The opinion of the court was delivered by: Platt, District Judge.
The Plaintiffs, the Bank Defendants*fn1 and the Director
Defendants*fn2 jointly move pursuant to Rule 23(e) of the
Federal Rules of Civil Procedure for approval of a settlement
("Settlement") agreed to by lead Class counsel ("Hogan &
Hartson"), Co-Class counsel ("Amrod") (collectively "Class
Counsel") and counsel for the Bank Defendants and Director
Defendants (collectively "Defense Counsel"). For the reasons
stated below, this motion is granted and the Settlement is
This class action lawsuit was commenced on behalf of a Class
of persons who allegedly paid inflated legal fees to a law firm
in connection with closings on residential mortgage loans
obtained from the Long Island Savings Bank, FSB ("LISB") from
January 1, 1983 to December 31, 1992. Weil v. Long Island
Savings Bank, 200 F.R.D. 164, 167 (E.D.N.Y. 2001).
The alleged scheme went as follows. Class members were
required to pay, directly to the law firms of Power, Meehan &
Petrelli, P.C. and Power, Meehan and Power, P.C., the legal fees
LISB incurred in processing and closing the mortgagors' loans.
Id. at 167. The aforementioned law firms were the successors
in interest to Conway & Ryan, P.C., which was James J. Conway,
Jr.'s ("Conway") former law firm. Id. Conway was LISB's Chief
Executive Officer during the Class period. Id.
Part of the allegedly inflated legal fees Class members paid
were used by the law firms to fund kickbacks to Conway and his
family members. Id. Those kickbacks were paid to Conway in
return for his promise that LISB would use only his law firm and
its successors in interest to perform LISB's residential
mortgage loan legal work. Id. Accordingly, it was claimed that
the Class members paid inflated legal fees to LISB's law firms
in order to fund an illegal kickback scheme, the primary
beneficiary of which was Conway.
On March 23, 1994, Plaintiffs brought this action, alleging
violations of the Racketeer Influenced and Corrupt Organizations
Act ("RICO"), 18 U.S.C. § 1962, the Truth-In-Lending Act
("TILA"), 15 U.S.C. § 1638, the Real Estate Settlement
Procedures Act ("RESPA"), 12 U.S.C. § 2607, common law fraud,
violations of section 349 of the New York General Business Law,
and negligent supervision.
On November 15, 1999, this Court partially denied and
partially granted Defendants' Motion to Dismiss. Weil v. Long
Island Savings Bank, 77 F. Supp.2d 313, 316 (E.D.N.Y. 1999). On
May 7, 2001, the Court certified a plaintiffs' Class consisting
of residential mortgage borrowers who closed their mortgage
loans between January 1, 1983 and December 12, 1992. Weil v.
Long Island Savings Bank, 77 F. Supp.2d 313, 316 (E.D.N.Y.
On December 21, 2001, the Court conducted a public hearing to
determine if the Proposed Settlement was fair, adequate and
reasonable. The Court heard from all interested parties and took
objections from Class members.*fn3 Having heard from the
interested parties and Class members, the Court is now prepared
to approve the Settlement as fair, adequate and reasonable.
The Settlement calls for the Defendants to create and fund an
account ("Settlement Fund") to be administered by a claims
administrator ("Claims Administrator"). The Settlement Fund will
be used to satisfy Class members' claims, expenses and fees
submitted by the Claims Administrator, and fees and expenses
awarded to Class Counsel.
Under the Settlement, Defendants will pay a minimum of
$265,000 plus any fees and expenses awarded to Class Counsel
into the Settlement Fund within three days of the entry of this
Order. The Defendants will then pay the balance of any sums
needed to satisfy Class members' claims within five days of
entering an order approving the Claims Administrator's final
report. The total amount the Defendants will pay into the
Settlement Fund is limited to $15 million.
C. Distribution of Settlement Fund Monies to Class Members
Class members who submit acceptable documentation to the
Claims Administrator will be paid a settlement award equal to
the amount by which the legal fees they paid to Conway's law
firm and its legal successors exceed agreed upon appropriate
closing costs for the Class period ("Appropriate Closing
Costs"). The Appropriate Closing Costs are listed in the chart
below. Essentially, Class members receive 100% of any excess
legal fees they paid, but do not receive any interest on that
Appropriate Closing Costs for the
Years Appropriate Closing
In addition to a settlement award, individual named plaintiffs
will also receive a $10,000.00 incentive award for the extra
time and effort they expended in prosecuting this case. Named
plaintiffs who are couples will receive a total incentive award
of $15,000.00 per couple. The Settlement requires the Claims
Administrator to pay these incentive awards immediately after
the Settlement Fund is financed.
Class members must submit acceptable documentation to receive
a settlement award. Acceptable documentation constitutes a
signed proof of claim and release and one document from either
column A or column B in the chart below.
Documents to be Submitted by Class Members with the
Proof of ...