Free Motion for Miscellaneous Relief - District Court of Arizona - Arizona

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SUSAN MARTIN (AZ#014226) DANIEL L. BONNETT (AZ#014127) JENNIFER KROLL (AZ#019859) MARTIN & BONNETT, P.L.L.C. 3300 N. Central Avenue, Suite 1720 Phoenix, Arizona 85012-2517 Telephone: (602) 240-6900 [email protected] [email protected] [email protected] Attorneys for Plaintiffs DAVID B. ROSENBAUM (AZ#009819) DAWN L. DAUPHINE (AZ#010833) OSBORN MALEDON P.A. 2929 North Central Avenue, Suite 2100 Phoenix, AZ 85012-2794 Telephone: (602) 640-9000 [email protected] [email protected] Attorneys for Defendants HOWARD SHAPIRO, Pro Hac Vice PROSKAUER ROSE LLP 909 Poydras Street, Suite 1100 New Orleans, LA 70112-4017 Telephone: (504) 310-4088 [email protected] Attorneys for Defendants AMY COVERT, Pro Hac Vice PROSKAUER ROSE, LLP One Newark Center, 18th Floor Newark, NJ 07102-5211 Telephone: (973) 274-3258 [email protected] MICHAEL L. BANKS, Pro Hac Vice AZEEZ HAYNE, Pro Hac Vice MORGAN, LEWIS & BOCKIUS LLP 1701 Market Street Philadelphia, PA 19103 Telephone: (215) 963-5000 [email protected] [email protected]

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Barbara Allen, Richard Dippold, Melvin Jones, Donald McCarty, Richard Scates and Walter G. West, individually and on behalf of all others similarly situated, Plaintiffs, vs. Honeywell Retirement Earnings Plan, Honeywell Secured Benefit Plan, Plan Administrator of Honeywell Retirement Earnings Plan, and Plan Administrator of Honeywell Secured Benefit Plan, Defendants. No. CV04-0424 PHX ROS JOINT MOTION FOR AND MEMORANDUM IN SUPPORT OF PRELIMINARY APPROVAL OF THE PARTIAL SETTLEMENT

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Plaintiffs, Barbara Allen, Richard Dippold, Melvin Jones, Donald McCarty, Richard Scates, and Walter G. West, individually and on behalf of all others similarly situated ("Plaintiffs"), and Defendants, the Honeywell Retirement Earnings Plan ("Retirement Plan"), the Honeywell Secured Benefit Plan ("Secured Benefit Plan"), the Plan Administrator of the Honeywell Retirement Earnings Plan, and the Plan Administrator of the Honeywell Secured Benefit Plan (collectively, "Defendants"), jointly by and through undersigned Counsel, respectfully move the Court to enter the proposed Order of Preliminary Approval of Settlement ("Preliminary Approval Order"), which is being submitted herewith. The Preliminary Approval Order has been agreed to by the Parties,1 and is necessary to effectuate the proposed Partial Settlement of this action. This motion is supported by the below Memorandum of Points and Authorities and the Court's file in this matter. MEMORANDUM OF POINTS AND AUTHORITIES The Class Action Partial Settlement Agreement (the "Agreement"), attached hereto as Exhibit A, provides substantial benefits to the entire Settlement Class. The Agreement removes the risk of non-recovery and lessens the delay and expense inherent in a complex ERISA case such as this. For the reasons explained herein, the Parties jointly request that the Court grant their motion for preliminary approval of the Partial Settlement and the Agreement.
I.

TERMS OF THE SETTLEMENT The terms and conditions of the Partial Settlement are set forth in detail in the

Agreement, (see Exhibit A), and the principal terms are summarized below: A. Scope: The Partial Settlement will settle all Released Claims as to all

Released Parties, with the exception of the Three Remaining Claims. The Parties retain the right to fully litigate the Three Remaining Claims, but have agreed to "cap" or limit the amount of relief for which Defendants may be liable to the Settlement Class
1

The capitalized and italicized terms herein, to the extent not otherwise defined herein, have the meaning ascribed to them in the Agreement.
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members in further litigation proceedings to the amount of $500 million. The Three Remaining Claims are (a) the SBA Offset Claim, (b) the Social Security Offset Claim, and (c) the Minimum Benefits Claim. B. 1. Settlement Consideration:

When the Partial Settlement is Final, the Retirement Plan will be amended to

provide Eligible Participants, Eligible Beneficiaries and Eligible Estate Representatives with additional benefits the value of which will not exceed $35 million, minus any amounts awarded for attorneys' fees and costs pursuant to the Initial Fee Application, all subject to the provisions of ERISA. In the Initial Fee Application, Class Counsel will seek approval from the Court for an award of attorneys' fees and costs, not to exceed $8.75 million in the aggregate. 2. Should any Settlement Class members prevail on all or any of the Three

Remaining Claims, the maximum amount of total relief to be paid by Defendants is limited to the $500 million Cap Amount, including attorneys' fees and costs. Any relief ordered by any court, including changes to plan terms through reformation or otherwise, and/or an award of attorneys' fees and costs to Class Counsel, is subject to and applied against the Cap Amount. 3. When the Partial Settlement is Final, the Retirement Plan will pay to the Named

Plaintiffs as Special Incentive Awards the total sum of $150,000, to be paid as a Retirement Plan administrative expense and to be allocated among the Named Plaintiffs. The Special Incentive Awards are in addition to and not paid out of the $35 million in benefits set forth in Paragraph 1 above. 4. When the Partial Settlement is Final, commencing for plan years beginning after

December 31, 2007, the Company will cease charging Ordinary Administrative Fees to the Secured Benefit Plan's trust and thereafter no such fees will be deducted or paid from SBA Participants' Secured Benefit Accounts. C. Settlement Class: The Agreement contemplates that the Court will certify

the following Settlement Class under Fed. R. Civ. P. 23(b)(1) and 23(b)(2):
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all individuals who participated in the Garrett Retirement Plan and the Garrett Severance Plan who (i) became vested in the Signal Retirement Plan and the Garrett Secured Benefit Account, and (ii) are, were or may become eligible for benefits under the Signal Retirement Plan, the Allied Signal Retirement Program and/or the Retirement Plan and was alive on July 1, 2002 or had a surviving Beneficiary who was alive on July 1, 2002 ("Participants"); all individuals who participated in the Garrett Severance Plan who became vested in the Garrett Secured Benefit Account ("SBA Participants"); and all derivative claimants of a Participant or SBA Participant ("Derivative Claimants"). Derivative Claimants include, without limitation, any spouse, domestic partner, civil union partner, child, representative, heir, administrator, beneficiary, alternate payee, executor, conservator, attorney, and/or an assign of a Participant and SBA Participant. Excluded from the Settlement Class are (a) former participants in the Garrett Retirement Plan and the Garrett Severance Plan with respect to whom the assets and liabilities have been transferred to a pension plan maintained by a third-party unrelated to Honeywell or its predecessor companies, and (b) Participants who died before July 1, 2002 without a Beneficiary or whose Beneficiary died before July 1, 2002. Plan of Allocation: The Agreement contemplates, subject to the Court's

approval, that the Partial Settlement proceeds having a value of $35,150,000 will be allocated and paid as follows: 1. Past and Future Fractional Reduction Settlement Benefits. Past and future

Fractional Reduction Benefits, including Interest on past amounts will be paid to each eligible Fractional Reduction Participant.2 The Partial Settlement provides for payment of this benefit (prior to adjustment for the Initial Fee Award) at 90% of its value, providing only a 10% discount for the risks and delay of continued litigation. The amount of this benefit is determined by multiplying each Fractional Reduction Participant's Fractional Reduction Difference (the difference between benefits paid with and without the challenged amendments that eliminated the Fractional Reduction in the SBA offset for participants who worked in excess of 35 years) by the Applicable

Participants must sign and timely return a claim form to be eligible to receive Fractional Reduction Benefits and/or Per Capita Benefits.
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Percentage. The Applicable Percentage is calculated under the following formula: $35 million minus the Initial Fee Award divided by $35 million times 90%. Past Fractional Reduction Settlement Benefits will be paid in a lump sum with Interest. Future

Fractional Reduction Settlement Benefits will be paid in the form elected or to be elected by the Participant at their Benefit Commencement Date. 2. Per Capita Settlement Benefits. After allocation for the Initial Fee Award

and the Fractional Reduction Settlement Benefits, the entire balance of the remaining $35 million will be allocated equally among all Eligible Participants, Eligible Beneficiaries and Eligible Estate Representatives as of the Partial Settlement Calculation Date. Eligible Participants, Eligible Beneficiaries and Eligible Estate

Representatives may elect from various optional forms of benefits available under the Partial Settlement, including a lump sum distribution option. 3. Initial Fee Award. The amount of the Initial Fee Award will be

determined by the Court and paid by the Retirement Plan from the $35 million as a reasonable administrative expense. 4. Special Incentive Awards. If approved by the Court, the Special Incentive

Awards, which Defendants have agreed to pay over and above the $35 million, are to be allocated among the six Named Plaintiffs. E. Released Claims: Upon Final Approval, in accordance with Section 4.01

of the Agreement, (Exhibit A hereto), Named Plaintiffs and each Settlement Class member will be deemed to have forever released and discharged the Released Parties from the Released Claims. The Partial Settlement will not release the Remaining Claims or attorneys' fees and costs for litigation of the Remaining Claims that do not exceed the Cap Amount. The Partial Settlement also will not release a Settlement Class member's individual claims for benefits based on allegations that the Retirement Plan and/or Secured Benefit Plan made an Individual Mistake as to that individual's claim for benefits.

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II.

THE PARTIAL SETTLEMENT MEETS THE STANDARDS FOR PRELIMINARY APPROVAL UNDER RULE 23(e). Although the procedure for approval of a class action settlement is not delineated

specifically in Fed. R. Civ. P. 23(e), a two step procedure generally followed by federal courts considering class action settlements is set forth and approved in the Federal District Court's Manual for Complex Litigation (Fourth), §21.632 - §21.634, at 320-22 (4th ed. 2004). See, e.g., In re McKesson HBOC, Inc. ERISA Lit., 391 F.Supp.2d 844, 847 (N.D.Ca. 2005); Arnold v. Arizona Dep't. of Pub. Safety, CV-01-1463-PHX-LOA, 2006 WL 2168637, *4 (D. Ariz., July 31, 2006) (citing In re Jiffy Lube Sec. Litig., 927 F.2d 155, 158 (4th Cir. 1991)); see also Tennessee Ass'n of Health Maint. Org., Inc. v. Grier, 262 F.3d 559, 565-66 (6th Cir. 2001). First, the court conducts a preliminary approval or pre-notification hearing to determine whether to preliminarily approve the settlement agreement. Arnold, 2006 WL 2168637 at *4; Jiffy Lube, 927 F.2d at 158. Second, assuming that the court grants preliminary approval and notice is sent to the class, the court conducts a "fairness hearing," which provides all interested parties with an opportunity to be heard on the proposed settlement. Id. The ultimate purpose of this procedure is to ensure that the settlement is "fair, reasonable and adequate." Id.; Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998). Approval of a class action settlement is committed to the "sound discretion of the district courts to appraise the reasonableness of particular class-action settlement on a case-by-case basis, in light of all the relevant circumstances." Evans v. Jeff D., 475 U.S. 717, 742 (1986); see also Hanlon, 150 F.3d at 1026 (the decision to approve or reject a settlement is committed to the sound discretion of the trial judge because he is "exposed to the litigants, and their strategies, positions and proof") (internal quotations omitted). The Supreme Court has cautioned that in reviewing a proposed class settlement, courts should "not decide the merits of the case or resolve unsettled legal questions." Carson v. Am. Brands, Inc., 450 U.S. 79, 88 n. 14 (1981); Evans, 475 U.S. at 726-27; Staton v. Boeing Co., 327 F.3d 938, 963 n.16 (9th Cir. 2003). Instead, the reviewing court's
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function is to determine whether the proposed settlement, taken as a whole is fundamentally fair, adequate, and reasonable. Hanlon, 150 F.3d at 1026 (citing Officers for Justice v. Civil Serv. Comm'n, 688 F.2d 615, 628 (9th Cir. 1982)). The Ninth Circuit has outlined eight factors that the court should consider in determining whether a settlement agreement is fundamentally fair, adequate, and reasonable: (1) the strength of plaintiffs' case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk of maintaining class action status throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery completed, and the stage of the proceedings; (6) the experience and views of counsel; (7) the presence of a governmental participant; and (8) the reaction of the class members to the proposed settlement. See, e.g., Staton, 327 F.3d at 959 (citing Molski v. Gleich, 318 F.3d 937, 953 (9th Cir. 2003); Mego Financial Corp., 213 F.3d at 458; Hanlon, 150 F.3d at 1026; Draney v. Wilson, Morton, Assaf & McElligott, Civ. 79-1029, 1985 WL 5820, *1 (D. Az. Sept. 30, 1985). When examined under these applicable criteria, the Partial Settlement is not only fair, reasonable, and adequate, but an excellent result for the Settlement Class members. (1) The Strength of Plaintiffs' Case and the Significant Risk, Expense, Complexity, and Likely Duration of Further Litigation All Support the Partial Settlement.

ERISA litigation is a complex, demanding and evolving area of the law requiring the devotion of significant resources both by the parties and the Court. This case has been vigorously contested since March 2004 and Plaintiffs' claims have been in process since 2002 when the Named Plaintiffs filed their claims with the plans. Since 2004, each party has filed numerous motions and briefs with the Court and the Court has issued a number of rulings. In July 2005, the Court granted in part and denied in part
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Defendants' motion to dismiss, and granted in part and denied in part Named Plaintiffs' cross motion for partial summary judgment. In addition, Named Plaintiffs have several claims yet to be litigated.3 This Partial Settlement resolves all of the claims that were dismissed by the Court and all of the claims that have not yet been litigated. The Partial Settlement also resolves one of Plaintiffs' anti-cutback claims, the claim that Defendants violated ERISA's anti-cutback rule by eliminating the fractional reduction to the SBA offset for participants with more than 35 years of service, by paying Fractional Reduction Participants 90% of the value of that claim. The Partial Settlement is an excellent result. By providing a $35,150,000

recovery, it eliminates the significant risk that there could be no monetary recovery whatsoever. While ensuring payment of additional benefits to vested retirement plan Participants, it also provides for the right to recover up to $500 million on the Remaining Claims. Although the Court ruled in favor of Plaintiffs on their ERISA § 204(g) anti-cutback claims regarding plan amendments increasing the interest rate used to calculate the SBA offset, the imposition of a Social Security offset with respect to years of service worked prior to the offset, and the elimination of the fractional reduction in the SBA offset for participants with more than 35 years of service, the Court did so only reluctantly, and urged the Ninth Circuit to revisit precedents the Court viewed as controlling on these issues. In the order on Defendants' motion for reconsideration, the Court reiterated its position that if not constrained by Ninth Circuit precedent, it "would adopt the Defendants' interpretation, because it is based on common sense, consistent
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The claims not yet litigated include Plaintiffs' claims that Defendants violated: ERISA by adopting certain Retirement Plan amendments in 2000 that altered the manner in which the SBA offset was applied to participants' benefits; ERISA's anti-cutback and notice provisions, as well as the terms of the plan, by adopting an amendment charging administrative fees to participants' Secured Benefit Accounts; ERISA's written document requirement; ERISA's plan merger rules, and the terms of the Retirement Plan by adopting amendments increasing the interest rate used to project a portion of SBA balances to age 65 for purposes of calculating the SBA offset for participants who terminated their employment or retired before age 65 and applying a Social Security offset to benefits attributable to years of service worked prior to the adoption of the offset.
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with the plain meaning of `accrued benefit' and legislative history of the anti-cutback rule, and prudent from a policy perspective ...." See also Doc. 138 at p. 4. While denying reconsideration, the Court granted Defendants' request to certify the case for an interlocutory appeal on the anti-cutback claims. Although the Ninth Circuit declined to hear the matter on an interlocutory basis, Defendants have expressed their continued intention to appeal the Court's summary judgment ruling in favor of Plaintiffs. The possibility of appeal presents a real risk of loss on the merits and the possibility that there would be no monetary recovery on the Remaining Claims. In addition to the risks inherent on an appeal of the Court's summary judgment ruling, in order to obtain a monetary recovery in the ongoing litigation Plaintiffs must prevail over the numerous affirmative defenses advanced by Defendants including the statute of limitations, laches and a variety of other asserted affirmative defenses yet to be ruled on by the Court. Defendants have endeavored and will continue to endeavor to pursue these defenses vigorously. Plaintiffs cannot discount the fact that a ruling in favor of Defendants could deprive some or all of the Settlement Class members of the right to any monetary or other relief. Rather than subject individual Settlement Class members (or the entire Settlement Class) to such risk, the Partial Settlement assures that virtually every Settlement Class member will derive some benefits from this litigation. The Partial Settlement also significantly minimizes the delay entailed in litigation of the Released Claims, and advances a monetary recovery to Settlement Class members by as much as several years. See Nat'l Rural Telecom. Coop. v. DirecTV, Inc., 221 F.R.D. 523, 526 (C.D.Cal. 2004) (unless settlement is clearly inadequate, approval is preferable to lengthy and expensive litigation with uncertain results). Where, as here, the vast majority of the Settlement Class members are retirees, (many of whom are in their later years), this factor is particularly important and supports preliminary approval of the Partial Settlement. The risks, delay and expense that will be avoided by withdrawal of the Released Claims through the Partial Settlement is significant. If the Partial Settlement is not
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approved, a substantial and significant amount of additional work will need to be done on issues that have not yet been developed, including motions and the completion of additional fact and expert discovery. There is no assurance that Named Plaintiffs would prevail on any of the Released Claims. For example, as part of the Partial Settlement, Named Plaintiffs have agreed to withdraw their claims regarding Defendants' failure to produce plan documents. Defendants have advanced a variety of defenses to this claim, asserting that the discretionary monetary penalty that Named Plaintiffs seek is not appropriate in light of what Defendants claim were significant efforts to find and retrieve the documents, the fact that the documents date back decades and that in the intervening 20 years between creation of the documents and Class Counsel's request for those documents, the Company went through several mergers and divestitures. If not

withdrawn, this claim will necessitate deposition testimony of various individuals responsible for storage and production of documents. Success on this claim would result in a maximum penalty of $110 per day for delay in responding to Class Counsel's demand for documents along with injunctive and declaratory relief. While the Court might ultimately impose a statutory penalty, obtaining the maximum penalty is not assured. Named Plaintiffs believe that the monetary benefits provided by the Partial Settlement weighed against the risks and expense of litigating this claim, make withdrawal of this claim appropriate. The Agreement to release Plaintiffs' claims regarding imposition of

administrative fees on Secured Benefit Accounts also illustrates the risks, delay and expense that will be avoided through the Partial Settlement. As part of the Partial Settlement, Defendants have agreed to eliminate Ordinary Administrative Fees for future plan years. Litigation of this claim would be particularly time consuming and expensive, requiring Plaintiffs to determine individual damages through expert testimony and to review numerous additional documents and communications and take depositions related to these communications regarding the authority to amend the Secured Benefit Plan and the amount of damages. Defendants have put forth a vigorous defense, arguing that the
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law allows reasonable deductions from defined contribution accounts for administrative fees and that this claim is untimely and barred by the statute of limitations. Despite the enormous effort required to litigate this claim, monetary damages were estimated to be relatively modest overall.4 The Partial Settlement saves the Parties and the Court the time, cost, and effort of resolving this claim in Court and provides complete prospective relief for virtually every Settlement Class member, regardless of any defenses or affirmative defenses. Here again, the Partial Settlement clearly outweighs the risks, delay and expense of further litigation. Finally, Defendants are represented by highly experienced and competent counsel. Defendants have forcefully defended their actions and it is not unreasonable to assume that the Defendants would continue their vigorous defense of the Released Claims up through trial and a probable appeal regardless of the trial's outcome. Defendants deny liability for all but one of the Released Claims5 and have identified a plethora of issues as areas of defense, which were addressed in Defendants' motion to dismiss and the summary judgment briefing. Given the risks inherent in continuing the Litigation, Named Plaintiffs believe that the Partial Settlement, which provides for significant additional benefits and other relief including payment of additional benefits to all Participants, payment of 90% of the value of the Fractional Reduction Claim, and the elimination of Ordinary Administrative Fees on SBA accounts on a going forward basis is adequate, fair, reasonable and in the best interests of all Settlement Class members. The Partial Settlement minimizes the risks inherent in continuing the litigation without the Partial Settlement, while streamlining the issues remaining to be determined, advancing a monetary payment to all Participants by as much as several years and still providing for significant potential
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Approximately $1 million for an estimated 18,500 SBA Participants.

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The claim granted in the administrative process involved Defendants' failure to adjust the SBA offset to retirement plan benefits to account for SBA administrative fees that were imposed on and after 1993.
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Subsequent Relief of up to $500 million on the Remaining Claims. (2) The Risk of Maintaining Class Action Status Throughout the Trial Further Weighs in Favor of the Partial Settlement.

Although this Court certified the action as a class action pursuant to Fed. R. Civ. P. 23(b)(3) on September 6, 2006, class certification remains an issue in the Litigation.. The Court may decertify a class at any time if the class proves to be unmanageable. Defendants have raised arguments relating to the statute of limitations, laches, and remedy defenses that places the class at risk of decertification. Named Plaintiffs and the Settlement Class cannot completely disregard the possibility that the Court would later decertify the action. Under the Agreement, the Parties have stipulated to the

certification of a Settlement Class under 23(b)(1) and 23(b)(2) for both the Partial Settlement and the Remaining Litigation. Additionally, Defendants have agreed to not move for decertification of the Settlement Class throughout the Remaining Litigation. (3) The Amount Offered in Settlement is Substantial.

The amount offered in the Partial Settlement, once it becomes Final, is $35 million, including attorney's fees and costs not to exceed $8.75 million. This amount is in addition to any benefits that Participants and Beneficiaries are currently entitled to or would be entitled to under the terms of the Retirement Plan as it currently exists or under any other benefit plan sponsored by Honeywell. Included in this amount is payment to Fractional Reduction Participants of 90% of the value of their claim6 and equal payments to all Participants of the Per Capita Benefits. Prospective elimination of administrative fees on SBA accounts, also included in the Partial Settlement, represents additional valuable relief above the $35 million. In addition, a Special Incentive Amount of $150,000, to be allocated among the Named Plaintiffs, will be paid by the Retirement Plan. The Partial Settlement also provides Named Plaintiffs and the Settlement Class with the opportunity to recover up to $500 million through the Remaining Litigation of the Three Remaining Claims.
6

Considering the uncertainties of trial, the expected

Prior to adjustment for attorneys' fees.
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duration of litigation, and the potential for an additional recovery of up to $500 million on the Three Remaining Claims, the amount offered in Partial Settlement is highly favorable. In contrast, the Released Claims either would not provide significant additional monetary recovery (e.g., the document claims and the claims relating to the fees charges on SBA accounts) or would provide monetary relief that overlaps and would be duplicative of the relief that could be granted on the Remaining Claims. For example, the Partial Settlement provides for withdrawal of Named Plaintiffs' claims that Defendants violated the terms of the plans by applying the same amendments that the Court found violated the anti-cutback rule. These claims seek the same monetary relief as the relief sought on the Remaining Claims. By preserving the right to seek a sizable potential recovery while guaranteeing the distribution of additional benefits to every Participant, the amount of the Partial Settlement is fair, reasonable and in the best interests of the Settlement Class. The Partial Settlement is appropriate in light of the uncertainties of trial. Mego Financial Corp., 213 F.3d at 459. In Mego, the Ninth Circuit approved a settlement that was 42% of estimated damages and stated that even using the objectors' damages estimates, a settlement of 14% would be fair. Id. Under these circumstances described above, payment of $35 million with the right to continue to seek up to $500 million is adequate and fair. (4) Counsel Has Performed Sufficient Discovery, and the Proceedings Are Sufficiently Advanced, to Allow the Parties to Reach an Informed Settlement Decision.

The proposed Partial Settlement was reached after more than three years of contested litigation, including substantial briefing on Defendants' Motion to Dismiss and Named Plaintiffs' Cross Motion for Partial Summary Judgment, both of which the Court granted in part and denied in part. During this time, Class Counsel has conducted an extensive investigation, and commenced broad based discovery that has already resulted in the production of millions of pages of documents from Defendants. At the time
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settlement negotiations commenced, Named Plaintiffs had also served several sets of interrogatories and document requests and were in the process of scheduling 30(b)(6) depositions, which had been previously noticed. The fact that formal discovery is not yet completed does not detract from the fairness, adequacy and reasonableness of the Partial Settlement. The Ninth Circuit held that "[i]n the context of class action

settlements, `formal discovery is not a necessary ticket to the bargaining table' where the parties have sufficient information to make an informed decision about settlement." Mego Financial Corp., 213 F.3d at 459, citing Linney v. Cellular Alaska P'ship, 151 F.3d 1234, 1239 (9th Cir. 1998). A settlement following sufficient discovery and

genuine arms-length negotiation is presumed fair. Nat'l Rural Telecom. Coop., 221 F.R.D. at 528 (citing City P'ship C. v. Atlantic Acquisition Ltd P'ship, 100 F.3d 1041, 1043 (1st Cir. 2006). In the present matter, Class Counsel has worked on this matter since 2001 and has conducted significant investigation, discovery and research. Class Counsel has

vigorously prosecuted this case and has undertaken extensive review of the governing law, relevant facts and tens of thousands pages of documents produced in discovery. Throughout the litigation, Class Counsel has worked with actuarial experts to determine damages and has abundant information on which to make an informed decision about the Partial Settlement. (5) The Partial Settlement Was Negotiated by Highly Experienced Class Counsel, Who View It as Fair, Reasonable, and Adequate

Class Counsel includes both of the founding partners of the law firm Martin & Bonnett, PLLC in Phoenix, Arizona. Class Counsel has extensive experience in ERISA litigation and is therefore very well equipped to negotiate a fair settlement for Named Plaintiffs and the Settlement Class. Class Counsel's opinion demands great weight both because of its familiarity with the Litigation and because of its extensive experience in similar actions. See In re Washington Pub. Power Supply Sys. Sec. Lit., 720 F.Supp. 1379, 1392 (D. Ariz. 1989) (citing Officers for Justice, 688 F.2d at 625). Courts may
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attach a presumption of fairness, adequacy, and reasonableness to a class settlement reached in arm's-length negotiations among experienced, capable counsel after meaningful discovery. Manual for Complex Litigation (Third ed.) § 30.42 (1995). In January 2007, the Parties jointly retained two mediators, one with expertise in large class action mediation, Eric Green, and the other with specialized expertise in ERISA matters, John Utz. Beginning in April 2007, the Parties and their attorneys participated in numerous meetings with the mediators and spent hundreds of hours in meetings, on phone calls and in preparation of written communications in an effort to reach the Partial Settlement. Class Counsel has spent many thousands of hours litigating and analyzing the merits of this case, the risks to the Settlement Class in continuing litigation without any settlement, the total potential damages and the benefits and detriments of the Agreement reached with Defendants. Based on an exhaustive review of the relevant factors in this case, Class Counsel is satisfied that the Partial Settlement is fair, reasonable, adequate and in the best interests of Named Plaintiffs and the Settlement Class. (6) The Partial Settlement Was Reached After Extensive and Adversarial Negotiations, and Is Not a Product of Collusion.

The Parties assure the Court that there was no collusion between the Parties in reaching the Partial Settlement. As explained above, the Partial Settlement is the result of a high level, arm's length, and hard-fought adversarial negotiation and mediation process. Both Parties represented the interests of their clients vigorously and devoted a considerable amount of time, effort and resources to secure the terms of the Partial Settlement before this Court. The arm's-length quality of the negotiations is shown further by the fact the Parties engaged in mediation with John Utz and Eric Green, two nationally recognized and highly experienced mediators with substantial ERISA and complex class action knowledge.

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III.

APPROVAL OF FORM AND METHOD OF NOTICE TO CLASS The Parties request that the Court authorize the issuance of class notice, in the

form attached to the Agreement as Exhibit 2, to Participants, SBA Participants and Beneficiaries via first-class mail and through posting on the website

www.garrettaction.com.

In addition, a summary of the Notice including pertinent

contact information will be published in a number of daily newspapers where class members reside and in a national newspaper. A. The Proposed Notice Satisfies Rule 23 and Due Process Requirements. The Parties request that the Class Notice be issued concerning this proposed Partial Settlement. In order to satisfy due process, notice to class members must be "reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections." Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950). The notice should generally describe the terms of the settlement "in sufficient detail to alert those with adverse viewpoints to investigate and to come forward and be heard." Torrisi, 8 F.3d at 1374, citing In re Cement and Concrete Antitrust Lit., 817 F.2d 1435, 1440 (9th Cir. 1987). The proposed form of Class Notice, (Exhibit 2 to the Agreement attached as Exhibit A), describes in plain English the terms of the Partial Settlement, the considerations that led Class Counsel to conclude that the Partial Settlement is fair and adequate, the maximum counsel fees and class representative compensation that may be sought, the procedure for objecting to the Partial Settlement, and the date and place of the fairness hearing. With the Court's approval, the class notice will be mailed to Participants, SBA Participants and Beneficiaries, no later than 60 days prior to the fairness hearing and will be placed on the website www.garrettaction.com. In addition, a summary of the Notice including pertinent contact information will be published in a number of daily newspapers where class members reside and in a national newspaper. This proposed form of Class Notice will fairly apprise Settlement Class members of the
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Partial Settlement and their options with respect thereto, and fully satisfy due process requirements. IV. CONCLUSION For the foregoing reasons, the Parties jointly and respectfully request that the Court grant their motion for preliminary approval of the Partial Settlement and issue an order (1) preliminarily approving the proposed Settlement, (2) approving the form and manner of Class Notice proposed to the Settlement Class, and (3) setting dates for the Fairness Hearing on the proposed Partial Settlement, and the dates leading up to that Fairness Hearing, as suggested in the Parties' proposed scheduling order, the Court's calendar permitting. Respectfully submitted this 26th day of October, 2007. s/Susan Martin Susan Martin, Atty, No. 014226 Daniel L. Bonnett, Atty. No. 014127 Jennifer Kroll, Atty, No. 019859 Martin & Bonnett, P.L.L.C. 3300 North Central Avenue, Suite 1720 Phoenix, AZ 85012-2517 Telephone: (602) 240-6900 [email protected] [email protected] [email protected] ATTORNEYS FOR PLAINTIFFS s/David B. Rosenbaum David B. Rosenbaum, Atty. No. 009819 Dawn L. Dauphine, Atty. No. 010833 OSBORN MALEDON, P.A. 2929 North Central Avenue, Suite 2100 Phoenix, AZ 85012-2794 Telephone: (602) 640-9000 [email protected] [email protected] Howard Shapiro, Pro Hac Vice PROSKAUER ROSE LLP 909 Poydras Street, Suite 1100 New Orleans, LA 70112-4017 Telephone: (504) 310-4088 [email protected] Amy Covert PROSKAUER ROSE, LLP
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One Newark Center, 18th Floor Newark, NJ 07102-5211 Telephone: (973) 274-3258 [email protected] Michael L. Banks, pro hac vice William J. Delany, pro hac vice Azeez Hayne, pro hac vice MORGAN, LEWIS & BOCKIUS LLP 1701 Market Street Philadelphia, PA 19103 Telephone: (215) 963-5000 [email protected] [email protected] [email protected] ATTORNEYS FOR DEFENDANTS

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1782838_1

CERTIFICATE OF SERVICE I do certify that on October 26th, 2007, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to all CM/ECF registrants.

s/Kelly Dourlein

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