The opinion of the court was delivered by: Harold Baer, Jr., United States District Judge
Plaintiffs and defendant move, pursuant to Rule 23(e) of the Federal Rules of Civil Procedure ("FRCP"), to have the proposed class action settlement approved. In addition, various non-parties or unnamed class members have moved to intervene to object to the proposed settlement. Plaintiffs and defendant oppose the intervention. For the following reasons, plaintiffs' and defendant's motion to approve the settlement is GRANTED and the motions to intervene are DENIED.
Plaintiffs filed the instant lawsuit on July 11, 2000. In the amended consolidated class action complaint, plaintiffs asserted causes of action against defendant Metropolitan Life Insurance Company ("Metropolitan") under 42 U.S.C. § 1981 for racial discrimination in the formation, performance, modification and termination of insurance contracts and 42 U.S.C. § 1982 for racial discrimination in rights to property. Plaintiffs' complaint revolves around their allegations that Metropolitan sold non-Caucasians insurance policies that cost more and provided less benefits than policies sold to Caucasians. Plaintiffs sought and obtained discovery of matters extending back to the beginning of the 20th century, amounting to some 450,000 pages of documents. In total, both sides have deposed 31 witnesses. In April 2001, defendant moved for summary judgment, which the Court denied. Thompson v. Metropolitan Life Ins. Co. 149 F. Supp.2d 38, 53 (S.D.N.Y. 2001). In October 2001, the parties began settlement discussion while the litigation continued. The settlement discussions eventually culminated in a stipulated proposed settlement agreement. This Court entered an Order on August 29, 2002 to preliminarily certify the putative class in this action for settlement purposes under FRCP 23(b)(3), have defendant provide notice, by individual notice, publication and other media, to potential class members, schedule a fairness hearing for February 7, 2003, and provide class members with an opportunity either to exclude themselves from the settlement class or to object to the proposed settlement. The fairness hearing was held on February 7, 2003, during which the parties presented arguments to the Court urging approval of the proposed settlement, and those moving to intervene or to object to the proposed settlement made their arguments to the Court.
Terms of Proposed Settlement Agreement
The settlement attempts to fully compensate class members for alleged past discriminatory overcharges and restrictions on the sale of certain types of policies. More specifically, the settlement compensates non-Caucasians who held "Industrial" policies issued by defendant from 1901 and 1964. In addition, the proposed settlement compensates non-Caucasians holding (a) certain "Ordinary" policies, issued from 1901 to 1972 with a substandard risk classification or (b) "Metropolitan Series" policies issued from 1960 to 1972 with initial coverage amounts of $4,500 through $5,000. Members of the class include (1) the insureds, and any assignees of the Industrial policies, (2) the past and present owners of Ordinary policies, and (3) the past beneficiaries of death benefits under any of the class policies. Settlement § I.D.1 et seq.
To rectify past discrimination by defendant, all in-force policies under the proposed settlement will receive increased death, maturity, and termination benefits, according to the formula set forth in the proposed settlement, that become payable in the future. Alternatively, holders of in-force policies may elect to receive cash payment equal to the present-value actuarial cost of the increased benefits. Id. § III. Where the policy has already paid death or maturity benefits, a cash payment will be made in an amount equal to the increased benefits available to a comparable in-force policy. Id. § IV. Policies that have terminated already will receive comparable relief in the form of cash and/or five years of free death benefit coverage. Id. § V. If the benefit calculated pursuant to the proposed settlement should be less than $10, the benefit paid will increase to $10. Id. § X.D. In total, the proposed settlement requires Metropolitan to provide these benefits at a cost of at least $52 million. In no event will the benefits paid be less than $52 million or more than $90 million. If the benefits owed fall outside these boundaries, the cost will be accordingly adjusted to fall within the prescribed limits. Id. §§ X.A & Ex. M. Based on claims submitted thus far, the settlement benefits will need to be increased to reach the $52 million minimum, thus each class member will receive more compensation than originally provided for "full compensation." Joint Decl. at ¶¶ 71. The proposed settlement further requires Metropolitan to contribute as much as $5 million to the United Negro College Fund, though the amount may be less if the present total value of the settlement exceeds $90 million.
In-force policies that are known to Metropolitan, which are subject to the proposed settlement, will have the benefits increased automatically. For all other in-force policies that may be subject to the settlement, Metropolitan will review the death certificate and/or application file before the policy benefits are paid to determine if an increase to the benefits is applicable under the settlement terms. For policies that have paid death benefits since August 1995, or that have paid maturity or surrender benefits since January 1989, settlement benefits will also be provided automatically. Settlement § IX.C. Where action is required to claim benefits, particularly for the older insurance policies, class members and claimants, such as relatives of deceased class members, have until April 23, 2003 to submit a claim for benefits. Id. §§ IX.B, IX.E, I.D.1.q. In addition, Metropolitan is obligated to conduct searches for policies for which death or maturity benefits may be payable since August 1995 or in the future, and to use its best effort to pay benefits where they are due under the settlement. Id. § VII & Exh. C.
To certify a class, FRCP 23 requires: (1) numerosity; (2) common questions of law or fact; (3) typicality; and (4) fair representation of the plaintiff class by the representative class members. Fed.R.Civ.P. 23(a). In addition, the party seeking certification must show that common questions of law or fact predominate and that a class action is a superior means to adjudicate the claims. Fed.R.Civ.P. 23(b)(3).
The parties have demonstrated that all of the aforementioned requirements have been met. First, no one disputes that the class members number in the hundreds of thousands, and thus the numerosity requirement cannot be disputed. Furthermore, such numbers preclude practical joinder of all the class members. See Fed.R.Civ.P. 23(a)(1). Second, the complaint alleges that defendant engaged in a course of conduct by systematically discriminating against non-Caucasians in the sale of its insurance policies. Common questions of fact and legal issues revolve around defendant's nationwide race-based discrimination, purportedly dictated at the home office level. See Defendant Memorandum in Support of Proposed Settlement ("Def Mem.") at 37. Third, the named plaintiffs are all African-Americans who purchased Metropolitan's life policies and were victims of defendant's discriminatory practices. Each named class member's claims arise from the same course of defendant's conduct and each member relies on the same legal argument to demonstrate defendant's liability, and thus the typicality requirement has been satisfied. Robidoux v. Celani, 987 F.2d 931, 936 (2d Cir. 1993). Fourth, I find plaintiffs' counsel has more than competently handled this case and no credible evidence has been presented, which might suggest a conflict between the named class representatives and the other class members that might impair the adequacy of representation. The adequacy requirement is met. Fifth, plaintiffs' claims center on defendant's discriminatory sales practices of its insurance policies, and thus there are substantial common questions of law and fact as to defendant's liability that predominate with respect to each of the non-Caucasian plaintiff class members. Lastly, in view of the numerosity of class members and the substantial passage of time that has elapsed since the discriminatory transactions, a class action is clearly the superior method to resolve this controversy. In re Twinlab Corp. Securities Litig., 187 F. Supp.2d 80, 83 (E.D.N.Y. 2002); Pigford v. Glickman, 185 F.R.D. 82, 94 (D.D.C. 1999). The Court certifies this lawsuit as a class action.
B. Application of the Grinnell Factors
FRCP Rule 23(e) requires that any settlement or dismissal of a class action be approved by the court. In determining whether to approve a class action settlement, the district court must determine whether it is "fair, adequate, and reasonable, and not a product of collusion." Joel A. v. Giuliani, 218 F.3d 132, 138 (2d Cir. 2000); Malchman v. Davis, 706 F.2d 426, 434, 436 (2d Cir. 1983) ("to survive appellate review, the district court must show it has explored comprehensively all relevant factors" and made "its own independent valuation of fairness and reasonableness."). In so doing, the court must "eschew any rubber stamp approval" yet simultaneously "stop short of the detailed and thorough investigation that it would undertake if it were actually trying the case." City of Detroit v. Grinnell Corp., 495 F.2d 448, 462 (2d Cir. 1974). Judicial discretion should be exercised in light of the general policy favoring settlement. See Weinberger v. Kendrick, 698 F.2d 61, 73 (2d Cir. 1982).
The Second Circuit identified nine factors ("Grinnell factors") that courts should consider in assessing the fairness of a proposed settlement:
(1) the complexity, expense and likely duration of the litigation;
(2) the reaction of the class to the settlement;
(3) the stage of the proceedings and the amount of discovery completed;
(4) the risks of establishing liability;
(5) the risks of establishing damages;
(6) the risks of maintaining the class action through the trial;
(7) the ability of the defendant to withstand a greater judgment;
(8) the range of reasonableness of the settlement fund in light of ...