Case 1:09-cv-01350-PAC Document 163 Filed 07/13/15 Page 1 of 18 UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN RE: 2008 FANNIE MAE ERISA LITIG. ) ) ) ) ) ) 09-CV-01350-PAC MDL No. 2013 JOINT DECLARATION OF ROBERT I. HARWOOD AND MARK K. GYANDOH IN SUPPORT OF PLAINTIFFS UNOPPOSED MOTIONS FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT, CERTIFICATION OF SETTLEMENT CLASS, APPROVAL OF PLAN OF ALLOCATION AND REQUEST FOR AN AWARD OF ATTORNEYS FEES, REIMBURSEMENT OF EXPENSES, AND CASE CONTRIBUTION AWARDS TO THE PLAINTIFFS ROBERT I. HARWOOD and MARK K. GYANDOH declare as follows: 1. Robert I. Harwood and Mark K. Gyandoh are, respectively, a member of Harwood Feffer LLP ( Harwood Feffer ) and Counsel to Kessler Topaz Meltzer & Check, LLP ( KTMC ), Plaintiffs Co-Lead Class Counsel in in the above-captioned litigation. 2. We have been actively involved in the prosecution of this Action, are familiar with its proceedings, and have personal knowledge of the matters set forth herein based on our active supervision and participation in all material aspects of the Action and if called to do so, we could and would testify competently thereto. We submit this Joint Declaration in support of Plaintiffs unopposed motions for entry of an order: (1) approving the $9,000,000 cash Settlement, (2) certifying the proposed Settlement Class, (3) approving the Plan of Allocation, (4) approving Co-Lead Class Counsel s application for an award of attorneys fees and reimbursement of expenses, and (5) awarding the two named Plaintiffs Case Contribution Awards in the amount of $5,000 each.
Case 1:09-cv-01350-PAC Document 163 Filed 07/13/15 Page 2 of 18 3. This Joint Declaration describes the claims asserted, the principal proceedings to date, the legal services provided and expenses incurred by Co-Lead Class Counsel, and the Settlement. The Final Approval Hearing is scheduled for August 13, 2015. I. INTRODUCTION 4. The Settlement in this Action results from the class action brought on behalf of participants in the Federal National Mortgage Association Employee Stock Ownership Plan (the Plan ) during the period from April 17, 2007 and May 14, 2010 (the Class Period ), whose individual Plan accounts included investments in the Fannie Mae Stock Fund. 5. From commencement of this Action on October 23, 2008 through its settlement late last year, it has been vigorously, skillfully, and tenaciously litigated by Co-Lead Class Counsel. The Settlement was reached after two formal mediation sessions before a nationally recognized mediator, David Geronemus, Esq. of Judicial Arbitration and Mediation Services ( JAMS ). At the time of Settlement, Co-Lead Class Counsel had engaged in significant discovery, which included review and analysis of tens of thousands of pages of documents, and had actively participated in depositions in a related securities action which was also before this Court. Counsel for Defendants aggressively defended this case at all times, yet Co-Lead Class Counsel succeeded in obtaining an excellent result for the Settlement Class. 6. The Settlement Agreement and Release (the Settlement Agreement ), attached hereto as Exhibit 1, provides for the payment of $9,000,000 in cash which has been deposited in escrow and is earning interest for the benefit of the Settlement Class. 7. The Settlement confers an immediate and substantial benefit on the Settlement Class and eliminates the significant risk of continued litigation under circumstances where a favorable outcome is uncertain. Co-Lead Class Counsel respectfully submit that under these 2
Case 1:09-cv-01350-PAC Document 163 Filed 07/13/15 Page 3 of 18 circumstances, the Settlement is in the best interest of the Settlement Class, and should be approved as fair, reasonable, and adequate. II. PLAINTIFFS PROSECUTION OF THE ACTION A. Complaints and Motion to Dismiss Briefing 8. On October 23, 2008 and November 25, 2008 respectively, Plaintiffs Moore and Gwyer filed a putative class action alleging that the Plan fiduciaries violated ERISA by, inter alia: (i) allowing the Plan to continue to invest in Fannie Mae Stock at a time when it was an imprudent Plan investment; and (ii) maintaining the Plan s pre-existing heavy investments in Fannie Mae Stock when Fannie Mae Stock was no longer a prudent investment for the Plan. 9. On May 14, 2009, the Court entered a pre-trial order consolidating the ERISA actions and appointing KTMC and Harwood Feffer as Interim Co-Lead Counsel for Plaintiffs and the putative class. Dkt. No. 8. 1 10. On September 11, 2009, Plaintiffs filed a consolidated class action complaint. Dkt. No. 16. 11. Defendants moved to dismiss the consolidated class action complaint on November 2, 2009 (Dkt. Nos. 20-27). Plaintiffs responded on January 15, 2010 (Dkt. No. 40), and Defendants replied on February 16, 2010 (Dkt. Nos. 41-43). After a pre-trial conference held on February 1, 2012, the Court entered an Order that all pending motions to dismiss were terminated as moot given Plaintiffs intention to file an amended complaint. By Minute Order, the Court also set the due date for Plaintiffs amended complaint as March 2, 2012. 12. In accordance with that order, on March 2, 2012, Plaintiffs filed their Amended Consolidated Class Action Complaint for violations of ERISA (hereinafter, Amended 1 All docket references herein are to documents bearing the 1:09-cv-1350-PAC. 3
Case 1:09-cv-01350-PAC Document 163 Filed 07/13/15 Page 4 of 18 Complaint ) (Dkt. No. 62). The Amended Complaint alleged that Defendants breached their fiduciary duties of prudence and loyalty to Plaintiffs, the Plan, and the Class by allowing the imprudent investment of the Plan s assets in Fannie Mae Stock throughout the Class Period (April 17, 2007 to May 14, 2010), despite the fact that they knew or should have known that such investment was imprudent for retirement. Amended Complaint at 4. In particular, Plaintiffs alleged that Fannie Mae Stock was an imprudent Plan investment option, inter alia, because: (a) the Company was exposed to tremendous losses as the mortgage and housing markets deteriorated; (b) the enormous and ongoing decline in the U.S. mortgage and housing markets rendered the Company undercapitalized; and (c) the Company failed to adequately and prudently manage its level of risk with respect to its capitalization. Id. at 7. 13. On April 4, 2012, Defendants filed three separate motions to dismiss the Amended Complaint. The Benefits Committee Defendants (the BPC and defendants Benson, Cobb, Hisey, Marra, McQuaid, Thompson, and Wolf) (Dkt. Nos. 65, 67) filed one such motion, defendant Mudd separately filed another (Dkt. Nos. 66, 68), and defendants Allison, Ashley, Beresford, Dunn, Freeh, Gaines, Knight, Macaskill, Perry, 2 Plutzik, Sidwell, Smith, and Williams filed the third (Dkt. Nos. 69, 70). 14. Plaintiffs responded to the motions to dismiss on May 21, 2012 (Dkt. Nos. 82-86), and Defendants filed their reply papers on June 18, 2012 (Dkt. Nos. 87-90). After oral argument, by Opinion and Order dated October 22, 2012, the Court granted in part and denied in part Defendants motions to dismiss (Dkt. No. 97). The Court dismissed the conflict of interest allegations in Count II of the Amended Complaint and dismissed all claims against the Director Defendants who became board members after Fannie Mae was placed into conservatorship. Id. 2 Pursuant to a tolling agreement executed by the Parties on March 30, 2012, defendant Perry was dismissed from the action without prejudice on May 1, 2012. Dkt. No. 79. 4
Case 1:09-cv-01350-PAC Document 163 Filed 07/13/15 Page 5 of 18 15. On December 10, 2012, Defendants answered the Amended Complaint (Dkt. Nos. 107, 108). Then, nearly a year later, in September 2013, the Fannie Mae Parties moved to reconsider the Court s decision denying the motion to dismiss in light of the opinion issued by the United States Court of Appeals for the Second Circuit in Rinehart v. Akers, 722 F.3d 137 (2d Cir. 2013) ( Lehman Brothers ) (Dkt. Nos. 115-117). Plaintiffs responded to the motion on October 4, 2013 (Dkt. Nos. 118-119), Defendants filed their reply on October 11, 2013 (Dkt. No. 120). 16. The motion was denied by Opinion and Order dated April 21, 2014 (Dkt. No. 129). The Court determined that Lehman Brothers did not create a new standard of law, and was factually distinguishable from this action. Id. B. Investigation of Claims and Discovery Efforts 17. Prior to filing the initial complaints and the Amended Complaint, Co-Lead Class Counsel conducted extensive investigations into the underlying merits of the actions. Among other efforts, Co-Lead Class Counsel reviewed public records regarding the financial condition of Fannie Mae and the assets held by the Plan, and analyzed relevant case law to determine potential legal claims. As part of its investigation and discovery efforts, on December 1, 2008, Co-Lead Class Counsel requested Plan-related documents from Defendants pursuant to ERISA 104(b)(4), 29 U.S.C. 1024(b)(4). Defendants complied with the request on December 22, 2008, producing the operative Plan documents, including trust agreements, summary annual reports for the Plan, Benefit Plans Committee Charters, and Board resolutions. 18. Plaintiffs discovery efforts continued following the filing of the Amended Complaint. On December 4, 2012, the Parties exchanged Rule 26(a)(1) Initial Disclosures. On January 23, 2013, Co-Lead Class Counsel issued a subpoena for documents to the Plan Trustee, Fidelity Management Trust Company. Fidelity responded to the subpoena on February 6, 2013. 5
Case 1:09-cv-01350-PAC Document 163 Filed 07/13/15 Page 6 of 18 On April 5, 2013, Co-Lead Class Counsel issued a Rule 30(b)(6) Deposition Notice to Defendants for the deposition of representatives from Fannie Mae most knowledgeable about the Plan. Additionally, Co-Lead Class Counsel either participated in depositions of key witnesses in the securities litigation or reviewed and analyzed testimony from those depositions. Moreover, on May 2, 2013, May 3, 2013, May 8, 2013, and June 11, 2013, Defendants provided Co-Lead Class Counsel with copies of documents produced in the related securities litigation. These productions consisted of nearly two million pages. 19. On June 5, 2013, Co-Lead Class Counsel served Plaintiffs First Request for Production of Documents. Defendants served written responses to Plaintiffs First Request for Production of Documents on July 5, 2013. In November 2013, and on several dates from January through July 2014, Defendants produced documents to Co-Lead Class Counsel. These productions contained an additional hundreds of thousands of pages of documents. On October 9, 2014, Co-Lead Class Counsel again served a Rule 30(b)(6) Deposition Notice on Defendants to depose the person(s) most knowledgeable about the Plan. Discovery was continuing when the Parties agreed to the Settlement. C. Settlement Negotiations 20. The settlement negotiations and the ultimate Settlement in this Action were a direct result of Plaintiffs vigorous prosecution of this matter and victories at key junctures of the litigation. 21. The Parties engaged in two separate mediation sessions before Mr. Geronemus of JAMS, a well-respected mediator highly experienced in ERISA matters. In addition to his role at JAMS, Mr. Geronemus, a former law clerk to Supreme Court Justice Potter Stewart, has taught negotiation and alternative dispute resolution on an adjunct basis at Yale and Columbia Law 6
Case 1:09-cv-01350-PAC Document 163 Filed 07/13/15 Page 7 of 18 Schools. A description of Mr. Geronemus s biography, including representative matters and background, can be found at http://www.jamsadr.com/geronemus/. 22. The first mediation session took place on July 24, 2013. In advance of that session, the Parties submitted to Mr. Geronemus and exchanged with each other, extensive, written, mediation memoranda. Plaintiffs also consulted with experts concerning damage calculations. Accordingly, in preparation for the mediation Co-Lead Class Counsel prepared different damages scenarios based on potential breach dates, that is, the date the Court could ultimately find Defendants breached their fiduciary duties to the Plan and its participants. Based in part on this analysis, Co-Lead Class Counsel was able to determine that at one end of the spectrum, assuming Plaintiffs could prove liability at trial or in a dispositive motion, damages for the Plan and Settlement Class could be over $86 million if the Court found the breach date to be the start of the alleged Class Period when the price of Company Stock was $57 per share. However, at the other end of the spectrum, there was a real possibility that damages could total less than the $9 million Settlement Amount if the breach date occurred closer to the end of the Class. For instance, if the Court found the breach date to have occurred just before Fannie Mae was placed into conservatorship in September 2008, as Defendants had advocated from the start of the litigation, then damages in this case would have been much less than $9,000,000 given that by that point in time, Fannie Mae Stock had already declined drastically and closed at $0.73 per share the next trading day after being placed into conservatorship. 23. During the mediation, the Parties made formal presentations and engaged in spirited debate as to critical legal and factual issues concerning liability and damages. At the close of this session, the Parties were too far apart and both sides returned to a litigation posture. 7
Case 1:09-cv-01350-PAC Document 163 Filed 07/13/15 Page 8 of 18 24. Over a year later, on July 30, 2014, the Parties re-engaged in mediation with Mr. Geronemus. Although this mediation was not immediately successful, we continued negotiations through Mr. Geronemus. In early November 2014, the Parties agreed in principle to a settlement of the Action, which ultimately resulted in the instant Settlement. It took several months to iron out the details of the Settlement Agreement, in part because the Plan was no longer active. 25. Throughout the litigation and extensive mediation process, Co-Lead Class Counsel were cognizant of the strengths and weaknesses of Plaintiffs claims and Defendants defenses. Plaintiffs had developed a comprehensive understanding of the key legal issues in the litigation based on their litigation and discovery efforts to date prior to agreeing to the Settlement. As noted above, Co-Lead Class Counsel s efforts in this Action span over six years, from the filing of the initial complaints, followed by the preparation and filing of the Amended Complaint, the briefing related to Defendants motions to dismiss and motion for reconsideration, and review of a voluminous amount of documents produced by Defendants. 26. The arm s-length nature of the settlement negotiations and Plaintiffs and Class Counsel s thorough understanding of the strengths and weaknesses of Plaintiffs claims, strongly support the conclusion that the proposed Settlement is fair, reasonable, and adequate. D. Preliminary Approval of the Settlement 27. On April 17, 2015, Co-Lead Class Counsel moved for preliminary approval of the Settlement. In connection with the Motion, Plaintiffs submitted a memorandum of law, the Settlement Agreement, Proposed Plan of Allocation, and proposed forms of Class Notice. 8
Case 1:09-cv-01350-PAC Document 163 Filed 07/13/15 Page 9 of 18 28. On May 5, 2015, following a conference before the Court, the Court entered the Order of Preliminary Approval (the Order ) and set a Final Approval Hearing pursuant to Fed. R. Civ. P. 23(e) for August 13, 2015. Dkt. No. 153. 29. The Order, among other things, provides that the Plaintiffs are adequate representatives of the Settlement Class, that Co-Lead Class Counsel is capable of fairly and adequately representing the interest of the Settlement Class with respect to the Settlement, and appoints Harwood Feffer and Kessler Topaz as co-co-lead Class Counsel for the Settlement Class. Id. at 4. 30. The Court preliminarily determined that the Action may proceed as a non-opt-out class action under FED. R. CIV. P. 23(a) and (b)(1) for purposes of the Settlement and ordered that the Settlement Class Members be bound by any Judgment concerning the Settlement upon its final approval by the Court. Id. at 3. 31. The Court further found that the Settlement appeared to be fair, reasonable, and adequate to all members of the Settlement Class; the product of serious, informed, arm s length negotiations; and within the range of possible final approval. The Court also directed that notice be given to members of the Settlement Class. Id. at 4-5. E. Effectuation of Notice 32. The Settlement Administrator implemented the notice program ordered by the Court, including mailing and publication. On June 4, 2015, the Settlement Administrator mailed the Class Notice to all identifiable Settlement Class Members with known addresses; (b) published on PR Newswire and the Washington Post; and (c) made available the Class Notice and other related Settlement documentation on a website dedicated to the Settlement. See Affidavit of Michael Rosenbaum sworn to July 10, 2015 (the Rosenbaum Affidavit ) (attached hereto as Exhibit 2). The notice program apprised Settlement Class Members of the terms of the 9
Case 1:09-cv-01350-PAC Document 163 Filed 07/13/15 Page 10 of 18 Settlement, and of their right to object to the Settlement, Plan of Allocation, Case Contribution Awards, or to Co-Lead Class Counsel s application for attorneys fees and reimbursement of expenses. To date, the members of the Class support the Settlement and Co-Lead Class Counsel s fee and expense request. Although the deadline to file objections to the proposed Settlement, July 23, 2015, has yet to pass, to date not a single objection has been received to any aspect of the Settlement or any other matter to be heard by the Court at the Final Approval Hearing. We will advise the Court if any objections are subsequently received. 33. As set forth in the Notice of Compliance filed by Defendants, it is our understanding that, on or about May 15, 2015, Defendants counsel sent notices to the United States Attorney General, and the attorneys general of the fifty states and the District of Columbia via overnight mail, informing them of the proposed Settlement in accordance with the Class Action Fairness Act of 2005, 28. U.S.C. 1715. Dkt. No. 157. 34. To our knowledge, no objections have been lodged by any of the States Attorney General receiving notice. III. THE PROPOSED SETTLEMENT AND PLAN OF ALLOCATION SHOULD BE FINALLY APPROVED BECAUSE IT IS FAIR, REASONABLE, AND ADEQUATE A. The Settlement Meets the Second Circuit s Standard and Should Be Finally Approved 35. As detailed in the accompanying Memorandum in Support of Plaintiffs Unopposed Motion for Final Approval of Class Action Settlement, Certification of Settlement Class, and Final Approval of Plan of Allocation (the Final Approval Memorandum ), we believe that this Settlement readily meets the standards set forth in City of Detroit v. Grinnell Corp., 495 F.2d 448, 463 (2d Cir. 1974) ( Grinnell ) and merits the Court s approval. 10
Case 1:09-cv-01350-PAC Document 163 Filed 07/13/15 Page 11 of 18 36. Notwithstanding that Plaintiffs defeated a motion to dismiss, the litigation was a long way from trial. There was additional fact discovery, expert discovery, and dispositive motions that would need to be completed. Even if the case went to trial, there is no guarantee of a Plaintiffs verdict and, even if a verdict were won, there is no guarantee that a judgment would survive an appeal or that the verdict would be for a greater amount than the proposed Settlement. If the case went to trial, it would be a long and expensive process. Without the Settlement, Plaintiffs would face considerable risks to establish liability, causation and damages in an everchanging landscape. 37. This Action was not immune to the risks attendant to the foregoing uncertainties. Plaintiffs claims raise numerous complex legal and factual issues under ERISA which, absent the Settlement, would consume substantial resources as the Parties proceeded with the necessary factual and expert discovery and motion practice. Although this Action was commenced more than six years ago and Plaintiffs have already expended considerable efforts pursuing their allegations through Defendants motions to dismiss and motion for reconsideration, there is no doubt that the bulk of the litigation lies ahead. Substantial discovery, including numerous depositions of Defendants and third-party witnesses, as well as damages experts, would need to be completed in order to make the case trial ready. Even before that, there would be extensive briefing, including on contested class certification and summary judgment motions in the absence of the proposed Settlement. Moreover, a trial in this Action, involving substantial judicial resources, would be lengthy and complex given the factual and legal issues relevant to Defendants decision to continue offering Company Stock as a Plan investment option during the Class Period and Plaintiffs arguments as to why such conduct was imprudent. Thus, the 11
Case 1:09-cv-01350-PAC Document 163 Filed 07/13/15 Page 12 of 18 immediate, guaranteed benefit provided by the Settlement as opposed to the uncertainty of continued, costly, and time-consuming litigation supports the approval of the Settlement. B. Other Factors Supporting the Settlement 38. Co-Lead Class Counsel s experience litigating ERISA imprudence claims and complex class actions also supports the Settlement. Co-Lead Class Counsel are highly regarded complex litigation and class actions firms with well-established records of successfully prosecuting ERISA and other class actions, as well as other complex litigation. The firms have substantial experience in litigating ERISA class actions and have recouped hundreds of millions of dollars on behalf of plan participants. 39. In re AIG ERISA Litig., 04-cv-9387 (S.D.N.Y.), where Harwood Feffer served as Co-Lead Counsel, a settlement of $24.2 million was achieved for plan participants and beneficiaries. Further, in Graden, Harwood Feffer obtained a settlement valued at over $9 million for the plaintiff ERISA class. Additionally, in In re Conagra Foods, Inc. ERISA Litig., 05-cv-00348 (D. Ne.), Harwood Feffer s successful prosecution of the action resulted in a settlement for the plaintiff class valued in excess of $14 million. In Salvato v. Zale Corp. et al., 06-cv-1124 (N.D. Tex.), where Harwood Feffer also served as Co-Lead Counsel, a settlement valued in excess of $7 million was achieved for the plan participants and beneficiaries. Similarly, in In re Boston Scientific Corp. ERISA Litig., 08-cv-12139 (D. Mass.), where Harwood Feffer served as Co-Lead Counsel, the parties agreed on a cash settlement of $8.2 million for the class of plan participants and beneficiaries. 40. In In re Colgate-Palmolive Co. ERISA Litig., No. 07-cv-9515 (S.D.N.Y. July 8, 2014), KTMC as Co-Lead Counsel, helped obtain a $45.9 million settlement on behalf of retirement plan participants. Similarly, in In re Merck & Co., Inc. Secs., Der. & ERISA Litig., 12
Case 1:09-cv-01350-PAC Document 163 Filed 07/13/15 Page 13 of 18 No. 05-cv-2369 (D.N.J. Nov. 29, 2011), as a member of the Lead Counsel Committee, KTMC helped obtain a settlement of $49.5 million. Further, in In re National City ERISA Litig., No. 08- nc-70000 (N.D. Ohio Nov. 30, 2010), KTMC obtained a $43 million settlement on behalf of participants of a defined contribution plan. In In re Bristol-Myers Squibb Co. ERISA Litig., No. 02-cv-10129 (S.D.N.Y Oct. 12, 2005), as Co-Lead Counsel, KTMC achieved a cash recovery of $41.22 million and significant structural relief regarding how the 401(k) plans at issue were administered a value of up to $52 million. And, in Lewis v. El Paso Corp., No. H-02-4860 (S.D. Tex. Apr. 27, 2009), as sole Lead Counsel, KTMC obtained a $17 million settlement class settlement. 41. Public policy considerations support approval of the Settlement as well. Class action litigation is notoriously difficult and time consuming for the Court. As a result of the Settlement, the Court s resources will be freed up to allow the resolution of other disputes while allowing the parties in the Action to resolve the claims in the instant case in a cooperative manner. Additionally, the Settlement is beneficial to the members of the Settlement Class and provides a substantial cash benefit directly to the Settlement Class Members. C. The Plan of Allocation Is Fair Reasonable and Adequate 42. The proposed Plan of Allocation was developed in consultation with Plaintiffs damages expert and the Settlement Administrator and takes into account the complexities of distributing funds to members of a Plan which has been terminated. After payment of costs, taxes, attorneys fees and expenses, the Net Settlement Fund will be proportionately allocated by the Settlement Administrator to qualifying Settlement Class Members based on the Plan of Allocation annexed to the Settlement Agreement as Exhibit C and as detailed in the Class Notice. The eligible Settlement Class Members need take no action to receive payment. 13
Case 1:09-cv-01350-PAC Document 163 Filed 07/13/15 Page 14 of 18 43. As discussed in Section V of the Final Approval Memorandum, the allocation method set forth in the Plan of Allocation is the basic approach that has been used in settlements of other 401(k) company stock cases, and it has been approved by judges in numerous cases, including within this Circuit. IV. CO-LEAD CLASS COUNSEL S REQUESTED FEE AND EXPENSE AWARD IS FAIR AND REASONABLE A. The Requested Attorneys Fees are Fair and Reasonable in Light of the Second Circuit s Standard 44. As detailed in the accompanying Memorandum in Support of Plaintiffs Unopposed Motion for Attorneys Fees, Reimbursement of Expenses, and Case Contribution Awards to the Plaintiffs (the Fee Memorandum ), we believe that Co-Lead Class Counsel s request for attorneys fees readily meets the standards set forth in Goldberger v. Integrated Res., Inc., 209 F.3d 43, 50 (2d Cir. 2000) ( Goldberger ) and merits the Court s approval. 45. The recovery of $9 million in cash was achieved through the skill, work, dedication, and effective advocacy of Co-Lead Class Counsel. As payment for services rendered in achieving such a result, Co-Lead Class Counsel seek an award of attorneys fees in the amount of $3 million, plus reimbursement of expenses reasonably incurred by Co-Lead Class Counsel. Co-Lead Class Counsel s efforts over the last six years have been without compensation of any kind and their fee has been wholly contingent upon the result achieved. 46. In this action, attorneys fees equaling one-third of the Settlement Fund result in a fair and reasonable fee, especially given that the monetary result provides a benefit to the Settlement Class, and society has an interest in seeing that the wrongdoing alleged is prevented in the future. 47. Attached hereto as Exhibits 3 and 4 are declarations submitted on behalf of Harwood Feffer and KTMC (hereinafter the Fee Declarations ). The Fee Declarations 14
Case 1:09-cv-01350-PAC Document 163 Filed 07/13/15 Page 15 of 18 summarize the lodestar of each firm, including the number of hours, hourly rates, and the expenses reasonably incurred by each firm in connection with the litigation. Co-Lead Class Counsel sought throughout this litigation to avoid duplication of effort by counsel. Moreover, we have reviewed our time records and eliminated certain entries in the exercise of billing judgment. 48. In total, we have expended over 10,000 hours in the prosecution of this Action, with a resulting lodestar of more than $4.1 million. The requested fee of $3 million (less than what was expended), is fair and reasonable considering the risks that Co-Lead Class Counsel took in prosecuting this Action under the applicable standards in this and other circuits in similar cases. The expenses requested are also reasonable in amount and were necessarily incurred for the successful prosecution of the Action. 49. The efforts of Co-Lead Class Counsel have resulted in a $9 million cash recovery for the Class without the substantial risk, delay, expense, and uncertainty of continued litigation and trial. This Court has found that a benefit to the class exists where the class receives a substantial monetary benefit. The number of persons benefited by the Settlement also supports the fee award requested. More than nine thousand Notices were sent to potential Settlement Class Members, a substantial number of whom are expected to benefit from the Settlement. In short, the Settlement will provide immediate compensation to the Settlement Class and will avoid the substantial risks of a smaller recovery or no recovery at all and weighs in favor of granting the requested fee. 50. Without the Action, it is highly unlikely that individual claimants would have had the resources to pursue claims of this magnitude. Moreover, protecting the retirement funds of 15
Case 1:09-cv-01350-PAC Document 163 Filed 07/13/15 Page 16 of 18 employees, and obtaining recompense when those funds are mismanaged, is in the public interest and supports the fee award sought. 51. Co-Lead Class Counsel are experienced and skilled practitioners in the fields of securities class actions and complex litigation. See Exhibits 3-4. As discussed herein, Co-Lead Class Counsel confronted and overcame a number of significant obstacles to success over six years of intense litigation. As a result of diligent efforts and their skill and expertise, Co-Lead Class Counsel were able to negotiate an excellent Settlement for the Settlement Class. 52. The quality and vigor of opposing counsel is also important in evaluating the quality of the work done by Co-Lead Class Counsel. Defendants here were vigorously represented by some of the country s leading defense firms, including O Melveny & Myers, LLP. B. Co-Lead Class Counsel s Lodestar Also Justifies the Fee 53. Although Co-Lead Class Counsel seek approval of a fee that is a percentage of the Settlement Class recovery, even if the Court employs the lodestar method (or examines the lodestar method as a cross-check for the percentage method), Co-Lead Class Counsel respectfully submit that their requested fees are reasonable and should be awarded in full. 54. In total, Co-Lead Class Counsel spent 10,758.85 hours in the prosecution of this Action of behalf of Plaintiffs and the Settlement Class resulting in a multiplier less than 1; indeed, Co-Lead Class Counsel are seeking less than their aggregate lodestars. The number of hours expended by Co-Lead Class Counsel is reasonable in light of the length of the Action, the hard-fought nature of the litigation, and the complexity of the issues involved. Co-Lead Class Counsel sought throughout this litigation to avoid duplication of effort by counsel. 16
Case 1:09-cv-01350-PAC Document 163 Filed 07/13/15 Page 17 of 18 C. The Expenses Are Reasonable and Were Necessarily Incurred 55. As detailed in the accompanying Fee Declarations, Co-Lead Class Counsel have also advanced significant out-of-pocket expenses in this Action, in the aggregate amount of $261,757.11. 56. The expenses incurred in this Action are commercially reasonable, and are reflected on the books and records of our firms, which are available for inspection at the Court s request. As detailed in the Fee Declarations, most of these expenses have been incurred in retaining an expert, e-discovery, mediation fees, computerized legal research, copy charges, and travel costs incurred for out-of-town travel, telephone and postal charges, messenger and overnight delivery services, and telecopy and facsimile charges. Courts have typically found that such expenses are properly paid from a fund recovered by counsel for the benefit of a class. 57. The Notice informed the Class that Co-Lead Class Counsel would be seeking reimbursement of expenses from the Settlement Fund. To date, no objection to that request has been raised. We will advise the Court if any objection is received subsequent to the date of this Joint Declaration. V. CASE CONTRIBUTION AWARDS SOUGHT FOR THE TWO PLAINTIFFS 58. Plaintiffs seek an award of $5,000 for each of the two named Plaintiffs for their contributions to the prosecution and settlement of the Action. Any such awards will be paid by Defendants insurer, not from the Settlement Fund. 59. Both Ms. Moore and Mr. Gwyer have been actively involved in the litigation. These individuals took time away from other obligations in order to fulfill their obligations to the Settlement Class by: (1) reviewing the Complaint; (2) staying informed of the case and making themselves available at all times to discuss the litigation; (3) providing information and 17
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