United States District Court, District of Columbia
EPHRAIM GREENBERG, individually on behalf of himself, and on behalf of all others similarly situated, Plaintiff,
CAROLYN W. COLVIN, in her official capacity as Acting Commissioner of the Social Security Administration, and THE SOCIAL SECURITY ADMINISTRATION, Defendants.
ROSEMARY M. COLLYER, District Judge.
On November 21, 2013, Plaintiffs brought a class action lawsuit against the Social Security Administration and Acting Commissioner Carolyn W. Colvin, in her official capacity. The parties quickly began settlement negotiations and submitted to the Court a proposed Settlement Agreement, which was preliminarily approved on April 8, 2015. At the Fairness Hearing on June 30, 2015, the parties jointly moved for final approval of the Settlement Agreement and requested a ruling from the bench so that the Social Security Administration could calculate the monies to be paid to Class Members. At the Fairness Hearing, the Court approved the Settlement Agreement and Consent Judgment [Dkt. 56], finding it fair, reasonable, and adequate, and set the attorney fee award at 20%, see Order [Dkt. 57]. The Court now issues this Memorandum Opinion to further explain its reasoning.
On November 21, 2013, Plaintiff Ephraim Greenberg filed a class action complaint alleging that the application of a statutory provision known as the Windfall Elimination Provision (WEP), implemented by the Social Security Administration (SSA), unlawfully reduced his and other similarly situated claimants' SSA benefits. See generally Compl. [Dkt. 1]. Pursuant to WEP, SSA reduces a beneficiary's Old Age, Survivors, and/or Disability Insurance Benefits (OASDI Benefits or Social Security Benefits) in instances where, for the same months that a claimant is entitled to OASDI Benefits, that claimant is also entitled to a monthly pension "based in whole or in part on [ ] earnings in employment which was not covered under Social Security." Compl. ¶ 24 (quoting 20 C.F.R. § 404.213(a)). SSA's regulations also provide that "[p]ensions from noncovered employment outside the United States include pensions from social insurance systems that base benefits on earnings but not on residence or citizenship." Id. ¶ 25 (quoting 20 C.F.R. § 404.213(a)).
As relevant here, SSA applied WEP to reduce OASDI Benefits in cases where recipients, such as Plaintiff and other similarly situated individuals, also received Old Age Benefits from the National Insurance Institute of Israel (NII Old Age Benefits). NII Old Age Benefits are guaranteed to all residents of Israel who have reached a certain age, subject to residency requirements and payment into the system for a minimum time period. Compl. ¶¶ 27-29. Mr. Greenberg alleged that his OASDI Benefits should not be subject to WEP reduction based on his receipt of NII Old Age Benefits.
Soon after the Complaint was filed in this case, the parties began settlement discussions. They filed a joint status report on April 2, 2014, stating that they had reached a partial resolution of Mr. Greenberg's claims on a class-wide basis and that the parties agreed that SSA should not apply WEP to a beneficiary who receives a NII Old Age pension. See Joint Status Report [Dkt. 11]. The parties reported that SSA had agreed to take the following actions: (1) rescind the practice of applying WEP to NII Old Age Benefits; (2) recalculate all Social Security benefits where WEP had been applied because a beneficiary received NII Old Age Benefits; and (3) pay all benefits that would have been paid had WEP not been applied. Id. at 2.
Upon notice from the parties that they were negotiating a settlement based on anticipated class certification, the Court certified a class after considering the requirements of Rule 23. See Op. [Dkt. 19]; Order [Dkt. 20]. On March 18, 2015, Plaintiffs filed an Unopposed Motion for Preliminary Approval of the Parties' Settlement Agreement and for Approval of the Notice Plan. See Unopposed Mot. [Dkt. 38]; Mem. in Support of Unopposed Mot. [Dkt. 38-2] (Prelim. Mem.). Following a status conference with the Court, the parties resubmitted an amended Settlement Agreement on March 30, 2015. See Notice [Dkt. 39]; Am. Settlement Agreement [Dkt. 39-1] (Settlement Agreement). On April 8, 2015, the Court preliminarily approved the Settlement Agreement and the proposed form of notice. See Order [Dkt 40]. Counsel for the class, Kelley Drye & Warren LLP (Class Counsel), explained their plan to notify the class as follows:
(1) a notice to be mailed to all potential Class Members identified by the SSA or Class Counsel, which includes relevant details about the litigation and benefits of the Settlement Agreement, and instruction on how to access a website dedicated to this case and the settlement for more information; (2) the "Greenberg Lawsuit Website, " www.ssa.gov/greenberg, which is to be established and maintained by the SSA on its official website and which will host information pertaining to the Lawsuit including a comprehensive, detailed notice form; (3) toll-free phone numbers established and operated by the SSA, to which Class Members and other persons can call to ask questions about the Settlement Agreement and to request a claim review; and (4) Class Counsel's request that Agudath Israel of America and the Association of Americans and Canadians in Israel post the Settlement Agreement and Long Form Notice on their websites and otherwise notify their members of the Lawsuit and settlement.
Prelim. Mem. at 23; see also Settlement Agreement, Section III, Art. 2 (setting out procedures for giving notice to Class Members).
On June 29, 2015, the parties confirmed that they had satisfied the Notice Plan's Requirements. June 29 Status Report [Dkt. 52] at 2-3. The June 29 Status Report indicated that SSA had completed mailing of notice packets to the 1, 696 potential Class Members by April 17, 2015. Id. The settlement was publicized to various organizations in Israel and advertised in many Israeli newspapers and on an Israeli radio show. Id. at 3-4. SSA also established a webpage to explain the settlement and post relevant documents. Id. at 3.
On June 30, 2015 the Court held a Fairness Hearing to consider the parties' request for final approval of Class Action Settlement, and Class Counsel's Fee Application [Dkt. 41]. No Class Member appeared in support of or in opposition to the Settlement, though the Court received eight letters (from nine individuals) objecting to Class Counsel's request for a 25% attorney fee award. At the Fairness Hearing, the parties moved for final approval of the Settlement Agreement and sought a ruling on Class Counsel's application for attorney fees; SSA could not pay Class Members their past-due benefits until after the Court approved the Settlement Agreement and set the percentage of the attorney fee award to be withheld from those benefits. Fee Application at 2 n.1.
For the reasons stated at the Fairness Hearing, as supplemented by this Memorandum Opinion, the Settlement Agreement and Consent Judgment is fair, reasonable, and adequate. Class Counsel is entitled to an attorney fee award of 20% of each payment of past-due benefits made by SSA as a result of this class action case. At the Fairness Hearing, the Court approved the Settlement Agreement and Consent Judgment [Dkt. 56] and set the attorney fee award at 20%. Order [Dkt. 57].
A. The Settlement
Settlement of a certified class action requires a court's approval. Fed.R.Civ.P. 23(e). Before granting its approval, a court has a duty to determine that the settlement is "fair, adequate, and reasonable and is not the product of collusion between the parties." In re Vitamins Antitrust Class Actions, 215 F.3d 26, 30 (D.C. Cir. 2000). A court "must strike a balance between a rubber stamp approval and the detailed and thorough investigation that it would undertake if it were actually trying the case.'" Vista Healthplan, Inc. v. Warner Holdings Co. III, Ltd., 246 F.R.D. 349, 357 (D.D.C. 2007) (citation omitted). Nonetheless, "the discretion of the Court to reject a settlement is restrained by the principle of preference' that encourages settlements." In re Black Farmers Discrim. Litig., 856 F.Supp.2d 1, 30 (D.D.C. 2011).
In this Circuit, there is no single test for evaluating a proposed settlement under Rule 23(e). See In re LivingSocial Marketing and Sales Practice Litigation, 298 F.R.D. 1, 11 (D.D.C. 2013). District courts consider the facts and circumstances of the case, and "examine[ ] the following factors: (a) whether the settlement is the result of arms-length negotiations; (b) the terms of the settlement in relation to the strength of plaintiffs' case; (c) the stage of the litigation proceedings at the time of settlement; (d) the reaction of the class; and (e) the opinion of experienced counsel." In re Lorazepam & Clorazepate Antitrust Litigation, Civ. No. 99-970 (TFH), 2003 WL 22037741, at *2 (D.D.C. June 16, 2003) (collecting cases). The Court addresses each factor in turn.
1. Arms-Length Negotiations
"A presumption of fairness, adequacy, and reasonableness may attach to a class settlement reached in arm's-length negotiations between experienced, capable counsel after meaningful discovery." Meijer, Inc. v. Warner Chilcott Holdings Co. III, Ltd., 565 F.Supp.2d 49, 55 (D.D.C. 2008) (internal citations omitted). In this case, counsel for both parties demonstrated their legal abilities before this Court. Counsel has negotiated hard and well on behalf of their clients. As part of the negotiations, Class Counsel engaged in informal discovery regarding the size, nature, and reduction in benefits suffered by the Class Members. Prelim. Mem. at 16. In addition, Class Counsel has a significant history of investigating the claims in this action and handling similar matters. As described above, see n.1, in the Berger litigation, Class Counsel successfully challenged the same SSA provision that is at issue in this case.
There is also no sign of collusion between the parties here. The Settlement Agreement has been reviewed and approved by both SSA and the Department of Justice. Id. at 17. Moreover, the Settlement Agreement reflects the reasonable compromises reached by both parties. Counsel agree that there was no collusion, up to and including settlement negotiations. June 29 Status Report at 12. Accordingly, the Settlement Agreement was reached after arms' length negotiation, and that is thus presumptively fair, adequate, and reasonable.
2. Terms of the Settlement in Relation to the Strength of Plaintiffs' Case
"Next, the Court compares the terms of the settlement with the likely recovery plaintiffs would attain if the case proceeded to trial, an exercise which necessarily involves evaluating the strengths and weaknesses of plaintiffs' case." In re Federal National Mortgage Association Securities, Derivative, and "ERISA" Litigation, 4 F.Supp. 3d 94, 103 (D.D.C. 2013).
The Settlement provides that Defendants shall rescind the practice of applying WEP to NII Old Age Benefits, cease all collection efforts on Overpayments,  and no longer reduce Social Security Benefits on account of a person's receipt of NII Old Age Benefits. ...