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Del Sesto v. Prospect Chartercare, LLC

United States District Court, D. Rhode Island

May 17, 2019

STEPHEN DEL SESTO, AS RECEIVER AND ADMINISTRATOR OF THE ST. JOSEPH HEALTH SERVICES OF RHODE ISLAND RETIREMENT PLAN, ET AL. Plaintiffs,
v.
PROSPECT CHARTERCARE, LLC, ET AL., Defendants.

          MEMORANDUM AND ORDER

          WILLIAM E. SMITH, CHIEF JUDGE

         Before the Court is a joint motion pursuant to Rule 23 of the Federal Rules of Civil Procedure seeking preliminary certification of a settlement class, appointment of class counsel, and preliminary approval of a proposed settlement in this action. The motion is brought by Plaintiffs and Defendants CharterCARE Foundation (“CCF”), CharterCARE Community Board (“CCCB”), St. Joseph Health Services of Rhode Island (“SJHSRI”), and Roger Williams Hospital (“RWH”) (collectively, “Settling Parties”). Two other groups of parties - the Diocesan Defendants[1] and the Prospect Entities[2] (collectively, “Non-Settling Parties”) - have objected to preliminary approval.

         The Court has carefully considered the parties' arguments. For the reasons that follow, the Joint Motion for Settlement Class Certification, Appointment of Class Counsel, and Preliminary Settlement Approval by Plaintiffs and Defendants CharterCARE Foundation, St. Joseph Health Services of Rhode Island, Roger Williams Hospital, and CharterCARE Community Board (ECF No. 77) (“Joint Motion”) is GRANTED.

         I. Preliminary Approval Under Rule 23(e)

         Rule 23(e)(2) permits the Court to approve a class action settlement only if the proposed agreement is fair, adequate, and reasonable. Fed.R.Civ.P. 23(e)(2); In re Pharma. Indus. Average Wholesale Price Litig., 588 F.3d 24, 32 (1st Cir. 2009). At the preliminary approval stage, however, a less rigorous standard applies: the Court need only determine whether the settlement “appears to fall within the range of possible final approval.” Trombley v. Bank of Am. Corp., Civil No. 08-cv-456-jd, 2011 WL 3740488, at *4 (D.R.I. Aug. 24, 2011); see also Armstrong v. Bd. of Sch. Dirs. of City of Milwaukee, 616 F.2d 305, 314 (7th Cir. 1980), overruled in part on other grounds by Felzen v. Andreas, 134 F.3d 873 (7th Cir. 1998). Preliminary approval should not be confused for a final finding of reasonableness or fairness. The first step is merely to “ascertain whether notice of the proposed settlement should be sent to the class . . . .” 4 William B. Rubenstein, Newberg on Class Actions § 13:13 (5th ed. 2018); see also Flynn v. N.Y. Dolls Gentlemen's Club, No. 13 Civ. 6530(PKC)(RLE), 2014 WL 4980380, *1 (S.D.N.Y. Oct. 6, 2014) (“Preliminary approval requires only an initial evaluation of the fairness of the proposed settlement on the basis of written submissions and an informal presentation by the settling parties.”) (quoting Clark v. Ecolab, Inc., No. 07 Civ. 8623(PAC), 04 Civ. 4488(PAC), 06 Civ. 5672(PAC), 2009 WL 6615729, at *3 (S.D.N.Y. Nov. 27, 2009) (quotation marks omitted)).

         The Court concludes that preliminary approval is warranted here. The proposed terms of the settlement are set forth in the Settling Parties' settlement agreement, ECF No. 77-2 (“Settlement Agreement”). The gravamen of this proposal is that Plaintiff Stephen Del Sesto[3], as Receiver and Administrator of the St. Joseph Health Services of Rhode Island Retirement Plan (“Plan”), will be transferred $4.5 million for deposit into the Plan assets. See Id. at 13. These proceeds will be transferred by CCF and its insurer. See Joint Mot. 8. In exchange, the Plaintiffs and Defendants SJHSRI, CCCB, and RWH will release CCF and the Rhode Island Foundation[4] from liability. See Settlement Agreement 13. In addition, the Receiver will transfer to CCF any rights he holds in CCF. See Id. On their face, these terms appear fair, reasonable, and adequate with respect to the proposed class, subject to this Order's other terms. See Fed.R.Civ.P. 23(e)(2). The proposed settlement also appears to have been negotiated at arm's length by highly experienced and informed counsel. Accordingly, the Court concludes that the proposed settlement “fall[s] within the range of possible final approval[, ]” Trombley, 2011 WL 3740488, at *4, and it therefore qualifies for preliminary approval.

         II. Settling Parties' Request for a Good Faith Finding Under R.I. Gen. Laws § 23-17.14-35

         In 2018, the Rhode Island General Assembly established certain ground rules for settlements that are unique to this litigation. Those rules are codified in R.I. Gen. Laws § 23-17.14-35, which states:

         The following provisions apply solely and exclusively to judicially approved good-faith settlements of claims relating to the St. Joseph Health Services of Rhode Island retirement plan, also sometimes known as the St. Joseph Health Services of Rhode Island pension plan:

(1) A release by a claimant of one joint tortfeasor, whether before or after judgment, does not discharge the other joint tortfeasors unless the release so provides, but the release shall reduce the claim against the other joint tort-feasors in the amount of the consideration paid for the release.
(2) A release by a claimant of one joint tortfeasor relieves them from liability to make contribution to another joint tortfeasor.
(3) For purposes of this section, a good-faith settlement is one that does not exhibit collusion, fraud, dishonesty, or other wrongful or tortious conduct intended to prejudice the non-settling tortfeasor(s), irrespective of the settling or non-settling tortfeasors' proportionate share of liability.

         The Settling Parties have requested that the Court declare the Settlement Agreement to be a “good faith settlement” as defined in this statute. See Joint Mot. 13-14. Such a determination is not required for the Court to grant preliminary approval under Rule 23 and the Court declines to make such a ruling here. The Settling Parties' request is, however, denied without prejudice and may be renewed in connection with any final fairness determination.

         III. Certification of Class, Class Representatives, and Class Counsel

         To qualify for preliminary certification, a proposed settlement class must satisfy the requirements of Federal Rule of Civil Procedure Rule 23(a) and one of the three categories in Rule 23(b). See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 621 (1997). Rule 23(a) permits one or more members of a class to represent all class members' interests if

(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.

         Fed.R.Civ.P. 23(a). The Settling Parties also seek certification under Rule 23(b)(1)(B), which requires a demonstration that prosecuting separate actions would risk creating “adjudications with respect to individual class members that . . . would be dispositive of the interests of the other members not parties to the individual adjudications or would substantially impair or impede their ability to protect their interests[.]” The Court concludes that these criteria have been satisfied.[5]

         First, there are 2, 729 Plan participants, rendering joinder of all members of the proposed settlement class impracticable. See ...


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