Stejskal v. Lundstrom
MEMORANDUM AND FINAL ORDER OF APPROVAL - IT IS ORDERED: Pursuant to Fed. R. Civ. P. 23, the class in this action is certified as set forth above at 3. Lead Plaintiffs' motions (Filing No. 116 in 8:10CV199 and Filing No. 72 in 8:10CV332 and 4 :10CV3177) for final approval of the Stipulation of Settlement dated May 25, 2012 ("Settlement"), Filing No. 102, Ex. 1, are granted. The Settlement, Filing No. 102, Ex. 1, is hereby approved and is incorporated herein as if fully set fo rth. Lead Plaintiffs and the Individual Defendants shall consummate the Settlement in accordance with its terms. Without further order of the Court, the parties may agree to reasonable extensions of time to carry out any of the provisions of the Sett lement. The court retains jurisdiction to enforce the Settlement. Any disputes arising out of the terms of the Settlement or the implementation or enforcement thereof, shall be submitted to the Court for final resolution upon the application of any p arty hereto. Lead counsel's motions for attorney fees, expenses and awards to lead plaintiffs (Filing No. 118 in 8:10CV199 and Filing No. 74 in 8:10CV332 and 4:10CV3177) are granted. A Judgment in accordance with this Memorandum and Final Order of Approval will issue this date. Member Cases: 8:10-cv-00199-JFB-TDT, 4:10-cv-03177-JFB-TDT, 8:10-cv-00332-JFB-TDT Ordered by Judge Joseph F. Bataillon. (Copy mailed to pro se party)(TCL )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
DAVID G. RAY, Individually and on behalf
of all others similarly situated; GABRIEL
D'SOUZA, VALENTINO GROUP,
Lead Case No. 8:10CV199
GILBERT G. LUNDSTROM, MICHAEL J.
FALBO, TIERONE CORPORATION,
EUGENE B. WITKOWICZ, CHARLES W.
HOSKINS, JAMES A. LAPHEN,
DOUGLAS L. STEJSKAL,
Member Case No. 4:10CV3177
GILBERT G. LUNDSTROM,
DOUGLAS L. STEJSKAL,
Member Case No. 8:10CV332
JAMES A. LAPHEN,
MEMORANDUM AND FINAL ORDER OF APPROVAL
This matter is before the court after a Final Fairness Hearing on October 26,
2012, on the Lead Plaintiffs’ motion for final approval of the parties’ proposed class
action settlement (Filing No. 102, Ex. 1 in 8:10CV99; and Filing No. 62, Ex. 1 in
8:10CV332 and 4:10CV3177) and motion for attorney fees, expenses, and awards to
Lead Plaintiffs, Filing Nos. 116 and 118 in 8:10CV199; and Filing Nos. 72 and 74 in
8:10CV332 and 4:10CV3177.
The Court must determine: (1) whether the parties’ Stipulation of Settlement (the
“Settlement”) dated May 25, 2012 (Filing No. 102, Ex.1 in 8:10CV99; Filing No. 62, Ex.
1 in 8:10CV332 and 4:10CV3177) is fair, reasonable, and adequate to settle all claims
asserted by Lead Plaintiffs Vincent Valentino, Raoul and Sharon Turcot, and Eric
Follestad (collectively, “The Valentino Group”) on behalf of themselves and all members
of the class against defendants Gilbert G. Lundstrom, Eugene B. Witkowicz, Michael J.
Falbo, James A. Laphen, and Charles W. Hoskins (collectively, the “Individual
Defendants”); (2) whether judgment should be entered dismissing these actions on the
merits and with prejudice, thus granting relief to the Individual Defendants against all
persons who are members of the Class and who have not requested exclusion
therefrom; (3) whether to approve the proposed Plan of Allocation described in the
Notice of Pendency and Settlement of Class Action (Filing No. 108, Ex. A-1 in
8:10CV99) as a fair and reasonable method to allocate the settlement proceeds among
members of the class; (4) whether and in what amount to award attorneys’ fees,
expenses, and awards to Lead Plaintiffs.
I. Final Approval of Settlement
As an initial matter, for the reasons stated in its order preliminarily approving the
settlement, the court finds that this action should be certified as a class action on behalf
All persons who purchased the common stock of TierOne Corporation
during the time period of August 9, 2007 through May 14, 2010, inclusive,
and allegedly were damaged thereby. The individual defendants, all
former officers and directors of TierOne Corporation, and their immediate
families, legal representatives, heirs, predecessors, successors, and
assigns, and any entity in which they have or had a controlling interest,
are excluded from the Class.
The following persons have filed timely requests for exclusion and are also
excluded from the Class: TierOne Corporation and TierOne Corporation
bankruptcy estate, c/o Brian Kruse, Esq., Rembolt Ludke, 1201 Lincoln
Mall, Suite 102, Lincoln, Nebraska, 68508; Gary L. Peck, 1529 Cafe
DuMonde, Conroe, TX, 77304; Mark G. Bernadiner and Dmitri M. Egorov
JTTEN, 1114 Sussex Trail, Pearland, TX 77584; Jeff & Janice Kuester,
1900 S.W. 23rd Street, Lincoln, NE 68522; Martin L. Grotelueschen, 1607
Road 2, Leigh, NE 68643; Gerald M. and Linda Sue Bontrager, 1267
Country Road I, Ithaca, NE 68033; and Martin L. Klotovich, 1455 W. Oak
Street, Bozeman, MT 59715.
See Filing No. 110 in 8:10CV199, Memorandum and Order at 2-5; Filing No. 70 in
8:10CV332 and 4:10CV3177; Filing No. 120, Ex. 2 in 8:10CV199, Declaration of
Josephine Bravata (“Bravata Decl.”) at 5, & 29-55, Ex. D; Filing No. 76, Ex. 2 in
8:10CV332 and 4:10CV3177; Filing No. 125, Ex. 8 in 8:10CV199, Supplemental
Declaration of Josephine Bravata (“Bravata Supp. Decl.”) at 27, Ex. F; Filing No. 78,
Ex. 8 in 8:10CV332 and 4:10CV3177.
The Court further finds that notices substantially in the form approved by the
court in the Preliminary Approval Order, e.g., Filing No. 108, Ex. A-1 in 8:10CV199,
were mailed to the putative class members and published in accordance with the
Court’s order. See, e.g., Filing No. 110 in 8:10CV199, Memorandum and Order at 1012; Filing No. 120, Ex. 2, Bravata Decl. at 2-4; Filing No. 125, Ex. 8, Bravata Supp.
Decl. at 1-2 (and corresponding filings in the member cases). The court hereby finds
that the notice given to the class provided the best notice practicable under the
circumstances and provided due and adequate notice of these proceedings, the
settlement, the plan of allocation, and the Final Fairness Hearing. The Court finds the
notice satisfies the requirements of Rule 23 of the Federal Rules of Civil Procedure and
is reasonably calculated to afford due process to persons entitled to such notice. Lead
Plaintiffs have shown that 13,986 notices were mailed and that 2,885 claims were
received by the claims administrator, Strategic Claims Services (“SCS”), as of the
claims-filing deadline. See, e.g., Filing No. 125, Ex. 8, Bravata Supp. Decl. at 2-3; Filing
No. 120, Ex. 1, Declaration of Phillip Kim (“Kim Decl.”) at 8-9. The court finds a full
opportunity has been offered to the class members to object to the proposed Settlement
and to participate in the hearing thereon. No one appeared at the hearing to object to
The court further finds that the proposed plan of allocation is a fair and
reasonable method to allocate the settlement proceeds among members of the Class.
See, e.g., Filing No. 120, Ex. 1, Kim Decl. at 10-12.
The plan of allocation was
formulated by lead counsel in consultation with a damages expert, and provides that the
claim administrator, SCS, will determine each claimant’s pro rata share of the Net
Settlement Fund based upon each claimant’s net recognized loss, with that share to be
determined by the ratio that the authorized claimant’s allowed claim bears to the total
allowed claims of all authorized claimants. Id. at 9. The court finds the Settlement is
fair, reasonable, and adequate, and in the best interests of the class. Accordingly, the
court finds the Settlement should be approved.
The Court has considered the objections filed by Betty L. Van Boening, Filing No.
113; Ron Brimmer, Filing No. 114; John Reimnitz, Filing No. 115; Duncan Riefler, Filing
No. 121; Douglas Stejskal, Filing No. 122, and Frank Cummings, Filing No. 123, as well
as an objection submitted to SCS by Karen Beavers, see Filing No. 125, Ex. 8, Bravata
Decl. at 26, and finds the objections should be overruled. Lead plaintiffs have shown
that, for the most part, the objections have been resolved. See, e.g., Filing No. 125, Ex.
8, Bravata Supp. Decl. at 2-3, 25-26 (stating that Betty L. Van Boening has been
determined not to be a member of the class, Duncan W. Riefler has indicated he has
withdrawn his objection, John Reimnitz has withdrawn his objection, Karen Beaver has
filed a timely claim form, and Frank Cummings will be allowed to file a claim out of time,
obviating his objection); Filing No. 120, Ex. 2, Bravata Decl. at 4-5.
The remaining objections are without merit. In his objection, Douglas Stejskal,
pro se plaintiff in the member cases, indicates that he does not necessarily object to the
general terms of the proposed settlement,” but “take[s] issue with the fact that no
provision is made in the proposed settlement concerning the two member cases.” Filing
No. 122 in 8:10CV199, Objection at 1. However, Stejskal has also submitted a claim
and will be included in the Settlement. Id. at 7, Ex. B. Additionally, Stejskal seeks
recovery of his investment and an additional payment in the amount of $1,500.00 to
settle his claims. The Court finds no support for his position and finds his objection
should be overruled. The court also finds that Ron Brimmer’s objection, Filing No. 114
in 8:10CV199, is conclusory, lacks merit and should be denied.
II. Attorney Fees, Expenses, and Awards to Lead Plaintiffs
A thorough judicial review of fee applications is required in all class action
settlements. In re Diet Drugs, 582 F.3d 524, 537-38 (3d Cir. 2009); Johnson v.
Comerica Mortgage Corp., 83 F.3d 241, 246 (8th Cir. 1996) (noting that the district court
bears the responsibility of scrutinizing attorney fee requests). Courts utilize two main
approaches to analyze a request for attorney fees:
(1) the “lodestar” methodology
(multiplying the hours expended by an attorney’s reasonable hourly rate of
compensation to produce a fee amount that can be adjusted to reflect the individualized
characteristics of a given action); and (2) the “percentage of the benefit” approach
(permitting an award of fees that is equal to some fraction of the common fund that the
attorneys were successful in gathering during the course of the litigation). Johnson, 83
F.3d at 244-45. It is within the court’s discretion to decide which method to apply. Id.
The percentage-of-recovery methodology has been approved in common-fund
settlement class action cases. See, e.g., In re US Bancorp Litig., 291 F.3d 1035, 1038
(8th Cir. 2002) (approving an award of 36% of the settlement fund); Petrovic v. Amoco
Oil Co., 200 F.3d 1140, 1157 (8th Cir. 1999) (approving award of 24% of monetary
compensation to the class). To recover fees from a common fund, attorneys must
demonstrate that their services were of some benefit to the fund or that they enhanced
the adversarial process. In Re US Bancorp Litig., 291 F.3d at 1038. Under the Private
Securities Litigation Reform Act (“PSLRA”), “Congress plainly contemplated that
percentage-of-recovery would be the primary measure of attorneys’ fees awards in
federal securities class actions.” In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 300 (3d
Although the PSLRA does not permit incentive awards and provides that “[t]he
share of any final judgment or of any settlement that is awarded to a representative
party serving on behalf of the class shall be equal, on a per share basis, to the portion
of the final judgment or settlement awarded to all other members of the class,” it permits
district courts to award “reasonable costs and expenses (including lost wages) directly
relating to the representation of the class to any representative party serving on behalf
of the class.” 15 U.S.C. § 78u–4(a)(4).
The Court has reviewed the motion for fees, expenses and awards to Lead
Plaintiffs and supporting materials. See, e.g., Filing No. 120 in 8:10CV199, Ex. 1, Kim
Decl. at 14-18, Ex. A, Declaration of Laurence Rosen (“Rosen Decl.”); Ex. B,
Declaration of Katherine M. Ryan ("Ryan Decl.”). The Settlement provides a fund of
$3,100,000.00 in cash, plus interest. See, e.g., Filing No. 102 in 8:10CV199, Ex. 1,
Settlement at 12.
Lead plaintiffs request a fee award to lead counsel of one-third
(33.3%) of the Settlement Fund or approximately $1,033,333.00. See, e.g., Filing No.
118 in 8:10CV199, Motion at 2; Filing No. 120 in 8:10CV199, Ex. 1, Kim Decl. at 14.
lead counsel also request reimbursement from the Settlement Fund of $77,907.41 in
actual expenses, as well as incentive awards of $2,000.00 to each of the three Lead
Plaintiffs. Filing No. 118 in 8:10CV199, Motion at 2. The defendants take no position
on the issues. See, e,g., Filing No. 102, Ex. 1, Settlement at 20.
Putative class members were informed by notice of lead counsel’s intent to seek
attorney fees of up to 33.3% of the settlement fund (or up to $1,033,333.00), as well as
to seek litigation expenses in an amount up to $100,000.00, and awards of up to
$2,500.00 each for each of the three Lead Plaintiffs. Id. at 14, 17. The court finds lead
counsel have competently prosecuted this litigation and have achieved a fair and
reasonable settlement. Their efforts benefitted the fund and enhanced the recovery.
This class action involves complex factual and legal issues and securities litigation
requires considerable skill. The action was actively prosecuted since its filing. Lead
Plaintiffs have shown that the Settlement will recover approximately 13.5% of plaintiffs’
counsels’ best case estimate of total damages of approximately $23,000,000.00. Filing
No. 120, Ex. 1, Kim Decl. at 7. This represents a reasonable recovery in a case of this
nature, especially in light of disputes on issues of falsity, materiality, scienter, loss
causation and damages. The Court finds those class members who file claims will
benefit from the Settlement. Lead Plaintiffs have also shown that the Settlement was
achieved only after thorough investigation, considerable motion practice and an arm’slength negotiation conducted by a mediator.
In light of the defendants’ financial
condition and the fact that other claims have been and could be filed against them, the
risk of the plaintiffs’ nonrecovery was substantial.
Further, Lead Plaintiffs have shown that lead counsel devoted over 913 hours of
time, at rates of $325.00 to $750.00 per hour for attorneys and $220.00 per hour for
paralegals, to this case, which is a lodestar of $527,000.00, and a lodestar multiplier of
1.96. Id. Although those hourly rates are arguably higher than prevailing rates in this
community, the court finds the overall fees are reasonable in view of the relatively low
multiplier, the risk of nonrecovery and the complexity of the case. Attorneys’ fees in the
amount of $1,033,333.00 are consistent with awards of fees in similar cases. Putative
class members were afforded appropriate notice of the requested fees. The single
investor who objected to the amount of the attorney fee award has requested exclusion
from the class. See Filing No. 125 in 8:10CV199, Ex. 8, Bravata Supp. Decl. at 27;
Filing No. 120 in 8:10CV199, Ex. 1, Kim Decl. at 17. The Court finds the requested
attorneys’ fees are reasonable and should be paid from the Settlement fund.
Lead Plaintiffs also seek reimbursement of $77,907.41 in costs and expenses.
They have submitted a summary of lead counsel’s expenses and costs. See Filing No.
120 in 8:10cv199, Ex. 1, Kim Decl., Ex. A, Rosen Decl. at 3; Ex. B, Ryan Decl. at 3.
The expenses include the cost banking, accounting and damages experts, consultants,
and a mediator, as well as travel and lodging expenses, photocopying and scanning,
filing fees, and costs of providing notice to the class. The court finds the claimed
expenses are reasonable in amount. The court finds the costs, mediation fees, forensic
accounting fees, consultants fees, and other costs and expenses were also necessary
to prosecute the claims on behalf of the class. No one has objected to the award of
expenses. Accordingly, the court finds Lead Plaintiffs’ motion for reimbursement of
expenses should be granted.
Lead Plaintiffs also move for an award for their lost time and efforts in
prosecution and oversight of this action pursuant to the PSLRA.
They each seek
$2,000.00. They have shown that they were actively involved in this litigation, reviewed
the various complaints, participated in the settlement negotiations, discussed case
strategy with lead counsel, and engaged in numerous communications with counsel.
See Filing No. 120 in 8:10CV199, Ex.1, Kim Decl. at 19-20. Lead counsel state that the
Lead Plaintiffs’ efforts were important and led to the successful resolution of the matter.
Id. at 20. The Court finds a $2,000.00 award is reasonable under the circumstances.
Also, the class had notice of the award and no class member objected to it. The Court
believes that this award is appropriate compensation for reasonable costs and
expenses under the PSLRA.
Accordingly, the Court will approve the award of
$2,000.00 to each of the three Lead Plaintiffs.
IT IS ORDERED:
Pursuant to Fed. R. Civ. P. 23, the class in this action is certified as set
forth above at 3.
Lead Plaintiffs’ motions (Filing No. 116 in 8:10CV199 and Filing No. 72 in
8:10CV332 and 4:10CV3177) for final approval of the Stipulation of Settlement dated
May 25, 2012 (“Settlement”), Filing No. 102, Ex. 1, are granted.
The Settlement, Filing No. 102, Ex. 1, is hereby approved and is
incorporated herein as if fully set forth.
Lead Plaintiffs and the Individual Defendants shall consummate the
Settlement in accordance with its terms.
Without further order of the Court, the parties may agree to reasonable
extensions of time to carry out any of the provisions of the Settlement.
Pursuant to 15 U.S.C . § 78u-4(f)(7), the Court hereby permanently bars
and enjoins any future claims for contribution arising out of this Action: (a) by any
person or entity against the Individual Defendants; or (b) by the Individual Defendants
against any person or entity other than a person or entity whose liability has been
extinguished by the Settlement reached with the Individual Defendants.
The court retains jurisdiction to enforce the Settlement.
arising out of the terms of the Settlement or the implementation or enforcement thereof,
shall be submitted to the Court for final resolution upon the application of any party
Lead counsel’s motions for attorney fees, expenses and awards to lead
plaintiffs (Filing No. 118 in 8:10CV199 and Filing No. 74 in 8:10CV332 and
4:10CV3177) are granted.
A Judgment in accordance with this Memorandum and Final Order of
Approval will issue this date.
DATED this 8th day of November, 2012.
BY THE COURT:
s/ Joseph F. Bataillon
United States District Judge
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