Prudential settlement upheld
Could the Prudential class action suit settled in March 1997 finally be coming to an end? On July 23, a federal appeals court in Philadelphia upheld the settlement between the Newark, N.J.-based insurance company and its policyholders. Settlement payments had been on hold because of an appeal filed in the 3rd U.S. District Court of Appeals that sought to overturn the agreement. (See "Prudential Settlement Languishes as Lawyers Fight On.")
Judge Anthony J. Scirica ruled, "We conclude that the district court's finding that the proposed settlement was fair, reasonable and adequate was well within its sound discretion."
Prudential is prepared to pay about $2 billion to policyholders in order to compensate for its companywide practice of "churning" policies. While about 8 million people were eligible, only slightly more than 1 million chose to take part in the class action suit. Further, fewer than 20,000 policyholders chose to "opt out" of the settlement, thereby paving the way for them to sue Prudential individually.