In re Prudential Insurance Co. Sales Practices Litigation

A class of approximately eight million policyholders (policyholders) (plaintiffs) sued Prudential Insurance Company (Prudential) (defendant), alleging that Prudential had engaged in deceptive sales practices. Early in the litigation, Prudential approached the policyholders’ lead counsel to initiate settlement negotiations, but counsel declined to negotiate until the facts of the lawsuit had been sufficiently developed. After extensive discovery, as well as the filing and argument of numerous motions, the parties reached a settlement agreement pursuant to which class members would elect one of two methods for resolving their claims. Under the first method, dubbed Alternative Dispute Resolution (ADR), a policyholder could submit evidence of Prudential’s liability and potentially be eligible for full compensatory relief. Claims resolved pursuant to ADR were subject to a four-tiered review process involving both specially trained Prudential employees and independent reviewers. Prudential’s liability for ADR claims was not capped. Under the second method, dubbed Basic Claim Relief, policyholders were entitled to a variety of forms of noncompensatory relief without demonstrating liability. The district court approved the settlement agreement and provided notice to the policyholders. Three hundred policyholders objected and approximately 0.2 percent of the class opted out of the settlement. One objector appealed the district court’s approval of the settlement agreement.