Westley et al v. Oclaro, Inc. et al

Filing 179

ORDER re Supplemental Briefing for 175 Plaintiffs' Motion for Preliminary Approval. Signed by Judge Edward M. Chen on March 25, 2014. (emclc1, COURT STAFF) (Filed on 3/25/2014)

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1 2 3 4 5 UNITED STATES DISTRICT COURT 6 NORTHERN DISTRICT OF CALIFORNIA 7 8 CURTIS WESTLEY, et al., 9 Plaintiffs, For the Northern District of California United States District Court 10 11 v. OCLARO, INC., et al., 12 13 No. C-11-2448 EMC Defendants. ORDER RE SUPPLEMENTAL BRIEFING FOR PLAINTIFFS’ MOTION FOR PRELIMINARY APPROVAL (Docket No. 175) ___________________________________/ 14 15 16 The Court has reviewed Plaintiffs’ motion for preliminary approval. Having reviewed the 17 motion, the Court hereby orders the parties to provide a joint supplemental brief regarding the 18 following issues. The joint supplemental briefing shall be filed no later than April 10, 2014. 19 1. 20 Net Settlement Fund The parties should state what they expect the net settlement fund to be and explain how they 21 arrived at the calculation. For example, out of the $3.7 million total settlement fund, how much do 22 the parties expect will go toward, e.g., notice and administration costs or taxes and tax expenses? 23 Cf. Stip. of Sett. § 2.6 (providing that Plaintiffs may use up to $600,000 without Court or 24 Defendants’ approval for such costs and expenses). 25 2. 26 Plan of Allocation The settlement agreement provides that the Plan of Allocation is not part of the agreement. 27 See Stip. of Sett. §§ 1.21, 5.6, 5.9; Prop. Order ¶ 15. However, it is not clear whether the parties are 28 taking the position that the Court cannot evaluate the Plan of Allocation in assessing the fairness, 1 reasonableness, and adequacy of the settlement. See Stip. of Sett. § 5.9 (providing that the Plan of 2 Allocation is not part of the settlement agreement “and is to be considered by the Court separately 3 from the Court’s consideration of the fairness, reasonableness, and adequacy of the settlement”). If 4 this is the parties’ position, then they should explain how the Court can assess the fairness, 5 reasonableness, and adequacy of the settlement without considering, inter alia, the Plan of 6 Allocation as the Plan will dictate what distribution each class member will get. 7 In addition, Plaintiffs should explain how the Plan of Allocation was derived and why it is an 8 appropriate plan for distribution to the class. As part of this explanation, Plaintiffs should describe 9 why it is using the dates January 24 and 25, 2011, as part of their calculations. See Notice at 8. 3. 11 For the Northern District of California United States District Court 10 Maximum Potential Recovery According to Plaintiffs, had they entirely prevailed in the litigation (i.e., succeed with respect 12 to both the representations in May/June 2010 and July/August 2010), the maximum potential 13 recovery in the case would be approximately $69 million. See Mot. at 11 n.5. Plaintiffs should 14 provide an explanation and summary description of the evidence supporting this claim. 15 Plaintiffs add that, if the June/August 2010 representations are excluded, then the maximum 16 potential recovery in the case (i.e., recovery based on the May/June 2010 statements only) would be 17 approximately $3.2 million – which is less than the total settlement fund of $3.7 million. See Mot. 18 at 11. Unlike above, Plaintiffs do cite some evidence in support of this claim. See Williams Decl. ¶ 19 59 (“Based upon a comprehensive event study, Plaintiffs estimate the maximum potential judgment 20 they could obtain for the Class is approximately $3.2 million for the May 2010-June 2010 claims 21 that remained in the case after the May 30, 2013 Order.”). However, Plaintiffs give no specific 22 information about the comprehensive event study – e.g., who conducted it, what assumptions were 23 made, etc. Plaintiffs should provide at least some description about the comprehensive event study 24 that was conducted. 25 4. 26 Scope of Release The settlement defines “Released Claims” as all claims that were asserted or that might have 27 been asserted “based upon, arising out of, or related to (a) the purchase or acquisition of Oclaro 28 common stock during the Class Period and any of the facts . . . which were or could have been 2 1 alleged in or embraced or otherwise referred to or encompassed by the Litigation . . . ; or (b) that 2 Defendants improperly defended or settled the Litigation, the Released Claims or both.” Stip. of 3 Sett. § 1.23. 4 The scope of the release is arguably overly broad as worded – in particular with respect to 5 (a). The parties should meet and confer to determine whether they can agree upon more precise 6 language for the release. 7 5. Cy Pres Beneficiary 8 The parties should explain why Bay Area Legal Aid is an appropriate cy pres beneficiary in 9 light of Nachsin v. AOL, LLC, 663 F.3d 1034, 1039 (9th Cir. 2011) (indicating that selection of a cy pres beneficiary should be “tethered to the nature of the lawsuit and the interests of the silent class 11 For the Northern District of California United States District Court 10 members”). 12 6. 13 Supplemental Agreement The settlement agreement refers to a Supplemental Agreement which includes (at the very 14 least) information as to Oclaro’s ability to terminate the settlement in the event that class members 15 with a certain number of shares opt out of the settlement. See Stip. of Sett. § 7.3. Under the 16 agreement, the Supplemental Agreement will not be filed unless, e.g., requested by the Court. The 17 Court hereby orders the parties to provide a copy of the Supplemental Agreement for the Court’s 18 review. If the parties either file the Supplemental Agreement under seal or lodge the Supplemental 19 Agreement for in camera review, then they must provide a declaration justifying the request to file 20 under seal or request for in camera review. A generic request shall not be sufficient; the parties must 21 provide specifics as to why a filing under seal or an in camera review is necessary. 22 7. Proposed Order Granting Preliminary Approval 23 a. 24 Paragraph 8 should be amended to read: “All Members of the Clas shall be subject to and be 25 Paragraph 8 bound by the provisions of the Stipulation if approved . . . .” 26 b. 27 Paragraph 14 should be amended so that all briefing is filed and served no later than fourteen 28 Paragraph 14 (14) days prior to the hearing on final approval. 3 1 8. Full-Length Notice of Proposed Settlement 2 a. 3 In the section “Settlement Fund,” the parties have disclosed (in bold) that the estimated Page 1 4 average distribution per share of common stock will be approximately $0.15 before deduction of 5 Court-approved fees and expenses and so forth. The parties should include (in bold) that the 6 estimated average distribution per share of common stock will be approximately $0.04 after 7 deduction of such fees and expenses. See Notice at 2. 8 b. 9 The parties disclose that Plaintiffs will ask for 25% of the settlement fund for attorney’s fees. The notice should include what the actual dollar amount is – i.e., $925,000. 11 For the Northern District of California United States District Court 10 Pages 2 and 14 c. 12 The option “GO TO A HEARING” is not really an independent option but rather part of the Page 3 13 option “OBJECT.” The text related to going to a hearing should be incorporated as part of the 14 “OBJECT” option. 15 d. 16 The parties should state what the estimated net settlement fund is expected to be. 17 e. 18 The following statement regarding the Plan of Allocation is confusing: “The allocation 19 below is based on the following Inflation Amounts as well as the statutory PSLRA 90-day look-back 20 amount of $11.53.” The statement needs to be clarified. Page 7 Page 8 21 f. 22 At the end of the notice, there is a special notice to banks, brokers, and other nominees. The Page 17 23 parties should address whether, in sending out the notice by mail to banks, brokers, and other 24 nominees specifically, it makes sense to include the special notice as a cover page for the notice. 25 9. 26 Claim Form Page 3 of the claim form should be amended to state that “[c]opies of broker confirmations 27 or other documentation of your transactions in Oclaro common stock should be attached to your 28 claim if available. Failure to provide this documentation could delay verification of your claim or 4 1 result in rejection of your claim.” This is consistent with page 9 of the claim form which states: 2 “Remember to attach supporting documentation, if available.” 3 4 IT IS SO ORDERED. 5 6 Dated: March 25, 2014 7 EDWARD M. CHEN United States District Judge 8 9 11 For the Northern District of California United States District Court 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5

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