Union Asset Management Holding A.G. v. Dell, Inc.
669 F.3d 632
| 5th Cir. | 2012Background
- District court certified a class and approved a $40 million settlement for a Dell securities action.
- Two groups of objectors (Schuleman and Murphy) challenged certification, settlement, and related procedures.
- PSLRA stayed discovery during dismissal; informal discovery by investigators was used.
- The de minimis provision was removed and replaced with per-claimant pro rata treatment; no re-notice or reopening of claims.
- Class counsel’s fee was set at 7.2 million (18% of the fund) using a percentage method with Johnson-factor analysis; objections ensued and the district court’s decisions were reviewed for abuse of discretion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing of objectors to the settlement | Union argues some objectors lacked proof of claim to show class membership | Objectors complied with settlement notice showing class membership | Objectors have standing; proof of claim not required to establish class membership |
| Adequacy, fairness, and reasonableness of the settlement | Court failed to consider full Reed factors due to limited discovery | District court thoroughly applied Reed factors with informed reasoning | No abuse of discretion; settlement approved |
| Validity of the class definition | Damaged thereby language is standard and not problematic | Language is routine and does not create ascertainability issues | Class adequately defined and ascertainable |
| Modification of plan of allocation and notice implications | District court lacked authority to rewrite plan or require new notice | Plan modification insulated from stipulation; no need for re-notice or extended filing | Modification permissible; no abuse in not re-noticing or reopening claims |
| Attorneys’ fee award methodology and interest | Objurchers claim the percentage method is improper and excessive | Johnson factors used; 18% reasonable; interest properly awarded | Fee award affirmed; methodology and interest upheld |
Key Cases Cited
- Reed v. Gen. Motors Corp., 703 F.2d 170 (5th Cir. 1983) (six Reed factors govern settlement fairness review)
- Ayers v. Thompson, 358 F.3d 356 (5th Cir. 2004) (PSLRA stays discovery; informs court consideration of merits)
- In re High Sulfur Content Gasoline Prods. Liability Litig., 517 F.3d 220 (5th Cir. 2008) (Johnson cross-check; lodestar vs. percentage method discussion)
- Forbush v. J.C. Penney Co., 98 F.3d 817 (5th Cir. 1996) (Johnson factors guide reasonableness of fees)
- Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974) (establishes Johnson factors for reasonable fees)