Hochstadt v. Boston Scientific Corp.

708 F. Supp. 2d 95, 2010 U.S. Dist. LEXIS 41007, 2010 WL 1704003

• Court: District Court, D. Massachusetts
• Decided: April 27, 2010
• Docket: Civil Action 08-12139-DPW
• Status: Published

Opinion

MEMORANDUM AND ORDER

DOUGLAS P. WOODLOCK, District Judge.

Before me is a motion seeking preliminary review 1 of a settlement agreement resolving two putative class actions 2 against Boston Scientific Corporation (“Boston Scientific” or the “Company”) and alleged fiduciaries 3 of Boston Scientific Corporation’s 401(k) Retirement Savings Plan (the “Plan”) (collectively, the “Defendants”). Both class actions are based on the allegation that Defendants breached their fiduciary duty to the Plan and to the Plan’s participants, in violation of the Employee Retirement Income Security Act (“ERISA”), by imprudently selecting Boston Scientific stock as an investment, despite their knowledge that the stock price was artificially inflated. The proposed settlement class consists of participants in the Plan whose individual Plan accounts held an interest in Boston Scientific common stock at any time between May 7, 2004 and January 26, 2006 (the “Class Period”). For the reasons set forth more fully below, I will certify the settlement class and authorize the publication of the proposed class notice.

I. BACKGROUND

A. Facts

Boston Scientific develops, manufactures, and distributes medical devices whose products are used in the cardiovascular and endosurgery health care arena. During the Class Period, Boston Scientific administered the Plan in the interest of its participants.

The Plan qualifies as an “employee pension benefit plan” within the meaning of ERISA § 3(2)(A), 29 U.S.C. § 1002(2)(A). Participants in the Plan make voluntary contributions and the Company makes matching contributions. Throughout the Class Period, participants could contribute to the Plan between 1% and 25% of their pre-tax annual compensation and between 1% and 10% of their compensation on an after-tax basis each year. Effective January 1, 2005, the Company provided a matching contribution equal to 200% of the employee’s contribution for up to 2% of the employee’s earnings, plus 50% of the next 4% of the employee’s earnings. During the Class Period, the Plan offered approximately ten separate investment options, including Boston Scientific stock.

Plaintiffs 4 allege that Defendants issued several misleading public disclosures, which caused the Company stock to be inflated artificially during the Class Period (the “Inflation Claim”). Plaintiffs further contend that, despite their knowledge that Boston Scientific stock was not a prudent investment for the Plan, Defendants continued to accept the Company matching contributions in Boston Scientific stock throughout the Class Period, thereby causing losses to the Plan’s participants (the “Prudence Claim”).

The alleged misleading disclosures are based on four events. 5 First, Plaintiffs contend that Defendants failed to disclose adequately the 1998 investigation conducted by the Department of Justice (“DOJ”) concerning defective NIR stents. This investigation led the DOJ to file a civil complaint in 2005 charging Boston Scientific with distributing in interstate commerce medical devices that were altered and misbranded between 1998 and 2005 and re- suited in the payment by Boston Scientific of $74 million.

Second, Plaintiffs allege that Defendants misrepresented the seriousness of the litigation with Medinol Ltd., one of Boston Scientific’s suppliers, as to which Defendants agreed to pay a $750 million settlement in 2005.

Third, Plaintiffs contend that Defendants failed to disclose adequately concerns associated with the 2004 recall of TAXUS stent systems when Defendants knew or should have known before the recalls took place that the TAXUS product contained dangerous manufacturing defects, which would lead to massive liabilities adversely affecting the Company stock.

The last subject as to which Defendants allegedly made misrepresentations concerns a series of “warning letters” sent between 2005 and 2006 by the U.S. Food and Drug Administration (“FDA”) to Boston Scientific in connection with FDA violations by several of its manufacturing facilities.

B. Procedural History

In January 2006, Plaintiffs Douglas Fletcher, Michael Lowe, Jeffrey Klunke, and Robert Hochstadt each filed separate class action complaints against Defendants. The four complaints were consolidated before Judge Tauro on April 3, 2006; a consolidated complaint was subsequently filed by Plaintiffs. In re Boston Scientific Corp. ERISA Litig., Civil Action No. 06-cv-10105-JLT (D.Mass.) (“ERISA I”).

On October 10, 2006, Defendants filed a motion to dismiss the Consolidated Complaint. Judge Tauro denied Defendants’ motion in significant part on August 27, 2007. 6 In re Boston Scientific Corp. ERISA Litig., 506 F.Supp.2d 73 (D.Mass.2007). Thereafter, the parties commenced fact discovery.

On March 12, 2008, Plaintiffs Fletcher, Lowe, Klunke and Hochstadt moved to certify the class under Federal Rule of Civil Procedure 23(a) and (b)(1). Klunke and Hochstadt later withdrew from the litigation. However, on June 30, 2008, Hochstadt filed a motion to intervene and asked to be reappointed as a class representative. On November 3, 2008, Judge Tauro denied the motion for class certification and Hochstadt’s motion to intervene; he then dismissed the case because Plaintiffs Fletcher and Lowe lacked Article III standing. In re Boston Scientific Corp. ERISA Litig., 254 F.R.D. 24 (D.Mass.2008). On December 2, 2008, Plaintiffs Fletcher, Lowe, and Hochstadt filed a notice of appeal. In re Boston Scientific Corp. ERISA Litig. (1st Cir. No. 08-2568). The matter is currently stayed in the First Circuit, pending settlement developments.

On December 24, 2008, Plaintiffs Hochstadt and Hazelrig filed the instant action, Hochstadt et al. v. Boston Scientific Corp. et al., Civil Action 08-cv-12139-DPW (D.Mass.) (“ERISA II”), seeking to sidestep the standing issue and the problem of Hochstadt’s failure to reenter the case through intervention, which together ended ERISA I before Judge Tauro. Thereafter, the parties resumed fact discovery where they left off in ERISA I. In doing so, the parties agreed that all documents produced in ERISA I would be deemed produced in ERISA II.

Under the auspices of Settlement Counsel for the First Circuit, counsel for Plaintiffs Fletcher, Lowe, and Hazelrig and the Defendants in September 2009 agreed to settle ERISA I and ERISA II (collective ly, the “ERISA Actions”) for an amount of $8.2 million (the “Settlement Amount”) to be paid in cash by Boston Scientific and its insurer, St. Paul Mercury Insurance Company.

On December 1, 2009, Plaintiffs Fletcher, Lowe, and Hazelrig filed a motion for preliminary review, see Note 1 supra, of the Proposed Settlement Agreement, contending that the agreement was an excellent result for the Settlement Class on whose behalf the ERISA Actions were brought. In their motion, they also sought certification of a mandatory class under Rule 23(b)(1) on the basis that the ERISA Actions involved Defendants’ Plan-wide conduct and relief was sought on behalf of the Plan as a whole.

Plaintiff Hochstadt filed an opposition to this motion by Plaintiffs Fletcher, Lowe, and Hazelrig, alleging that Fletcher and Lowe had been found to lack standing to settle the ERISA Actions, that the settlement amount was insufficient and that the non-opt-out provision, the proposed plan of allocation and the class notice were inappropriate.

I held a hearing on January 13, 2010 in connection with my preliminary review of the Proposed Settlement Agreement. During that hearing, I requested the parties to file supplemental briefing on three points: (1) the participation of Plaintiffs Fletcher and Lowe in the class settlement in light of Judge Tauro’s decision that they lacked Article III standing, (2) the proposed plan of allocation, which at the time did not separately take into consideration discrete disclosure events that occurred during the Class Period, and (3) the publication of the report of the independent fiduciary Plaintiff Hazelrig and Defendants agreed to retain to review the settlement agreement.

On February 17, 2010, Plaintiff Hazelrig and Defendants submitted the Amended Stipulation and Agreement of Settlement (the “Amended Settlement Agreement”) now before me. Pursuant to this amended agreement, Plaintiffs Fletcher and Lowe are now excluded from the Settlement Class, leaving Hazelrig the only settlement class representative. 7 The Amended Settlement Agreement incorporates a revised plan of allocation (the “Revised Plan of Allocation”), a copy of which is attached hereto as Exhibit A, which now provides for the payment of settlement proceeds to class members separately based upon discrete disclosure events that occurred during the Class Period. A revised class notice has been prepared reflecting the Revised Plan of Allocation (the “Revised Class Notice”). In addition, Plaintiff Hazelrig and the Defendants have committed to ensure that the report of the independent fiduciary they will retain will be made publicly available at least thirty days before the deadline for objecting to the Amended Settlement Agreement.

II. PRELIMINARY CLASS CERTIFICATION

Before preliminarily determining whether the settlement is fair, I must determine whether to certify the class for settlement purposes. The Amended Settlement Agreement defines the Settlement Class as a non-opt-out class consisting of:

[ A]ll Participants in the Plan for whose individual accounts the Plan held an interest in Boston Scientific common stock at any time during the Class Period. Excluded from the Proposed Class are Douglas Fletcher, Michael Lowe, Defendants, members of the Defendants’ Immediate Families, any officer, director or principal stockholder of Boston Scientific under Section 16 of the Securities Exchange Act of 1934, any entity in which a Defendant has a controlling interest, and their heirs, Successors-In-Interest, or assigns (in their capacities as heirs, Suceessors-In-Interest, or assigns).

Am. Settlement Agreement, ¶ 1.1.29. I first address the standing issue before turning to the requirements of Federal Rule of Civil Procedure 23.

A. Standing

In a class action lawsuit, as in every law suit, “Article III standing is a ‘threshold requirement,’ and the representative plaintiff must demonstrate personal injury in fact to certify a class.” In re Boston Scientific ERISA Litig., 254 F.R.D. at 28. As discussed above, Judge Tauro previously dismissed class certification in ERISA I because the proposed class representatives, Fletcher and Lowe, failed to demonstrate individual injury in fact and therefore lacked Article III standing. Id. at 28-32.

Plaintiff Hochstadt initially relied on Judge Tauro’s ruling to show that Plaintiffs Fletcher and Lowe lacked standing to settle the ERISA Actions. Given that Plaintiffs Fletcher and Lowe are now excluded from the Settlement Class, see Notes 2 and 7 supra, the only issue at this point is therefore whether Plaintiff Hazel-rig has adequate standing to settle the ERISA Actions as class representative.

Hochstadt did not specifically address Hazelrig’s standing in his initial briefing. Rather he merely contended, without adducing any evidence, that “the presently ‘proposed’ representatives are not representative because they did not lose money[,] were not injured.” For his part, Hazelrig asserted without evidentiary support, that he has constitutional and statutory standing to maintain and settle the ERISA Actions because he has suffered a compensable loss. At a further hearing in this matter on April 21, 2010, I directed counsel for Hazelrig to make a submission demonstrating that Hazelrig in fact has a compensable loss, which would support his standing to act as class representative. Counsel has submitted a Declaration from Candace L. Preston, CFA, who assisted crafting the Revised Plan of Allocation. Ms. Preston opined that Hazelrig would have a likely recovery of approximately $1,970.00. This is sufficient to establish standing at this stage. 8 For purposes of this preliminary review, I find that Plaintiff Hazelrig has the requisite standing to settle the ERISA Actions and will therefore focus my analysis on wheth er the Rule 23 requirements are met in this case.

B. Rule 23

1. Legal Standard

In order to certify a class, “[a] district court must conduct a rigorous analysis of the prerequisites established by Rule 23.” Smilow v. Sw. Bell Mobile Sys., Inc., 323 F.3d 32, 38 (1st Cir.2003) (citing Gen. Tel. Co. v. Falcon, 457 U.S. 147, 161, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982)). In doing so, “the question is not whether the plaintiff or plaintiffs have stated a cause of action or will prevail on the merits, but rather whether the requirements of Rule 23 are met.” Waste Mgt. Holdings, Inc. v. Mowbray, 208 F.3d 288, 298 (1st Cir.2000) (quoting Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 178, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974)). “[W]hen confronted with a request for settlement-only class certification, a district court need not inquire whether the case, if tried, would present intractable management problems, for the proposal is that there be no trial.” Id. (quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997)). Nevertheless, “[w]hen a settlement class is proposed, it is incumbent on the district court to give heightened scrutiny to the requirements of Rule 23 in order to protect absent class members.” In re Lupron Mktg. and Sales Practices Litig., 228 F.R.D. 75, 88 (D.Mass.2005) (citing Amchem, 521 U.S. at 620, 117 S.Ct. 2231). “This cautionary approach notwithstanding, the law favors class action settlements.” Id. (citing City P’ship Co. v. Atl. Acquisition Ltd. P’ship, 100 F.3d 1041, 1043 (1st Cir.1996)).

To obtain class certification, the plaintiff must establish the Rule 23(a) requirements of numerosity, commonality, typicality, and adequacy of representation and demonstrate that the action may be maintained under Rule 23(b)(1), (2), or (3). See Smilow, 323 F.3d at 38 (citing Amchem, 521 U.S. at 614, 117 S.Ct. 2231). Here, Hazel-rig seeks to obtain class certification pursuant to Rule 23(b)(1).

2. iRule 23(a)

In light of the First Circuit’s instruction in Smilow that the court to which a settlement is tendered conduct a “rigorous analysis of the prerequisites established by Rule 23,” I address each of Rule 23 requirements, although only the typicality and the adequacy requirements appear to be in dispute.

a. Numerosity

In order to satisfy Rule 23(a)(l)’s numerosity requirement, Plaintiff must demonstrate that “the class [would be] so numerous that joinder of all members is impracticable.” Fed.R.CivP. 23(a)(1). This requirement is easily met here because the Settlement Class consists of approximately 12,000 Boston Scientific employees who held Boston Scientific stock in their Plan accounts during the Class Period.

b. Commonality

Rule (23)(a)(2)’s commonality requirement is satisfied when “there are questions of law or fact common to the class.” FED. R. CIV. P. 23(a)(2). “While at least one common issue of fact or law at the core of the action must shape the class, Rule 23(a) does not require that every class member share every factual and legal predicate of the action.” In re Lupron, 228 F.R.D. at 88. “The threshold of commonality is not a difficult one to meet.” In re Relafen Antitrust Litig., 231 F.R.D. 52, 69 (D.Mass.2005).

In this case, there are a number of common issues of fact and law that the Settlement Class members bear upon in establishing the Defendants’ liability, as well as Plaintiffs’ entitlement to damages. Such questions concern Defendants’ alleged breaches of fiduciary duties under ERISA and their impact on the price of Boston Scientific stock. Accordingly, I conclude that the commonality requirement of Rule 23(a)(2) is satisfied.

c. Typicality

The typicality requirement set forth in Rule 23(a)(3) requires that “the claims or defenses of the representative parties are typical of the claims or defenses of the class.” Fed.R.Civ.P. 23(a)(3). “The representative plaintiff satisfies the typicality requirement when its injuries arise from the same events or course of conduct as do the injuries of the class and when plaintiffs claims and those of the class are based on the same legal theory.” In re Credit Suisse-AOL Sec. Litig., 253 F.R.D. 17, 23 (D.Mass.2008). The typicality inquiry “is designed to align the interests of the class and the class representatives so that the latter will work to benefit the entire class through the pursuit of their own goals.” In re Prudential Ins. Co. of Am. Sales Practice Litig., 148 F.3d 283, 311 (3d Cir.1998). “Rule 23(a)(3), however, does not require that the representative plaintiffs claims be identical to those of absent class members.” In re Credit Suisse, 253 F.R.D. at 23.

Here, Plaintiff Hazelrig was a Boston Scientific employee and his claim arises from the fact he held Boston Scientific stock in its Plan account during the Class Period. Contrary to Hochstadt’s allegations, Hazelrig’s claim is therefore based on the same basic legal theory as the claims of all other class members. This fact is sufficient to support a finding of typicality because I need not determine that Plaintiff Hazelrig’s claims and the claims of the Settlement Class are precisely aligned as to all issues in order to find that Hazelrig has satisfied his burden with respect to the typicality requirement. See In re Tyco Int’l, Ltd. Multidistrict Litig., No. MD-02-1335-PB, 2006 WL 2349338, at *6 (D.N.H. Aug. 15, 2006). Under these circumstances, for purposes of settlement only, I conclude that the claims asserted by Plaintiff Hazelrig are sufficiently typical of the claims of the Settlement Class as a whole to satisfy Rule 23(a)(3).

d. Adequacy

The final requirement articulated in Rule 23(a)(4) requires that the proposed class representatives “fairly and adequately protect the interests of the class.” Fed. R.CivP. 23(a)(4). This entails a two-prong showing: “The moving party must show first that the interests of the representative party will not conflict with the interests of any of the class members, and second, that counsel chosen by the representative party is qualified, experienced and able to vigorously conduct the proposed litigation.” Andrews v. Bechtel Power Corp., 780 F.2d 124, 130 (1st Cir.1985).

The first prong of the test seeks to ensure that the interests of the class representatives are aligned with the interests of absent class members. For essentially the same reasons that Plaintiff Hazelrig’s claims are “typical” of the claims of the Settlement Class, I find that, for purposes of the settlement, 9 Plaintiff Hazelrig’s interests do not conflict with the interests of other class members. Cf. In re Credit Suisse, 253 F.R.D. at 22 (noting that “[t]he requirements of typicality and adequacy tend to merge”). I also find that, unlike Hochstadt’s new counsel, 10 Plaintiff Hazel-rig’s counsel have demonstrated that they are qualified, experienced, and are fully prepared to represent the Settlement Class to the best of their abilities. Accordingly, I conclude that the adequacy requirement is satisfied in this case.

In sum, all of the Rule 23(a) requirements are met.

S. Rule 2S(b)

Plaintiff Hazelrig seeks class certification under Rule 23(b)(1)(B). 11 In addition to satisfying the four elements set forth in Rule 23(a), Rule 23(b)(1) requires that a class action may be maintained if:

(1) prosecuting separate actions by or against individual class members would create a risk of: ...

(B) adjudications with respect to individual class members that, as a practical matter, 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.

Fed.R.CivP. 23(b)(1)(B). Because Rule 23(b)(1) does not provide opt-out protec tions, class actions brought under this rule “are often referred to as ‘mandatory1 class actions.” Ortiz v. Fibreboard Corp., 527 U.S. 815, 833 n. 13, 842, 119 S.Ct. 2295, 144 L.Ed.2d 715 (1999). Plaintiff Hazelrig argues that certification of a non-opt-out class under Rule 23(b)(1) is appropriate in this case because the ERISA Actions involve Defendants’ Plan-wide conduct and relief is sought on behalf of the Plan as a whole under ERISA § 502(a)(2), 29 U.S.C. 1132(a)(2). In making this argument, Hazelrig relies on the assumption that “[sjuits brought pursuant to this provision are derivative in nature; those who bring suit do so on behalf of the plan and the plan takes legal title to any recovery.” Evans v. Akers, 534 F.3d 65, 70 n. 4 (1st Cir.2008) (citing Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 141, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985)).

Generally, an action “charging ‘a breach of trust by an indenture trustee or other fiduciary similarly affecting the members of a large class’ of beneficiaries, requiring an accounting or similar procedure ‘to restore the subject of the trust’ ” is a classic example of the type of case appropriate for certification under Rule 23(b)(1)(B). Ortiz, 527 U.S. at 833-34, 119 S.Ct. 2295 (quoting Fed.R.Civ.P. 23 advisory committee’s notes). Not surprisingly, therefore, “[i]n light of the derivative nature of ERISA § 502(a)(2) claims, breach of fiduciary duty claims brought under § 502(a)(2) are paradigmatic examples of claims appropriate for certification as a Rule 23(b)(1) class, as numerous courts have held.” In re Schering Plough Corp. ERISA Litig., 589 F.3d 585, 604 (3rd Cir.2009); Evans v. Akers, No. 04-11380-WGY, slip op. at 4 (D.Mass. Oct. 7, 2009) (finding class certification appropriate under Rule 23(b)(1)(B) because “[gjiven the Pi<m-representative nature of Named Plaintiffs’ breach of fiduciary duty claims, there is a risk that failure to certify the Settlement Class would leave future plaintiffs without relief’); Stanford v. Foamex L.P., 263 F.R.D. 156, 174 (E.D.Pa.2009) (“because of the unique and representative nature of an ERISA § 502(a)(2) suit, numerous courts have held class certification proper pursuant to Rule 23(b)(1)(B)”); In re Nortel Networks Corp. ERISA Litig., No. 03-MD-01537, 2009 WL 3294827, at *15 (M.D.Tenn.2009) (finding class certification appropriate under Rule 23(b)(1)(B) because “[i]f individual adjudications would be dispositive of the interests of other Plan Participants, it would be better for those Plan Participants to be members of a class”); Jones v. NovaStar Fin., Inc., 257 F.R.D. 181, 193 (W.D.Mo.2009) (certifying a class under Rule 23(b)(1)(B) because “[gjiven that [named plaintiffj’s claim seeks ‘Plan-wide relief, there is a risk that failure to certify the class would leave future plaintiffs without relief ”); In re Merck & Co., Inc. Sec., Derivative & ERISA Litig., MDL No. 1658, 2009 WL 331426, at *10 (D.N.J. Feb. 10, 2009) (finding class certification appropriate under Rule 23(b)(1)(B) because “[ijf the prudence claims proceeded individually, and one court removed a Plan fiduciary, this would be, as a practical matter, dispositive of the interests of the other Plan members in that particular regard”); In re Tyco, Int’l, Ltd. Multidistrict Litig., 2006 WL 2349338, at *7 (“the majority of courts have concluded that certification under 23(b)(1)(B) is proper” for ERISA fiduciary class actions). 12

Given that the present case involves an ERISA § 502(a)(2) claim brought on be half of the Plan and alleging breaches of fiduciary duty on the part of Defendants that will, if true, be the same with respect to every class member, I find that Rule 23(b)(1)(B) is clearly satisfied. Accordingly, I conclude that the Settlement Class should be certified.

C. Subclasses

Plaintiff Hochstadt argues that subclasses should be created to reflect the greater needs of those of are “retired and approaching retirement.”

Under Rule 23(c)(5), “[w]hen appropriate, a class may be divided into subclasses that are each treated as a class under this rule.” Fed.R.Civ.P. 23(c)(5). “Subclasses must be created when differences in the positions of class members require separate representatives and separate counsel.” Manual for Complex Litigation (Fourth) § 21.23 (2004). Subclassing may also provide “structural guaranties that a proposed settlement is fair.” Natchitoches Parish Hosp. Serv. Dist. v. Tyco Int’l, Ltd., 247 F.R.D. 253, 269 (D.Mass.2008) (citing 1 Herbert B. Newberg & Alba Conte, Newberg on Class Actions § 3.31 (4th ed. 2002) (“When the class members are united in interest on the liability issues but have potential conflicts regarding the nature of the relief or the division of a monetary award, the court may avoid the potential conflict by creating subclasses”)).

I reject Hochstadt’s contention that sub-classes should be created in this case because the needs-based sub-classes he proposes would not treat all class members in an equitable manner and would make the distribution of the Settlement Amount unduly complicated. Hochstadt cites no case law, and my research has not identified any, in which a court has certified subclasses based on the personal needs of the class members rather than on their losses, which are at the core of their claims. Hochstadt does not, in any event, offer a way to create sub-classes to reflect the greater needs of those of are “retired and approaching retirement.” Under these circumstances, I overrule Hochstadt’s objection based upon a failure to create subclasses in the present case. Moreover, to the degree that the differentiation of claims that subclassing allows is appropriate, I find the Revised Plan of Allocation serves that purpose adequately.

III. PRELIMINARY FAIRNESS DETERMINATION

A. Legal Standard

Pursuant to Rule 23(e), “[t]he claims, issues, or defenses of a certified class may be settled, voluntarily dismissed, or compromised only with the court’s approval.” Fed.R.Civ.P. 23(e). When approving a settlement:

[ T]he judge is required to scrutinize the proposed settlement to ensure that it is fair to the persons whose interests the court is to protect. Those affected may be entitled to notice and an opportunity to be heard. This usually involves a two-stage procedure. First, the judge reviews the proposal preliminarily to determine whether it is sufficient to warrant public notice and a hearing. If so, the final decision on approval is made after the hearing.

Manual for Complex Litigation (Fourth) § 13.14 (2004). Therefore, before making a final decision on the “approval” of a settlement, a court must first make a “preliminary determination on the fairness, reasonableness, and adequacy of the settlement terms.” Id. § 21.632.

While “policy encourages settlements, the burden remains on the proponents to show that the settlement is reasonable.” Nat’l Ass’n of Chain Drug Stores v. New England Carpenters Health Benefits Fund, 582 F.3d 30, 44 (1st Cir.2009) (internal citations omitted). “Rule 23’s reasonableness standard has been given substance by case law offering laundry lists of factors, most of them intuitively obvious and dependent largely on variables that are hard to quantify.” Id. Nonetheless, there is generally a presumption in favor of the settlement “[i]f the parties negotiated at arm’s length and conducted sufficient discovery.” In re Pharm. Indus. Average Wholesale Price Litig., 588 F.3d 24, 32-33 (1st Cir.2009) (citing (City P’ship, 100 F.3d at 1043)). More specifically, a presumption of fairness attaches to the court’s preliminary fairness determination when “(1) the negotiations occurred at arm’s length; (2) there was sufficient discovery; (3) the proponents of the settlement are experienced in similar litigation; and (4) only a small fraction of the class objected.” In re Lupron Mktg. and Sales Practices Litig., 345 F.Supp.2d 135, 137 (D.Mass.2004) (quoting In re Gen. Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 785 (3d Cir.1995)).

B. Application to the Amended Settlement Agreement

1. The Negotiations Occurred at Arms’ Length

Plaintiff Hochstadt argues that the settlement agreement was the result of collusion and did not occur at arms’ length. The record shows otherwise.

Even though the parties did not reach an agreement at that stage, settlement discussions began on February 10, 2009 during the pre-argument settlement conference at the Court of Appeals. The parties resumed settlement discussions on or about August 14, 2009. During the month that followed, they exchanged multiple settlement proposals and involved Paul W. Sandman, Boston Scientific’s general counsel, in the settlement negotiations. On or about the evening of September 11, 2009, the parties reached an agreed compromise to settle the ERISA Actions. Thereafter, the parties’ counsel spent two months detailing the settlement terms.

Under these circumstances, I find that the time spent and the efforts made by parties on both sides during the settlement negotiations are persuasive indicators that the Amended Settlement Agreement was not the result of collusion but rather the result of negotiations conducted at arms’ length. Accordingly, I conclude that this requirement is satisfied.

%. Sufficient Discovery Was Conducted

Plaintiff Hochstadt alleges that the proponents of the settlement cannot justify the Settlement Amount because the discovery has not been completed. In doing so, Hochstadt misconceives the applicable standard, which does not require that discovery be completed, but rather that sufficient discovery be conducted to make an intelligent judgment about settlement.

Applying this standard, I find that sufficient discovery was undertaken. Fact discovery began in 2006 with ERISA I. When the parties engaged in fact discovery for ERISA II, they resumed fact discovery where they left off in ERISA I and adopted an aggressive schedule. The parties’ counsel agreed that all documents produced in ERISA I would be deemed produced in ERISA II and reviewed over three million pages of documents produced by Defendants. Fact discovery also involved the deposition of several witnesses, including the Plan administrator and an outside consultant to the Plan. Accordingly, I find that, given the thorough investigation of the facts over the last four years, this case is at a stage where both the court and counsel are able to evaluate the merits of the claims.

3. The Proponents of the Settlement Are Experienced in Similar Litigation

The experience of co-lead counsel in this case is apparent from their prosecution of the ERISA Actions over the last four years. They have worked from the inception of their pre-filing factual investigation, filed the successive complaints and conducted discovery. In addition, they have significant class action experience in ERISA and related investor disputes and in class action litigation generally. Plaintiff Hochstadt recognizes that, in his words, “[t]here is no doubt that proposing counsel teams have extensive experience in the field.” Accordingly, I am satisfied that the proponents of the settlement are experienced in similar litigation.

k. Number of Objections

Because the notice to the Settlement Class has not yet been issued, this factor can only be assessed preliminarily based on the objection of Plaintiff Hochstadt. To date, Hochstadt is the only known objector to the Amended Settlement Agreement. However,- when the notice will be issued, other putative class members will be given a full opportunity to develop and lodge any objection. In doing so, putative class members will be able to rely on the independent fiduciary’s report, which will be made publicly available at least thirty days before the expiration of the deadline for objecting to the Amended Settlement Agreement.

Whether a significant number of the class members will ultimately object to the Amended Settlement Agreement when it is proposed for final approval will be further discussed at that time. At this point, there is but one objector, a party who has variously sought, then abandoned and then sought again representative status.

Under these circumstances and for purposes of this preliminary review, I find the Amended Settlement Agreement to be fair, adequate and reasonable as a general proposition. I turn now to specific objections.

IV. OBJECTIONS 13

A. Objection to the Proposed Settlement Amount

Hochstadt first objects to the Settlement Amount, as defined in paragraph 1.1.37 of the Amended Settlement Agreement, which he considers to be “inadequate.” I find, however, that the amount of $8.2 million offered by Defendants is reasonable in light of the risks of continuing litigation. As noted by Plaintiff Hazelrig, ERISA I has been dismissed and the outcome of the appeal from that dismissal remains unknown. Both ERISA I, if reinstated, and ERISA II could face significant legal and factual hurdles in obtaining any recovery greater than the Settlement Amount. In addition, I find the Settlement Amount to be reasonable in light of the best possible recovery. While co-lead counsel preliminarily estimated damages at approximately $160 million based on a “lost opportunity” theory, that theory was rejected by Judge Tauro in ERISA I in favor of the “out-of-pocket” theory, thereby reducing class members’ prospect for damages. See In re Boston Scientific Corp. ERISA Litig., 254 F.R.D. at 28-32. This prospect of more limited damages is also reinforced by the fact that no loss was apparently sustained by the litigation with Medinol, Ltd. or by the DOJ investigation because the stock price did not decline when settlements with Medinol and the DOJ were disclosed. Damages obtainable at trial would at best be limited to stock declines associated with the TAXUS recalls and the FDA warning letters, which approximate $30 million.

Moreover, as it bears noting, see Note 5 supra, that I have today granted summary judgment for Defendants in the parallel securities litigation on the TAXUS recall claim and that Plaintiffs in that litigation had earlier abandoned the FDA warning and other claims. In short, the amount of $8.2 million, which represents approximately 27% of the more conservatively estimated $30 million loss, is plainly reasonable in a disputable matter such as this.

In sum, the risks of continuing litigation and the best possible recovery make it uncertain, if not unlikely, that Defendants would ever be required to pay more, through further litigation than they are willing to pay now. Accordingly, I find the Settlement Amount to be reasonable.

B. Objection to the Revised Plan of Allocation 14

Hochstadt also objects to the proposed distribution of the Settlement Amount. 15 He argues that the Settlement Amount should be allocated to provide greater benefits to “those retired and approaching retirement.”

As with the settlement itself, “the plan of allocation must be fair, reasonable, and adequate.” In re Tyco Int’l, Ltd. Multidistrict Litig., 535 F.Supp.2d 249, 262 (D.N.H.2007). For the reasons discussed in Section II.C. supra with respect to subclasses, I disagree with Hochstadt that the proposed Plan of Allocation should be based on the needs of the members of the Settlement Class rather than on their losses.

Furthermore, I find the Revised Plan of Allocation to be reasonable because its provides for payments of settlement proceeds to class members based upon discrete disclosure events that occurred during the Class Period. Under this Revised Plan of Allocation, Plan participants who held and purchased Boston Scientific stock in the Plan prior to the various disclosures of the TAXUS stent problems and FDA issues but did not sell until after such disclosures were made, have “Recognizable Claims,” whereas those who sold before the disclosures were made are not entitled to receive any settlement proceeds. In addition, damages are limited to the actual market loss a Plan participant actually incurred; therefore if the Plan participant had a market gain, he will not be deemed not to have suffered any damages.

Under these circumstances and for purposes of this preliminary review, I find the Revised Plan of Allocation to be fair, reasonable, and adequate. In addition, I note that, as part of its review of the Amended Settlement Agreement, the independent fiduciary will specifically review the allocation formula for reasonableness and the results of that review will be available before the final fairness hearing is conducted.

C. Objection to the Revised Class Notice

Finally, Hochstadt argues that the proposed class notice is inappropriate because it does not clearly and concisely recite the distribution of the Amended Settlement Amount or any method for calibrating the apportionment of the proceeds in light of the age of the class members.

While it is not mandatory, “th^ court may direct appropriate notice to the class” certified under Rule 23(b)(1). Fed. R.CrvP. 23(c)(2)(A). Contrary to Hochstadt’s allegations, I find the Revised Class Notice, as defined in Exhibit B.l of the Amended Settlement Agreement, to be appropriate because it clearly provides background information on the ERISA Actions, accurately recites the legal rights and options of the Settlement Class and fully explains the Revised Plan of Allocation of the Settlement Amount in the light of the discrete disclosure events that occurred during the Class Period.

V. CONCLUSION

For the reasons set forth more fully above, I GRANT class certification of the Settlement Class, as defined in paragraph 1.1.29 of the Amended Settlement Agreement, and AUTHORIZE the publication of the Revised Class Notice, as defined in Exhibit B.l of the Amended Settlement Agreement. A Final Fairness Hearing will be held before me in Courtroom 1 of the John Joseph Moakley Courthouse in Boston at 2:30 p.m., August 5, 2010.

1 . By terms, the motion seeks "preliminary approval” of the settlement agreement. As will be discussed below, the approval of a settlement agreement is a two-step process, which first requires the court to make a preliminary determination regarding the fairness, reasonableness, and adequacy of the settlement terms. Manual for Complex Litigation (Fourth) § 13.14 (2004). It is only after the second step, a fairness hearing has taken place, however, that the court may "approve” the settlement agreement. Id.) see generally Principles of the Law of Aggregate Litig. § 3.03, cmt. a (Proposed Final Draft, Apr. 1, 2009, approved in substance at the American Law Institute's 2009 Annual Meeting) (discussing preliminary review process). Accordingly, I have replaced the term "approval” with the term "review” for this step in the process.

2 . The settlement agreement before me would effectively resolve two parallel class actions based on the same allegations: (A) Hochstadt et al. v. Boston Scientific Corp. et al., Civil Action No. 08-cv-12139-DPW (D.Mass.) ("ERISA II"), in which Plaintiff Hazelrig is a representative party and (B) In re Boston Scientific Corp. ERISA Litig., Civil Action No. 06-cv-l0105-JLT (D.Mass.) ("ERISA I") (appeal currently pending, In re Boston Scientific Corp. ERISA Litig. (1st Cir. No. 08-2568)), in which the named representative parties-who were found not to have standing in ERISA I, as a consequence of which they have no standing in ERISA II under principles of res judicata — are purporting to prosecute on behalf of other ERISA II class members. As noted at Note 7 infra, the named representative parties in ERISA I have entered into a separate individual settlement as to their claims.

3 .The individual defendants include James R. Tobin, Peter M. Nicholas, John E. Abele, Joel L. Fleishman, Ernest Mario, Ph.D., Uwe E. Reinhardt, John E. Pepper, Ursula M. Burns, Marye Anne Fox, Ph.D., Ray J. Groves, N.J. Nicholas, Jr., Senator Warren B. Rudman, Lawrence C. Best, Robert G. MacLean, Lucia L. Quinn, Paul W. Sandman, Richard A. Duffy, Warren Clark III, Rose Marie Brana Has-linger, Jamie Rubin, John and Jane Does 1-10.

4 . The term “Plaintiffs” refers in this section to the Plaintiffs both in ERISA I and in ERISA II, see Note 2 supra, because the complaints in both actions are based on identical underlying allegations.

5 . Parallel to this litigation, several related securities fraud cases filed in 2005 against Boston Scientific were consolidated into a single case before Judge Tauro on February 15, 2006. In re Boston Scientific Corp. Sec. Litig., Civil Action No. 05-11934. Lead Plaintiff Mississippi Public Employees’ Retirement System, a pension fund, subsequently filed a Consolidated Amended Complaint, alleging false and misleading statements in connection with the same four events at issue in the present case: (1) the Department of Justice investigation into a 1998 product recall, (2) the civil lawsuit with Medinol Ltd., (3) the introduction and subsequent recall of the TAXUS stents, and (4) investigations and warnings by the U.S. Food and Drug Administration regarding Boston Scientific’s manufacturing facilities. Judge Tauro dismissed the action on June 21, 2007. In re Boston Scientific Corp. Sec. Litig., 490 F.Supp.2d 142 (D.Mass.2007). Lead Plaintiff filed an appeal limited to the TAXUS stent claims, and the First Circuit reversed dismissal with regard to those claims and remanded the case on April 16, 2008. Miss. Pub. Employees’ Ret. Sys. v. Boston Scientific Corp., 523 F.3d 75 (1st Cir.2008). The securities fraud litigation was transferred to me on remand. Thereafter, Lead Plaintiff filed a Second Consolidated Amended Complaint and a motion for class certification, which I granted on March 10, 2009. In re Boston Scientific Corp. Sec. Litig., 604 F.Supp.2d 275 (D.Mass.2009). I have this day, however, granted summary judgment for the Defendants as to the remaining TAXUS claims. In re Boston Scientific Corp. Sec. Litig., No. 05-11934-DPW (D.Mass. filed Apr. 27, 2010).

6 . Plaintiffs' ERISA § 502(a)(3) claims were dismissed, however. In re Boston Scientific Corp. ERISA Litig., 506 F.Supp.2d 73, 76 (D.Mass.2007).

7 . Fletcher and Lowe are entering into a separate settlement agreement with the Defendants to resolve their individual claims, including dismissal of the currently-pending appeal of ERISA I. Plaintiff Hazelrig and Defendants report in their briefing that the additional payment Defendants are making in connection with the separate Fletcher/Lowe settlement will not affect the amount being paid under the proposed class settlement. I have reviewed the Fletcher/Lowe settlement agreement and find that their settlement does not derogate from or otherwise adversely affeet the proposed Class Settlement before me. I have directed the settling parties to file the Fletcher/Lowe Settlement Agreement, with the amount of financial consideration redacted, because my review of that Agreement as a whole — but not the amount of financial consideration — has played a role in my preliminary review of the Class Settlement. The redacted Fletcher/Lowe Settlement Agreement is docketed as No. 71. As to Hochstadt’s separate appeal, it will presumably be mooted if the non-opt-out Class Settlement before me is ultimately approved.

8 . Hochstadt has challenged the Preston Declaration as inadequate because "rather than providing the underlying factual information, the Declaration presents [only] Preston's ultimate conclusion that Hazelrig has a recognized claim." While I do not find Hazelrig's objection compelling at this stage, I will permit him to engage in limited discovery regarding the issue, should he seek to do so.

9 . When initially opposing class certification, Defendants argued that Plaintiffs could not satisfy the adequacy requirement because inherent conflicts existed between the interests of the class representatives and the interests of other class members. Specifically, Defendants contended that class members had different and conflicting interests as to "(i) when, why, and the extent to which the price of Boston Scientific stock was artificially in- ■ hated, (ii) when and why it became an imprudent investment that should have been eliminated as a Plan investment option, and (iii) what alternative investment should have been offered in its place.” In making this argument, Defendants relied on Langbecker v. Elec. Data Sys. Corp., 476 F.3d 299 (5th Cir.2007), where a divided Fifth Circuit panel in a case similar to this vacated a district court’s decision to certify a class action on the ground, among others, that "[substantial conflicts exist[ed] among the class members, raising questions about the adequacy of the lead Plaintiff’s ability to represent the class.” Id. at 315. In particular, the Fifth Circuit found that participants in the company were affected by changes in their company’s stock price in "dramatically different ways” because some of the class members had made money while others had lost money and because there were significant variations among class members concerning their optimal breach dates and resulting maximum recovery. Id.

The existence of similar detailed intraclass conflicts has not been raised or argued by Plaintiff Hochstadt.. Rather Hochstadt merely asserts "the presently proposed’ representatives are not [adequate] representative because they did not lose money[,] were not injured.” See Note 8 supra and accompanying text. At this stage of the proceeding, I am satisfied that the Revised Plan of Allocation adequately addresses any problems of intraclass conflict.

10 . Hochstadt suggests that his new counsel, who is apparently one of his relatives, be named interim class counsel because Plaintiff Hazelrig's counsel is purportedly inadequate. I find Hazelrig's counsel more than adequate to the task, consequently I need not address the adequacy of Hochstadt's counsel.

11 . While Plaintiff Hazelrig purports to seek class certification under Rule 23(b)(1)(A) and (B), I find that class certification is inappropriate under Rule 23(b)(1)(A) because Hazel-rig only seeks monetary damages as opposed to equitable relief. See In re Tyco Int’l, Ltd., No. MD-02-1335-PB, 2006 WL 2349338, at *3 (D.N.H. Aug. 15, 2006) ("Certification under Rule 23(b)(1)(A) is ... not appropriate in an action for damages.”) (quoting Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1193 (9th Cir.2001)); Johnson v. Geico Cas. Co., 673 F.Supp.2d 255, 270 (D.Del.2009) ("Certification under Rule 23(b)(1)(A) is generally inappropriate where the primary relief sought is monetary damages.”); but see Stanford v. Foamex L.P., 263 F.R.D. 156, 173 (E.D.Pa.2009) (certifying class under Rule 23(b)(1)(A) because "[t]he issue is not whether plaintiff seeks primarily monetary damages; rather, the focus of a Rule 23(b)(1)(A) analysis is on whether separate actions could lead to adjudications that establish 'incompatible standards of conduct for the party opposing the class.' ”) (quoting Fed.R.CivP. 23(b)(1)(A)). Finding Rule 23(b)(1)(A) inappropriate to the proposed settlement, I will therefore focus my analysis on Rule 23(b)(1)(B).

12 . When initially opposing class certification, Defendants argued that LaRue v. DeWolff, Boberg & Assocs., Inc., 552 U.S. 248, 128 S.Ct. 1020, 169 L.Ed.2d 847 (2008) precluded class certification under Rule 23(b)(1)(B) because Plan participants could now pursue individual account actions against Plan fiduciaries. Though this argument has some support, In re First Am. Corp. ERISA Litig., 258 F.R.D. 610, 622 (C.D.Cal.2009) (holding class certification inappropriate under Rule 23(b)(1)(B) because “LaRue cures any concern that the potential class members’ claims would essentially be disposed of by this litigation”), I find it to be unpersuasive at this stage. See Stanford, 263 F.R.D. at 174 (discussing LaRue) (certifying class under Rule 23(b)(1)(B) because "[t]he availability of an individual account claim under § 502(a)(2) does not alleviate the concerns cited by the numerous courts that have certified ERISA class actions pursuant to Rule 23(b)(1)(B) in situations where claims on behalf of the Plan are identical to those on behalf of an individual account.”).

13 . Because Hochstadt is the only known objector at this stage, I address only his objections without prejudice to further consideration of these and other objections when confronting the question of final approval in connection with the Fairness Hearing.

14 . As noted, the plan of allocation has been revised in response to my inquiries at the initial preliminary review hearing. These revisions do not, however, entirely obviate Hochstadt's objection.

15 . The revised plan of allocation provides the following damage calculation formula: "For each Participant, the Administrator shall determine the Participant’s 'Recognized Claim' approximating the damages the Participant allegedly suffered.” Am. Settlement Agreement Ex. D., § II.C. In doing so, the Administrator will take into consideration for each Participant the disclosure of discrete events. Id. Additionally, the following limit will be imposed on Recognized Claims: "For each Participant, the Administrator shall determine their overall market loss (the 'Net Market Loss') for the entire Class Period, as follows: Net Market Loss = A + B — C—D, where for each Participant's account:

A = the dollar value of the Boston Scientific shares held in the Boston Scientific Stock Fund, if any, held for the Participant on the first day of the Class Period (valued at $39.50 per share);

B = the dollar value, if any, of all of the purchases of interests in the Boston Scientific Stock Fund during the Class Period as of the time of the purchase(s);

C = the dollar value, if any, of all dispositions of interests in the Boston Scientific Stock Fund during the Class Period as of the time of the sale(s); and

D = the dollar value of the Boston Scientific shares held in the Boston Scientific Stock Fund, if any, held for the Participant on the close of trading on the last day of the Class Period (valued at $21.87 per share).

Id. § II.D. The entire Revised Plan of Allocation is attached as Exhibit A to this Memorandum and Order.