JOSEPH F. BATAILLON, District Judge.
This matter is before the Court on the plaintiffs' unopposed motion for certification of class and for preliminary approval of settlement, Filing No. 101. These are consolidated cases for violations of federal securities laws under
The Court must first consider whether to conditionally certify a settlement class. See
A number of factors are relevant to the numerosity requirement of Rule 23(a), "the most obvious of which is, of course, the number of persons in the proposed class."
The commonality element requires that questions of law or fact are common to the Class.
Typicality under Rule 23(a)(3) means "that there are `other members of the class who have the same or similar grievances as the plaintiff.'"
The "adequacy of representation" inquiry reflects concerns about whether the class representatives have common interests with the members of the class and whether they and their counsel will competently and vigorously pursue the lawsuit. Id.;
If the requirements of numerosity, commonality, typicality, and adequacy are satisfied, a plaintiff must satisfy one of the three subsections of Rule 23(b).
In addition to the Rule 23(a) and (b) requirements, "[a]n order certifying a class action must define the class and the class claims, issues, or defenses, and must appoint class counsel under Rule 23(g)."
The Stipulation is subject to review under Rule 23 of the Federal Rules of Civil Procedure. Approval of a class action settlement under Rule 23(e) involves a two-step process: first, a "preliminary approval" order; and second, after notice of the proposed settlement has been provided to the class and a hearing has been held to consider the fairness, reasonableness and adequacy of the proposed settlement, a "final approval" order or judgment will be entered. See Manual for Complex Litigation § 13.14 (4th ed. 2004). In considering preliminary approval, the court makes a preliminary evaluation of the fairness of the settlement, prior to notice. Manual of Complex Litigation (Fourth) § 21.632 (2010). First, the court must make a preliminary determination of the fairness, reasonableness and adequacy of the settlement terms and must direct the preparation of notice of the proposed settlement and the date of the fairness hearing. Id. After an agreement is preliminarily approved, the second step of the process ensues: notice is given to the Class members of a hearing, at which time class members and the settling parties may be heard with respect to final court approval. Id.
A district court is required to consider four factors in making a determination that a settlement is fair, reasonable, and adequate: (1) the merits of the plaintiff's case, weighed against the terms of the settlement; (2) the defendant's financial condition; (3) the complexity and expense of further litigation; and (4) the amount of opposition to the settlement.
Rule 23 also provides that "[t]he court must direct notice in a reasonable manner to all class members who would be bound by the proposal."
The Court finds, preliminarily and for purposes of this settlement only, that the requirements of Rule 23 have been met and the Class should be certified. The proposed class consists of "all persons who purchased the common stock of TierOne corporation during the time period of August 9, 2007 through May 14, 2010, inclusive and were allegedly damaged thereby." See Filing No. 102-2 (Page ID 1558). All of the Individual Defendants and all former officers and directors of TierOne Corporation, and such excluded persons' immediate families, legal representatives, heirs, predecessors, successors, and assigns, and any entity in which any excluded person has or had a controlling interest are excluded from the Class as are any people who file timely requests for exclusion is accordance with this order. Id.
The record shows that the number of class members is so numerous that joinder of all class members would be impracticable. Although the exact size of the Class is not yet known, the Complaint alleges that there are hundreds, if not thousands, of people who purchased TierOne Corporation stock during the relevant time period and the Company's stock was actively traded in an efficient market on the NASDAQ stock exchange. Further, the record shows there are questions of law and fact common to the Class in that the issues of the claims are whether false statements of material fact were made, whether the statements were made with the requisite state of mind, and determination of the proper measure of damages. All of the Class members were injured by the same allegedly fraudulent conduct. The parties have also shown that the Class representatives' claims are typical of the claims of other members of the Class. The Class claims arise from the same conduct and give rise to the same theories of recovery. Also, the Court finds that the representative parties can fairly and adequately protect the interests of the Class. The representatives' interests are congruent to those of the Class. The Court previously appointed the Rosen Law Firm to litigate this case for the Proposed Class as Lead Plaintiffs' counsel and now finds they have the experience and resources to represent the Class fairly and adequately. The Court further finds that the questions of law and fact common to all the Class members predominate over any question affecting only individual members and a class action is superior to other available methods for the fair and efficient adjudication of the controversy. Issues of liability are the same with respect to each class member in most securities fraud cases. If every class member were to bring an individual action, each plaintiff would be required to demonstrate the same omissions or misrepresentations to prove liability. The Court also finds that a class action is superior to other methods of adjudication in that absent a class action, the Court would be faced with numerous lawsuits. Also, the prosecution of costly litigation as individuals is not a realistic alternative for most class members and class members have little economic incentive to do so.
The Court has reviewed the proposed settlement agreement, Filing No. 102, Index of Evid., Ex. 1. Lead Plaintiffs have shown that the proposed settlement is the product of extensive litigation and arm's-length negotiations conducted by experienced counsel and mediated by a retired federal judge. See Filing No. 84, Mediation Reference Order. Counsel for the parties have shown that they negotiated the terms of a proposed settlement that maximizes the defendants' financial contribution. The Settlement requires the defendants' insurers to pay $3,100,000 into escrow for the benefit of the Class. See Filing No. 102, Ex. 1, Stipulation of Settlement at 12. The parties have devised a Plan of Allocation based on Lead Counsel's assessment of the merits and the relative strengths or weaknesses of the claims of the Class members. Id. at 18. The parties request that Strategic Claims Services, an accounting and claims administration firm, be appointed as Claims Administrator to determine, under supervision of Lead Counsel, the extent to which claims are allowed, subject to appeal to this Court. Id. at 5, 15. The Plan of Allocation for distributing the proceeds of the Net Settlement Fund (after the payment of attorneys' fees, costs of administration, taxes, any payment under
Lead Counsel have shown that the proposed settlement in the best interests of the plaintiff class, based on the claims and defenses in this action, its procedural posture, the anticipated time and expense of protracted litigation, and the risk that the Class would recover nothing in view of the fact that TierOne is in bankruptcy and TierOne and its former management are subject to numerous regulatory proceedings and investigations seeking damages and penalties.
The proposed settlement between the plaintiff class and defendants appears, on preliminary review, to be within the range of reasonableness and, accordingly, the Court finds the proposed partial settlement should be submitted to class members for their consideration and a fairness hearing under
The parties have submitted a proposed Notice of Pendency and Proposed Settlement of Class Action, Motion for Attorneys' Fees and Settlement Hearing (the "Notice"), proposed Summary Notice of Class Action Settlement ("Summary notice") and a proposed Proof of Claim and Release (the "Proof of Claim") to the Court for review. Filing No. 108, Index of Evid., Exs. A-1, A-2, and A-3. The Court has reviewed the proposed notices, and finds they are satisfactory. The Notice satisfies the requirements of Rule 23(h)(1), as it notifies proposed class members that counsel for plaintiffs will apply to the Court for attorneys' fees and expenses, including an award of attorneys' fees of approximately 33% of the settlement amount and will seek reimbursement of litigation costs and expenses of up to $100,000, to be paid from the Settlement Fund.
The Notice sets forth the amount of the Settlement Fund, sets out the amount of fees requested, explains the nature and history of the litigation, and describes the plan of allocation. See Filing No. 108, Ex. A-1. It also sets out the parties' disagreement over damages and liability. Id. Further, the Notice includes detailed information on requesting exclusion from the Class and provides the name and mailing address of the Claims Administrator. Id. It also provides detailed instructions on the process for completing and submitting the Proof of Claim and the Release forms that accompany it. Id. The Summary Notice also informs class members that copies of the Notice and Proof of Claim and Release forms may be obtained by writing or calling the Claims Administrator. Filing No. 108, Ex. A-2. Finally, the Notice discloses the date, time and place of the final approval hearing, along with the procedures for commenting on the Settlement and includes the postal address for the Court, and the postal addresses and telephone numbers of Lead Counsel and counsel for all defendants. Id. The Court finds the Notice includes all of the information required under the Federal Rules and the PSLRA.
Under the terms of the Settlement, the Claims Administrator is charged with disseminating the Notice to the Class. Filing No. 102, Ex. 1, Settlement at 5. Lead Counsel state
that the parties propose to mail the Notice and accompanying documents to proposed class members who can be identified with reasonable effort and to brokerage firms and others who regularly act as nominees for beneficial purchasers of stock. Filing No. 103, Brief at 12. In addition, Lead Counsel indicate that the Summary Notice will be published in
IT IS ORDERED:
1. The plaintiffs' unopposed motion for certification of class and for preliminary approval of settlement (Filing No. 101) is granted.
2. Pursuant to Rule 23(a) and (b)(3) of the Federal Rules of Civil Procedure and for the purposes of the Settlement only, this action is hereby preliminarily certified as a class action on behalf of:
3. The individual defendants and all former officers and directors of TierOne Corporation, and such excluded persons' immediate families, legal representatives, heirs, predecessors, successors, and assigns, and any entity in which any excluded person has or had a controlling interest are excluded from the Class.
4. Those who file valid and timely requests for exclusion in accordance with this order are excluded from the Class.
5. Lead Plaintiffs are certified as the Class representatives on behalf of the Class, and the Lead Counsel previously selected by Lead Plaintiffs and appointed by the Court is hereby appointed as Lead Counsel for the Class.
6. An Order Preliminarily Approving Settlement and Providing for Notice will issue this date.
7. A Fairness Hearing is scheduled on
8. The Clerk of Court is directed to mail a copy of this order and the order preliminarily approving the Settlement by first class mail to: