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SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF KINGS
UNITED MARINE DIVISION LOCAL 333 INDEX NO. 506685/2016
BENEFICIAL ANNUITY FUND and its
Trustees: Michael Bull and Richard Russo,
Interpleader Plaintiff,
against
CHARLES MARTINEZ, on behalf of himself
and all others similarly situated,
and
STEVEN KEFALAS, on behalf of himself and
all others similarly situated,
Interpleader Defendants.
The above-entitled matter came before the Court on Joint Motion for Final
Approval for Class Action Settlement ("Motion for Final Approval").
IPROPOSED| FINAL JUDGMENT AND ORDER GRANTING FINAL APPROVAL OF
CLASS ACTION SETTLEMENT
Plaintiff, the UNITED MARINE DIVISION LOCAL 333 BENEFICIAL ANNUITY
FUND and its Trustees: Michael Bull and Richard Russo ("Annuity Fund"), filed this
Interpleader Complaint in Kings County Supreme Court on April 25, 2016 ("the Litigation")
against Interpleader Defendant Charles Martinez, on behalf of himself and all others similarly
situated ("Pooled Account Class"), and Steven Kefalas, on behalf of himself and all others
similarly situated ("Individual Account Class"). The Complaint asserted claims under CPLR §
1006(a) seeking relief for the Annuity Fund which may be exposed to liability as a result of
potential claims by the Pooled Account Class and the Individual Account Class, as well as relief
related to the upcoming termination of the Annuity Fund and distribution of Annuity Fund assets
to participants and beneficiaries.
After prolonged settlement negotiations, the parties executed a class-wide Settlement
Agreement and Release ("Settlement Agreement") on or about June 20, 2018. The parties filed
for a Motion for Preliminary Approval on the Settlement Agreement on June 22, 2018. On
August 17, 2018, the Court preliminarily approved the Settlement Agreement and appointed
Barnes, Iaccarino & Shepherd as counsel for the Pooled Account Class, and New & Karfunkel as
counsel for the Individual Account Class, ordered that notices be sent to class members, and set
November 27, 2018 as a date for a Fairness Hearing.
On November 20, 2018 the parties filed a Joint Motion for Final Approval of the
Settlement Agreement. No objections were filed.
The Court held a Fairness Hearing on November 27, 2018, No class member objected to
the settlement.
Having considered the Motion for Final Approval, the supporting Declaration of Patrick
McCullough, oral argument presented at the November 27, 2018 Fairness Hearing, and the
complete record in the matter, for the reasons set forth therein on the record at the November 27,
2018 Fairness Hearing, and for good cause shown:
NOW, THEREFORE, IT IS HEREBY ORDERED, ADJUDGED AND DECREED:
Certification of the Settlement Class
1. This Court certifies the following classes under Article 9 under the New York
Civil Practice Laws and Rules ("CPLR") for settlement purposes:
2
Pooled Account Class. The named Pooled Account Class representative Charles
Martinez and Annuity Fund participants whose Pension Plan benefit accounts are deposited in a
single account held by the Annuity Fund.
Individual Account Class. The named Individual Account Class representative Steve
Kefalas and Annuity Fund participants whose Annuity Fund benefit accounts are invested in
separate participant - directed accounts at the Principal Financial Group.
Approval of the Settlement Agreement
parties'
2. The Court hereby grants the Motion for Final Approval and approves the
settlement set forth in the Settlement Agreement.
3. CPLR § 908 requires judicial approval for any compromise of claims brought on
a class basis. In determining whether to approve a class action settlement, courts examine "the
fairness of the settlement, its adequacy, its reasonableness and the best interests of the class
members". See Fiala v. Metro. Life Ins. Co., 899 NYS 2d 531, 537 (Sup. Ct. N.Y. County
2010)(citing Klein v. Robert's Am. Gourmet Food, Inc., 28 A.D. 3d 63, 73 (N.Y. App. Div. 2d
Dep't 2006).
4. Relevant factors in determining whether settlement is fair, reasonable and
adequate include, "the likelihood of success, the extent of support from the parties, the judgment
of counsel, the presence of bargaining in good faith, the nature of the issues of law and fact". In
1"
re: Colt Indus. Shareholder Litig., 155 A.D. 2d 154, 160 (N.Y. App. Div. Dept. 1990)(internal
quotation marks omitted). New York Courts generally refer to the federal standards in making
this determination, in recognition that the two statutory frameworks are similar. Fernandez v.
Legends Hospitality, LLC, 2015 N.Y. Misc. Lexis 2193, at *3.
3
5. A court should also "balance[e] the value of [a proposed] settlement against the
present value of the anticipated recovery following a trial on its merits, discounted for the
inherent risks of litigation". Ryan v. Volume Servs. Am., 2013 N.Y. Misc. Lexis 932, at *3 (Sup.
Ct. N.Y. County Mar. 7, 2013).
6. In reaching a settlement, Class Counsel took into account the risk of establishing
liability, and also considered the time, delay, and financial repercussions in the event of trial and
appeal. The settlement negotiations were at all times hard fought and arm's length between
parties represented by counsel experienced in employee benefits actions and employee benefits
Defendants'
law, and they have produced a result that Plaintiff's counsel and counsel believe to
be in the best interest of the classes in light of the costs and risks of continued litigation. M
Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F. 3d. 96, 116 (2d. Cir. 2005)(internal quotation
omitted). Additionally, the parties have and will continue to vigorously contest Plaintiff's claims
if the action does not settle. In light of the strengths and weaknesses of the case, the settlement
easily falls within the range of reasonableness because it achieves a significant benefit for
Plaintiff and the Class Members in the face of significant obstacles. While there is a possibility
that each Class could recover more money, including interest, after trial, the Settlement
Agreement provides a significant benefit of a guaranteed and substantial payment to Class
Members, rather than "speculative payment of a hypothetically larger amount years down the
road". Ryan at *4. "The favorable reception by the Class also constitutes strong evidence of the
fairness of the proposed Settlement and supports judicial approval". Ryan at *4.
Settlement Procedure
Date"
7. The "Effective of the settlement shall be thirty (30) days following this
Date"
Order if no appeal is taken from the Order. If a party appeals this Order, the "Effective of
4
the settlement shall be the date the Court enters the fmal order and judgment after resolving any
appeals.
8. Within ten (10) days of the Effective Date, the Individual Account Class and the
Annuity Fund shall undertake all reasonable efforts to cause the Principal Financial Group to
transfer the Settlement Amount to the Qualified Settlement Fund.
9. Within ten (10) days of the Effective Date, the Settlement Claims Administrator
shall determine the Forfeited Balance of the Pooled Account Class based on the Pooled Account
Class Members who did not timely submit a Claim Form.
10. Within ten (10) days of the Effective Date, the Settlement Claims Administrator
shall send a notice to the Authorized Claimants notifying them of their account balance on record
Claimants'
at the Annuity Fund office that will be used to determine each Authorized ultimate
distribution and requesting documentation demonstrating the Authorized Claimant was a
participant in the Annuity Fund.
11. The Settlement Claims Administrator shall allow Authorized Claimants forty-five
(45) days to object to the account balance on record at the Annuity Fund office and submit any
relevant supporting documentation ("Second Claims Period").
12. Pooled Account Class Members that did not receive a Claim Form are eligible to
opt-in to the settlement and receive a distribution pursuant to the settlement if they contact the
Settlement Claims Administrator and complete a Claim Form on or before the expiration of the
Second Claims Period.
13. Within ten (10) days of the end of the Second Claims Period, the Annuity Fund
Trustees shall review all challenges and relevant supporting documentation submitted by
5
Authorized Claimants and determine in their sole discretion whether the Account Balances of
such Authorized Claimants should be adjusted.
14. Within ten (10) days of determining the correct account balances for the
Authorized Claimants, the Settlement Claims Administrator shall transfer the Forfeited Balance
to the Qualified Settlement Fund and pay all outstanding administrative expenses incurred
through the date of execution of the Settlement Agreement from the Qualified Settlement Fund.
15. Within ten (10) days of determining the correct account balances for the
Authorized Claimants, the Annuity Fund Trustees shall deduct amounts from all Pooled Account
Class Members and Individual Account Class Members necessary to cover all Post-Settlement
Administrative Expenses and estimated Post-Distribution Administrative Expenses.
16. Within ten (10) days of paying all Post-Settlement Administrative Expenses and
deducting amounts to cover estimated Post-Distribution Administrative Expenses, the Settlement
Claims Administrator shall either distribute the surplus assets from the Qualified Settlement
Fund to the Authorized Claimants on a pro-rata basis corresponding to their account balance, or
deduct any deficiency from the Authorized Claimant's balances on a pro-rata basis
corresponding to their account balance.
17. The Settlement Claims Administrator will disburse Settlement Checks to the
Authorized Claimants within fifteen (15) days of the payment of all outstanding administrative
expenses.
18. Within ten (10) days of all Post-Settlement Administrative Expenses and
deducting amounts to cover estimated Post-Distribution Administrative Expenses, the Annuity
Fund shall undertake allreasonable efforts to cause the Principal Financial Group to remove the
6
restrictions placed on the accounts of the Individual Account Class Members who participate in
the settlement.
19. The Annuity Fund Trustees shall terminate the Annuity Fund on a date
determined by the Trustees.
20. Any Individual Account Class Members that have not elected to receive a full
distribution of their account at Principal Financial Group be provided with a mandatory full
distribution of their accounts subject to the terms of the Annuity Plan, including the ability to roll
their account over to another retirement account, by a date to be determined by the Annuity Fund
Trustees in connection with the termination of the Annuity Fund.
21. Within thirty (30) days of the disbursement of Settlement Checks, the Settlement
Claims Administrator shall establish a money market account ("Restitution Account") for the
receipt of periodic restitution checks from the United States Department of Treasury in
connection with the August 18, 2011 order entered in United States v. Chiaese in the United
States District Court for the District of New Jersey, Case No. 10-8235 ("Restitution Checks").
22. The Settlement Claims Administrator shall have authority to hire professionals
and deduct reasonable administrative expenses from the Restitution Account, including expenses
for the Settlement Claims Administrator's services. The Settlement Claims Administrator's
monthly fees with respect to the Restitution Account shall not exceed the monthly fees charged
by the Settlement Claims Administrator for his monthly services charged to the Annuity Fund for
claims administration in this class action litigation.
23. The Settlement Claims Administrator shall distribute the balance of the
Restitution Account to Authorized Claimants on a pro rata basis in relation to each Authorized
7
Claimant's final disbursement when the balance of the Restitution Account exceeds $25,000,
leaving an appropriate balance to cover administrative expenses.
24. Upon the Effective Date, this litigation shall be dismissed with prejudice and all
members of the Classes who have not excluded themselves from the settlement shall be
permanently enjoined from pursuing and/or seeking to reopen claims that have been released
pursuant to the Settlement Agreement and this Action.
25. Notwithstanding paragraph 24, this Court retains jurisdiction over this action for
the purpose of enforcing the Settlement Agreement and overseeing the distribution of settlement
funds. The parties shall abide by all terms of the Settlement Agreement which are incorporated
herein, and this Order.
IT IS ORDERED, this day of November, 2018.
Entered:
HONORABLE LAWRENCE KNIPEL, J.S.C.
20682421vl
8
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SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS UNITED MARINE DIVISION LOCAL 333 INDEX NO. 506685/2016 BENEFICIAL ANNUITY FUND and its Trustees: Michael Bull and Richard Russo, Interpleader Plaintiff, against CHARLES MARTINEZ, on behalf of himself and all others similarly situated, and STEVEN KEFALAS, on behalf of himself and all others similarly situated, Interpleader Defendants. The above-entitled matter came before the Court on Joint Motion for Final Approval for Class Action Settlement ("Motion for Final Approval"). IPROPOSED| FINAL JUDGMENT AND ORDER GRANTING FINAL APPROVAL OF CLASS ACTION SETTLEMENT Plaintiff, the UNITED MARINE DIVISION LOCAL 333 BENEFICIAL ANNUITY FUND and its Trustees: Michael Bull and Richard Russo ("Annuity Fund"), filed this Interpleader Complaint in Kings County Supreme Court on April 25, 2016 ("the Litigation") against Interpleader Defendant Charles Martinez, on behalf of himself and all others similarly situated ("Pooled Account Class"), and Steven Kefalas, on behalf of himself and all others similarly situated ("Individual Account Class"). The Complaint asserted claims under CPLR § 1006(a) seeking relief for the Annuity Fund which may be exposed to liability as a result of potential claims by the Pooled Account Class and the Individual Account Class, as well as relief related to the upcoming termination of the Annuity Fund and distribution of Annuity Fund assets to participants and beneficiaries. After prolonged settlement negotiations, the parties executed a class-wide Settlement Agreement and Release ("Settlement Agreement") on or about June 20, 2018. The parties filed for a Motion for Preliminary Approval on the Settlement Agreement on June 22, 2018. On August 17, 2018, the Court preliminarily approved the Settlement Agreement and appointed Barnes, Iaccarino & Shepherd as counsel for the Pooled Account Class, and New & Karfunkel as counsel for the Individual Account Class, ordered that notices be sent to class members, and set November 27, 2018 as a date for a Fairness Hearing. On November 20, 2018 the parties filed a Joint Motion for Final Approval of the Settlement Agreement. No objections were filed. The Court held a Fairness Hearing on November 27, 2018, No class member objected to the settlement. Having considered the Motion for Final Approval, the supporting Declaration of Patrick McCullough, oral argument presented at the November 27, 2018 Fairness Hearing, and the complete record in the matter, for the reasons set forth therein on the record at the November 27, 2018 Fairness Hearing, and for good cause shown: NOW, THEREFORE, IT IS HEREBY ORDERED, ADJUDGED AND DECREED: Certification of the Settlement Class 1. This Court certifies the following classes under Article 9 under the New York Civil Practice Laws and Rules ("CPLR") for settlement purposes: 2 Pooled Account Class. The named Pooled Account Class representative Charles Martinez and Annuity Fund participants whose Pension Plan benefit accounts are deposited in a single account held by the Annuity Fund. Individual Account Class. The named Individual Account Class representative Steve Kefalas and Annuity Fund participants whose Annuity Fund benefit accounts are invested in separate participant - directed accounts at the Principal Financial Group. Approval of the Settlement Agreement parties' 2. The Court hereby grants the Motion for Final Approval and approves the settlement set forth in the Settlement Agreement. 3. CPLR § 908 requires judicial approval for any compromise of claims brought on a class basis. In determining whether to approve a class action settlement, courts examine "the fairness of the settlement, its adequacy, its reasonableness and the best interests of the class members". See Fiala v. Metro. Life Ins. Co., 899 NYS 2d 531, 537 (Sup. Ct. N.Y. County 2010)(citing Klein v. Robert's Am. Gourmet Food, Inc., 28 A.D. 3d 63, 73 (N.Y. App. Div. 2d Dep't 2006). 4. Relevant factors in determining whether settlement is fair, reasonable and adequate include, "the likelihood of success, the extent of support from the parties, the judgment of counsel, the presence of bargaining in good faith, the nature of the issues of law and fact". In 1" re: Colt Indus. Shareholder Litig., 155 A.D. 2d 154, 160 (N.Y. App. Div. Dept. 1990)(internal quotation marks omitted). New York Courts generally refer to the federal standards in making this determination, in recognition that the two statutory frameworks are similar. Fernandez v. Legends Hospitality, LLC, 2015 N.Y. Misc. Lexis 2193, at *3. 3 5. A court should also "balance[e] the value of [a proposed] settlement against the present value of the anticipated recovery following a trial on its merits, discounted for the inherent risks of litigation". Ryan v. Volume Servs. Am., 2013 N.Y. Misc. Lexis 932, at *3 (Sup. Ct. N.Y. County Mar. 7, 2013). 6. In reaching a settlement, Class Counsel took into account the risk of establishing liability, and also considered the time, delay, and financial repercussions in the event of trial and appeal. The settlement negotiations were at all times hard fought and arm's length between parties represented by counsel experienced in employee benefits actions and employee benefits Defendants' law, and they have produced a result that Plaintiff's counsel and counsel believe to be in the best interest of the classes in light of the costs and risks of continued litigation. M Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F. 3d. 96, 116 (2d. Cir. 2005)(internal quotation omitted). Additionally, the parties have and will continue to vigorously contest Plaintiff's claims if the action does not settle. In light of the strengths and weaknesses of the case, the settlement easily falls within the range of reasonableness because it achieves a significant benefit for Plaintiff and the Class Members in the face of significant obstacles. While there is a possibility that each Class could recover more money, including interest, after trial, the Settlement Agreement provides a significant benefit of a guaranteed and substantial payment to Class Members, rather than "speculative payment of a hypothetically larger amount years down the road". Ryan at *4. "The favorable reception by the Class also constitutes strong evidence of the fairness of the proposed Settlement and supports judicial approval". Ryan at *4. Settlement Procedure Date" 7. The "Effective of the settlement shall be thirty (30) days following this Date" Order if no appeal is taken from the Order. If a party appeals this Order, the "Effective of 4 the settlement shall be the date the Court enters the fmal order and judgment after resolving any appeals. 8. Within ten (10) days of the Effective Date, the Individual Account Class and the Annuity Fund shall undertake all reasonable efforts to cause the Principal Financial Group to transfer the Settlement Amount to the Qualified Settlement Fund. 9. Within ten (10) days of the Effective Date, the Settlement Claims Administrator shall determine the Forfeited Balance of the Pooled Account Class based on the Pooled Account Class Members who did not timely submit a Claim Form. 10. Within ten (10) days of the Effective Date, the Settlement Claims Administrator shall send a notice to the Authorized Claimants notifying them of their account balance on record Claimants' at the Annuity Fund office that will be used to determine each Authorized ultimate distribution and requesting documentation demonstrating the Authorized Claimant was a participant in the Annuity Fund. 11. The Settlement Claims Administrator shall allow Authorized Claimants forty-five (45) days to object to the account balance on record at the Annuity Fund office and submit any relevant supporting documentation ("Second Claims Period"). 12. Pooled Account Class Members that did not receive a Claim Form are eligible to opt-in to the settlement and receive a distribution pursuant to the settlement if they contact the Settlement Claims Administrator and complete a Claim Form on or before the expiration of the Second Claims Period. 13. Within ten (10) days of the end of the Second Claims Period, the Annuity Fund Trustees shall review all challenges and relevant supporting documentation submitted by 5 Authorized Claimants and determine in their sole discretion whether the Account Balances of such Authorized Claimants should be adjusted. 14. Within ten (10) days of determining the correct account balances for the Authorized Claimants, the Settlement Claims Administrator shall transfer the Forfeited Balance to the Qualified Settlement Fund and pay all outstanding administrative expenses incurred through the date of execution of the Settlement Agreement from the Qualified Settlement Fund. 15. Within ten (10) days of determining the correct account balances for the Authorized Claimants, the Annuity Fund Trustees shall deduct amounts from all Pooled Account Class Members and Individual Account Class Members necessary to cover all Post-Settlement Administrative Expenses and estimated Post-Distribution Administrative Expenses. 16. Within ten (10) days of paying all Post-Settlement Administrative Expenses and deducting amounts to cover estimated Post-Distribution Administrative Expenses, the Settlement Claims Administrator shall either distribute the surplus assets from the Qualified Settlement Fund to the Authorized Claimants on a pro-rata basis corresponding to their account balance, or deduct any deficiency from the Authorized Claimant's balances on a pro-rata basis corresponding to their account balance. 17. The Settlement Claims Administrator will disburse Settlement Checks to the Authorized Claimants within fifteen (15) days of the payment of all outstanding administrative expenses. 18. Within ten (10) days of all Post-Settlement Administrative Expenses and deducting amounts to cover estimated Post-Distribution Administrative Expenses, the Annuity Fund shall undertake allreasonable efforts to cause the Principal Financial Group to remove the 6 restrictions placed on the accounts of the Individual Account Class Members who participate in the settlement. 19. The Annuity Fund Trustees shall terminate the Annuity Fund on a date determined by the Trustees. 20. Any Individual Account Class Members that have not elected to receive a full distribution of their account at Principal Financial Group be provided with a mandatory full distribution of their accounts subject to the terms of the Annuity Plan, including the ability to roll their account over to another retirement account, by a date to be determined by the Annuity Fund Trustees in connection with the termination of the Annuity Fund. 21. Within thirty (30) days of the disbursement of Settlement Checks, the Settlement Claims Administrator shall establish a money market account ("Restitution Account") for the receipt of periodic restitution checks from the United States Department of Treasury in connection with the August 18, 2011 order entered in United States v. Chiaese in the United States District Court for the District of New Jersey, Case No. 10-8235 ("Restitution Checks"). 22. The Settlement Claims Administrator shall have authority to hire professionals and deduct reasonable administrative expenses from the Restitution Account, including expenses for the Settlement Claims Administrator's services. The Settlement Claims Administrator's monthly fees with respect to the Restitution Account shall not exceed the monthly fees charged by the Settlement Claims Administrator for his monthly services charged to the Annuity Fund for claims administration in this class action litigation. 23. The Settlement Claims Administrator shall distribute the balance of the Restitution Account to Authorized Claimants on a pro rata basis in relation to each Authorized 7 Claimant's final disbursement when the balance of the Restitution Account exceeds $25,000, leaving an appropriate balance to cover administrative expenses. 24. Upon the Effective Date, this litigation shall be dismissed with prejudice and all members of the Classes who have not excluded themselves from the settlement shall be permanently enjoined from pursuing and/or seeking to reopen claims that have been released pursuant to the Settlement Agreement and this Action. 25. Notwithstanding paragraph 24, this Court retains jurisdiction over this action for the purpose of enforcing the Settlement Agreement and overseeing the distribution of settlement funds. The parties shall abide by all terms of the Settlement Agreement which are incorporated herein, and this Order. IT IS ORDERED, this day of November, 2018. Entered: HONORABLE LAWRENCE KNIPEL, J.S.C. 20682421vl 8