The Fourth Circuit Court of Appeals rejected one policyholder’s efforts to overturn a $40 million class action settlement, finding that the lower court in Maryland did not abuse its discretion in approving the agreement reached between the policyholders and Banner Life Insurance and William Penn Insurance Companies. The firm’s lawyers Dee Miles, Rachel Minder, and Paul Evans helped negotiate the settlement on behalf of the plaintiffs in the class action lawsuit.
“We were confident that the objector, in this case, didn’t have a meritorious objection to the class, and it is unfortunate that the class members’ relief was delayed as a result of a meritless objection,” said Beasley Allen lawyer Dee Miles. “Nonetheless, we are thrilled that the policyholders will now be made whole by this certified and now-affirmed class settlement.”
The Fourth Circuit’s three-judge panel refused to part from the common standard for class action settlements on appeal, giving substantial deference to the lower court. The Fourth Circuit stated that this case could be the poster child for the deferential standard because the case was “chock-full of the most esoteric principles of life insurance accounting imaginable.” The 25-page published opinion clarified the standard in the Fourth Circuit for objections to class settlements as follow: Objectors must specify and support its objection, while the proponents of the settlement must demonstrate it is fair, reasonable, and adequate despite the objection. In affirming the approval of the settlement, the Fourth Circuit held that “[t]he district court did a commendably careful job in evaluating the Allen Trust’s arguments and determining that they did not justify refusing to certify the class.”
The named plaintiffs, represented by Beasley Allen lawyers and co-counsel, alleged the companies unfairly increased the cost of insurance charges on certain universal life insurance policies in 2015. In May 2019, Maryland Federal District Court Judge Richard D. Bennett approved the $38.2 million class-wide settlement between plaintiffs and Defendants Banner Life Insurance Co. and William Penn Life Insurance Co. This settlement consisted of more than 10,750 universal life policyholders.
However, before the Maryland court could give final approval, only one policyholder objected to the settlement, the 1988 Trust for Allen Children (Allen Trust). The Allen Trust argued that the settlement releases, but provides no compensation for, the speculative damages it termed “Deficit Account Harm.” Such “harm” was the basis for a separate class action filed by the Allen Trust after the Banner Life/William Penn settlement was announced. Prior to granting final approval of the settlement, the district court permitted the Allen Trust discovery to assist in determining whether the objection was meritorious, which the Fourth Circuit acknowledged was “an extremely unusual occurrence” that was within the district court’s discretion.
Beasley Allen and co-counsel from other firms represented the named plaintiffs and successfully argued before the district court judge that the settlement was fair, reasonable, and adequate to all class members notwithstanding the lone objector’s arguments. Further, the so-called “Deficit Account Harm” was nothing more than negative policy account value—an aspect known to and considered by plaintiffs, Banner, and William Penn during settlement discussions and in structuring the settlement ultimately reached.
The Allen Trust appealed to the Fourth Circuit, asking the court to allow the claims it raised in a separate lawsuit to proceed in individual litigation without regard to the overlapping factual predicate between the two suits. The named plaintiffs and defendants filed separate responses with the Fourth Circuit asking it to affirm the district court’s order. In affirming the district court’s approval of the settlement as fair to the class, the Fourth Circuit recognized the “settlement was reached after an extensive motions practice, extensive discovery and investigation of Banner and William Penn policies by Plaintiffs’ counsel and multiple settlement discussions and negotiations.”
The case is 1988 Trust for Allen Children v. Banner Life Insurance Company, case number 20-1630, in the U.S. Court of Appeals for the Fourth Circuit.
May 2020 – Banner Life Insurance & William Penn Life Insurance Class Action: $38.2 Million Settlement Approved
Nov 2019 – Class Action Settlement Valued at $40.7 Million Reached with Banner and William Penn
April 2016 – Beasley Allen Files Class Action Lawsuit Against Banner Life for Unfounded Premium Increases