Clark R. Huffman et. al v. The Prudential Insurance Company of America

In The United States District Court For The Eastern District of Pennsylvania: Civil Action No. 2:10-CV-05135-JFL

NOTICE OF CLASS ACTION SETTLEMENT

 

TO:  Beneficiaries of employee benefit plans that were sponsored by JPMorgan Chase Bank, Inc. and Con-way, Inc. (the "Plans") and insured by The Prudential Life Insurance Company of America (“Prudential”), whose death benefits were paid using an Alliance Account instead of a check between September 30, 2004 and October 31, 2011.

 

A federal court authorized this notice.
This is not a solicitation from a lawyer
.

 

Your legal rights are affected whether you act, or don’t act.  Read this notice carefully. These rights and options—and the deadlines to exercise them—are explained in this notice.

 

 

Your Legal Rights and Options in this Settlement:

Do Nothing:

You will be paid a pro rata share of the net settlement proceeds in accordance with the Distribution Plan as long as your calculated distribution is not less than $5.00.  Class members whose calculated distribution is less than $5.00 will not receive a distribution under this settlement.  See section 4 of this notice for more details.

Object:

Write to the Court about why you don't like the settlement and do not want it approved.  Act by February 12, 2019.  See section 10 of this notice for more details.

Go to a Hearing:

Ask to speak in Court about the fairness of the settlement on April 2, 2019. See section 12 of this notice for more details.

  1. WHY DID I RECEIVE THIS NOTICE?

    1. You received a notice because it appears from Prudential’s records that you are a member of the class that is covered by this lawsuit.  Notice of this class action was recently mailed to you. Our records indicate that you did not ask to be excluded from this case.  The Court directed that the notice be sent to you to inform you about a proposed settlement of this lawsuit and your rights and options. 

  2. WHAT IS THIS LAWSUIT ABOUT?

    1. This lawsuit concerns Prudential’s use of retained asset accounts called “Alliance Accounts” to settle claims for life insurance benefits due under the Plans.  A retained asset account is a method of settling claims in which an insurance company: (a) establishes an interest-bearing account through a bank for the beneficiary, (b) issues the beneficiary a book of blank drafts that resembles a checkbook to use to access the settlement amount, and (c) retains and invests the money owed to the beneficiary until it is called upon to transfer funds to the bank to cover drafts drawn on the account. 

       

      The Plaintiffs allege that Prudential’s use of Alliance Accounts to settle claims is unauthorized because the applicable insurance policies provide that benefits will be paid to the beneficiary in “one sum” unless the beneficiary requests another form of payment, and allege that the practice is unfair because Prudential keeps for itself most of the profits it earns investing the money owed to the beneficiaries.  The Plaintiffs further allege that the practice is improper because Prudential controls how much income it receives from the practice and does not disclose this income to the Plans.  The Plaintiffs allege that these practices violate a federal law, the Employee Retirement Income Security Act of 1974 (“ERISA”), that requires persons who administer employee benefit plans to act in accordance with the plans’ terms and solely in the interests of the plans’ beneficiaries (“Count 1”), and prohibits plan administrators from earning compensation for their services unless certain requirements are met (“Count 2”). 

       

      Prudential denies these allegations and contends that its conduct with respect to settling claims via Alliance Accounts was not governed by ERISA, was authorized by the Plans, and was lawful.

  3. WHAT HAS HAPPENED SO FAR IN THE CASE?

    1. The parties filed motions for summary judgment asking the Court to rule in their favor without a trial.  The Court ruled in Plaintiffs' favor as to Count 1, denied both parties' motions as to Count 2, and ruled in Prudential's favor as to Count 3, which asserted that Prudential breached certain duties that it allegedly owed under state law.  The Plaintiffs filed a motion for class certification asking the Court to allow them to represent other beneficiaries who were affected by Prudential's practices.  The Court granted this motion in part and ruled that the Plaintiffs may represent a class ("Class") that consists of:

       

      All beneficiaries of ERISA-governed employee benefit plans that were sponsored by JPMorgan Chase Bank, Inc. or Con-way, Inc., and that were insured by group life insurance contracts issued by Prudential that provided “Life Insurance is normally paid to the beneficiary in one sum,” for whom Prudential established an “Alliance Account” between September 30, 2004 and October 31, 2011.  Excluded from the Class are beneficiaries of contracts that were sitused in Arkansas, Colorado, or Nevada, and beneficiaries who resided in Maryland.

       

      Following the Court's rulings and its order setting the matter for trial, both sides agreed to this settlement.  The Class Representatives and their attorneys think the settlement is in the best interests of all Class Members.

  4. WHAT DOES THE SETTLEMENT PROVIDE?

    1. Prudential has agreed to pay Nine Million Dollars ($9,000,000.00) to settle the lawsuit.  The settlement proceeds will be distributed to each class member based upon his or her share in accordance with the Distribution Plan.  The amount payable to each Class Member will vary, depending on, among other things, the size of your life insurance benefit, how long your Alliance Account was open, the amount of interest credited to your Alliance Account, and the passage of time. Should the amount allocated to any Class Member be less than $5.00 (net of fees and expenses), that Class Member will not receive a payment.

       

      The Settlement Agreement, the Distribution Plan and other papers, in both English and Spanish, can be found in the "Important Documents" and "Para Español?" sections of this website.

  5. WHEN AND WHERE WILL THE COURT DECIDE WHETHER TO APPROVE THE SETTLEMENT?

    1. The Court will hold a hearing to decide whether to approve the settlement.  You may attend and you may ask to speak, but you don’t have to.  The hearing will be held on April 2, 2019, at 9:00 a.m. in Courtroom C, Third Floor, located at the Edward N. Cahn U.S. Courthouse and Federal Bldg., 504 W. Hamilton Street, Allentown, Pennsylvania 18101. At this hearing the Court will consider whether the settlement is fair, reasonable, and adequate.  If there are objections, the Court will consider them.  The Court will listen to people who have asked to speak at the hearing. The Court may also decide how much to pay to Class Counsel.  At or after the hearing, the Court will decide whether to approve the settlement.

       

      The Court has reserved the right to change the date and time of the Fairness Hearing without further notice to the Class.  If you would like to attend the hearing, please check the "Key Dates"  section of this website for any changes of the hearing date.

  6. HOW AND WHEN CAN I RECEIVE PAYMENT?

    1. You need to do nothing.  If the settlement is approved and your share of the settlement (net of fees and expenses) is $5.00 or more, a check will be mailed to you at this same address.  If there is an appeal, then settlement checks will not be issued until the appeal is resolved and the order approving the settlement is approved by the appeals court.

  7. WHAT IF I CURRENTLY HAVE A BALANCE IN AN ALLIANCE ACCOUNT?

    1. If you currently have a balance in an Alliance Account, Prudential will continue to administer the account in accord with the account agreement.  Prudential will continue to guarantee the balance and credit interest on that balance.  Prudential will be free to invest the funds associated with that balance as it sees fit.  Prudential may make more investment income using your funds than the interest that it pays to you.  Part of this settlement includes a release of all claims relating to the rate of interest credited to Alliance Accounts issued under the Plans. As was always the case, you may choose to close your Alliance Account or keep it open.

  8. DO I HAVE A LAWYER IN THIS CASE?

    1. The Court appointed John C. Bell, Jr., Esq., Lee W. Brigham, Esq., Cary L. Flitter, Esq., Stuart T. Rossman, Esq., and M. Scott Barrett, Esq. to represent you and other Class Members.  These lawyers are called Class Counsel.  You will not be personally charged for these lawyers.  If you want to be represented by your own lawyer, you may hire one at your own expense.

  9. HOW WILL THE LAWYERS BE PAID?

    1. Class Counsel will ask the Court to award attorneys’ fees of no more than one-third of the settlement fund and to seek reimbursement of their expenses incurred to prosecute this action and administer this settlement in an amount no greater than One Hundred Ninety Thousand Dollars ($190,000.00) and to seek an incentive award of up to Five Thousand Dollars ($5,000.00) to each of the Class Representatives, all to be paid from the Settlement Fund. Attorneys’ fees, expenses and incentive awards will be determined by the Court following a hearing and will be based upon the evidence presented and legal principles that govern such awards.  The Court may award less than the amounts requested. Prudential has agreed not to oppose the application for attorneys’ fees, expenses and incentive awards.

  10. HOW DO I TELL THE COURT IF I DON'T LIKE THE SETTLEMENT?

    1. If you are a Class Member, you can object to the settlement if you don’t like any part of it.  You can give reasons why you think the Court should not approve it.  The Court will consider your views.  To object, you must send a letter saying that you object to the settlement. Include your name, address, telephone number, and signature, and the reasons you object to the settlement. DO NOT CALL THE COURT.  Mail the objection to the Clerk of the Court, Kate Barkman, James A. Byrne U.S. Courthouse, 601 Market Street, Philadelphia, PA 19106, to be postmarked no later than February 12, 2019, and received by the Clerk no later than February 19, 2019.

  11. DO I HAVE TO COME TO THE HEARING?

    1. No, but you are welcome to come at your own expense.  If you send an objection, you don’t have to come to Court.  As long as you mailed your written objection on time, the Court will consider it.  You may also pay your own lawyer to attend, but this is not necessary.

  12. MAY I SPEAK AT THE HEARING?

    1. You may ask the Court for permission to speak at the Fairness Hearing.  To do so, you must send a letter saying that it is your “Notice of Intention to Appear.” Include your name, address, telephone number, and your signature.  Your Notice of Intention to Appear must be received by March 3, 2019, by the Clerk of the Court at the address noted in FAQ 10. 

  13. ARE THERE MORE DETAILS ABOUT THE SETTLEMENT?

    1. You may visit the "Important Documents" part of this website, where you will find copies of the Settlement Agreement and significant orders, as well as other information that may help you determine whether you are a Class Member and whether you are eligible for a payment. You may also call 1-888-262-6044 toll free, or write to Huffman Class Action, c/o Settlement Administrator, P.O. Box 23369, Jacksonville, FL 32241 and [email protected]

       

      The papers filed in this case are also available for inspection during business hours at the Office of the Clerk of Court, United States District Court for the Eastern District of Pennsylvania, 601 Market Street, Philadelphia, PA 19106, or on the internet at http://www.paed.uscourts.gov/.