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Krell v. Prudential Ins. Co. of Am. (in Re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions)

Krell v. Prudential Ins. Co. of Am. (in Re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions)

United States Court of Appeals for the Third Circuit

January 26, 1998, Argued ; July 23, 1998, Filed

Nos. 97-5155, 97-5156, 97-5217 & 97-5312

Opinion

 [*288]  TABLE OF CONTENTS

OPINION OF THE COURT

I. BACKGROUND AND PROCEDURAL HISTORY

A. The Multi-State Life Insurance Task Force

B. The Federal Class Action

1. The Proposed Settlement

a. The Alternative Dispute Resolution process

b. Basic Claim Relief

c. Enhancements To the Task Force Plan

2. The Fairness Hearing 23

II. ISSUES RAISED ON APPEAL AND STANDARD OF REVIEW

 [**3]  III. JURISDICTION

A. Subject Matter Jurisdiction

1. Federal Question Jurisdiction as a Basis for Supplemental Jurisdiction

2. Diversity Jurisdiction as a Basis for Supplemental Jurisdiction

B. Personal Jurisdiction

C. Article III

IV. CLASS CERTIFICATION

A. Settlement-Only Class Certification

B. Class Certification under Rule 23

1. The Rule 23(a) Criteria

a. Numerosity

b. Commonality

c. Typicality

d. Adequacy of Representation

2. The Rule 23(b) Criteria

a. Predominance

b. Superiority

C. Conclusion

V. THE FAIRNESS OF THE PROPOSED SETTLEMENT

A. The Girsh Factors

1. The complexity and duration of the litigation

2. The reaction of the class to the settlement

3. The stage of the proceedings and amount of discovery completed

4. The risks of establishing liability and damages

a. Replacement Claims

5. The risks of maintaining the class action through trial

6. The ability of the defendants to withstand a greater judgment

7. The range of reasonableness of the settlement fund in light of the best possible recovery and all the attendant risks of litigation

B. Other Objections 

1. The Rules Enabling Act and the McCarran - Ferguson Act

2. Failure [**4]  to Allow Discovery

C. "Other Sales Claims"

1. The Alleged Expansion of the Class

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148 F.3d 283 *; 1998 U.S. App. LEXIS 17057 **; 41 Fed. R. Serv. 3d (Callaghan) 596

IN RE: PRUDENTIAL INSURANCE COMPANY AMERICA SALES PRACTICE LITIGATION AGENT ACTIONS; RICHARD P. KRELL, MDL transfer, N.D. Ohio, DNJ Civil Action No. 95-6062 v. PRUDENTIAL INSURANCE COMPANY OF AMERICA; Richard P. Krell, as well as Objectors Elizabeth Bajek, Amanda Bajek, Helen Bartsch, Mark Ciconte, Raymond Dolce, Margaret Dolice, Louise Duggan, Peter Duggan, Charles Duncan, Mary Howe, Mary Krell, William Morris, Diana Racer, Thomas Racer, Gweneth Reidel, The Estate of Carl J. Scalzo, Marie Scalzo, Terry Sligar, Alice Smith, Jerry Smith, and William Walton, Appellants at Nos. 97-5155/5156/5312; IN RE: PRUDENTIAL INSURANCE COMPANY AMERICA SALES PRACTICE LITIGATION AGENT ACTIONS; RICHARD JOHNSON, Intervenor-Plaintiff in District Court; Richard E. Johnson, Appellant at No. 97-5217

Subsequent History:  [**1]  Certiorari Denied January 19, 1999, Reported at: 1999 U.S. LEXIS 741; 1999 U.S. LEXIS 740.

Later proceeding at, Sub nomine at Steele v. Prudential Ins. Co. of Am. (In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions), 159 F.3d 1353, 1998 U.S. App. LEXIS 18972 (3d Cir. N.J., July 23, 1998)

Writ of certiorari denied Krell v. Prudential Ins. Co. of Am., 525 U.S. 1114, 119 S. Ct. 890, 142 L. Ed. 2d 789, 1999 U.S. LEXIS 740 (Jan. 19, 1999)

Writ of certiorari denied Johnson v. Prudential Ins. Co. of Am., 525 U.S. 1114, 119 S. Ct. 890, 142 L. Ed. 2d 789, 1999 U.S. LEXIS 741 (Jan. 19, 1999)

Motion granted by In re Prudential Ins. Co. of Am. Sales Practices Litig., 1999 U.S. Dist. LEXIS 22477 (D.N.J., May 6, 1999)

Prior History: On Appeal from the United States District Court for the District of New Jersey. (D.C. Civil Action No. 95-cv-04704).

In re Prudential Ins. Co. of Am. Sales Practices Litig., 962 F. Supp. 572, 1997 U.S. Dist. LEXIS 3848 (D.N.J., Mar. 20, 1997)In re Prudential Ins. Co. of Am. Sales Practices Litig., 962 F. Supp. 450, 1997 U.S. Dist. LEXIS 4049 (D.N.J., Mar. 17, 1997)

Disposition: Affirmed the certification of the proposed class and the approval of the settlement, and vacated and remanded on the issue of attorneys' fees.

CORE TERMS

district court, settlement, class member, class action, task force, proposed settlement, discovery, notice, supplemental jurisdiction, parties, attorney's fees, named plaintiff, policyholders, calculation, fee award, cases, lead counsel, replacement, remediation, sales, plaintiffs', factors, sales practices, predominance, certification, negotiations, absentee, Consolidated, claimants, proposed class

Civil Procedure, Appeals, Standards of Review, Abuse of Discretion, Special Proceedings, Class Actions, General Overview, Appellate Review, Certification of Classes, Compromise & Settlement, Judicial Discretion, Clearly Erroneous Review, Jurisdiction, Jurisdictional Sources, Subject Matter Jurisdiction, Jurisdiction Over Actions, Supplemental Jurisdiction, Prerequisites for Class Action, Governments, Courts, Common Law, Torts, Business Torts, Fraud & Misrepresentation, Adequacy of Representation, Certification of Classes, Decertification, Settlements, Multiple Party Settlements, Class Attorneys, Fees, Remedies, Costs & Attorney Fees, Attorney Fees & Expenses, Basis of Recovery, American Rule, Legal Ethics, Client Relations, Attorney Fees, Reasonable Fees