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