Hayes v. Harmony Gold Mining Co.
509 F. App'x 21
2d Cir.2013Background
- The case is Hayes v. Harmony Gold Mining Co., a securities class action in the Second Circuit.
- Hayes, acting pro se as lead plaintiff, appeals from a district court approval of a settlement.
- The settlement resolved claims under 15 U.S.C. § 78j(b) and Rule 10b-5 related to Harmony’s expenses from a new accounting system.
- The district court held a fairness hearing on November 10, 2011 and entered final judgment on November 14, 2011.
- This Court reviews the district court’s settlement approval for abuse of discretion and affirms the judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May a lead plaintiff veto settlement on his own? | Hayes objects to approval alone. | Class representative cannot unilaterally veto. | No, lead plaintiff cannot singlehandedly veto. |
| Must the district court perform a quantitative analysis before approval? | District court should conduct numeric damages analysis. | Court need not turn hearing into trial; substantial factors suffice. | Not required to conduct a separate quantitative analysis. |
| Is there a 10% fee cap for common fund settlements? | Fees should not exceed 10% unless per-share/claims basis. | District court has discretion to determine reasonable fee; no fixed cap. | No strict 10% cap; discretion governs fees. |
| Does a presumption of fairness apply to arm’s-length settlements? | Presumption of fairness should not apply without strong discovery. | Presumption applies to arm’s-length settlements after discovery. | The district court could approve even without a presumption. |
Key Cases Cited
- In re Boesky Sec. Litig., 948 F.2d 1358 (2d Cir. 1991) (class settlement approval and fiduciary duty to silent members)
- Grant v. Bethlehem Steel Corp., 823 F.2d 20 (2d Cir. 1987) (district court’s fiduciary responsibility to silent class members)
- City of Detroit v. Grinnell Corp., 495 F.2d 448 (2d Cir. 1974) (nine factors for fairness of settlement (Grinnell factors))
- Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96 (2d Cir. 2005) (applies Grinnell factors and presumption of fairness in arm’s-length settlements)
- In re Initial Public Offerings Securities Litig., 471 F.3d 24 (2d Cir. 2006) (rejects some showing standard for Rule 23 requirements, supports presumption of fairness)
- Goldberger v. Integrated Resources, Inc., 209 F.3d 43 (2d Cir. 2000) (reasonable fee is within district court discretion)