Elgindy v. AGA Service Company

Background

Adam Elgindy, Julianne Chuanroong, and Andrew Tasakos brought class-action claims against AGA Service Company, doing business as Allianz Global Assistance, Jefferson Insurance Company, and BCS Insurance Company. The plaintiffs alleged that the defendants’ online marketing and sales of travel and event insurance included hidden assistance fees in the total price. The claims included violations of California’s Unfair Competition Law and False Advertising Law, common-law fraud, and claims under Washington law. The court had previously dismissed the California plaintiffs’ common-law fraud claim but allowed the other claims to proceed.

After discovery and three mediation sessions, the parties proposed a settlement. The settlement class covers qualifying purchasers of California travel or event protection plans from September 4, 2016, through entry of the preliminary-approval order and qualifying purchasers of Washington plans from April 2, 2018, through that order’s entry date, subject to the exclusions in the settlement. The defendants agreed to pay $19.75 million into a settlement fund.

Settlement Terms and Notice

The plan of allocation divides authorized claimants into two groups based on when they purchased their plans. Claimants with earlier plans may receive 75% of the assistance fees charged, with payments potentially increasing to as much as 150% if funds remain. Claimants with later plans may receive 40%, with payments potentially increasing to as much as 80%. Unclaimed funds will be paid to Travelers Aid International as a cy pres recipient, meaning a designated organization may receive remaining funds when direct distribution is not made.

The settlement releases claims concerning allegations that the plans were unlawfully, unfairly, falsely advertised, or deceptive regarding their marketing, pricing, sale, and assistance fees. The release does not cover personal-injury claims, claims about insurance coverage or particular assistance benefits, claims arising from later purchases, or rights to enforce the settlement agreement.

The claims administrator sent about 17.5 million email notices and 1.74 million postcard notices, sent reminder notices, maintained a website and toll-free hotline, and extended the claim deadline. More than 480,000 class members submitted claims covering more than 1.2 million plans. Two class members objected, and 661 opted out. The court found the notice adequate.

Court’s Fairness Analysis

Applying Rule 23 of the Federal Rules of Civil Procedure, the court considered whether the settlement was fair, adequate, and reasonable. It found that the named plaintiffs and class counsel adequately represented the class, that the class members’ claims shared common facts and legal theories, and that different recovery percentages were supported by differences in the disclosures received by the two purchase groups. The court rejected an objector’s argument that separate subclasses and separate counsel were required.

The court also found that plaintiffs faced significant risks in continued litigation, including disputes over liability, class certification, damages, and possible appeals. It approved the proposed claims process and found the settlement amount reasonable in light of those risks. The court noted that the parties had conducted extensive discovery, including document production, interrogatories, depositions, and consultation with experts.

The court found no evidence of collusion. It noted that the requested attorney’s fee was 25% of the common fund, the Ninth Circuit benchmark, that the fees would come from the same fund as the class recovery, and that no funds would revert to the defendants. The court overruled the objections, including objections concerning redactions, the cy pres provision, separate subclasses, attorney’s fees, and incentive awards.

Fees, Costs, and Incentive Awards

The court granted class counsel 25% of the settlement fund, totaling $4,937,500 in attorney’s fees. It found the percentage reasonable based on the result for the class, the risks counsel undertook, the contingency arrangement, and the case’s four-year duration. The court also considered counsel’s lodestar—the hours reasonably worked multiplied by reasonable hourly rates—and found the requested award reasonable in relation to the recovery.

The court granted $188,870.47 in litigation expenses after reviewing an itemized list. It also approved a $5,000 incentive award for each named plaintiff because Elgindy, Chuanroong, and Tasakos provided documents, information, and other assistance during the litigation.

Disposition

Judge Jon S. Tigar confirmed certification of the class for settlement purposes only and granted final approval of the settlement agreement and allocation plan. He granted the requested attorney’s fees, expenses, and incentive awards. Class members who opted out were excluded from the class. The court withheld 10% of the attorney’s fees until a post-distribution accounting was filed, entered judgment on the stated terms, and directed the clerk to close the file.