306 F.R.D. 672
D. Colo.2014Background
- Five related securities actions against Crocs, Inc. and related defendants were consolidated into a single case alleging Exchange Act violations arising from misrepresentations about Crocs’ inventory and related systems.
- Lead Plaintiff Sanchez Group was appointed Lead Plaintiff in 2008; the amended complaint included additional named plaintiffs (Babbitt and Lundberg).
- A settlement was reached after mediation and extensive negotiations, and the Tenth Circuit remanded on a limited basis to permit the district court to consider the proposed settlement.
- The Settlement Class includes persons who purchased Crocs securities between April 2, 2007 and April 14, 2008, excluding defendants, insiders, and opted-out members.
- Crocs agreed to pay $10 million into a Settlement Fund funded by D&O insurance; notices were sent, opt-outs/exclusions were received, and a fairness hearing was held.
- Final certification of the Settlement Class and final approval of the settlement, the plan of allocation, and notice are sought.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing of the Sanchez Group to represent the class | National Roofing argued Sanchez Group lacked Article III standing. | Sanchez Group’s CFDs could still confer injury within the class claims. | Objection overruled; Sanchez Group adequately represents the class despite potential defenses. |
| Fairness of the settlement | Settlement timing and value are fair given litigation risks. | Settlement may have been unfair due to timing close to appellate proceedings. | Settlement found fair, reasonable, and adequate after Rule 23(e) analysis. |
| Class certification under Rule 23(b)(3) | Common questions predominate; settlement class is appropriate. | Concerns about adequacy of representation and possible individualized issues. | Rule 23(b)(3) certification for a settlement class granted. |
| Plan of Allocation fairness | Allocation reflects mortality of damages and is based on recognized formulas. | No significant opposition to allocation methodology. | Plan of Allocation found fair, reasonable, and adequate. |
| Notice and due process sufficiency | Notice was reasonably calculated to apprise class members; extensive mailing occurred. | None articulated beyond standard objections. | Notice deemed sufficient under Rule 23(e)(1)-(2) and due process. |
Key Cases Cited
- Morrison v. Nat’l Australia Bank Ltd., 561 U.S. 247 (2010) (extraterritorial reach of §10(b) is merits, not subject-matter jurisdiction)
- Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997) ( Rule 23(b)(3) predominance and settlement class considerations)
- Dukes v. Wal‑Mart Stores, Inc., 131 S. Ct. 2541 (2011) (rigorous analysis and commonality in class certification)
- In re Pet Food Prods. Liability Litig., 629 F.3d 333 (2010) (adequacy and fairness in nationwide class action settlements)
- In re American Int’l Grp., Inc. Sec. Litig., 689 F.3d 229 (2012) (class certification and adequacy considerations in large securities actions)
- Absolute Activist Value Master Fund, Ltd. v. Ficeto, 677 F.3d 60 (2012) (standing and merits-oriented considerations in securities cases)