to MetLife by failing to adequately oversee, supervise, and maintain control over MetLife's sales agents. Count II alleges that the Individual Defendants, based on the same alleged fiduciary breaches, must indemnify MetLife to the extent it is found liable for any of the Individual Defendants' failures to act in accordance with law.
After the filing of the Complaint, the parties commenced discovery. Some 17,000 pages of documents were produced by MetLife. On November 18, 1994, MetLife moved to dismiss the Complaint on two grounds. First, MetLife contended that plaintiff, as a policyholder of a New York mutual insurance company, did not have standing to bring a derivative action on MetLife's behalf. Second, MetLife contended that plaintiff was required, but had failed, to make a demand on MetLife's Board of Directors before bringing this action.
Before plaintiff could respond to the motion, and before any depositions were taken, settlement discussions were initiated. Upon request of the parties, plaintiff's time to respond to the motion was extended several times. A tentative settlement was reached in the interim.
C. The Proposed Settlement
On March 22, 1996, after extensive negotiations, plaintiffs, MetLife, the Director Defendants, and the insurance carrier for MetLife's directors and officers entered into a stipulation (the "Stipulation") that set forth the proposed settlement of this action (the "Proposed Settlement"). Certain of the Individual Defendants who are not Director Defendants are not parties to the Stipulation, but the Stipulation nonetheless provides for the resolution of all claims against all the Individual Defendants.
The key features of the Proposed Settlement are as follows:
First, the insurance carrier for MetLife's directors and officers will pay $ 4 million to MetLife.
Second, MetLife will create and maintain for at least three years an independent Sales Practices Compliance Committee (the "SPCC") of its Board of Directors with duties and powers related to sales practices compliance. MetLife's Corporate Ethics and Compliance Department will be required to communicate directly with the SPCC on certain matters.
Third, MetLife will take sales practices compliance into account in making compensation and promotion decisions and in awarding prizes for group and individual performance.
Fourth, the instant consolidated case and the four state court lawsuits will be dismissed and the derivative claims of all the plaintiffs and MetLife policyholders (based on the events in question) will be released. The Proposed Settlement does not, however, release any individual claims that policyholders may have for direct injury. (See Tr. at 19-20).
The Stipulation also acknowledges that MetLife took certain actions "partly in response to" the litigation. For example, MetLife improved its ongoing compliance efforts, including its system of monitoring and overseeing customer and regulatory complaints. MetLife also reduced its compensation to all officers and certain other management personnel by $ 6.4 million for the year 1993 "in response to sales practices compliance issues raised in the Complaint and during the course of the Litigation." Following the commencement of this litigation, MetLife also appointed three new outside directors. The non-monetary terms of the Proposed Settlement as well as the steps taken "partly in response to" the litigation are and were intended to prevent the type of sales practices that were criticized by the regulatory bodies and by many policyholders.
Finally, the Stipulation provides that plaintiffs would apply to this Court for reasonable attorneys' fees and costs, to cover all six lawsuits, in an amount not to exceed $ 2.9 million, to be paid by MetLife. In the Stipulation, MetLife and the Director Defendants agreed not to oppose the application as long as it did not request compensation in excess of that amount.
Notice of the Proposed Settlement was given by publication and a fairness hearing was scheduled for June 11, 1996.
D. The Objections
Eleven responses to the Proposed Settlement were received.
One (Audrey and Edwin Weiss) was not an objection but was an unnecessary request to "opt out." (Tr. at 3-4). Six were objections that were withdrawn before the fairness hearing.
One policyholder (Dwight M. Schulz) objected to the Proposed Settlement because of concerns over his own policies; his objections were not to the terms of the Proposed Settlement. Another policyholder (Sylvia L. Corsini), who had purchased policies from MetLife in 1963 and approximately 1979-80, objected to the payment of attorneys' fees. Another policyholder (Stuart L. Posselt) objected to the payment of $ 2.9 million in attorneys' fees. Finally, another policyholder (Crosby P. Engel) opposed the Proposed Settlement because of a belief that it did not "punish the board members and employees responsible for the sales malfeasance and other misconduct and mismanagement."
E. The Requests for Attorneys' Fees and Costs
Eleven sets of attorneys seek to be compensated for services rendered and costs incurred in connection with the consolidated federal case and four state court actions. The total "lodestar" amount is $ 2,263,211.25. It breaks down as follows:
Morris and Morris 3,231.10 $ 1,137,212.25
Boies & McInnis 674.20 219,026.00
Cederberg, Shott &
Smith, P.C. 13.90 1,390.00
Timothy J. Dennin, P.C. 263.75 93,293.75
Duker & Barrett, LLP 977.85 244,477.50
Goodkind Labaton Rudoff
& Sucharow LLP 237.30 69,821.50
Lovell & Skirnick LLP 43.25 18,381.25
Miller Faucher Chertow
Cafferty and Wexler 234.20 73,926.50
Law Office of Klari
Neuwelt 439.90 160,773.50
Stull, Stull & Brody 692.00 231,235.00
Zwerling & Koppell, LLP 51.60 13,674.00
Totals 6,859.05 $ 2,263,211.25
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