Case 3:21-cv-00019-REP Document 115 Filed 06/28/22 Page 1 of 45 PageID# 2473
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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE EASTERN DISTRICT OF VIRGINIA
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`Richmond Division
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`JUDY HALCOM,
`et al. /
`
`Plaintiffs,
`
`V.
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`Civil Action No. 3:21-cv-19
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`GENWORTH LIFE INSURANCE COMPANY,
`et al. ,
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`Defendants.
`
`MEMORANDUM OPINION
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`This matter is before the Court on the CLASS COUNSEL'S MOTION
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`FOR AN AWARD OF ATTORNEYS' FEES AND EXPENSES AND SERVICE AWARDS TO
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`THE NAMED PLAINTIFFS (ECF No. 59) , the JOINT MOTION TO APPROVE
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`SETTLEMENT WITH OBJECTORS (ECF No. 104), the OBJECTORS' PETITION
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`FOR INCENTIVE AWARDS AND ATTORNEYS' FEES (ECF No. 106)
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`(collectively, ''the Motions"), as well as the objections to the
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`class settlement submitted to the Court by Herbert Skovronek (ECF
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`No. 56) , Angela Brown (ECF No. 62) , Michael and Kathleen Buben
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`(ECF No. 65), Rochelle and Roger Borgen (ECF Nos. 66 & 67), Ellen
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`Franck ECF No. 68) , Larry and Marsha Brigleb and Joanne Barron
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`(ECF No. 70) (collectively, "the Objections"). The rationale for
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`the Court's approval of the settlement terms is set forth in the
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`accompanying FINAL JUDGMENT AND ORDER OF DISMISSAL WITH PREJUDICE.
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`The Court has considered the memoranda in support of the
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`Motions, the accompanying exhibits, the Objections submitted by
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`class members, arguments presented during the February 9, 2022
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`hearing by the parties and objectors, the parties' post-hearing
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`amendment to the release language in the Settlement Agreement, the
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`renewed objections made by a subset of the plaintiff class to the
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`amended Settlement Agreement, the plaintiffs' response thereto,
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`the objectors' reply, the terms of the resolution reached by the
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`parties with that group of objectors, the motion by objectors'
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`counsel for attorney fees and incentive payments, and arguments in
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`support of that motion at the June 21, 2022 hearing. For the
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`reasons set forth below, the Motions will be granted and the
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`Objections will be overruled.^
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`I. Background
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`a. Factual History
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`Genworth Life Insurance Company {''Genworth") is a Virginia
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`company that provides long-term care ("LTC") insurance to its
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`policyholders. In exchange for paying ongoing premiums from the
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`time they first take out their policies, policyholders receive the
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`assurance of coverage should they require long-term care. The
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`CLASS ACTION COMPLAINT (ECF No. 1) (the "CAC") was filed on behalf
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`of Genworth's PCS I and PCS II policyholders. ECF No. 1 ^ 2.
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`1 The objectors' attorneys petition for attorney fees is denied in
`part insofar as the Court will not award the objectors' attorneys
`the full measure of fees requested in the petition.
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`Genworth's policyholders are not guaranteed a fixed premium for
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`their insurance; rather, Genworth can, with clearance from state
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`insurance regulators, adjust policy premiums over time. While the
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`plaintiffs make clear that they do not challenge Genworth's
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`prerogative to raise premiums, subject to certain regulatory
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`conditions, they allege that the manner in which Genworth raised
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`premiums, in combination with disclosures made by Genworth in
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`connection with premium increases, fraudulently deprived them of
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`material information that was necessary to their being able to
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`make informed decisions about their long-term care policies.
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`The policyholders in the plaintiff class purchased their
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`Genworth policies before 2002. Id. K 10. The CAC alleges that,
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`"[d]uring this time, Genworth and its sales agents typically
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`emphasized that the Company had never raised rates on its LTC
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`policies over the decades it had been providing such insurance."
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`Id. That representation, according to the plaintiffs, "set a
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`reasonable expectation that rates would not increase, or that any
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`increases would be minimal." Id.
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`As early as 2008, however, the plaintiffs allege that
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`"Genworth began to recognize that some premium rate increases would
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`be needed on its older policy blocks." Id. U 11. Ongoing analysis
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`of the company's financial position over the next six years
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`confirmed this picture.
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`Id. M 11-13.
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`Genworth's analysis
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`resulted finally in its "Multi Year Rate Increase Action Plan"
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`(MYRAP) . Id. H 14. The MYRAP rate increases were, according to
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`the CAC, then integrated into Genworth's financial accounting, so
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`certain was Genworth that the rate increases could and would be
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`implemented. Id. H 15-16.
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`But, the plaintiffs say, Genworth did not disclose those
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`anticipated future rate increases to policyholders, nor did it
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`inform them that such rate increases were necessary for Genworth
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`to remain solvent and viable as a long-term business enterprise.
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`The plaintiffs allege that Genworth's illicit withholding of
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`information resulted in many class members' opting to make premium
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`payments they would have elected not to make had they received the
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`disclosures to which they were entitled. Id. HH 17-20. As a
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`result, the plaintiffs allege, policyholders were led to make
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`decisions about their policies with a mistaken view (encouraged by
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`Genworth's communications, and selective silence) as to the
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`likelihood and magnitude of any future rate increases. Id.
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`b. Plaintiffs' Claims
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`COUNT ONE of the CAC alleges fraudulent inducement by
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`omission.
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`Specifically, the plaintiffs allege that Genworth
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`deliberately withheld infomnation about future rate increases, and
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`that the withheld information was material to policyholders'
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`decisions regarding whether to renew their policies.
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`COUNT TWO of the CAC states a claim for declaratory relief.
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`The plaintiffs ask the Court to declare that Genworth had a duty
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`to make a variety of disclosures to the plaintiff class (which
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`disclosures, it is alleged, Genworth did not make).
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`The CAC asked for several forms of relief:
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`class
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`certification; a ruling that Genworth's failure to make adequate
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`disclosures was unlawful; compensatory, consequential, and general
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`damages to the plaintiff class; injunctive relief; costs; pre-
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`judgment interest; attorney fees; and any other relief "this Court
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`may deem just and proper." Id. HH 239(A)-(H).
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`c. Procedural History
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`This is the second such suit against Genworth that has been
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`brought before the Court. In the first suit, Skochin v. Genworth,
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`No. 3:19cv49, the plaintiff class comprised a different set of
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`Genworth's policyholders but the claims they brought were largely
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`the same as those at issue here. The parties in Skochin engaged
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`in extensive discovery and Genworth moved to dismiss the Claims
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`under Fed. R. Civ. P. 12(b)(6). 3:19cv49, ECF No. 39. The Court
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`granted the motion to dismiss as to one count of the AMENDED
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`COMPLAINT in that case but denied it as to three other counts.
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`ECF No. 79. The parties eventually reached a settlement agreement
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`with terms similar to those proposed here. This suit was filed
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`two years after Skochin, just as that case approached its
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`resolution. Having tested the strength of their respective claims
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`and defenses in the Skochin litigation, the parties were able to
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`engage in significant informal discovery and several rounds of
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`mediation. By the time the CAC was filed, the parties had already
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`more or less agreed to the terms of a settlement now under review.
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`In September 2021, the Court granted the parties' preliminary
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`approval of the settlement and directed that notice be sent to
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`class members. A final approval hearing was held in February 2022,
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`at which the Court heard from several objectors. For reasons set
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`forth below, most of those objections will be overruled. In light
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`of some of those objections, however, the Court expressed concern
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`about the breadth of the language in the settlement's provision
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`governing the release of claims against Genworth by class members.
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`The Court informed the parties that, though the remaining aspects
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`of the settlement merited approval, the settlement could not be
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`approved with the release in the form in which it was submitted.
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`The parties conferred after the hearing and proposed a
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`modified release, ECF No. 94-2, which resolved the Court's
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`concerns. Some of the objectors, represented by counsel, then
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`renewed their objections, arguing that even the modified release
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`language left open the possibility that a member of the plaintiff
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`class would be precluded from bringing suit if Genworth committed
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`certain forms of fraud in the execution of the settlement. ECF
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`No. 97. After briefing on the issue was completed, but before the
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`Court issued a decision as to the objections, the parties reached
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`a separate settlement agreement with the represented objectors.
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`See ORDER, ECF No. 102.
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`The agreement between class counsel, Genworth, and the
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`represented objectors makes further modifications to the language
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`in the release. ECF No. 105-1. Because the revised release
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`language only broadens the plaintiff class's rights under the
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`settlement, the Court's approval of the earlier version of the
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`release remains effective.
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`On June 21, 2022, the Court held a hearing on objectors'
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`counsels' petition for attorney fees and incentive payments. All
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`matters before the Court are now ripe for disposition. The parties
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`to the case reached a complex, multi-faceted settlement agreement.
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`That agreement, in turn, was supplemented by the terms of the
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`parties' settlement with objectors. It is therefore necessary to
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`explain the structure of the settlement agreement before the
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`Motions can be decided.
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`II. The Settlement Agreement
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`a. Special Election Letters
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`As part of the settlement, all class members will receive a
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`"Special Election Letter" from Genworth. ECF No. 113-1 K 51(a).
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`The DISCLOSURES portion of the letter, "APPENDIX B" of the
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`Settlement, informs class members of Genworth's projected future
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`rate increases for their policy, with the proviso that Genworth
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`cannot know with perfect accuracy the degree of rate increases
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`given the uncertainty of economic conditions, actuarial necessity,
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`and the approval of state regulatory bodies. Id. at 44-45.
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`The Special Election Letters will further provide class
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`members with Special Election Options, as described in APPENDIX C.
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`Id. Class members are divided into three categories with differing
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`options for each category. The first category comprises ''Class
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`Members with Policies That Are Not in Non-Forfeiture Status or
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`Fully Paid-up Status," excluding "Class Members whose level of
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`benefits are below the level of benefits required for any of the
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`below Options with the exception of Options I.E.3 and
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`I.B.4 . . . ." Id. at 46. These class members will be presented
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`with a choice between "Paid-Up Benefit Options" and "Reduced
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`Benefit Options."
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`The paid-up benefit option provides class members with two
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`sub-options:
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`1. A settlement option consisting of two components: (a) a
`paid-up benefit equivalent to 100% of the Class Member's paid-
`in premiums through December 31, 2016 plus the Class Member's
`paid-in premiums paid on or after January 1, 2021, if any,
`less any claims paid over the lifetime of the policy, and (b)
`a damages payment equivalent to premiums paid during the time
`period beginning January 1, 2017 through December 31, 2020.
`The total paid-up benefit available under this option shall
`not exceed the Class Member's current actual lifetime benefit
`at the time his or her election is processed less the Class
`Member's damages payment under this option.
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`2. A settlement option consisting of a paid-up benefit
`option equivalent to two times the difference between the
`Class Member's paid-in premiums to date less claims paid to
`the Class Member to date. The total paid-up benefit amount
`available under this option is capped at the Class Member's
`current actual lifetime benefit at the time his or her
`election is processed. This option will not include any
`damages payment.
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`The reduced benefit option for class members without stable premium
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`options or lifetime stable premium option policies has four sub-
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`options :
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`1. For Class Members with policies with a Benefit Inflation
`Option ("BIO")/ a settlement option consisting of two
`components: (a) a change in the Class Member's policy benefits
`that removes BIO with a reduction of their Daily Benefit
`Amount ("DBA") to their original DBA (i.e., the DBA that he
`or she hadprior to any BIO increases) for a reduced annual
`premium, and (b) a damages payment equal to four times the
`differential between the Class Member's current (as billed)
`annual premium for his or her existing policy and the current
`annual premium for the new reduced level of benefits.
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`2. For Class Members with lifetime benefit period policies
`and/or who have Partnership Plan policies, a settlement
`option consisting of two components: (a) a reduction of the
`Class Member's existing benefit period to the next lowest
`benefit option available (in the case for Class Members with
`lifetime benefit period policies, a 6-year benefit period)
`and a reduction to his or her current DBA (after benefit
`inflation) by 25%, for a reduced annual premium, and (b) a
`damages payment equal to four times the differential between
`the Class Member's current (as billed) annual premium for his
`or her existing policy and the current annual premium for the
`new reduced level of benefits.
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`3. For Class Members whose policies are regulated by States
`that have approved the LSPO, a LSPO with an extended
`elimination period that will maintain the Class Member's
`premiums at a stable rate for the life of his or her policy
`and consist of two additional components: (a) a change to his
`or her existing benefits reducing his or her DBA by 30%, and
`(b) a damages payment equal to four times the differential
`between the Class Member's current (as billed) annual premium
`and the current annual premium for the new LSPO, or $1,000,
`whichever is higher.
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`4. For Class Members whose policies are regulated by States
`that have approved the SPG but not the LSPO, a SPO with an
`extended elimination period that will maintain the Class
`Member's premiums at a stable rate until at least January 1,
`2028 and consist of two additional components: (a) a reduction
`of the Class Member's DBA by 30%, and (b) a damages payment
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`equal to four times the differential between the Class
`Member's current (as billed) annual premium and the current
`annual premium for the new SPO with the reduced level of
`benefits, or $1,000, whichever is higher.
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`Id. at 48-49. Class members with lifetime stable premium options
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`or stable premium options may opt for the following reduced benefit
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`option:
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`Class Members who currently have LSPO or SPO Policies will
`have an option that maintains their LSPO or SPO status and
`consists of two additional components: (a) a reduction of the
`Class Member's DBA by 40%, and (b) a damages payment equal to
`four times the differential between the Class Member's
`current (as billed) annual premium and the current annual
`premium for the new LSPO or SPO with the reduced level of
`benefits.
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`Id.
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`Class members in fully paid-up status may select from among
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`two options:
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`1. A settlement option consisting of two components: (a) a
`paid-up benefit equivalent to 100% of the Class Member's paid-
`in premiums through December 31, 2016 plus the Class Member's
`paid-in premiums paid on or after January 1, 2021, if any,
`less any claims paid over the lifetime of the policy, and (b)
`a damages payment equivalent to four times the Class Member's
`last annual premium when he or she was in premium-paying
`status. The total paid-up benefit available under this option
`shall not exceed the Class Member's current actual lifetime
`benefit at the time his or her election is processed less the
`Class Member's damages payment under this option.
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`2. A settlement option consisting of two components: (a) a
`reduction of the Class Member's existing benefit period to
`the next lowest benefit option available (in the case for
`Class Members in a Fully Paid-Up Status that have lifetime
`benefit period policies, a 6-year benefit period) and a
`reduction to his or her current DBA (after benefit inflation)
`by 25%, and (b) a damages payment equal to four times the
`differential between (i) what the Class Member's annual
`premium for his or her existing policy would be as of January
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`1, 2022 if the Class Member were still in a premium-paying
`status, and (ii) what the Class Member's annual premium for
`his or her existing policy would be as of January 1, 2022 for
`the new reduced level of benefits if the Class Member were
`still in a premium paying status.
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`Id. at 49-50.
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`Class members in non-forfeiture status are given only a single
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`special election option: a damages payment of $2500 in combination
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`with retaining their current paid-up benefit. Id. at 50.2
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`The damages payments have the effect of returning the
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`allegedly defrauded party to the status quo ante, or as near an
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`approximation of it as is feasible. The members of the plaintiff
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`class are in effect offered the option of redoing their earlier
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`selections with the advantage of the additional information
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`regarding Genworth's actual and projected rate increases that they
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`allege they were owed in the first place. Class members who do
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`make a different election from what they originally made are given
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`damages payments to compensate them for the difference between the
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`premiums they actually paid and the premiums they would have paid
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`if they had, at the time, made the elections they make now with
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`the benefit of the information they are alleged to have been owed.
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`Policyholders who, upon receiving the disclosures, elect not
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`to choose a reduced benefits option, are thereby treated as not
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`2 The settlement included an additional provision for class members
`in states that did not permit the disclosures, id. at 51, but,
`because there are no such states, that provision was not triggered
`and is not relevant to the settlement agreement.
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`having suffered cognizable harms over and above the fact of not
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`having receive the disclosures to which they are alleged to be
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`entitled. Those policyholders thus do not receive any damage
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`payments and are treated as having been made whole by the new
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`disclosures and opportunity to revise their past benefits
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`elections.
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`b. Release of Claims
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`At the settlement approval hearing, the objectors Diane and
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`Terry Crone, Walter Leen, Paul Lubell, Bonnie Fontenot Nielson and
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`Dennis Nielson, represented by counsel, objected to many different
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`aspects of the settlement agreement, including the provisions
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`governing the release of claims. After reviewing the provisions
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`of the settlement agreement to which the objectors had drawn
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`attention, the Court noted that the original settlement agreement
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`seemed to release both plaintiffs' and defendants' attorneys, and
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`Genworth itself, from liability arising out of any form of fraud
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`or false pretenses in connection with the execution of the
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`settlement. Insofar as the cause of action in the case related to
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`what are claimed to be material misrepresentations by Genworth,
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`the Court expressed concern that the release of claims would leave
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`policyholders without recourse if Genworth were less than
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`forthcoming in disclosures that were themselves intended to remedy
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`past disclosures that were less than forthcoming.
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`The Court
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`therefore infoinned the parties that the release in its existing
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`form could not be approved.
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`After the hearing, the parties submitted a revised version of
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`Paragraph 46(a) that incorporated the Court's concerns about the
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`issues raised by the objectors.
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`The paragraph that originally troubled the Court read as
`follows:
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`Named Plaintiffs and Class Members will further release the
`Genworth Released Parties and Class Counsel from any future
`claims, on any legal or equitable basis, relating to or
`arising out of the Special Election Options and/or statements
`and representations provided in connection with the Special
`Election Options including (but not limited to) any claim
`specifically relating to any decision, or non-decision, to
`maintain, modify, or give up coverage. Collectively, the
`claims described in this paragraph shall be referred to as
`the "Released Claims."
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`The modified release read as follows:
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`Upon the Final Settlement Date, each Class Member, as well as
`each Named Plaintiff, releases and discharges the Genworth
`Released Parties of and from any and all known or unknown,
`contingent or absolute, matured or unmatured, suspected or
`unsuspected, disclosed or undisclosed, foreseeable or
`unforeseeable, liquidated or unliquidated, existing or
`arising in the future, and accrued or unaccrued claims,
`demands, interest, penalties, fines, and causes of action,
`that the Named Plaintiffs and Class Members may have from the
`beginning of time through and including the Final Settlement
`Date that relate to claims alleged, or that have a reasonable
`connection with any matter of fact set forth in the Action
`including, but not limited to, any claims relating to rate
`increases on Class Policies. This release specifically
`includes any legal or equitable claim arising from or related
`to any election or policy change made or not made by any Class
`Members to his or her policy benefits prior to the Final
`Settlement Date. Named Plaintiffs and Class Members, subject
`to the exception set forth below, will further release the
`Genworth Released Parties and Class Counsel from any claims
`relating to or arising out of the Disclosures the Class
`Members are provided as part of the Settlement Agreement,
`including (but not limited to) claims specifically relating
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`to any alleged omissions in the Disclosures or any decision,
`or non-decision, to maintain, modify, or give up coverage
`based on the Disclosures or Special Election Options offered.
`Collectively, the claims described in this paragraph shall be
`referred to as the "Released Claims." The following claim
`shall not be a Released Claim; if within one year of the date
`a Class Member makes a Special Election or one year of the
`deadline for the Class Member to make a Special Election,
`whichever is earlier, a Class Member who believes he or she
`was harmed by an express and intentional misrepresentation in
`the Disclosures or in representations made by the Genworth
`Released Parties or Class Counsel about the Disclosures can
`pursue a claim in this Court via verified complaint or
`verified petition, provided that, before filing any such
`claim, the Class Member shall first notify the Parties of the
`basis for the claim and provide them with a reasonable
`opportunity to investigate and, if appropriate, remedy the
`alleged harm.
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`ECF No. 94-2.
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`The new language thus excepted from the general release claims
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`not only regarding alleged misrepresentation "in the Disclosures,"
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`but also claims regarding "representations made by the Genworth
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`Released Parties or Class Coiinsel about the Disclosures" (emphasis
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`added). This avoided the Court's worry regarding the original
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`release language, namely, that the Agreement was "asking them
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`[i.e., the plaintiff class] to give up fraud in the inducement
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`claims." Class counsel, Genworth, and all of Genworth's affiliates
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`(the "Genworth Released Parties") were made explicitly liable for
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`the kinds of misrepresentations the Court had contemplated at the
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`hearing (and which are most naturally a concern given the nature
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`of the suit).
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`The objectors, however, did not agree that this modification
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`resolved their concerns and renewed their objections to the
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`settlement.
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`ECF No. 97.
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`Their objection focused on the
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`requirement that a class member having such claims must go through
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`a dispute resolution process with Genworth and must file a verified
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`complaint to get the claim into court. They also objected to the
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`one-year limitation put on the release's exception for fraud
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`claims. ECF No. 94 at 4-5.
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`The plaintiffs' response, ECF No. 100, informed that the Crone
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`objectors had not even objected specifically to the breadth of the
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`release in their initial submission to the Court, much less to the
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`release's purported waiver of claims based on future conduct of
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`the defendants.
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`Id. at 2 ("Objectors never criticized or
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`challenged those provisions in their written objection in any
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`way."). The plaintiffs further argued that: (1) the release "does
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`not bar claims based on future conduct, nor did the Parties intend
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`it (or the original Release) to bar claims for future conduct",
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`and (2) "[t]o the extent that Genworth would deviate from the
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`content of these Disclosures or not make accurate Disclosures when
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`mailing Special Election Letters in accordance with the terms of
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`the Amended Settlement Agreement, claims for breach of the
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`Settlement Agreement are also not released and are subject to this
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`Court's continuing jurisdiction."^
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`3
`4
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` at 3.
` at 4.
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`15
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`Before the Court ruled on the renewed objections to the
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`settlement, the parties and the Crone objectors informed the Court
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`that they had reached a compromise and that the revised settlement
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`(at ECF No. 105 at 6-7) made several changes to the release
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`language. The final version of the relevant portion of the release
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`now reads:
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`A claim that a Class Member was harmed by an express and
`intentional misrepresentation: in the completed portion of
`the Disclosures that currently is bracketed in the template
`Special Election Letter appended as Appendix D to this
`Settlement Agreement, in the completed portions of the
`Special Election Options that are made available to that Class
`Member that currently are bracketed in the template Special
`Election Letter, or by the Genworth Released Parties or Class
`Counsel about the Disclosures, shall not be a Released Claim.
`A Class Member may pursue such a claim in this Court via
`complaint or petition within three years of the date the Class
`Member makes a Special Election or three years of the
`deadline for the Class Member to make a Special Election,
`whichever is earlier, provided that, before filing any such
`claim, the Class Member shall first notify the Parties of the
`basis for the claim and provide them with a reasonable
`opportunity to investigate and, if appropriate, remedy the
`alleged harm.
`
`In addition to revised wording at the beginning of the paragraph,
`
`the second revised release extends the period within which claims
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`of the sort described can be brought to a period of three years
`
`instead of one and no longer requires that a complaint making such
`
`a claim be a verified complaint. The parties' settlement with the
`
`objectors included not only revisions to the release language but
`
`also attorney fees for the objectors' counsel and incentive
`
`payments for the objectors. The objectors also agreed to withdraw
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`Case 3:21-cv-00019-REP Document 115 Filed 06/28/22 Page 17 of 45 PageID# 2489
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`all previous objections. Because a modification to a settlement
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`that serves only to expand class members' rights under the
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`settlement does not require a new notice and approval process, the
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`Court instead held a fairness hearing pursuant to Fed. R. Civ. P.
`
`23(e)(5), which requires Court approval for class action
`
`settlements between objectors and the parties that involve some
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`payment to the objectors as part of the consideration for
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`retraction of objections.
`
`c. Attorney Fees and Costs
`
`Class Counsel
`
`The settlement agreement provides a lump-sum attorney fee for
`
`class counsel in the form of a $1 million payment. That payment
`
`" [relates] to the injunctive relief that is siibstantially in the
`
`form of the Disclosures and Special Election Option" described
`
`above. ECF No. 113 H 60(a). The settlement further provides for
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`a contingency fee "equivalent to 15% . . . of the damages payments
`
`paid to Class Members who elect any of the following Special
`
`Election Options described in Appendix C, Options I.A.I, I.B.I,
`
`I.B.2, I.B.3, I.B.4, I.C.I, II.1, II.2, or III.l (the ^Contingency
`
`Fees')
`
`Id. H 60(b) . The contingency portion of class counsel's
`
`attorney fees are capped at $18.5 million. The payment of these
`
`fees does not subtract from the amount that Genworth will disburse
`
`to plaintiffs as part of their damages payments; rather, the 15%
`
`attorney fee will be paid by Genworth over and above the damage
`
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`Case 3:21-cv-00019-REP Document 115 Filed 06/28/22 Page 18 of 45 PageID# 2490
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`payments to class members. The settlement provides class counsel
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`with payment of litigation expenses up to $50,000, id. H 61(a),
`
`but the petition for attorney fees requests $26,701.96. These
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`amounts are in every respect lower than the attorney fees requested
`
`and awarded in the Skochin litigation.
`
`Objectors' Counsel
`
`The parties and the Crone objectors agreed that the objectors'
`
`attorneys could seek attorney fees of up to $1.4 million without
`
`objection from the parties. They further agreed that, if the
`
`objectors' attorneys pursued any form of appeal of the Court's
`
`decision with regard to the fees, that appeal would not disturb
`
`the finality of the Court's appeal of the settlement, which can be
`
`executed simultaneously with any appeal of attorney fees. ECF No.
`
`105 at 7-8.
`
`At the Rule 23(e)(5) hearing, the Court approved the petition
`
`for attorney fees but reduced the award to $1.2 million. The
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`attorney fees will be paid to objectors' counsel out of the
`
`parties' own funds and will not in any way subtract from the amount
`
`disbursed to members of the settlement class as part of the
`
`settlement.
`
`d. Incentive Payments
`
`Named Plaintiffs
`
`The settlement also includes incentive payments for the named
`
`plaintiffs in the case as compensation for their contributions to
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`Case 3:21-cv-00019-REP Document 115 Filed 06/28/22 Page 19 of 45 PageID# 2491
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`the case. Under the terms of the agreement, each named plaintiff
`
`will receive $15,000 in compensation for the investment of time,
`
`risk, and effort they put into the litigation.
`
`Objectors
`
`The parties' settlement with the objectors also included a
`
`provision of incentive payments to the Crone objectors. Those
`
`payments will be for $7500 each and will be paid directly to the
`
`objectors by Genworth.
`
`II. LEGAL STANDARD
`
`a. Attorney Fees and Costs
`
`Fed. R. Civ. P. 23(h) requires that a Court's award of
`
`attorney fees be ''reasonable."
`
`Attorney fees are generally
`
`calculated by one of two methods. The lodestar method calculates
`
`the product of hours worked by each attorney multiplied by each
`
`attorney's respective hourly rate.
`
`The common fund method
`
`apportions counsel a percentage of the settlement fund paid out to
`
`plaintiffs by defendants. The Court in Brown v. Transurban USA,
`
`Inc. further noted that "[the] current trend among the courts of
`
`appeal favors the use of a percentage method to calculate an award
`
`of attorneys' fees in common fund cases." 318 F.R.D. 560, 575
`
`(E.D. Va. 2016) (internal quotation marks and citation omitted).
`
`In the Skochin litigation, the Court treated a settlement with a
`
`structure closely analogous to that here as a "constructive common
`
`fund" settlement.
`
`Skochin v. Genworth Financial, Inc., No.
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`Case 3:21-cv-00019-REP Document 115 Filed 06/28/22 Page 20 of 45 PageID# 2492
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`3:19cv49, 2020 WL 6536140, at *6 {E.D. Va. Nov. 5, 2020). It is
`
`only constructively treated as a common fund settlement because
`
`the attorney fees and damages payments are not actually paid out
`
`of a common fund. Instead, as described above, for each class
`
`member who selects an option that entails a damages payment, class
`
`counsel will receive a separate payment from Genworth
`
`corresponding to 15% of th