Latorraca v. Centennial Technologies Inc.
834 F. Supp. 2d 25
D. Mass.2011Background
- Pinez disseminated materially false and misleading financial statements for 1994–1996, inflating Centennial’s stock price.
- Class action judgment against Pinez totaled $207 million in November 2000 for securities fraud and insider trading on Century’s options.
- The Taniki account at H&R Block, opened by Pinez and his wife, was attached in 2005 and enlarged in 2008 to include accrued interest.
- H&R Block was held as a trustee and assessed $665,320 in partial satisfaction of the judgment; remaining funds were transferred to Berdon LLP after Taniki’s appeal failed.
- Taniki’s remaining funds amounted to $604,837, now subject to the class counsel’s motion for fees, administrator fees, and expense reimbursement.
- The court ultimately approved a fee award of 25% of the aggregate collected, plus expenses, with Berdon LLP receiving $30,000 for its services.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether fees should be calculated by a common fund method. | Pinez | Pinez | Yes, common fund method appropriate. |
| Whether 25% of the collected funds is reasonable for attorneys’ fees. | Class Counsel seeks 30% as reasonable given effort. | Court should reduce due to modest class recovery. | 25% deemed reasonable given recovery level. |
| Whether expenses should be reimbursed in addition to fees. | Expenses should be reimbursed as incurred. | Expenses must be reasonable and guarded. | Expense reimbursement approved as part of overall award. |
| Whether the Claims Administrator's fee is payable. | Administrator entitled to reasonable fee for distribution. | Fees must be reasonable and proportionate. | Administrator’s $30,000 fee approved. |
Key Cases Cited
- Boeing Co. v. Van Gemert, 444 U.S. 472 (U.S. 1980) (common fund fees and expenses award permissible)
- In re Thirteen Appeals Arising Out of San Juan, 56 F.3d 295 (1st Cir. 1995) (POF method advantageous, avoids burden of lodestar)
- In re Fidelity/Micron Sec. Litig., 167 F.3d 735 (1st Cir. 1999) (court acts as fiduciary to safeguard fund; reimburse expenses)
- Six Mexican Workers v. Arizona Citrus Growers, 904 F.2d 1301 (9th Cir. 1990) (24%–aknown benchmark for fee awards in class actions)
- In re Fleet/Norstar Sec. Litig., 935 F. Supp. 99 (D.R.I. 1996) (illustrates reasonableness standard for fee awards)