united states district court bancorp, inc., defendants. : … · 2019-03-22 · ryan m. martin...

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UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF ILLINOIS

JOSEPH J. MEZYK, et al.,

Plaintiffs,v.

U.S. BANK PENSION PLAN and U.S.BANCORP, INC.,

Defendants.____________________________________

:::::::::::

Civil Action No. 3:09-cv-384-JPG

Judge J. Phil Gilbert

: Consolidated with

THOMAS L. PELLETT and RICHARD A.WILLIAMS, Individually and on Behalf ofAll Others Similarly Situated,

Plaintiffs,

v.

U.S. BANK PENSION PLAN,

Defendant.

::::::::::::

Case No. 3:10-cv-686-JPG-DGW

JOINT MOTION FOR PRELIMINARYAPPROVAL OF CLASS ACTIONSETTLEMENT AGREEMENT ANDPROPOSED CLASS NOTICE

Plaintiffs Joseph Mezyk, Mary Mulqueeney, Doris Carthy, Shirley Chatman, Peggy

Raymond, Thomas Pellett and Richard Williams (the “Class Representatives”) and Defendants

U.S. Bank Pension Plan and U.S. Bancorp (collectively “USBPP”) have entered into a

Settlement Agreement resolving, subject to additional class certification and Court approval, all

the claims of the parties.

Pursuant to Fed. R. Civ. P. 23, the parties jointly move the Court to enter an Order:

(1) Granting preliminary approval of the proposed Settlement Agreementsubject to a final fairness hearing;

(2) Approving the proposed notice to be sent to the class members affected bythe settlement; and

Case 3:09-cv-00384-JPG-DGW Document 135 Filed 06/05/12 of 14 Page ID #2024

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(3) Setting a date for a hearing on the fairness, reasonableness, and adequacyof the proposed Settlement Agreement pursuant to Federal Rule of CivilProcedure 23(e).

A Memorandum in Support of this Motion is attached, along with a copy of the proposed

Notice to Class Members (Exhibit A) and a copy of the proposed Settlement Agreement, which

is attached to the Notice to Class Members as Attachment 1. A proposed Agreed Order has also

been submitted to the Court’s chambers by email to [email protected].

Respectfully submitted,

/s/ David L. SteelmanDavid L. SteelmanSteelman, Gaunt & Horsefield901 Pine Street, Suite 110Rolla, MO 65402(573) [email protected]

Matthew ArmstrongArmstrong Law Firm LLC8816 Manchester Road, No. 109St. Louis, MO 63144(314) [email protected]

Co-Class Counsel

/s/ Gregory Parker RogersGregory Parker RogersRyan M. MartinTaft, Stettinius & Hollister LLP425 Walnut Street, Suite 1800Cincinnati, Ohio 45202-3957(513) [email protected]@taftlaw.com

Attorneys for Defendants


12881476.1 1

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF ILLINOIS

JOSEPH J. MEZYK, et al.,

Plaintiffs,v.

U.S. BANK PENSION PLAN and U.S.BANCORP, INC.,

Defendants.____________________________________

:::::::::::

Civil Action No. 3:09-cv-384-JPG

Judge J. Phil Gilbert

: Consolidated with

THOMAS L. PELLETT and RICHARD A.WILLIAMS, Individually and on Behalf ofAll Others Similarly Situated,

Plaintiffs,

v.

U.S. BANK PENSION PLAN,

Defendant.

::::::::::::

Case No. 3:10-cv-686-JPG-DGW

MEMORANDUM IN SUPPORT OFJOINT MOTION FOR PRELIMINARYAPPROVAL OF CLASS ACTIONSETTLEMENT AGREEMENT ANDPROPOSED CLASS NOTICE

I. INTRODUCTION

The Plaintiffs and USBPP, following extensive arms’ length negotiations, have entered

into a Settlement Agreement that would resolve all claims raised in this proceeding. The parties

jointly submit the Settlement Agreement for preliminary approval by the Court, pursuant to Fed.

R. Civ. P. 23(e). By this Motion, the parties respectfully submit that the Court should grant

preliminary approval to the Settlement Agreement, approve the notice to class members, and

schedule the fairness hearing for final approval.


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II. BACKGROUND

As is discussed in the proposed Settlement Agreement, Mezyk v. U.S. Bank Pension Plan

and Pellett v. U.S. Bank Pension Plan are the third and fourth lawsuits brought against USBPP

concerning the January 1, 1999 amendment of the Mercantile Bancorporation Inc. Retirement

Plan from a final average pay defined benefit pension plan to a cash balance defined benefit

pension plan.

The first case filed was Chamberlain v. U.S. Bank Pension Plan, Case No. 3:04-CV-841

(S.D. Ill.). That case was a putative class action, claiming that all cash balance plans were

inherently age discriminatory in violation of ERISA § 204(b)(1)(H). After the Seventh Circuit’s

decision in Cooper v. IBM Personal Pension Plan, 457 F.3d 636 (7th Cir. 2006), Chamberlain

was dismissed with prejudice. That case never advanced to the class certification stage.

The second lawsuit was Edward Sunder and Louis Jarodsky v. U.S. Bank Pension Plan,

Case No. 4:05-CV-1153-ERW (E.D. Mo.). That lawsuit, brought on behalf of Sunder and

Jarodsky, made several allegations including that USBPP used an inappropriately high discount

rate when calculating opening cash balances in the January 1, 1999 amendment. The District

Court on summary judgment dismissed all claims but the claim of an inappropriately high

discount rate when setting opening balances, and it found for the Plaintiffs on this claim. USBPP

appealed and the Eighth Circuit reversed the District Court, finding that USBPP set the opening

balances consistently with ERISA. Sunder v. U.S. Bank Pension Plan, 586 F.3d 593 (8th Cir.

2009).

After the District Court decision in Sunder, the putative class action Pellett v. U.S. Bank

Pension Plan, Case No. 4:07-CV-1683 (E.D. Mo.) was filed in the Eastern District of Missouri.

Pellett claimed only that USBPP used an unfairly high interest rate in setting opening balances.

While the Sunder case was awaiting decision in the Eighth Circuit, the putative class action of


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Mezyk v. U.S. Bank Pension Plan, Case No. 3:09-CV-384-JPG-DJW was filed in the Southern

District of Illinois, making a variety of claims concerning the January 1, 1999 plan amendment.

Pellett and Mezyk later were consolidated in the Southern District of Illinois under the name of

Mezyk and an amended consolidated complaint was filed.

On February 11, 2011, the Court certified two different classes on different claims

brought by the Plaintiffs in Mezyk, one of which was a class of all participants as of January 1,

1999 who allegedly did not receive sufficient notice of the plan amendment in alleged violation

of ERISA § 204(h) and ERISA § 102. After much additional discovery, Plaintiffs have filed a

second amended consolidated complaint keeping the notice allegation, adding a claim of

miscalculation of opening balances for those ages 45-49 at the time of the calculation, and

dropping other claims. The first allegation concerns the same alleged lack of notice concerning

the January 1, 1999 plan amendment which allegedly did not meet the terms of either ERISA

§ 204(h) or ERISA § 102, on which a class already has been certified. This certification needs to

be slightly modified. The second claim, which is new, is that the opening balances for those ages

45 through 49 at the time of the opening balance calculation were not performed in accordance

with the plan’s terms.

The parties have been litigating these matters now for five years. All seven named

Plaintiffs have been deposed as have the plan’s record keeper, Mercantile’s head of pension

administration and also a member of Mercantile’s Human Resources Department who was

involved in the 1999 amendment. Plaintiffs have engaged three expert witnesses (two actuaries

and one communications expert) and Defendants have engaged one expert, an actuary. All four

experts have issued their reports in this matter. Defendants have taken the deposition of all three

of Plaintiffs’ experts. Defendants have produced tens of thousands of pages of paper and

numerous electronic spreadsheets in response to requests made by Plaintiffs.


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In this fifth year of the litigation, the parties conducted a mediation in Atlanta, Georgia,

on April 24, 2012. As a result of discussions that day and following, the Parties have reached

this settlement. The settlement will involve the following proposed classes:

1) “Class One” includes all plan participants in the MercantileBancorporation Inc. Retirement Plan as of January 1, 1999.Excluded from this class are Edward W. Sunder III; Louis R.Jarodsky; Eileen Chamberlain; Defendants’ legal counsel(including members of Defendants’ legal department); and anyjudge assigned to this case and any member of such judge’simmediate family.

2) “Class Two” includes all plan participants in the MercantileBancorporation Inc. Retirement Plan that were participants in theplan as of January 1, 1999 and who were between the ages of 4549 on the date an opening balance was calculated for their cashbalance accounts. Excluded from this class are Edward W. SunderIII; Louis R. Jarodsky; Eileen Chamberlain; Defendants’ legalcounsel (including members of Defendants’ legal department); andany judge assigned to this case and any member of such judge’simmediate family.

Plaintiffs have requested that these proposed classes be certified under either Fed. R. Civ. P.

23(b)(1) or (b)(2).

Under the proposed settlement, USBPP will pay nine million six hundred thousand

dollars ($9,600,000) into a common fund for settlement. (Settlement Agreement, § 7.2.2) From

this common fund, the seven Class Representatives will each be paid five thousand dollars

($5,000.00) for recognition of the time and expense they have put into the Lawsuit to prosecute

it. (Id. at §§ 7.2.3 and 7.2.8) Class Counsel will make application to the Court for 27.5% of the

common fund for their attorney fees. The amount of the request will be two million six hundred

forty thousand dollars ($2,640,000.00). (Id. at § 7.2.4) In this application, Class Counsel will

also seek reimbursement of expenses to prosecute this litigation, up to a maximum of two

hundred thousand dollars ($200,000.00). (Id. at § 7.2.5)


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The remaining amounts will be distributed to the proposed class members as follows.

Members of Class Two will receive the amounts shown in exhibit A to the proposed Settlement

Agreement from the common fund, which represent the difference between how their opening

cash balances were calculated and how the Plan required them to be calculated, plus interest

added through June 30, 2012. In the aggregate, these amounts add up to eight hundred nineteen

thousand four hundred ninety six dollars and forty four cents ($819,496.44). (Id. at § 7.2.9)

There are approximately 748 members of Class Two. The amount remaining in the common

fund after the distribution to Class Two will be distributed per capita to each member of Class

One. (Id. at § 7.2.10) The amount left for distribution from the common fund to members of

Class One will be approximately $5,900,000.00 to $6,100,000.00 if the Court approves

distribution from the common fund as described in Section 7 of the proposed Settlement

Agreement. (Id.)

If, after 180 days of reasonable effort to locate Class Members (which shall start to run

once the payment has been wired under the terms of Section 7.2.1 of the proposed Settlement

Agreement), the Notice Administrator cannot locate any class member, the amounts left over

from distribution described in Sections 7.2.9 and 7.2.10 will be contributed to the Land of

Lincoln Legal Assistance Foundation, Incorporated. (Id. at § 7.2.11)

In exchange for the benefits outlined above, the Plaintiffs and proposed class members

agree to release all claims, known or unknown, by or on behalf of any or all Class Members, for

any type of relief against the USBPP Releasees (as that term is defined in Section 7.1.23 of the

proposed Settlement Agreement), including for declaratory relief, injunctive relief, equitable

relief, restitution, damages, unpaid costs, penalties, liquidated damages, punitive damages,

interest, attorney fees, litigation costs, or any other monetary remedy, as well as relief of any

kind based on any and all claims which have been or could have been asserted in this litigation.


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The Plaintiffs and proposed class members also agree to fully, finally and forever release,

dismiss with prejudice, relinquish and discharge all claims, known or unknown, for any type of

relief against the U.S. Bancorp Releasees (as that term is defined in Section 7.1.25 of the

proposed Settlement Agreement) through the Effective Date of the Settlement Agreement, but

only in their capacity as a “plan sponsor” or plan “administrator” as those terms are defined in 29

U.S.C. §§ 1002(16)(A) and (B), or as a “fiduciary” as that term is mentioned in 29 U.S.C.

§ 1104. The release includes claims for declaratory relief, injunctive relief, equitable relief,

restitution, damages, unpaid costs, penalties, liquidated damages, punitive damages, interest,

attorney fees, litigation costs, or any other monetary remedy, as well as of any kind based on any

and all claims which have been or could have been asserted in this litigation. (Id. at § 8.1.1)

III. ARGUMENT

Under Fed. R. Civ. P. 23(e), this Settlement Agreement must be approved by the Court.

Review and approval of a class action settlement involves two steps: (1) the Court preliminarily

approves the proposed settlement and directs notices to the class for comment and (2) the Court

holds a final hearing to determine whether the proposed settlement is fair, reasonable, and

adequate. Armstrong v. Bd. of Sch. Dirs. of Milwaukee, 616 F.2d 305, 314 (7th Cir. 1980)

(overruled on other grounds by Felzen v. Andreas, 134 F.3d 873 (7th Cir. 1998)); In re AT&T

Mobility Wireless Data Services Sales Litigation, 270 F.R.D. 330, 345-346 (N.D. Ill. 2010).

During the first step of the relevant inquiry, the court holds a pre-notification hearing to

determine whether the proposed settlement is “within the range of possible approval.”

Armstrong, 616 F.2d at 314. “This hearing is not a fairness hearing; its purpose, rather, is to

ascertain whether there is any reason to notify the class members of the proposed settlement and

to proceed with a fairness hearing.” Id. (citing MANUAL FOR COMPLEX LITIGATION § 1.46, at 53-

55 (West 1977)). “If the district court finds a settlement proposal ‘within the range of possible


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approval,’ it then proceeds to the second step in the review process, the fairness hearing. Class

members are notified of the proposed settlement and of the fairness hearing at which they and all

interested parties have an opportunity to be heard.” Id.

“In deciding whether to preliminarily approve a settlement, courts must consider: (1) the

strength of plaintiffs' case compared to the terms of the proposed settlement; (2) the likely

complexity, length and expense of continued litigation; (3) the amount of opposition to

settlement among effected parties; (4) the opinion of competent counsel; and (5) the stage of the

proceedings and the amount of discovery completed.” Synfuel Techs., Inc. v. DHL Express

(USA), Inc., 463 F.3d 646, 652 (7th Cir. 2006) (quoting Isby v. Bayh, 75 F.3d 1191, 1196 (7th

Cir. 1996)). Although the “fair, reasonable, and adequate” standard and the factors used to

measure it are ultimately questions for the fairness hearing that comes after a court finds that a

proposed settlement is within approval range, “a more summary version of the same inquiry

takes place at the preliminary phase.” Kessler v. American Resorts International's Holiday

Network, Ltd., 2007 WL 4105204, *5 (N.D. Ill. Nov. 14, 2007) (citing Armstrong, 616 F.2d at

314).

In this Joint Motion, the parties submit that the requirements for preliminary approval are

satisfied, and they ask that the Court direct the mailing of the class notice and schedule a fairness

hearing.


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A. The Court Should Grant The Parties’ Joint Motion For PreliminaryApproval Of The Settlement Agreement.

The Court should preliminarily approve the Settlement Agreement in this case because it

is within the range of reasonableness and does not evidence unduly preferential treatment or

other obvious deficiencies.

“Federal courts naturally favor the settlement of class action litigation.” Isby, 75 F.3d at

1196. The proposed Settlement Agreement contemplates USBPP paying nine million six

hundred thousand dollars ($9,600,000) into a common fund for settlement. (Settlement

Agreement, § 7.2.2) This sum is significant considering that the claims in this litigation are

vigorously contested, as established by the expert reports of James Turpin (on of Plaintiffs’

actuaries) and Lawrence Sher (USBPP’s actuary), which have been attached to this Joint Motion

as Exhibit B. Considering the asserted claims and defenses of the parties, the problems of proof,

and the risks and delays of litigation, this sum clearly represents an amount “within the range of

reasonableness.”

The proposed Settlement Agreement was negotiated at arms length by adversarial and

informed parties with the assistance of experienced counsel. (See Doc. 96, appointing class

counsel) Preliminary settlement discussions commenced in January 2012, following five years

of vigorously contested litigation and extensive discovery, during which tens of thousands of

documents were exchanged and key witnesses relevant to the litigation were deposed. In the

course of settlement discussions, USBPP provided detailed actuarial data to the Plaintiffs,

Plaintiffs’ counsel and their actuaries, allowing them to assess the merits of their claims and the

potential damages. Ultimately, after engaging in a formal mediation in Atlanta, Georgia, on

April 24, 2012 and subsequent discussions, the parties reached agreement to resolve this

litigation.


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There can be no question that, if the agreed upon settlement is not consummated, the

parties face a long, complex and expensive litigation. Five years after Pellett was filed, the

parties have only recently completed expert discovery, and Plaintiffs have just filed a Second

Amended Consolidated Complaint, which may require further discovery and further motion

practice (and possible appeals) related to class certification. Summary judgment briefing, trial

and multiple levels of appeals, which could add several years to the litigation, are also likely.

The proposed Settlement Agreement, which was negotiated by the parties to a highly

adversarial lawsuit, clearly is not the result of illegality or collusion. There is currently no

opposition to the settlement, which is fair and reasonable in the opinion of counsel for Plaintiffs

and USBPP. The requirements for preliminary approval are met and the Court should grant the

Joint Motion.

B. The Court Should Approve The Parties’ Proposed Form And Method OfNotice Of The Class Settlement.

Once the Court makes a determination that a proposed settlement is within the range of

reasonableness, notice of a formal Rule 23(e) hearing is given to class members. MANUAL ON

COMPLEX LITIGATION (4TH) § 21.633. The notice of the fairness hearing should advise objectors

to file written statements of their objections by a specified date in advance of the hearing and to

give notice if they intend to appear at the fairness hearing. Id.

The parties have agreed on the content and method of the proposed notice. The Class

Notice explains the nature of the controversy, the details of the Settlement Agreement, the

eligibility of class members to participate in the settlement, and their right to object to it.

(Attached as Exhibit A) The Class Notice will be mailed to all class members via first class mail

to their last known addresses (Settlement Agreement, § 9.3.1), which is proper under the

circumstances. See Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 175 (1974) (individual notice


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via U.S. Mail preferred where possible); see also MANUAL ON COMPLEX LITIGATION (4TH)

§ 21.311 (same).

The Court should approve the form and method of notice to the classes.

C. The Parties Request The Court To Schedule A Final Fairness Hearing.

In the proposed Settlement Agreement, the parties have agreed to endeavor in good faith

to meet several targeted deadlines. (Settlement Agreement, § 9.2) To meet the deadlines, the

parties propose the schedule set forth at page 13 of the proposed Settlement Agreement,

culminating in a Settlement Hearing in October 2012. (Id.)

The parties request the Court to schedule:

-A hearing on this Joint Motion for preliminary approval and on Plaintiffs’renewed motion for class certification on June 13, 2012 (or such other time theCourt sets);

-A deadline for filing objections to the Settlement Agreement on August 7, 2012;

-A deadline for parties to file briefs objecting to or in favor of final approval ofthe Settlement Agreement on September 10, 2012; and

-A fairness hearing on the Settlement Agreement on October 2, 2012 (or suchother time the Court sets).


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IV. CONCLUSION

For the foregoing reasons, the parties respectfully request that the Court (i) preliminarily

approve the Settlement Agreement; (ii) approve the proposed Class Notice and the mailing

thereof; and (iii) set a date for a fairness hearing under Rule 23(e).

Respectfully submitted,

/s/ David L. SteelmanDavid L. SteelmanSteelman, Gaunt & Horsefield901 Pine Street, Suite 110Rolla, MO 65402(573) [email protected]

Matthew ArmstrongArmstrong Law Firm LLC8816 Manchester Road, No. 109St. Louis, MO 63144(314) [email protected]

Co-Class Counsel

/s/ Gregory Parker RogersGregory Parker RogersRyan M. MartinTaft, Stettinius & Hollister LLP425 Walnut Street, Suite 1800Cincinnati, Ohio 45202-3957(513) [email protected]@taftlaw.com

Attorneys for Defendants


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CERTIFICATE OF SERVICE

I certify that on June 5, 2012, I electronically filed the foregoing Joint Motion For

Preliminary Approval Of Class Action Settlement And Proposed Class Notice with the Clerk of

Court using the CM/ECF system which will send notification of such filing to the following:

David L. [email protected]

Matthew H. [email protected]

Matthew H. [email protected]

Ryan M. [email protected]

Mary M. [email protected]

/s/ Gregory Parker RogersGregory Parker RogersTaft, Stettinius & Hollister LLP425 Walnut Street, Suite 1800Cincinnati, Ohio 45202-3957(513) [email protected]


Case 3:09-cv-00384-JPG-DGW Document 135-1 Filed 06/05/12 Page 1 of 46 Page ID #2038

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