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Azar v. Blount International Inc.

United States District Court, D. Oregon

December 31, 2019

ELIA AZAR and DEAN ALFANGE, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
BLOUNT INTERNATIONAL, INC., JOSHUA L. COLLINS, DAVID A. WILLMOTT, ROBERT E. BEASLEY, JR., RONALD CAMI, ANDREW C. CLARKE, NELDA J. CONNORS, E. DANIEL JAMES, HAROLD E. LAYMAN, MAX L. LUKENS, and DANIEL J. OBRINGER, Defendants.

          Robert J. McGaughey, Aurelia J. Erickson, and Kevin Kress, McGaughey Erickson, W. Scott Holleman, Johnson Fistel LLP, and Shannon L. Hopkins, Levi & Korsinsky LLP, Lead Counsel for Plaintiffs.

          Joshua M. Sasaki and Ian Christy, Miller Nash Graham & Dunn LLP, Of Attorneys for Defendants Blount International, Inc., Robert E. Beasley, Jr., Ronald Cami, Andrew C. Clarke, Nelda J. Connors, E. Daniel James, Harold E. Layman, Max L. Lukens, and Daniel J. Obringer.

          Gary A. Bornstein and Nicole D. Valente, Cravath, Swaine & Moore LLP, Of Attorneys for Defendants Blount International, Inc., Andrew C. Clarke, Nelda J. Connors, E. Daniel James, and Harold E. Layman.

          Lawrence J. Portnoy and Rebecca L. Martin, Davis Polk & Wardwell LLP, Of Attorneys for Defendants Robert E. Beasley, Jr., Ronald Cami, Max L. Lukens, and Daniel J. Obringer.

          B. John Casey, K&L Gates LLP, Jay P. Lefkowitz and Nathaniel J. Kritzer, Kirkland & Ellis LLP, Of Attorneys for Defendants Joshua L. Collins and David A. Willmott.

          OPINION AND ORDER APPROVING IN PART SETTLEMENT, ATTORNEY'S FEES, EXPENSES, AND SERVICE AWARDS

          Michael H. Simon United States District Judge.

         This matter comes before the Court on Plaintiffs' unopposed motion for final approval of class settlement (“Final Approval Motion”) and Plaintiffs' counsel's motion for attorney's fees, costs, and a service award for each class representative, submitted as part of Plaintiffs' Final Approval Motion.[1] ECF 148. The Court held an initial final approval hearing on September 9, 2019, to determine: (1) whether the terms and conditions of the Stipulation of Settlement, ECF 145, (“Stipulation” or “Settlement”) are fair, reasonable, and adequate for the settlement of all claims asserted by Lead Plaintiffs Elia Azar and Dean Alfange (collectively, “Lead Plaintiffs”) against Blount International, Inc. (“Blount”), Joshua L. Collins, David A. Willmott, Robert E. Beasley, Jr., Ronald Cami, Andrew C. Clarke, Nelda J. Connors, E. Daniel James, Harold E. Layman, Max L. Lukens, and Daniel J. Obringer (collectively “Defendants”); (2) whether to approve the proposed plan of allocation as a fair and reasonable method to allocate the Settlement Fund[2] among Class Members; (3) whether to approve the requested attorney's fees and expenses; and (4) whether to approve the requested service, or incentive, awards for the Lead Plaintiffs. The Court continued the hearing because counsel for Defendants failed to comply with the requirements of the Class Action Fairness Act (“CAFA”), specifically, to provide the notice required under 28 U.S.C. § 1715(b), (d). The Court continued the Fairness Hearing and consideration of Plaintiffs' motion until after Defendants' counsel provided notice under CAFA.

         The Court has considered the Final Approval Motion, the Stipulation, the papers submitted in connection with the motion, the arguments of counsel, the response of Class Members to the Notice of Pendency and Proposed Settlement of Class Action (“Notice”), and the files, records, and proceedings in the above-captioned action (“Action”). The Court finds good cause to give final approval to the Settlement and the Plan of Allocation. The Court also grants in part Plaintiff's counsel's requested attorney's fees, expenses, and service awards.

         STANDARDS

         A. Approval of Class Action Settlement

         Under Rule 23(e) of the Federal Rules of Civil Procedure, “[t]he claims, issues, or defenses of a certified class may be settled, voluntarily dismissed, or compromised only with the court's approval.” “The purpose of Rule 23(e) is to protect the unnamed members of the class from unjust or unfair settlements affecting their rights.” In re Syncor ERISA Litig., 516 F.3d 1095, 1100 (9th Cir. 2008). Thus, to approve a class action settlement, a court must find that the settlement is “fair, reasonable, and adequate.” Fed.R.Civ.P. 23(3); Lane v. Facebook, Inc., 696 F.3d 811, 818 (9th Cir. 2012).

         The settlement must be considered as a whole, and although there are “strict procedural requirements on the approval of a class settlement, a district court's only role in reviewing the substance of that settlement is to ensure it is ‘fair, adequate, and free from collusion.'” Lane, 696 F.3d at 818-19 (quoting Hanlon v. Chrysler Corp., 150 F.3d 1011, 1027 (9th Cir. 1998). There are a number of factors guiding this review, including: (1) the strength of the plaintiffs' case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk of maintaining class action status throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery completed and the stage of the proceedings; (6) the experience and views of counsel; (7) the presence of a governmental participant; and (8) the reaction of the class members to the proposed settlement. Id. at 819. Courts within the Ninth Circuit “put a good deal of stock in the product of an arms-length [sic], non-collusive, negotiated resolution.” Rodriguez v. W. Publ'g Corp., 563 F.3d 948, 965 (9th Cir. 2009).

         Class action settlements involve “unique due process concerns for absent class members who are bound by the court's judgments.” Radcliffe v. Experian Info. Solutions Inc., 715 F.3d 1157, 1168 (9th Cir. 2013) (quotation marks and citation omitted). When the parties negotiate the settlement agreement before formal class certification, as in this case, the court should engage in “an even higher level of scrutiny for evidence of collusion or other conflicts of interest than is ordinarily required under Rule 23(e).” Id. (quotation marks and citation omitted). This more “exacting review” is warranted “to ensure that class representatives and their counsel do not secure a disproportionate benefit at the expense of the unnamed plaintiffs who class counsel had a duty to represent.” Lane, 696 F.3d at 819.

         The Ninth Circuit has recognized, however, that “[j]udicial review also takes place in the shadow of the reality that rejection of a settlement creates not only delay but also a state of uncertainty on all sides, with whatever gains were potentially achieved for the putative class put at risk.” Staton v. Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003). Thus, there is a “strong judicial policy that favors settlements, particularly where complex class action litigation is concerned.” In re Hyundai & Kia Fuel Econ. Litig., 926 F.3d 539, 556 (9th Cir. 2019) (en banc). (quoting Allen v. Bedolla, 787 F.3d 1218, 1223 (9th Cir. 2015)).

         B. Approval of Attorney's Fees and Expenses

         Requests for attorney's fees must be made by a motion pursuant to Federal Rules of Civil Procedure 54(d)(2) and 23(h), and notice of the motion must be served on all parties and class members. Fed.R.Civ.P. 23(h). When settlement is proposed along with a motion for class certification, notice to class members of the fee motion ordinarily accompanies the notice of the settlement proposal itself. Advisory Committee Notes to Fed.R.Civ.P. 23(h). The deadline for class members to object to requested fees must be set after the motion for the fees and documents supporting the motion have been filed. In re Mercury Interactive Corp. Sec. Litig., 618 F.3d 988, 993 (9th Cir. 2010). “Allowing class members an opportunity thoroughly to examine counsel's fee motion, inquire into the bases for various charges and ensure that they are adequately documented and supported is essential for the protection of the rights of class members.” Id. at 994.

         In considering the amount of attorney's fees for class counsel where there is a common fund, “courts have discretion to employ either the lodestar method or the percentage-of-recovery method.” In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 942 (9th Cir. 2011). Under either method, the court must exercise its discretion to achieve a “reasonable” result. Id. Because reasonableness is the goal, “mechanical or formulaic application of either method, where it yields and unreasonable result, can be an abuse of discretion.” Fischel v. Equitable Life Assurance Soc'y of the U.S., 307 F.3d 997, 1006 (9th Cir. 2002). When using the percentage method, 25 percent is the “benchmark” fee award, but the Court may adjust this amount upward or downward when “special circumstances” warrant a departure. In re Bluetooth, 654 F.3d at 942. Courts must place in the record the relevant special circumstances. Id. Factors that a court may consider in making such a departure include: (1) the result obtained; (2) the effort expended by counsel; (3) counsel's experience; (4) counsel's skill; (5) the complexity of the issues; (6) the risks of nonpayment assumed by counsel; (7) the reaction of the class; (8) non-monetary or incidental benefits, including helping similarly situated persons nationwide by clarifying certain laws; and (9) comparison with counsel's lodestar. See Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1048-50 (9th Cir. 2002); In re Heritage Bond Litig., 2005 WL 1594403, at *18 (C.D. Cal. June 10, 2005).

         DISCUSSION

         A. Final Certification of the Settlement Class

         1. Notice to the Class

         The Court granted preliminary approval to the parties' proposed notice procedure after the parties made certain amendments to the notice requested by the Court. See ECF 142, 143, 144, 145. The Court is satisfied that the notice procedure was carried out according to the applicable standards. The Court finds that notice of the Stipulation was given to the Settlement Class by the best means practicable under the circumstances, including mailing the Notice to Class Members, posting the Notice, Proof of Claim, Stipulation, and Preliminary Approval Order on a dedicated website, and publishing the Summary Notice in Investor's Business Daily and on PR Newswire.

         The Notice provided Class Members with all required information including, among other things: (1) a summary of the Action and the claims asserted; (2) a clear definition of the Settlement Class; (3) a description of the material terms of the Stipulation; (4) the fact that no affirmative action was needed to receive the benefit of class membership, but notice that Class Members could opt out of the Settlement Class; (5) an explanation of Class Members' opt-out rights, the date by which Class Members must opt out, and information about how to do so; (6) explaining the release of claims should Class Members choose to remain in the Settlement Class; (7) instructions about how to object to the Stipulation and the deadline for Class Members to submit any objections; (8) instructions about how to object to the requested attorney's fees, expenses, and service awards and the deadline for Class Members to submit any objections; (9) the date, time, and location of the final approval hearing; (10) the internet address for the settlement website and the telephone number from which Class Members could obtain more information on the Stipulation; (11) contact information for the settlement administrator and the Court; and (12) information about how Lead Counsel and the Class Representative would be compensated. The notice is sufficient. See Lane v. Facebook, Inc., 696 F.3d 811, 826 (9th Cir. 2012) (reaffirming that a class notice need only “generally describe[] the terms of the settlement in sufficient detail to alert those with adverse viewpoints to investigate and to come forward and be heard” (alteration in original) (quoting Rodriguez v. W. Publ'g Corp., 563 F.3d 948, 962 (9th Cir. 2009)).

         The form and method of notifying the Settlement Class fairly and adequately advised Class Members of all relevant and material information about the Action and the proposed Stipulation. The Court finds that the notice satisfies the requirements of due process and Rule 23 and the Private Securities Litigation Reform Act of 1995, 15 U.S.C. § 78u-4, et seq., as amended (“PSLRA”).

         2. Final Certification

         Plaintiffs move without objection to resolve this case as a settlement class defined as:

all persons who held Blount common stock continuously from March 4, 2016, the record date for voting on the Transaction, through April 12, 2016, when the Transaction was completed. Excluded from the Class are Defendants, the Purchasers, the officers and directors of the Company at all relevant times, members of the immediate families of the Individual Defendants and their legal representatives, heirs, successors or assigns, any entity in which Defendants have or had a controlling interest, and any Person who timely and validly seeks exclusion from the Class.

         To certify a settlement class, the requirements of Rule 23 of the Federal Rules of Civil Procedure must be satisfied. See Hanlon, 150 F.3d at 1019. Under Rule 23, the plaintiff “must be prepared to prove” that each of the requirements of the Rule is satisfied. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011). Rule 23 sets forth more than a “mere pleading standard.” Id. On the other hand, Rule 23 provides district courts with broader discretion to certify a class than to deny certification. See Abdullah v. U.S. Sec. Assocs., Inc., 731 F.3d 952, 956 (9th Cir. 2013).

         A party seeking class certification must satisfy each of the requirements of Rule 23(a) and at least one requirement of Rule 23(b). Wang v. Chinese Daily News, Inc., 737 F.3d 538, 542 (9th Cir. 2013). Under Rule 23(a), a district court may certify a class only if:

(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law and fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.

Fed. R. Civ. P. 23(a). In other words, a proposed class must meet the requirements of numerosity, commonality, typicality, and adequacy of representation. Mazza v. Am. Honda Motor Co., Inc., 666 F.3d 581, 588 (9th Cir. 2012). Rule 23 also requires, implicitly, that the members of the proposed class be ascertainable based on objective criteria. Ott v. Mortg. Inv'rs Corp. of Ohio, Inc., 65 F.Supp.3d 1046, 1064 (D. Or. 2014). Along with the five requirements of Rule 23(a), the party seeking to maintain a class action also must “satisfy through evidentiary proof at least one of the provisions of Rule 23(b).” Comcast Corp. v. Behrend, 569 U.S. 27, 33 (2013).

         The Rule 23 analysis is “rigorous” and may “entail some overlap with the merits of the plaintiff's underlying claim.” Wal-Mart, 564 U.S. at 351 (quotation marks omitted); Comcast Corp., 569 U.S. at 33-34. This “rigorous” review applies even when certification is for settlement purposes only. See, e.g., In re Hyundai, 926 F.3d at 556. Still, Rule 23 “grants courts no license to engage in free-ranging merits inquiries at the certification stage.” Amgen Inc. v. Conn. Ret. Plans & Trust Funds, 568 U.S. 455, 466 (2013). “Merits questions may be considered to the extent-but only to the extent-that they are relevant to determining whether the Rule 23 prerequisites for class certification are satisfied.” Id. A district court, however, “must consider the merits if they overlap with the Rule 23(a) requirements.” Ellis v. Costco Wholesale Corp., 657 F.3d 970, 981 (9th Cir. 2011) (emphasis in original).

         The parties agreed to certification of the class for settlement purposes, and the Court previously agreed that the class met the requisite factors in conditionally certifying the class for settlement purposes in the preliminary approval of the Stipulation. The Court, however, must now conduct a “rigorous” analysis of the factors.

         a. Rule 23(a)

         i. Numerosity

         In this district, there is a “rough rule of thumb” that 40 class members is sufficient to meet the numerosity requirement. Giles v. St. Charles Health Sys., Inc., 294 F.R.D. 585, 590 (D. Or. 2013); see also Wilcox Dev. Co. v. First Interstate Bank of Or., N.A., 97 F.R.D. 440, 443 (D. Or. 1983) (same); 1 McLaughlin on Class Actions § 4:5 (15th ed.) (“The rule of thumb adopted by most courts is that proposed classes in excess of 40 generally satisfy the numerosity requirement.”). The claims administrator sent 5, 304 Notice packets to potential Class Members and their Nominees. This shows that there likely are thousands of Class Members. The Court finds that the numerosity requirement is met.

         ii. Commonality

         To satisfy the commonality requirement, Plaintiffs must show that the class members suffered the “same injury”-that their claims depend upon a “common contention.” Wal-Mart, 564 U.S. at 350 (quotation marks omitted). “That common contention, moreover, must be of such a nature that it is capable of classwide resolution-which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” Id. Class members, however, need not have every issue in common: commonality requires only “a single significant question of law or fact” in common. Mazza, 666 F.3d at 589; see also Wal-Mart, 564 U.S. at 359. The Class Members have the significant issues of law and fact in common, including whether Defendants misstated or omitted material facts in public statements and filings with the U.S. Securities and Exchange Commission and whether Defendants violated securities laws. See, e.g., In re Hot Topic, Inc. Sec. Litig., 2014 WL 12462472, at *4 (C.D. Cal. Nov. 3, 2014) (finding commonality in a case involving similar allegations); In re VeriSign, Inc. Sec. Litig., 2005 WL 7877645, at *5 (N.D. Cal. Jan. 13, 2005), amended sub nom. In re Verisign, Inc. Sec. Litig., 2005 WL 226154 (N.D. Cal. Jan. 31, 2005) (noting that “commonality ‘is easily met in cases where class members all bought or sold the same stock in reliance on the same disclosures made by the same parties, even when damages vary'” (quoting Alba Conte & Herbert Newberg, Newberg On Class Actions § 22:21 (4th ed. 2002))). Thus, the commonality requirement is satisfied.

         iii. Typicality

         To meet the typicality requirement, Plaintiffs must show that the named parties' claims or defenses are typical of the claims or defenses of the class. Fed.R.Civ.P. 23(a)(3). Under the “permissive standards” of Rule 23(a)(3), the “representative's claims are ‘typical' if they are reasonably co-extensive with those of absent class members; they need not be substantially identical.” Hanlon, 150 F.3d at 1020. “The purpose of the typicality requirement is to assure that the interest of the named representative aligns with the interests of the class.” Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992). To determine whether claims and defenses are typical, courts look to “whether other members have the same or similar injury, whether the action is based on conduct which is not unique to the named plaintiffs, and whether other class members have been injured by the same course of conduct.” Id. (quotation marks omitted); see also Wolin v. Jaguar Land Rover N. Am., LLC, 617 ...


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