only the monetary relief recovered on behalf of the 23 Settlement Class and even without considering the non-monetary benefits afforded 24 to the Settlement Class. 25 Before reaching the Settlement, Plaintiffs and Defendants fully and 26 vigorously litigated their claims and defenses in extensive proceedings before this [27] 1 Court, including Defendant’s motion to dismiss and Defendant’s motion for 2 interlocutory appeal. 3 The Settlement Class is and was at all times adequately represented by the 4 Class Representatives and Settlement class counsel, including in litigating this case 5 and in entering into and implementing the Settlement, and have satisfied the 6 requirements of Rule 23 and applicable law. Class counsel have demonstrated that 7 they have competently prosecuted this action on behalf of the Settlement Class. 8 Class counsel are experienced class action lawyers with specialized knowledge in 9 complex class action litigation, fully capable of properly assessing the risks, 10 expenses, and duration of continued litigation, including at trial and on appeal. Class 11 counsel submit that the Settlement is fair, reasonable, and adequate for the 12 Settlement Class Members. 13 The Settlement also treats class members equitably relative to each other. The 14 Gross Settlement Fund, net of attorneys’ fees and administrative expenses, will be 15 distributed to Settlement Class Members in a manner that generally corresponds to 16 the injuries resulting from the Amendments. Specifically, funds will be distributed 17 based on the timing and amount of lost coverage suffered, with the greatest award 18 going to Senior Performers who lost active coverage with relatively little warning. 19 Additionally, HRA allocations will be apportioned among qualifying Senior 20 Performers based on the relative amount of their residual earnings reported to the 21 Plan. 22 Defendants continue to deny all allegations of wrongdoing and deny all 23 liability for the allegations and claims made in this case. Defendants maintain that 24 they are without fault or liability but agree that this settlement avoids the burdens 25 and costs of litigation and prevents interference with the orderly operation of the 26 Plan. Dkt. 128-1 ¶ 1.14. [27] 1 The Court notes that the Settlement only provides monetary relief to Senior 2 Performers and their family members; it does not provide any monetary relief to 3 non-Senior Performers. This distribution is nevertheless equitable. The record 4 demonstrates that, while the Amendments adversely impacted all class members, 5 Senior Performers were particularly affected. For example, the elimination of the 6 Dollar Sessional Rule and Senior Performer Coverage uniquely impacted Senior 7 Performers. As a result, it is fair that Senior Performers will receive most of the 8 monetary relief provided by the Settlement. The absence of any objections to the 9 Settlement by non-Senior Performers is also a factor supporting the fairness of the 10 Settlement. 11 J. Final Settlement Approval and Binding Effect. 12 The terms and provisions of the Settlement have been entered into in good 13 faith, and are fair, reasonable and adequate as to, and in the best interests of, the 14 Parties and the Settlement Class Members, and in full compliance with all applicable 15 requirements of the Federal Rules of Civil Procedure, the United States Constitution 16 (including the Due Process Clause) and the California Constitution. Therefore, the 17 Settlement is approved. The Settlement, this Final Approval Order and the Judgment 18 shall be forever binding on the Plaintiffs and all other Settlement Class Members, as 19 well as their heirs, beneficiaries, beneficiaries designated under the Policies, 20 conservators, personal representatives, executors and administrators, predecessors, 21 successors and assigns, and shall have res judicata and other preclusive effect in all 22 pending and future claims, lawsuits or other proceedings maintained by or on behalf 23 of any such persons, to the fullest extent allowed by law. 24 K. Releases and Covenants Not to Sue. 25 The Release set forth in Paragraphs 2.53, 12.1-12.9 of the Settlement 26 Agreement is expressly incorporated herein in all respects and is effective as of the 27 effective date of Settlement. The Class Members are deemed to have fully, finally, 1 and forever settled, released, relinquished, waived, and discharged all Released 2 Parties from the Released Claims (as those terms are defined in the Settlement 3 Agreement), regardless of whether or not such class members receive a monetary 4 benefit from the Settlement, filed an objection to the Settlement or to any application 5 by Class Counsel for an award of Attorneys’ Fees and Costs or Service Awards, and 6 whether or not the objections have been allowed. The Plan is similarly deemed to 7 have discharged all Released Parties from the Released claims. Class Counsel and 8 Class Members are deemed to have waived the Release Claims, even if they 9 hereafter discover facts in addition to or different from those that they know or 10 believe to be true with respect to the Released Claims. 11 Defendants and each Class Member are also deemed to have fully, finally, and 12 forever settled, released, relinquished, waived, and discharged any claims against 13 the Class Representatives that arise out of the institution, prosecution, settlement or 14 dismissal of this action. 15 Each Class Member is also deemed to have fully, finally, and forever settled, 16 released, relinquished, waived, and discharged any claims against the Released 17 Parties, Defense Counsel, and Class Counsel that arise from the allocation of the 18 Gross Settlement Amount or Net Settlement Amount (including with respect to any 19 tax liability or penalties). 20 The Class Members, on behalf of themselves and their respective heirs, 21 beneficiaries, executors, administrators, estates, past and present partners, officers, 22 directors, agents, attorneys, predecessors, successors, and assigns, on their own 23 behalves and on behalf of the Plan and the Plan, expressly agree that they, acting 24 individually or together, or in combination with others, shall not sue or seek to 25 institute, maintain, prosecute, argue, or assert in any action or proceeding, any cause 26 of action, demand, or claim on the basis of, connected with, or arising out of any of [27] 1 the Released Claims. Nothing herein shall preclude any action to enforce the terms 2 of this Settlement Agreement. 3 The Settling Parties and all other Class Members expressly waive to the fullest 4 extent of the law: (i) the provisions, rights and benefits of Section 1542 of the 5 California Civil Code, which provides that “A general release does not extend to 6 claims that the creditor or releasing party does not know or suspect to exist in his or 7 her favor at the time of executing the release and that, if known by him or her, would 8 have materially affected his or her settlement with the debtor or released party”; and 9 (ii) the provisions, rights and benefits of any similar statute or common law of any 10 other jurisdiction that may be, or may be asserted to be, applicable. 11 L. Permanent Injunction. 12 All Settlement Class Members are permanently barred and enjoined from 13 asserting, commencing, prosecuting, or continuing any of the Released Claims, as 14 set forth in the Settlement Agreement. 15 M. Enforcement of Settlement. 16 Nothing in this Final Approval Order shall preclude any action to enforce the 17 Settlement or interpret the terms of the Settlement Agreement. Any action which 18 seeks to enforce or interpret the terms of the Settlement, or which seeks to interpret 19 or avoid in any way any legal consequences of or the effect of the Settlement 20 Agreement, the Preliminary Approval Order, this Final Approval Order, the 21 Permanent Injunction contained in this Final Approval Order, or the Release 22 contained in the Settlement Agreement shall be brought solely in this Court. 23 III. ATTORNEYS’ FEES. 24 The parties disagree as to the appropriate amount of attorneys’ fees to award 25 plaintiffs’ counsel. Plaintiffs have requested $6,866,667 in attorneys’ fees. Dkt. 141 26 at 4. Defendants object and request that the court “award lower, more reasonable 27 fees.” See Dkt. 149 at 19. Plaintiffs do not contest defendants’ standing to do so. 1 A. Legal Standard. 2 District courts must ensure that attorneys’ fees awards in class action cases 3 are reasonable. Lowery v. Rhapsody Int’l, Inc., 75 F.4th 985, 991 (9th Cir. 2023). 4 In the Ninth Circuit, there are “two ways to determine attorneys’ fees awards in class 5 actions: (1) the ‘lodestar’ method and (2) the ‘percentage-of-recovery’ method.” Id. 6 at 990. “[T]he choice between lodestar and percentage calculation depends on the 7 circumstances, but . . . ‘either method may . . . have its place in determining what 8 would be reasonable compensation.’” Six (6) Mexican Workers v. Arizona Citrus 9 Growers, 904 F.2d 1301, 1311 (9th Cir. 1990) (third alteration in original) (quoting 10 Paul, Johnson, Alston & Hunt v. Graulty, 886 F.2d 268, 272 (9th Cir. 1989)). 11 Having reviewed the history and facts of this case, the Court finds that the 12 percentage-of-recovery method is appropriate.2 13 B. Calculating Attorneys’ Fees. 14 The parties disagree on two issues regarding the percentage-of-recovery 15 approach: (1) the value of the total recovery to the class, and (2) the appropriate 16 percentage to use. 17 On the first issue, plaintiffs argue that fees should be calculated based on a 18 total estimated maximum recovery of $20.6 million. Dkt. 141 at 23. This figure is 19 the sum of the $15 million in compensation from the Gross Settlement Fund and the 20 maximum annual HRA payments of $700,000 over the next eight years, totaling $5.6 21 million. 22 On the other hand, defendants argue that the amount of total recovery that 23 should be counted is only $7.5 million. In reaching this figure, they count only the 24 $7.5 million paid into the $15 million cash fund by defendants’ insurers, and they 25 exclude the HRA payments. Dkt 149 at 9. In support, defendants argue that only [27] 2 The Court notes that neither party has argued for the lodestar method. 1 externally contributed money counts as part of the common fund, as opposed to 2 internal reallocation of Plan assets. Dkt. 149 at 9. In addition, they argue that the 3 HRA payments cannot be counted as part of the common fund because they are 4 “inexact” and cannot be “accurately ascertained.” Dkt. 149 at 8. 5 The Court finds that the entire $15 million from the cash fund should be 6 included for the purposes of calculating attorneys’ fees. “The touchstone for 7 determining the reasonableness of attorneys’ fees in a class action is the benefit to 8 the class.” Lowery, 75 F.4th at 987 . Defendants do not cite any authority that limits 9 the calculation of such benefit to only money that is paid into a class fund from 10 external sources. While some of the funds here may come from pre-existing Plan 11 assets, the settlement still benefits the class by reallocating funds to the class 12 members; that is, pursuant to the Settlement, class members would be getting funds 13 (between $400-$4,400) that they would not otherwise receive now. At the hearing, 14 class counsel confirmed that, absent the Settlement, qualifying Senior Performers 15 would not otherwise receive any portion of the $4,400, $2,200, $1,100, or $400 16 allocated to them by the Settlement. The immediate disbursement of money to class 17 members is a benefit to them, regardless of whether the money is externally or 18 internally contributed. 19 The Court also finds that, for the purposes of calculating attorneys’ fees, class 20 recovery should include an award based on $450,000 from the future HRA 21 allocations. 22 Pursuant to the Settlement, class members will not need to submit claims to 23 receive the HRA payments; rather, payments “will be apportioned among Qualifying 24 Senior Performers based on the relative amount of their residual earnings reported 25 to the Plan (up to $125,000) and processed in the applicable October 1 through 26 September 30 Base Earnings Period.” Dkt. 128-1 ¶ 10.2.2. “[A]ny Class Members 27 who has enrolled in an HRA account by May 1, 2024” may qualify for an allocation. 1 Id. ¶ 10.2.4. Plaintiffs emphasize that “there will be no need to fill out claim forms 2 or submit a claim.” Dkt. 141 at 27. 3 Defendants argue that the HRA allocations should be disregarded because 4 they are not “sum certain.” Dkt. 149 at 8. However, even if class members do not 5 end up receiving the entirety of the $5.6 million in allocations over the next eight 6 years, it appears that they will receive some amount of the potential allocation. 7 Defendants concede that, based on current enrollment numbers, class members will 8 receive around $450,000 in 2023 alone. Dkt 149 at 4. At the high end, members 9 could receive up to $625,000, with average payments of over $1,600 per qualifying 10 member. Dkt. 150 at 5; Dkt. 141 at 3. There is no reason to believe that HRA 11 allocations will drop to zero after 2023 and such benefit to the class should be fairly 12 considered when calculating attorneys’ fees. 13 The cases that defendants cite are inapposite. They rely on cases addressing 14 “claims-made” settlements. However, the Settlement does not provide that the HRA 15 allocations will only be made to class members who submit claims. Claims-made 16 settlements are subject to particular scrutiny because they often create “glaring 17 disparit[ies] between the amount [actually] paid to the class[] and the hypothetical 18 settlement cap.” That is why “Courts[] consider the actual or realistically anticipated 19 benefit to the class—not the maximum or hypothetical amount—in assessing the 20 value of a [claims-made] class action settlement.” Lowery, 75 F.4th at 992 . But 21 here, as discussed above, a substantial portion of the HRA allocations will ultimately 22 be paid out to class members who need not submit claims to receive their allocated 23 amounts. Contra Lowery, 75 F.4th at 993 (involving a claims-made settlement with 24 a theoretical $20 million cap where only $52,841.05 was actually paid out).3 [25] 26 3 Lowery is additionally distinguishable because it deals with the lodestar method 27 for calculating attorneys’ fees, rather than the percentage-of-recovery method. 75 1 The aggregate amount of annual additional allocations “will be equal to one2 half of the aggregate contributions made to the Plan with respect to the Qualifying 3 Senior Performers’ residual earnings reported to the Plan” and the annual allocations 4 “will be apportioned among Qualifying Senior Performers based on the relative 5 amount of their residual earnings . . . (up to $125,000).” Dkt. 128-1 ¶ 10.2.2. 6 However, at this time, it is impossible to predict what future residual earnings will 7 be. Both parties conceded at the Fairness Hearing that they do not have projections 8 for the actual amount of HRA payments that will be distributed in each year after 9 2024. As a result, it cannot be said that the Class Members have ascertainable claims 10 at this time. Rather, the Plan has agreed to pay yet-unascertainable claims to class 11 members up to a fixed ceiling of $700,000 per year. The only ascertainable amounts 12 are the payments in 2023, which defendants concede will be around $450,000 13 “[b]ased on the number of Senior Performers who have thus far enrolled in the HRA 14 Plan.” Dkt. 149-1 ¶ 7. Further, with respect to any future HRA allocations, class 15 counsel have not provided any estimate of the present discounted value of these 16 payments. Thus, for purposes of awarding fees, only the $450,000 estimated 17 payment will be considered.4 18 /// 19 /// [20] 21 F.4th at 991. Defendants’ other cases are also distinguishable. In Staton v. Boeing 22 Co., the court only addressed the difficulties in valuing injunctive relief, not a 23 hypothetical settlement cap. In In re Apple Inc. Device Performance Litigation, 24 plaintiffs’ counsel only requested attorneys’ fees based on the lower bound of the 25 settlement fund and not the hypothetical upper bound. No. 5:18-MD-02827-EJD, [26] 2021 WL 1022866 , at *6 (N.D. Cal. Mar. 17, 2021). 27 4 At the Fairness Hearing, class counsel rejected the Court’s proposal that fees be paid out over time based on the actual HRA payments disbursed in each year. 1 On the second issue, regarding the appropriate percentage for calculating 2 attorneys’ fees, the Court finds that 25% of the common fund is an appropriate 3 attorneys’ fee. 4 In the Ninth Circuit, 25% of a common fund is considered a presumptively 5 reasonable amount of attorneys’ fees when using the percentage-of-recovery 6 method. See, e.g., In re Bluetooth, 654 F.3d at 942 (“[C]ourts typically calculate 7 25% of the fund as the ‘benchmark’ for a reasonable fee award, providing adequate 8 explanation in the record of any ‘special circumstances’ justifying a departure.”); 9 Six (6) Mexican Workers, 904 F.2d at 1311 (“[W]e established 25 percent of the 10 fund as the ‘benchmark’ award that should be given in common fund cases.”). That 11 said, “[t]he 25% benchmark rate, although a starting point for analysis, may be 12 inappropriate in some cases.” Vizcaino, 290 F.3d at 1048. 13 In determining whether a deviation from the 25% benchmark is warranted, 14 courts frequently consider the Vizcaino factors: (1) the extent to which class counsel 15 achieved exceptional results for the class; (2) whether the case was risky for class 16 counsel; (3) whether counsel’s performance generated benefits beyond the cash 17 settlement fund; (4) the market rate for the particular field of law; (5) the burdens 18 class counsel experienced while litigating the case; (6) and whether the case was 19 handled on a contingency basis. In re Optical Disk Drive Prod. Antitrust Litig., 959 20 F.3d 922, 930 (9th Cir. 2020) (citing Vizcaino, 290 F.3d at 1048-50). 21 Taken altogether, the Vizcaino factors do not justify an upward deviation from 22 the 25% benchmark in this case. 23 Factor one, exceptional results, does not heavily favor an upward deviation. 24 The result here is mixed. On the one hand, plaintiffs’ counsel secured a substantial 25 benefit to the class that this Court has valued, for present purposes, at $15,450,000. 26 Defendants argue that this is just a “small fraction” of the $200 million that plaintiffs 27 initially set out to recover. Dkt. 149 at 16. They are mistaken. In evaluating the 1 quality of a settlement amount, courts compare the value of the settlement against 2 the potential damages that would have been recoverable at trial, not the damages 3 plaintiffs sought in their initial pleadings. See Linney v. Cellular Alaska P’ship, 151 4 F.3d 1234, 1242 (9th Cir. 1998) (concluding that a settlement was “fair, adequate, 5 and reasonable” in light of the “significant” risks of going to trial); Churchill Vill., 6 L.L.C. v. Gen. Elec., 361 F.3d 566 , 576 (9th Cir. 2004) (emphasis added) 7 (concluding there was ample evidence that a settlement was fair because “recovering 8 more than the settlement[] at trial would be difficult”); Marshall v. Northrop 9 Grumman Corp., No. 16-CV-6794 AB (JCX), 2020 WL 5668935 , at *2 (C.D. Cal. 10 Sept. 18, 2020) (emphasis added) (noting that “the settlement fund represents 11 approximately 29% of Plaintiffs’ claimed damages at trial”); In re MacBook 12 Keyboard Litig., No. 5:18-CV-02813-EJD, 2023 WL 3688452 , at *9 (N.D. Cal. May 13 25, 2023) (emphasis added) (finding that a settlement amount was satisfactory 14 because it represented “approximately 9% to 28% of the total estimated damages at 15 trial”); Carlin v. DairyAmerica, Inc., 380 F. Supp. 3d 998, 1011 (E.D. Cal. 2019) 16 (emphasis added) (“To determine whether th[e] settlement amount is reasonable, the 17 Court must consider the amount obtained in recovery against the estimated value of 18 the class claims if successfully litigated.”) 19 Here, plaintiffs’ counsel was able to secure a substantial settlement for the 20 class despite their uncertain odds at trial. Plaintiffs would have faced various 21 challenges in the event this case continued. Subsequent litigation would likely have 22 involved re-litigation of defendants’ “settlor” function defense, a lengthy and 23 uncertain “battle of the experts,” and a serious dispute as to whether evidence of a 24 prudent decision-making process would insulate defendants from liability. Dkt. 141 25 at 34. 26 /// 27 /// 1 On the other hand, while Class Members certainly benefit from the $15 2 million Gross Settlement Fund, they benefit to varying degrees. In particular, Class 3 Members who are not Senior Performers receive no monetary benefit. 4 Factor two only slightly favors an upward deviation, as it is unclear how risky 5 this case was. As plaintiffs’ counsel argue, nearly a dozen other firms declined to 6 litigate this case before they came on the scene. Dkt. 141 at 5. However, defendants 7 argue that plaintiffs should not be rewarded for bringing “exceedingly weak claims.” 8 Dkt. 149 at 12. As a result, the Court does not give this factor significant weight. 9 Factor three, non-monetary benefits, does not clearly favor deviation either. 10 While this settlement did generate benefits beyond the Gross Settlement Fund, the 11 parties dispute the value of such benefits. Plaintiffs explain that the mandatory 12 disclosure obligations are “critical” because they help union negotiators achieve 13 better results and decrease the likelihood of future adverse changes to the Plan. Dkt. 14 141 at 17. On the other hand, defendants characterize these benefits as “token 15 administrative changes that will be largely inconsequential.” Dkt. 148 at 12. At this 16 juncture, it is difficult to predict whether the disclosure obligations and consulting 17 requirements will generate substantially better results for class members. Given this 18 uncertainty, the Court does not assign factor three significant weight. 19 Factor four, the market rate for comparable cases, only slightly favors 20 deviation. Plaintiffs cite numerous ERISA class actions where courts have awarded 21 a one-third fee. See, e.g., Marshall v. Northrop Grumman Corp., No. 16-CV-6794 22 AB (JCX), 2020 WL 5668935 , at *2-9 (C.D. Cal. Sept. 18, 2020) (awarding a one 23 third fee in an ERISA class action for obtaining 29% gross recovery of potential 24 damages, which was described as “an exceptional result on behalf of the Class”); 25 Waldbuesser v. Northrop Grumman Corp., No. CV 06-6213-AB (JCX), 2017 WL 26 9614818, at *3 (C.D. Cal. Oct. 24, 2017) (awarding a one-third fee in an ERISA 27 class action for achieving an “exceptional result”). However, defendants argue that 1 court usually award fees of only 20-30% for common funds valued at less than $50 2 million. Vizcaino, 290 F.3d at 1050. Here, the settlement result was more mixed 3 when compared to other ERISA class actions due to the limited benefit received by 4 non-Senior Performer class members. As a result, the cases that plaintiffs cite are 5 not directly on point. 6 Factor five, the burdens of litigating the case, also weighs against deviation. 7 Defendants argue that class counsel spent less time, money, and resources on this 8 case relative to other cases where courts have granted an upward deviation from the 9 25% benchmark. Marshall, 2020 WL 566893 , at *3, *9 (awarding a one-third fee 10 because the case settled “approximately fourteen minutes before trial,” meaning 11 counsel was “fully prepared for trial” and had to “devote enormous efforts and 12 resources to this matter”). In response, plaintiffs argue that they spent significant 13 amounts of time and resources on this case and contend they should not be punished 14 for resolving this case in an efficient manner. Dkt. 150 at 17-18. While plaintiffs 15 certainly should not be punished for efficiency, it is also true that they incurred less 16 costs relative to the attorneys in other cases where a higher fee was granted. 17 Finally, factor six slightly favors an upward adjustment because plaintiffs’ 18 counsel took this case on contingency. 19 The Court finds that, altogether, the Vizcaino factors do not justify an upward 20 adjustment from the 25% benchmark in this case. Correspondingly, plaintiffs’ 21 counsel should be awarded 25% of the $15,450,000 benefit generated for the class, 22 for a total of $3,862,500 in attorneys’ fees. 23 C. Lodestar Check. 24 A lodestar cross-check confirms that $3,862,500 is a reasonable award. To 25 guard against an unreasonable result, the Ninth Circuit encourages district courts to 26 “cross-check[] their calculations against a second method.” In re Bluetooth, 654 F.3d 27 at 944; see also Vizcaino v. Microsoft Corp., 290 F.3d 1043 , 1050–51 (9th Cir. 2002) 1 (applying a lodestar cross-check to ensure the percentage-of-recovery method 2 yielded a reasonable result). 3 Here, plaintiffs’ counsel calculated their collective lodestar to be $3.8 million. 4 Dkt. 141 at 38. In support, counsel submitted summary charts listing the firms that 5 worked on this case, the relevant attorneys, their hours, and their hourly rates. Dkt. 6 142-2; Dkt. 12-3. Defendants argue that the $3.8 million lodestar figure is inflated 7 because plaintiffs’ summary charts were not sufficiently detailed and showed heavy 8 reliance on partner time. Dkt. 149 at 15-18. Plaintiffs respond by noting that their 9 summary charts breakdown time spent working on specific filings, that their rates 10 have been approved by other courts, and that their lodestar figure is comparable to 11 defense counsel’s fees of nearly $5 million. Dkt. 150 at 19-22. Having considered 12 the arguments presented by both parties, the Court finds that its reported lodestar of 13 $3.8 million supports the reasonableness of a 25% fee award. 14 IV. EXPENSE REIMBURSEMENT. 15 The Court hereby grants class counsel’s request for reimbursement of 16 litigation expenses in the amount of $50,954.13, to be deducted from the $7.5 million 17 paid by the Plan’s fiduciary liability insurers. 18 V. SERVICE AWARDS. 19 The Court hereby awards service awards to the Class Representatives in the 20 amount of $5,000 each, to be deducted from class counsel’s attorneys’ fees and not 21 from the Gross Settlement Fund, as provided in the Settlement Agreement. 22 Based on the declarations of class counsel submitted in support of final 23 settlement approval, Plaintiffs have actively participated and assisted Class Counsel 24 in this litigation for the substantial benefit of the Settlement Class despite facing 25 significant personal limitations. These service awards are approved to compensate 26 the Plaintiffs for the burdens of their active involvement in this litigation and their [27] 1 commitment and effort on behalf of the Class. The service award payments will be 2 made within 14 days after the Final Settlement Date. 3 VI. RETENTION OF JURISDICTION. 4 The Court has jurisdiction to enter this Final Approval Order and the Final 5 Judgment. Without in any way affecting the finality of this Final Approval Order or 6 the Final Judgment, for the benefit of the Settlement Class and defendants, and to 7 protect this Court’s jurisdiction, the Court expressly retains continuing jurisdiction 8 as to all matters relating to the Settlement, including but not limited to any 9 modification, interpretation, administration, implementation, effectuation, and 10 enforcement of the Settlement, the administration of the Settlement and Settlement 11 Relief, including notices, payments, and benefits thereunder, the Class Notice and 12 sufficiency thereof, any objection to the Settlement, the adequacy of representation 13 by class counsel and/or the class representatives, the amount of attorneys’ fees and 14 litigation expenses paid to plaintiffs’ counsel, the amount of any service awards to 15 be paid to any plaintiff, any claim by any person or entity relating to the 16 representation of the Settlement Class by class counsel, to enforce the release and 17 injunction provisions of the Settlement and of this Final Approval Order and Final 18 Judgment, any remand after appeal or denial of any appellate challenge, any 19 collateral challenge made regarding any matter related to this litigation or this 20 Settlement or the conduct of any party or counsel relating to this litigation or this 21 Settlement, and all other issues related to this case and Settlement. 22 VII. DISMISSAL OF ACTION. 23 This case is hereby dismissed on the merits and with prejudice, without an 24 award of attorneys’ fees or costs to any party except as provided in this Final 25 Approval Order. 26 /// 27 /// 1 VIII. CONCLUSION. 2 The Final Approval Motion is GRANTED on the terms set forth in this Final 3 || Approval Order, and the Parties and their counsel are directed to implement and 4 || consummate the Settlement according to its terms and provisions as set forth in the 5 || Settlement Agreement. 6 IT IS SO ORDERED. Alb ies 4 brgde 7 || Dated: October 19, 2023 By: | □□ 8 HONORABLE CHRISTINA A. SNYDER 9 UNITED STATES DISTRICT COURT