Brehm et al v. Engle et al

Filing 489

MEMORANDUM AND ORDER that the proposed partial settlement agreement with defendant John Boyce 469 is approved and incorporated herein by reference. Pursuant to the Settlement Agreement 469 , defendant John Boyce is dismissed as a party defendant i n this case. The settlement proceeds shall be deposited into the trust account of Mattson Ricketts Davies Stewart & Calkins and, unless otherwise ordered by the court, the settlement proceeds shall be held in trust for eventual distribution to the class members. Nothing in this order is intended to waive, release or discharge any claims against the remaining defendants. Ordered by Chief Judge Joseph F. Bataillon. (JSF)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
DAVID BUCKLEY, on behalf of himself, the
Robert L. McKissick Irrevocable Trust and
the Brenda L. Buckley Revocable Trust,
REX WELDON, on behalf of Nancy
Weldon, Robert Clark Weldon and the
Robert Clark Weldon and Nancy Weldon
Trust, and JILL SCHUNEMAN, on behalf of
herself and the Jill Schuneman Living Trust,
collectively on behalf of themselves and all
others similarly situated,
Plaintiffs,
v.
REBECCA ENGLE, BRIAN SCHUSTER,
ENGLE & SCHUSTER FINANCIAL, INC.,
AMERICAN CAPITAL Corp., ROYAL PALM
CAPITAL GROUP, INC., GERALD
PARKER, JOHN BOYCE, GERALDINE
MAGALNICK, and LIANA DOBARGANES
HARRINGTON, in her capacity as sole heir
or putative personal representative of the
estate of Patrick Harrington, deceased,
Defendants.

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8:07CV254

MEMORANDUM AND ORDER

This matter is before the court for final approval of a proposed partial settlement
agreement with defendant John Boyce. This is a class action for securities fraud pursuant
to 15 U.S.C. § 77 et seq.
I. Facts
The case has been certified as a class action. Filing No. 299, order approving class;
Filing No. 311, order approving notice of class certification. This court preliminarily
approved the proposed partial settlement agreement with defendant Boyce and approved
notice of the settlement and fairness hearing thereon. Filing No. 472, order preliminarily

approving proposed partial settlement and notice; Filing No. 469, Index of Evid.,
Attachment 1, Settlement Agreement (Doc # 469-1, Page ID # 4650-59). The Notice of the
Proposed Partial Settlement of Class Action & Fairness Hearing was provided to members
of the class by first class U.S. mail. Filing No. 476, Affidavit of J.L. Spray (certificate of
service).
A fairness hearing was held on April 28, 2011. Attorney Gregory Scaglione
appeared as lead counsel for the lead plaintiffs. No objections to the proposed partial
settlement or notices of intent to appear were filed, and no one appeared at the hearing
to object. The court takes judicial notice of the settlement agreement. Filing No. 469,
Index of Evid., Attachment 1, Settlement Agreement (Doc # 469-1, Page ID # 4650-59).
The settlement agreement will settle lead plaintiffs’ claims against defendant John
Boyce in this action and in the case of Willard Brehm, et al. v. First Clearing, L. L. C, Case
No, CI09-325, currently pending in the District Court of Otoe County, Nebraska. Id. at 2.
The agreement provides for payment of $12,500 in monthly payments of $250.00 per
month beginning on the first day of the month following the entry of this Order approving
the settlement agreement. Id. at 3. It also provides that Boyce will cooperate with the
plaintiffs by providing testimony, documents and information regarding the plaintiffs’ claims
against nonsettling defendants in this class action and in pending arbitration actions. Id.
at 5. The plaintiffs reserve the right to reinstate this action should Boyce fail to cooperate
or to make the required payments. In consideration of those payments and Boyce’s
cooperation, plaintiffs agree to dismiss, without prejudice, the claims identified in this class
action against Boyce, as well as claims against Boyce in the state court action. Id.
Counsel for lead plaintiffs represent 165 of the 190 members of the class. The plaintiffs
have shown that the proposed partial settlement is the product of several months of
arm's-length negotiations. See Filing No. 470, Affidavit of Gregory C. Scaglione and J.L.
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Spray at 1-2. Plaintiffs’ lead counsel have investigated Boyce’s financial condition to
ensure that the proposed settlement maximizes recovery. Id. at 2-3. Lead counsel have
shown that, because of the anticipated time and expense of protracted litigation and
Boyce’s poor financial condition, the proposed partial settlement is in the best interests of
the plaintiff Class. Id. at 3. Importantly, Boyce has agreed to use good faith efforts to
recall and learn of facts and documents that would assist the Class in making claims
against the remaining defendants and to disclose and produce such information and
related documentation to the Class so as to assist them in prosecuting their claims against
those defendants. Id. at 2.
II. Law
In approving a class settlement, the district court must consider whether it is fair,
reasonable, and adequate. DeBoer v. Mellon Mortgage Co., 64 F.3d 1171, 1178 (8th Cir.
1995). A district court is required to consider four factors in determining whether a
settlement is fair, reasonable, and adequate: (1) the merits of the plaintiff’s case, weighed
against the terms of the settlement; (2) the defendant’s financial condition; (3) the
complexity and expense of further litigation; and (4) the amount of opposition to the
settlement. In re Wireless Tel. Fed. Cost Recovery Fees Litig., 396 F.3d 922, 931 (8th Cir.
2005).

“The most important consideration in deciding whether a settlement is fair,

reasonable, and adequate is ‘the strength of the case for plaintiffs on the merits, balanced
against the amount offered in settlement.’” Id. at 933 (quoting Petrovic v. Amoco Oil Co.,
200 F.3d 1140, 1150 (8th Cir. 1999) (internal quotations omitted)). A court may also
consider procedural fairness to ensure the settlement is “not the product of fraud or
collusion.” Id. at 934. The experience and opinion of counsel on both sides may be
considered, as well as whether a settlement resulted from arm’s-length negotiations, and
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whether a skilled mediator was involved. See DeBoer, 64 F.3d at 1178. A court may also
consider the settlement’s timing, including whether discovery proceeded to the point where
all parties were fully aware of the merits. With respect to notice, due process is satisfied
where class members receive notice of a settlement proposal and are able to argue their
objections to the district court. Id. at 1176.
III. Analysis
The court has reviewed the proposed settlement agreement, Filing No. 469, Index
of Evid. , Attachment 1, Settlement Agreement. The settlement agreement will settle lead
plaintiffs’ claims against defendant John Boyce. In addition to providing some monetary
compensation to class members, the proposed settlement provides the important benefit
of Boyc’s cooperation in pursuing recovery from the nonsettling parties. Further, there are
no objections to the partial settlement. The court finds the partial settlement agreement
with defendant Boyce is fair and reasonable. Based on the court’s familiarity with the case
throughout the course of this litigation, the court concludes that the proposed partial
settlement is within the range of potential outcomes in this case.
The court finds that the requirements of due process have been met as to the
method and content of the notice to the class members. The court has reviewed the
notices and proofs of service and finds them satisfactory. There are no objections to the
partial settlement and most potential claimants are represented in the class. Under the
circumstances, the court finds the settlement is fair, reasonable, adequate and in the best
interests of the class. Accordingly, the court finds that the proposed partial settlement with
defendant Boyce should be approved.

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IT IS ORDERED:
1. The proposed partial settlement agreement with defendant John Boyce (Filing
No. 469) is approved and incorporated herein by reference.
2. Pursuant to the Settlement Agreement (Filing No. 469), defendant John Boyce
is dismissed as a party defendant in this case.
3.

The settlement proceeds shall be deposited into the trust account of Mattson

Ricketts Davies Stewart & Calkins and, unless otherwise ordered by the court, the
settlement proceeds shall be held in trust for eventual distribution to the class members.
4. Nothing in this order is intended to waive, release or discharge any claims
against the remaining defendants.
DATED this 3rd day of May, 2011.
BY THE COURT:

s/Joseph F. Bataillon
CHIEF DISTRICT JUDGE

*This opinion m ay contain hyperlinks to other docum ents or W eb sites. The U.S. District Court for
the District of Nebraska does not endorse, recom m end, approve, or guarantee any third parties or the services
or products they provide on their W eb sites. Likewise, the court has no agreem ents with any of these third
parties or their W eb sites. The court accepts no responsibility for the availability or functionality of any
hyperlink. Thus, the fact that a hyperlink ceases to work or directs the user to som e other site does not affect
the opinion of the court.
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