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WEIL v. LONG ISLAND SAV. BANK

January 16, 2002

RONNIE WEIL A/K/A RONNIE MOORE, ET AL., PLAINTIFF,
V.
THE LONG ISLAND SAVINGS BANK, FSB, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Platt, District Judge.

MEMORANDUM AND ORDER

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 approved.

BACKGROUND

A. Generally

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. 1999).

Following that Order, the parties accelerated settlement negotiations. On November 7, 2001, they executed a proposed settlement agreement ("Proposed Settlement"), the terms of which are substantially identical to those contained in the final settlement discussed below. On November 13, 2001, the Court ordered notice of the Proposed Settlement to be mailed to Class members.

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.

B. Settlement Structure

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 excess.

Appropriate Closing Costs for the Class Period
Years Appropriate Closing Costs
1983 to 1984 $350.00
1985 to 1990 $400.00
1991 to 1992 $450.00

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 ...

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