PHT Holding I LLC v. PHL Variable Life Insurance Company

Background

The plaintiffs sought preliminary approval of a proposed settlement with PHL Variable Insurance Company under Federal Rule of Civil Procedure 23(e), the rule governing settlements in class actions. The application relied on a joint settlement agreement and supporting papers. The opinion states that PHL did not oppose the application.

Settlement Class and Preliminary Findings

The court preliminarily approved the settlement, including its releases, after finding that it would likely be able to approve the settlement finally as fair, reasonable, and adequate. The court found that the agreement was negotiated at arm’s length by experienced counsel with help from a mediator and was sufficiently reasonable to justify sending notice to the proposed class. The proposed allocation plan was also found sufficiently fair and reasonable for notice purposes.

The court found that it would likely certify the settlement class for purposes of judgment on the settlement proposal under Rule 23(b)(3). The class consists of owners of PAUL and PEL policies issued by PHL whose policies experienced an increase to the cost-of-insurance rate scales between November 5, 2017, and the monthly deduction immediately preceding the policy’s first policy anniversary date falling on or after January 1, 2021. The order excludes Policy Nos. 97523677 and 97523828, which are owned by Conestoga Trust and Conestoga Trust Services, LLC and are subject to separate litigation against PHL, as well as policies listed in Exhibit A to the settlement agreement that had previously settled with PHL.

The court found that the proposed class was numerous enough that joining every member in one case would be impractical, that the plaintiffs’ claims presented common issues typical of the class, that James Kenney and class counsel would fairly and adequately represent the class, and that common issues predominated over individual issues. It also found that resolving the action as a class action for settlement purposes was superior to other methods. The court appointed Susman Godfrey L.L.P. as settlement-class counsel, James Kenney as the class representative, and JND Legal Administration LLC as settlement administrator.

Notice, Exclusion, Objections, and Hearing

The court approved the proposed notice process as the best practicable notice under the circumstances and as satisfying Rule 23 and constitutional due-process requirements. PHL was ordered to provide the settlement administrator with a list of the last-known policy owners and addresses within 14 days. The administrator was directed to update addresses and make reasonable efforts to resend or locate undeliverable notices.

Settlement-class members may request exclusion by written notice postmarked no later than 45 days after the notice date. Members who do not timely exclude themselves will be bound by the proceedings, orders, and judgments in the action. Members may also object by filing and serving a written objection no later than 45 calendar days after the notice date, subject to the requirements listed in the order.

The court scheduled a final fairness hearing for December 19, 2023, before Judge Mary Kay Vyskocil. The hearing was to address final approval of the settlement, certification of the class for purposes of judgment on the settlement proposal, entry of a final order and judgment, approval of the proposed allocation plan, and any request for attorneys’ fees, expense reimbursement, or incentive awards. The order stated that the settlement was not an admission of liability by PHL or an admission that the plaintiffs’ claims lacked merit. If the settlement failed to become effective or was not consummated, the parties would return to their prior positions and retain their available arguments and defenses.

Ruling and Classification

Judge Mary Kay Vyskocil entered an order preliminarily approving the settlement, finding likely certification of the settlement class for settlement purposes, directing notice, appointing class counsel and a settlement administrator, staying proceedings except as needed to implement the settlement or comply with it, and scheduling the final fairness hearing. The court did not finally approve the settlement or finally certify the class in this order. Because the order addressed settlement approval, class administration, and related procedures without deciding the underlying claims, this is a procedural order.