In re COLONIAL BANCGROUP, INC. ERISA LITIGATION (LEAD CASE)

Filing 191

OPINION AND ORDER: Plaintiff's [ 188 Motino for Preliminary Approval of Proposed Settlement, Certification of a Settlement Class, Approval of a Notice Plan, and Setting of a Fairness Hearing. Pursuant to FRCP 23(g)(2) the court preliminary desi gnates Whatley, Drake & Kallas, LLC, Keller Rohrback LLP, and Harwood Feffer LLP as co-lead class counsel with respect to the settlement class in this action. The settlement documented in the 189 Stipulation of Settlement is preliminarily approved as further set out in the opinion and order. Fairness Hearing set for 10/12/2012 at 10:00 AM in Montgomery, Alabama before Honorable Judge Myron H. Thompson. The parties have presented to the court a proposed class notice, consisting of a mailed noti ce and a summary notice, which are appended hereto as Exhibits A and B. At or before the fairness hearing, class counsel shall file with the court a proof of timely compliance with the foregoing mailing and publication requirements. The defendants sh all, no or before 9/28/2012, file with the court proof of compliance with the Class Action Fairness Act of 2005, as further set out in the order. Objections to be filed with the court at least 14 days prior to the fairness hearing, that is, by 9/28/2 012. Objectors or their attorneys intending to appear at the fairness hearing must effect service of a "Notice of Intention to Appear" as further set out in the order and file it with the court at least 14 calendar days prior to the fairnes s hearing, that is, by 9/28/2012. Any application by class counsel for attorneys' fees and reimbursement of expenses, for a case contribution award to the plaintiffs, and all papers in support thereof, shall be filed with the court and served on all counsel of record at least 28 calendar days prior to the fairness hearing, that is, by no later than 9/14/2012. Class counsel shall file with the court a motion for entry of the final approval order and approval of the plan of allocation at least 28 calendar days prior to the fairness hearing, that is, by no later than 9/14/2012. This case is reopened. Signed by Honorable Judge Myron H. Thompson on 6/28/2012. (Attachments: # 1 Exhibit A, # 2 Exhibit B) (dmn, )

IN THE DISTRICT COURT OF THE UNITED STATES FOR THE
MIDDLE DISTRICT OF ALABAMA, NORTHERN DIVISION

In re COLONIAL BANCGROUP,
INC. ERISA LITIGATION

)
)
)

CIVIL ACTION NO.
2:09cv792-MHT
(WO)

OPINION AND ORDER
Before
preliminary

the

court

is

approval

the
of

plaintiffs’
proposed

motion

for

settlement,

certification of a “settlement class,” approval of a
notice plan, and setting of a fairness hearing.
putative

class

action,

named-plaintiffs

Lora

In this
McKay,

Leonor M. Torregroza, Linda Shockley, and Johnny Pompa
asserted claims for alleged violations of the Employee
Retirement Income Security Act of 1974, as amended, 29
U.S.C. §§ 1001-1461 (ERISA), with respect to the Colonial
BancGroup 401(k) Plan as against defendants Lewis E.
Beville, Augustus K. Clements (and his estate), Robert S.
Craft, Patrick F. Dye, Hubert L. Harris, Jr., Clinton
Holdbrooks, Deborah L. Linden, Robert E. Lowder, John Ed
Mathison, Milton E. McGregor, Joseph D. Mussafer, William

E. Powell, III, James W. Rane, Simuel S. Sippial, Jr.,
Edward

V.

Welch

(and

his

estate),

R.

Thomas

Burge,

Michelle M. Condon, Kelli Gant, T. Brent Hicks, Patti G.
Hill, Kamal S. Hosein, Sarah H. Moore, Angie S. Parker,
Harlan C. Parrish, Rudi Thompson, and Andrew Wilson.

The

terms of the settlement are set out in a stipulation of
settlement executed on June 13, 2012, which has been
signed

by

the

named

plaintiffs

and

all

defendants.

Pursuant to 29 U.S.C. § 1132, the court has jurisdiction
over the subject matter of this action and over all
parties to this action, including all members of the
settlement class.
It

is

preliminary

ORDERED

that

approval

the
of

plaintiffs’
proposed

motion

for

settlement,

certification of a settlement class, approval of a notice
plan, and setting of a fairness hearing (Doc. No. 188) is
granted as follows:

2

I.

CLASS FINDINGS AND CERTIFICATION

The court preliminarily finds, for purposes of the
settlement, that the requirements of the Federal Rules of
Civil Procedure, the United States Constitution, the
Rules of the Court and any other applicable law have been
met as to the settlement class, in that:
(a) The

settlement

class

is

ascertainable

from

records kept with respect to the plan and from
other objective criteria, and the members of the
settlement

class

are

so

numerous

that

their

joinder before the court would be impracticable.
(b) Based

on

allegations

in

the

plaintiffs’

complaint, and examination of the legal claims
and facts necessary to prove them, the court
preliminarily finds that there are one or more
questions

of

fact

and/or

law

common

to

the

settlement class.
(c) Based

on

allegations

in

the

plaintiffs’

complaint and otherwise supported in the record,

3

the

court

preliminarily

finds

that

the

defendants engaged in uniform conduct affecting
members of the settlement class.

The court

further finds that the plaintiffs’ claims and
their alleged legal injuries are typical of the
claims and injuries of the settlement class.
(d) The

plaintiffs

will

fairly

and

adequately

protect the interests of the settlement class in
that: (i) the interests of the plaintiffs and
the

nature

of

their

alleged

claims

are

consistent with those of the members of the
settlement class; (ii) there are no significant
conflicts between or among the plaintiffs and
the settlement class; and (iii) the plaintiffs
are

represented

by

qualified

and

reputable

counsel who are experienced in preparing and
prosecuting

large

and

actions of this type.

4

complex

ERISA

class

(e) The

prosecution

of

separate

actions

by

individual members of the settlement class would
create a risk of: (i) inconsistent or varying
adjudications as to individual class members,
that would establish incompatible standards of
conduct

for

the

parties

opposing

the

claims

asserted in the action; or (ii) adjudications as
to individual class members that would, as a
practical

matter,

be

dispositive

of

the

interests of the other members not parties to
the adjudications, or substantially impair or
impede those persons’ ability to protect their
interests.
Based

on

these

findings,

therefore,

the

court

preliminarily certifies the following settlement class
under Federal Rule of Civil Procedure 23(b)(1):
“All persons, other than defendants, who
were participants in or beneficiaries of
the plan at any time between April 18,
2007, and August 25, 2009, and whose
accounts
included
investments
in
Colonial BancGroup Stock.”
5

The court finds that the settlement class is sufficiently
well-defined and cohesive to warrant certification as a
non-opt-out class under Rule 23(a) and 23(b)(1).
As required by Rule 23(g), the court has considered:
(i) the work class counsel has done in identifying or
investigating potential claims in this action; (ii) class
counsel’s experience in handling class actions, other
complex litigation, and claims of the type asserted in
this

action;

(iii)

class

counsel’s

knowledge

of

the

applicable law and, in particular, their knowledge of
ERISA as it applies to claims of the type asserted in
this action (breach-of-fiduciary-duty claims that pertain
to the plan’s investment in company stock); and (iv) the
resources class counsel have committed to representing
the class.

Based on these factors, the court finds that

class counsel have and will continue to represent fairly
and adequately the interests of the settlement class.
Accordingly,

pursuant

to

Federal

Rule

of

Civil

Procedure 23(g)(2) the court preliminarily designates

6

Whatley, Drake & Kallas, LLC, Keller Rohrback LLP, and
Harwood Feffer LLP as co-lead class counsel with respect
to the settlement class in this action.
As

mentioned,

the

court

finds

that

the

named

plaintiffs are adequate and typical class representatives
for the settlement class and, therefore, appoints these
plaintiffs

as

the

representatives

of

the

settlement

class.
The court having determined preliminarily that this
action may proceed as a non-opt-out class action under
Fed. R. Civ. P. 23(a) and 23(b)(1), members of the
settlement

class

shall

be

bound

by

any

judgment

concerning the settlement in this action, subject to the
court’s final determination as to whether this action may
so proceed.

II.
The

PRELIMINARY APPROVAL OF SETTLEMENT

settlement

documented

in

the

stipulation

of

settlement (Doc. No. 189-1) is preliminarily approved, as

7

the court preliminarily finds that: (a) the proposed
settlement resulted from arm’s-length negotiations; (b)
the stipulation of settlement was executed only after
class counsel had researched and investigated multiple
legal and factual issues pertaining to the plaintiffs’
claims; (c) there is a genuine controversy between the
parties involving the defendants’ compliance with the
fiduciary

requirements

of

ERISA;

(d)

the

settlement

appears on its face to be fair, reasonable, and adequate;
and (e) the settlement evidenced by the stipulation is
sufficiently fair, reasonable, and adequate to warrant
sending notice of the action, and its settlement, to the
settlement class.

A.

Fairness Hearing

A fairness hearing, pursuant to Fed. R. Civ. P.
23(e), is scheduled to be held before the court on
October 12, 2012 at 10:00 a.m. at the United States
Courthouse,

Frank

M.

Johnson,

8

Jr.

U.S.

Courthouse

Complex, One Church Street, Montgomery, Alabama 36104, to
determine finally, among other things:
(a) Whether the settlement should be approved as
fair, reasonable, and adequate;
(b) Whether

the

settlement

class

requirements of Fed. R. Civ.

satisfies

the

P. 23 and should

be finally certified as preliminarily found by
the court;
(b) Whether the litigation should be dismissed with
prejudice

pursuant

to

the

terms

of

the

stipulation of settlement;
(d) Whether the final approval order attached to the
stipulation should be entered and whether the
releasees should be released of and from the
released claims, as provided in the stipulation;
(e) Whether

the

notice

and

notice

methodology

implemented pursuant to the stipulation (i) were
reasonably calculated, under the circumstances,
to apprise members of the settlement class of

9

the pendency of the litigation, their right to
object to the settlement, and their right to
appear

at

the

fairness

hearing;

(ii)

were

reasonable and constituted due, adequate, and
sufficient notice to all persons entitled to
notice;

and

requirements

(iii)
of

met

the

Federal

all

applicable

Rules

of

Civil

Procedure and any other applicable law;
(f) Whether class counsel adequately represents the
settlement class for purposes of entering into
and implementing the stipulation as required by
Fed. R. Civ. P. 23(g) and as preliminarily found
by the court;
(g) Whether the proposed method of allocation of the
net settlement fund is fair, reasonable, and
adequate and should be approved by the court;
(h) Whether the settlement has been negotiated at
arm’s length by class counsel on behalf of the
plan

and

the

settlement

10

class,

whether

the

plaintiffs have acted independently, whether the
plaintiffs’

interests

are

identical

to

the

interests of the plan and the settlement class,
and whether the negotiations and consummation of
the settlement by the plaintiffs on behalf of
the

plan

and

the

settlement

class

do

not

constitute “prohibited transactions” as defined
by ERISA §§ 406(a) or (b) and/or qualify for a
class exemption from the prohibited transaction
rules,

including

Prohibited

Transaction

Exemption 2003-39;
(i) Whether the application for attorneys’ fees and
expenses to be filed by class counsel should be
approved;
(j) Whether

case

contribution

awards

should

be

awarded to the plaintiffs; and
(k) Any other issues necessary for approval of the
settlement.

B. Class Notice.
11

The parties have presented to the court a proposed
class notice, consisting of a mailed notice and a summary
notice, which are appended hereto as exhibits A and B.
The court approves the form and content of the class
notice,

finding

that

it

fairly

and

adequately:

(1)

describes the terms and effect of the stipulation and of
the settlement; (2) gives notice to the settlement class
of the time and place of the fairness hearing; and (3)
describes how the recipients of the class notice may
object to approval of the settlement.
The parties have proposed the following manner of
communicating the notice to members of the settlement
class, and the court finds that such proposed manner is
adequate and directs that the plaintiffs shall:
(a) By no later than August 10, 2012, cause the
mailed

notice,

with

such

non-substantive

modifications thereto as may be agreed upon by
the parties, to be disseminated pursuant to the
stipulation, to the last known address of each

12

member

of

the

settlement

class

who

can

be

identified by reasonable effort.
(b) By no later than August 10, 2012, cause the
mailed notice to be published to the website
identified in the mailed notice.
(c) By no later than August 10, 2012, cause the
summary notice to be electronically published on
the Business Wire.
At or before the fairness hearing, class counsel shall
file with the court a proof of timely compliance with the
foregoing mailing and publication requirements.
The defendants shall, on or before September 28,
2012, file with the court proof of compliance with the
Class Action Fairness Act of 2005, as specified in 28
U.S.C. § 1715 and paragraph 2 of the stipulation.
Reasonable expenses of effecting class notice shall
be paid out of the settlement fund.

C. Objections to Settlement.

13

“Objector” shall mean any member of the settlement
class

who

wishes

to

object

to

the

fairness,

reasonableness, or adequacy of the settlement; to the
plan of allocation; to any term of the stipulation of
settlement; to the proposed case contribution awards; or
to the proposed award of attorney’s fees and expenses.
Any objector must file with the court a statement of his,
her, or its objection(s), specifying the reason(s), if
any, for each such objection made, including any legal
support and/or evidence that such objector wishes to
bring to the court’s attention or introduce in support of
such

objection.

objection

and

all

The

objector

supporting

law

must

also

and/or

mail

evidence

the
to

counsel for the parties.
The addresses for filing objections with the court
and service on counsel are as follows:
1. Court.
Clerk of the U.S. District Court
Middle District of Alabama
One Church Street
Montgomery, AL 36104

14

2. Plaintiffs’ Counsel.
Whatley Drake & Kallas, LLC
Joe R. Whatley, Jr.
P.O. Box 10647
Birmingham, AL 35202-0647
3.

Defendants’ Counsel.
Alston + Bird, LLP
H. Douglas Hinson
One Atlantic Center
1201 West Peachtree St.
Atlanta, GA 30309-3424

The objector, or, if represented by counsel, his,
her, or its counsel, must both effect service of the
objection on counsel listed above and file the objection
with the court at least 14 calendar days prior to the
fairness hearing, that is, by September 28, 2012.

Any

member of the settlement class or other person who does
not timely file and serve a written objection complying
with the terms of this paragraph shall be deemed to have
waived,

and

shall

be

foreclosed

from

raising,

any

objection to the settlement and any untimely objection
shall be barred.

15

Any objector who files and serves a timely, written
objection may also appear at the fairness hearing either
in person or through counsel retained at the objector’s
expense.

Objectors

or

their

attorneys

intending

to

appear at the fairness hearing must effect service of a
“Notice of Intention to Appear” setting forth, among
other things, the name, address, and telephone number of
the objector (and, if applicable, the name, address, and
telephone number of the objector’s attorney) on counsel
identified above and file it with the court at least 14
calendar days prior to the fairness hearing, that is, by
September 28, 2012.

Any objector who does not timely

file and serve a “Notice of Intention to Appear” in
accordance with this paragraph shall not be permitted to
appear at the fairness hearing, except for good cause
shown.

The parties’ counsel shall promptly furnish each

other with copies of any and all objections that come
into their possession.

16

The parties shall respond to any objector at least
seven calendar days prior to the fairness hearing, that
is, by no later than October 5, 2012.

III. OTHER FEES AND EXPENSES
The court understands that the plan’s fiduciary has
retained or will retain an independent fiduciary for the
purpose of evaluating the settlement to determine whether
to authorize the settlement on behalf of the plan.

The

defendants have caused or will cause to be paid all fees
and

expenses

incurred

by

the

independent

fiduciary

(including fees and expenses incurred by consultants,
attorneys, and other professional retained or employed by
the independent fiduciary) in the course of evaluating
and authorizing the settlement on behalf of the plan, up
to

a

total

amount

of

two

hundred

thousand

dollars

($ 200,000) for such expenses and the expenses incurred
in

administering

settlement

fund

the

settlement

pursuant

approved by the court.

to

the

and
plan

allocating
of

the

allocation

Any fees and expenses in excess
17

of this amount incurred by the independent fiduciary
and/or the settlement administrator shall be paid out of
the settlement fund.
Any application by class counsel for attorneys’ fees
and reimbursement of expenses, for a case contribution
award

to

the

plaintiffs,

and

all

papers

in

support

thereof, shall be filed with the court and served on all
counsel of record at least 28 calendar days prior to the
fairness hearing, that is, by no later than September 14,
2012.

IV. FINALIZATION OF SETTLEMENT
Class counsel shall file with the court a motion for
entry of the final approval order and approval of the
plan of allocation at least 28 calendar days prior to the
fairness hearing, that is, by no later than September 14,
2012.
Pending final determination of whether the settlement
should be approved, all members of the settlement class
and

the

plan

are

each

BARRED
18

AND

ENJOINED

from

instituting or prosecuting any action that asserts any
released claim against any releasees.
If the settlement is terminated in accordance with
the stipulation of settlement or does not become final
under the terms of the stipulation of settlement for any
other reason, this order and all class findings shall
become null and void, and shall be without prejudice to
the rights of the parties, all of whom shall be restored
to their respective positions existing immediately before
the court entered this order.
In the event this order becomes of no force or
effect, no part of it shall be construed or used as an
admission, concession, or declaration by or against the
defendants

of

any

fault,

wrongdoing,

breach,

or

liability, nor shall the order be construed or used as an
admission, concession, or declaration by or against the
plaintiffs or the settlement class that their claims lack
merit or that the relief requested in the action is
inappropriate, improper, or unavailable, or as a waiver
by any party of any defenses or claims he, she, or it may
19

have.

The court reserves the right to continue the

fairness hearing without further written notice.
This case is reopened.
DONE, this the 28th day of June, 2012.
/s/ Myron H. Thompson
UNITED STATES DISTRICT JUDGE