EDUARDO C. ROBRENO, District Judge.
Presently before the Court is "Lead Plaintiffs' Unopposed Motion for (I) Preliminary Approval of Settlements and (II) Approval of Notice to the Class." On behalf of themselves and other members of the class, Lead Plaintiffs
For the reasons that follow, the Court will grant the motion, preliminarily approve the proposed class action settlements set forth in the Stipulations, and approve the form, content, and manner of giving notice to the Class.
Beginning in November 2010, numerous securities class actions were filed against certain Defendants in the United States District Court for the District of Delaware, alleging violations of federal securities laws. On March 7, 2010, the Court consolidated the various actions under the caption
Lead Plaintiffs allege that Defendants violated the federal securities laws by making false and misleading statements regarding Wilmington Trust in the offering materials for the Offering.
On May 16, 2011, Lead Plaintiffs filed their Consolidated Securities Class Action Complaint. ECF No. 39. The matter was assigned to the Honorable Sue L. Robinson. After several rounds of motions to dismiss and to amend, Lead Plaintiffs filed the operative complaint, their Fourth Amended Consolidated Securities Class Action Complaint ("FAC"), on June 13, 2013. ECF No. 149.
The FAC asserted claims for (i) violations of § 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act"), and Rule 10b-5, (ii) violations of § 20(a) of the Exchange Act, (iii) violations of § 11 of the Securities Act of 1933 (the "Securities Act") in connection with the Offering, (iv) violations of § 12(a)(2) of the Securities Act in connection with the Offering, and (v) violations of § 15 of the Securities Act in connection with the Offering. On March 20, 2013, the Court denied Defendants' motions to dismiss the FAC as to all Defendants except two. ECF No. 185.
On September 12, 2014, Lead Plaintiffs moved for class certification. ECF No. 259. On September 3, 2015, the Court granted Lead Plaintiff's class certification motion in full, appointed Lead Plaintiffs as "Class Representatives," Lead Counsel as "Class Counsel," and Chimicles & Tikellis LLP as "Liaison Counsel" for the Class. ECF No. 406.
On January 15, 2016, the Court approved notice to be disseminated to potential members of the class (the "Class Notice"). ECF No. 429. The Class Notice informed Class Members of (i) the action pending against the Defendants, (ii) the Court's certification of the action as a class action, and (iii) Class Members' right to request exclusion from the Class.
Beginning on March 1, 2016, the Notice of Pendency of Class Action was mailed to potential Class Members, and on March 8, 2016, the Summary Notice of Pendency of Class Action was published in the
On June 13, 2017, the Action was reassigned to the Honorable Eduardo C. Robreno of the United States District Court for the Eastern District of Pennsylvania, sitting by designation in the District of Delaware.
At that time, Lead Plaintiffs, Wilmington Trust Defendants and Underwriter Defendants reached an agreement to settle. The agreed-upon settlement stipulated that Wilmington Trust would pay $200,000,000 in cash to resolve all claims against Wilmington Trust Defendants and Underwriter Defendants. On May 15, 2018, the parties signed the stipulated settlement.
On May 21, 2018, Lead Plaintiffs and KPMG reached an agreement stipulating that KPMG would pay $10,000,000 to resolve all claims against it. On May 25, 2018, Lead Plaintiffs and KPMG signed the stipulation.
On May 25, 2018, Lead Plaintiffs filed the instant motion for preliminary approval of the settlements and approval of the notice program. ECF No. 821.
The terms of the proposed class action settlement agreement are set forth in the Stipulation and Agreement of Settlement with Wilmington Trust Defendants and Underwriter Defendants, Pl. Mot. Ex. 1, and the Stipulation and Agreement of Settlement with KPMG. Pl. Mot. Ex. 2. The terms are outlined below.
The Stipulation and Agreement of Settlements provide for a Class defined as follows:
Pl. Mot. Ex. 1, at 8-9; Pl. Mot. Ex. 2, at 8-9.
At the hearing, Counsel informed the Court that they had sent out 65,500 notice packets to likely Class Members, which they estimated consisted of about 80% institutional shareholders. Counsel also indicated that approximately 130 million shares were allegedly damaged by Defendants' actions. Of the potential Class Members, eight opted out during the notice period.
The settlement agreements provide that Wilmington Trust will pay $200,000,000 in cash and KPMG will pay $10,000,000 in cash to be deposited into separate escrow accounts no later than ten business days after the Court enters an order preliminarily approving the settlement agreements. The Settlement Amounts plus any interest earned thereon comprise the "Settlement Funds." A Class Member who submits a valid Claim Form will be reimbursed a
The Plan of Allocation is a method of weighing the claims of Claimants against one another to make
The Settlement Funds shall also be used to pay attorney's fees not to exceed 28% of each Settlement Fund, and expenses and costs of not more than $7,500,000.
In exchange for the benefits provided by the settlement, settlement Class Members agree to release all claims that they alleged or could have alleged in the action.
Under Federal Rule of Civil Procedure 23(e), the settlement of a class action requires court approval. Fed. R. Civ. P. 23(e)(2). A district court may approve a settlement agreement only "after a hearing and on finding that it is fair, reasonable, and adequate."
The Federal Judicial Center's
If the proposed settlement is preliminarily acceptable, the court then directs that notice be provided to all class members who would be bound by the proposed settlement to afford them an opportunity to be heard, opt out of the class, or object to the settlement.
After class members are notified, the court proceeds with the second hearing, the formal "fairness hearing" as required by Rule 23(e)(2).
In approving a class action settlement, the court must determine whether the proposed settlement is "fair, adequate, and reasonable," as required by Rule 23(e)(2).
In making this preliminary determination, the Court's "first and primary concern is whether there are any obvious deficiencies that would cast doubt on the proposed settlement's fairness."
Defendants asserted that the maximum recoverable damages would be $590 million and that the settlements offer the Class compensation of 40% of that amount.
The Court further concludes that the notices of the class action settlement submitted by the parties are adequate. Rule 23(e) requires that all members of the class be notified of the terms of any proposed settlement. Fed. R. Civ. P. 23(e)(1). This "notice is designed to summarize the litigation and the settlement" and "to apprise class members of the right and opportunity to inspect the complete settlement documents, papers, and pleadings filed in the litigation."
The Claims Administrator, Epiq Class Action & Claims Solutions, Inc. ("Epiq") was previously approved by the Court to administer the dissemination of the Class Notice, to supervise and administer the notice procedure in connection with the proposed settlements as well as the processing of claims. Lead Plaintiffs describe two forms of notice in their motion. First, they propose a Settlement Notice Packet, consisting of a copy of the Settlement Notice and the Claim Form, to be mailed by first-class mail to members of the Class who may be identified through reasonable effort. Pl. Mot. Ex. 3, ECF No. 821-3 at 19-55. The Claims Administrator will also post copies of the Settlement Notice and the Claim Form on the website for this Action,
The notices, inter alia, advise the Class Members of the essential terms of the Settlement and how to file a claim or object, provide information regarding Class counsel and their fees, and provide information regarding the final fairness hearing. The Court has reviewed the notices and concludes that they explain, in plain language, the settlement and the procedures. Accordingly, the Court finds that the settlement notice program satisfies Rule 23(e). The Court further concludes that, given the extensive and detailed previous notice in this case providing the Class Members with the opportunity to exclude themselves from the Class, there is no need under Rule 23(e)(f) to provide another period of time for Class members to request exclusion from the Class.
The terms in the settlement agreements, as well as the forms of notice, appear fair, reasonable, and adequate. As a result, the Court will grant Lead Plaintiffs' motion for preliminary approval of the settlements and notice program.
An appropriate order follows.