298 F.R.D. 171
S.D.N.Y.2014Background
- Lead Plaintiff moved for final approval of the Settlement and reimbursement of expenses in consolidated securities class actions against ABAT Defendants and auditors.
- Settlement terms originated from a Stipulation of Settlement (preliminarily approved Nov. 26, 2013) and Amendment No. 1, which delinked derivative actions from the settlement.
- Complaints alleged Section 10(b) and 20(a) violations and misstatements about ABAT’s financial results, including inflated profits and related party transactions.
- Court consolidated related actions in 2011, appointed Lead Plaintiff, and selected Pomerantz LLP as Lead Counsel; auditors were dismissed in earlier dismissals.
- Preliminary notice was issued; a final settlement hearing was held Feb. 21, 2014, with objections limited and no formal objections filed; derivative actions’ settlement was revised in Amendment No. 1.
- Court ultimately granted final approval, approved the Plan of Allocation, certified the Settlement Class for settlement purposes, and approved modest lead plaintiff’s award and counsel’s expenses.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Settlement is fair, reasonable and adequate | Sanderson supports fairness given Grinnell factors and discovery results. | ABAT Defendants contend settlement balances risk and potential recovery. | Settlement approved as fair, adequate, and reasonable. |
| Whether the Settlement Class should be certified for settlement purposes | Class meets numerosity, commonality, typicality, and adequacy; predominance and superiority satisfied. | Defendants dispute class certification for trial but not for settlement. | Settlement Class certified for settlement purposes. |
| Whether the Plan of Allocation is fair and reasonable | Plan rational; $100 minimum avoids depleting fund; allocation appropriately balanced. | No specific objection; arguments focus on overall settlement fairness. | Plan of Allocation approved. |
| Whether notice to the Settlement Class complied with due process | Notice program via Berdon with postcard and online details satisfied due process. | Argues notice adequate; no objections filed. | Notice deemed to comply with due process. |
| Whether lead plaintiff’s expenses and lead counsel’s reimbursement are reasonable | Expenses ($115,000) and lead plaintiff award ($3,000) reasonable and necessary; counsel forgoes fees to maximize class recovery. | No opposition raised; cost recovery standard. | Lead Counsel expenses and Lead Plaintiff award approved. |
Key Cases Cited
- Wal-Mart Stores, Inc. v. Visa U.S.A. Inc., 396 F.3d 96 (2d Cir. 2005) (strong presumption of fairness for arm's-length settlements)
- Grinnell Corp. v. City of Detroit, 495 F.2d 448 (2d Cir. 1974) (nine Grinnell factors for evaluating settlements)
- Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (U.S. 1997) (settlement class certification standards and predominance)
- In re Flag Telecom Holdings, Ltd. Sec. Litig., 574 F.3d 29 (2d Cir. 2009) (adequacy and predominance in class actions)
- In re Oxford Health Plans, Inc. Sec. Litig., 191 F.R.D. 369 (S.D.N.Y. 2000) (commonality and typicality in securities class actions)
- Robidoux v. Celani, 987 F.2d 931 (2d Cir. 1993) (typicality and adequacy principles in class actions)
- Weinberger v. Kendrick, 698 F.2d 61 (2d Cir. 1982) (settlement class certification recognized in Second Circuit)