Where policyholders reached a settlement with a long-term care insurer over its disclosures surrounding premium increases, an award of attorneys’ fees to their counsel of at least $1 million, and up to $18.5 million, was fair and reasonable.
Genworth Life Insurance Company is a Virginia company that provides long-term care insurance to its policyholders. In this suit, plaintiffs allege that the manner in which Genworth raised premiums, in combination with disclosures made by Genworth in connection with premium increases, fraudulently deprived them of material information that was necessary to their being able to make informed decisions about their long-term care policies.
The parties reached a settlement. Now before the court are the joint motion to approve settlement with objectors, class counsel’s motion for an award of attorneys’ fees and expenses and service awards to the named plaintiffs and objections to the class settlement and to the incentive awards and attorneys’ fees.
Attorneys’ fees and costs
The settlement agreement provides a lump-sum attorney fee for class counsel in the form of a $1 million payment. The settlement further provides for a contingency fee “equivalent to 15% … of the damages payments paid to Class Members who elect” special election options, but capped at $18.5 million. The payment of these fees does not subtract from the amount that Genworth will disburse to plaintiffs as part of their damages payments; rather, the 15% attorney fee will be paid by Genworth over and above the damage payments to class members.
After considering the reasonableness factors from both Johnson v. Ga. Highway Express, Inc., 488 F.2d 714 (1974), and Gunter v. Ridgewood Energy Corp., 223 F.3d 190 (3d Cir. 2000), the court finds the settlement is reasonable. As of the date the fee petition was submitted, the lodestar multiplier for the requested fee was 8.4x. It is now presumably somewhat lower given the work that class counsel has performed since. The court finds that the 8.4x multiplier is acceptable and the requested attorney fees are reasonable.
The fee petition includes a request for expenses of $26,701.96. Those expenses were supported with documentation and are less than the $50,000 that plaintiffs’ counsel had initially requested be allotted. Although there was an objection, it does not state with adequate specificity the basis for the objection. The expenses are, accordingly, approved.
The $15,000 incentive payments for named plaintiffs are reasonable. They are reduced in comparison with the $25,000 the court approved for named plaintiffs in a prior related case.
Objector counsel’s attorneys’ fees
Objectors’ counsel initially petitioned the court for an award of $1.4 million, to be paid for jointly by the parties without subtracting from the value of the settlement. That figure represented the attorneys’ lodestar fee ($502,100) with a multiplier of 2.8x. The parties had already agreed not to oppose a petition for attorney fees up to that amount.
When asked what proportion of hours in the lodestar calculation were directed at ultimately successful claims, objectors’ counsel stated that they could not disentangle the different legal issues from one another in their accounting of hours. They proposed instead an alternative method of reducing their requested fee by lowering the lodestar multiplier rather than recalculating the number of hours worked. The court accepted this concession, resulting in a fee award of $1.2 million (at a multiplier of approximately 2.4x).
Objectors’ incentive payments
Finally, objectors’ counsel requests incentive payments of $7500 for each of the represented objectors. The declarations submitted by the objectors attest to the work done by each of the objectors in pursuing their aim of improving the terms of the settlement. These payments will not detract from the value of the relief obtained by the plaintiff class. The court therefore finds that they are reasonable.
Several of the objections raise the concern that the costs of the settlement will undermine Genworth’s financial stability. That argument is foreclosed by Genworth’s own sworn declaration affirming that the costs of the settlement will not cause Genworth to become insolvent. The remaining objections are overruled or have been previously addressed by the court.
Class counsel’s motion for an award of attorneys’ fees and expenses and service awards to the named plaintiffs granted. Objectors’ petition for incentive awards and attorneys’ fees granted in part, denied in part.
Halcom v. Genworth Life Insurance Company, Case No. 3:21-cv-19, June 28, 2022. EDVA at Richmond (Payne). VLW 022-3-270. 45 pp.