Anwar et al v. Fairfield Greenwich Limited et al

Filing 1417

FILING ERROR - WRONG EVENT TYPE SELECTED FROM MENU - MOTION for Attorney Fees and Expenses in Connection with Settlement. Document filed by Harel Insurance Company, Ltd., Pacific West Health Medical Center, Inc. Employee's Retirement Trust, Securities & Investment Company Bahrain, St. Stephen's School.(Barrett, David) Modified on 10/6/2015 (db).

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
PASHA ANWAR, et al.,
Plaintiffs,
v.
FAIRFIELD GREENWICH LIMITED, et al.,

Master File No. 09-cv-118 (VM) (FM)

Defendants.
This Document Relates To: 09-cv-118 (VM)

PLAINTIFFS’ MEMORANDUM IN SUPPORT OF
PROPOSED SETTLEMENT AND FEE AWARD

BOIES, SCHILLER & FLEXNER LLP
David A. Barrett
Howard L. Vickery, II
575 Lexington Avenue
New York, NY 10022
Telephone: [phone]
Facsimile: [phone]

WOLF POPPER LLP
Robert C. Finkel
845 Third Avenue
New York, NY 10022
Telephone: [phone]
Facsimile: [phone]

BOIES, SCHILLER & FLEXNER LLP
Stuart H. Singer
Carlos Sires
Sashi Bach Boruchow
401 East Las Olas Boulevard, #1200
Ft. Lauderdale, Florida 33301
Telephone: [phone]
Facsimile: [phone]

LOVELL STEWART HALEBIAN JACOBSON LLP
Christopher Lovell
Victor E. Stewart
61 Broadway, Suite 501
New York, NY 10006
Telephone: [phone]

Lead Counsel for Plaintiffs

TABLE OF CONTENTS
Page
I. 

INTRODUCTION ...............................................................................................................1 

II. 

STATEMENT OF FACTS ..................................................................................................2 

III. 

ARGUMENT .......................................................................................................................3 
A. 

The Proposed Partial Settlement Should Be Approved as Fair, Reasonable and
Adequate ................................................................................................................. 3 

B. 

The Grinnell Factors Support Approval of the Settlement ..................................... 4 
1.  

Complexity, Expense, and Likely Duration of the Action.......................... 4 

2. 

The Settlement Class’s Response to the Settlement ................................... 5 

3.  

The Stage of the Proceedings and the Amount of Information Reviewed
and Analyzed .............................................................................................. 6 

4. 

The Risks of Establishing Liability and Damages ...................................... 6 

5. 

The Risk of Maintaining the Case as a Class Action .................................. 7 

6. 

The Amount of the Settlement .................................................................... 7 

C. 

The Plan Of Allocation Is Fair, Reasonable And Adequate And Warrants
Approval ................................................................................................................. 9 

D. 

The Court Should Finally Certify The Settlement Class ...................................... 10 

E. 

Lead Counsel’s Petition for an Award of Attorneys’ Fees Is Reasonable and
Should Be Granted ................................................................................................ 11 
1. 

Legal Standard .......................................................................................... 11 

2. 

The Requested Fee is Fair Under the Percentage-of-Recovery Method... 12 

3. 

The Requested Fee is Supported by the Second Circuit’s Goldberger
Factors ....................................................................................................... 13 
a. 

Time and Labor Expended by Counsel ......................................... 13 

b. 

Magnitude and Complexities of the Litigation ............................. 15 

c. 

Risks of the Litigation................................................................... 16 

d. 

Quality of Representation ............................................................. 17 

e. 

The Requested Fee in Relation to the Settlement ......................... 18 

f. 

Public Policy Considerations ........................................................ 19 

g. 

Reaction of the Settlement Class to the Fee Request .................... 20 

h. 

The Requested Fee is Reasonable Under the Lodestar "CrossCheck" ........................................................................................... 21 

IV. 

PLAINTIFFS’ COUNSEL’S REQUEST FOR REIMBURSEMENT OF EXPENSES
SHOULD BE GRANTED ................................................................................................ 23 

V. 

CONCLUSION..................................................................................................................23 

TABLE OF AUTHORITIES
Page
Cases
Anwar v. Fairfield Greenwich Ltd (Da Silva Ferreira v. EFG Cap. Int’l Corp., 11-cv-813),
No. 09-cv-118 (VM), 2012 WL 1981505 (S.D.N.Y. June 1, 2012) ......................................... 13
Blum v. Stenson,
465 U.S. 886 (1984) ............................................................................................................ 12, 21
Boeing Co. v. Van Gemert,
444 U.S. 472 (1980) .................................................................................................................. 11
Charron v. Wiener,
731 F.3d 241 (2d Cir. 2013)........................................................................................................ 4
Credit Alliance Corp. v, Arthur Andersen & Co.,
65 N.Y.2d 536, 493 N.Y.S.2d 435 (1985) ................................................................................ 16
D'Amato v. Deutsche Bank,
236 F.3d 78 (2d Cir. 2001).......................................................................................................... 3
Detroit v. Grinnell Corp.,
495 F.2d 448 (2d Cir. 1974)............................................................................................... passim
Flag Telecom Holdings Ltd. Sec. Litig.,
No. 02-cv-3400, 2010 WL 4537550, at *29 (S.D.N.Y. Nov. 8, 2010)..................................... 19
Fogarazzo v. Lehman Bros., Inc.,
No. 03-cv-5194 (SAS), 2011 WL 671745 (S.D.N.Y. Feb. 23, 2011) ................................ 12, 15
Goldberger v. Integrated Res., Inc.,
209 F.3d 43 (2d Cir. 2000)................................................................................................. passim
Hicks v. Morgan Stanley,
No. 01-cv-10071 (RJH), 2005 WL 2757792 (S.D.N.Y. Oct. 24, 2005) ................................... 11
In re Adelphia Commc’ns Sec. & Deriv. Litig.,
No. 03 MDL 1529 (LMM), 2006 WL 3378705 (S.D.N.Y. Nov. 16, 2006),
aff’d, 272 F. App’x 9 (2d Cir. 2008) ......................................................................................... 18
In re Am. Int'l Group Inc. Sec. Litig.,
No. 04 Civ. 8141 (DAB), 2012 WL 345509 (S.D.N.Y. Feb. 2, 2012) ............................... 19, 23
In re AOL Time Warner, Inc. Sec. & ERISA Litig.,
MDL Docket No. 1500, 02 cv. 5575 (SWK), 2006 WL 903236 (S.D.N.Y. Apr. 6, 2006) ........ 7

In re Bear Stearns Cos. Sec., Deriv. & ERISA Litig.,
909 F. Supp. 2d 259, 271 (S.D.N.Y. 2012)................................................................... 13, 21, 22
In re Bisys Sec. Litig.,
No. 04 Civ. 3840 (JSR), 2007 WL 2049726 (S.D.N.Y. July 16, 2007) ................................... 19
In re Blech Sec. Litig.,
No. 94 Civ. 7696 (RWS), 2002 WL 31720381 (S.D.N.Y. Dec. 4, 2002) .......................... 12, 22
In re Comverse Tech. Inc. Sec. Litig.,
No. 06-CV-1825 (NGG), 2010 WL 2653354 (E.D.N.Y. June 24, 2010) ........................... 12, 18
In re Drexel Burnham Lambert Group,
960 F.2d 285 (2d Cir. 1992)...................................................................................................... 10
In re Giant Interactive Grp., Inc. Sec. Litig.,
279 F.R.D. 151 (S.D.N.Y. 2011) ........................................................................................ 13, 21
In re Global Crossing Sec. & ERISA Litig.,
225 F.R.D. 436 (S.D.N.Y. 2004) ....................................................................................... passim
In re IMAX Sec. Litig.,
283 F.R.D. 178 (S.D.N.Y. 2012) ............................................................................................ 6, 9
In re Indep. Energy Holdings PLC Sec. Litig.,
302 F. Supp. 2d 180 (S.D.N.Y. 2003)....................................................................................... 23
In re IPO Sec. Litig.,
671 F. Supp. 2d 467 (S.D.N.Y. 2009)................................................................................... 9, 18
In re Lehman Bros. Sec. & ERISA Litig.,
No. 1:08-cv-05523 (LAK) (GWG) (S.D.N.Y. Mar. 2012) ....................................................... 21
In re Luxottica Grp. S.p.A. Sec. Litig.,
233 F.R.D. 306 (E.D.N.Y. 2006) ................................................................................................ 4
In re Marsh & McLennan Cos., Inc. Sec.,
No. 04 Civ. 8144, 2009 WL 5178546 (S.D.N.Y. Dec. 23, 2009)..................................... 7, 9, 18
In re Michael Milken & Assocs. Sec. Litig.,
150 F.R.D. 46 (S.D.N.Y. 1993) .................................................................................................. 4
In re PaineWebber Ltd. P'ships Litig.,
171 F.R.D. 104 (S.D.N.Y. 1997) ................................................................................................ 8
In re Priceline.com, Inc. Sec. Litig.,
No. 3:00 cv 1884 (AVC), 2007 WL 2115592 (D. Conn. July 20, 2007).................................. 19

In re Sumitomo Copper Litig,
189 F.R.D. 274 (S.D.N.Y. 1999) ................................................................................................ 4
In re Sumitomo Copper Litig.,
74 F. Supp. 2d 393 (S.D.N.Y. 1999)......................................................................................... 16
In re Telik Inc. Sec. Litig.,
576 F. Supp. 2d 570 (S.D.N.Y. 2008)............................................................................. 9, 16, 20
In re Union Carbide Corp. Cons. Prods. Bus. Sec. Litig.,
724 F. Supp. 160 (S.D.N.Y. 1989)............................................................................................ 20
In re Veeco Instruments Inc. Sec. Litig.,
No. 05 MDL 01695(CM), 2007 WL 4115808 (S.D.N.Y. Nov. 7, 2007) ........................... 11, 18
In re WorldCom Inc., Sec. Litig.,
388 F. Supp. 2d 319 (S.D.N.Y. 2005)....................................................................................... 19
Kurweil v. Philip Morris Cos., Inc.,
No. 94 Civ. 2373 (MBM), 1999 WL 1076105 (S.D.N.Y. Nov. 30, 1999) ............................... 19
LeBlanc-Sternberg v. Fletcher,
143 F.3d 748 (2d Cir. 1998)...................................................................................................... 15
Luciano v. Olsten Corp.,
109 F.3d 111 (2d Cir. 1997)...................................................................................................... 21
Maley v. Del Global Techs. Corp.,
186 F. Supp. 2d 358 (S.D.N.Y. 2002)................................................................................ passim
McReynolds v. Richards-Cantave,
588 F.3d 790 (2d Cir. 2009)........................................................................................................ 3
Merrill Lynch Research Reports Sec. Litig.,
246 F.R.D. 156 (S.D.N.Y. 2012) .............................................................................................. 15
Morrison v. National Australia Bank,
130 S. Ct. 1869 (2010) .......................................................................................................... 5, 16
Newman v. Stein,
464 F.2d 689 (2d Cir. 1972)........................................................................................................ 9
Plumbers’ & Pipefitters’ Local #562 Supplemental Plan & Trust v. J.P. Morgan
Acceptance Corp. I,
No. 08-cv-01713 (PKC) (WDW) (E.D.N.Y. July 24, 2014) .................................................... 21
Rubin v. MF Global, Ltd.,
No. 08 Civ. 2233 (VM) (Nov. 18, 2011) .............................................................................. 4, 13

Short v. Westport National Bank, 3:09cv1955(VLB),
3:09cv1955(VLB), 2014 WL 1316098 (D. Conn. March 31, 2014) ........................................ 17
Stephenson v. Citco Grp. Ltd.,
700 F. Supp. 2d 599 (S.D.N.Y. 2010),...................................................................................... 17
Stephenson v. PricewaterhouseCoopers, LLP,
482 F. App’x 618 (2d Cir. 2012) .............................................................................................. 17
Teachers' Ret. Sys. of La. v. A.C.L.N., Ltd.,
No. 01 Civ. 11814 (MP), 2004 WL 1087261 (S.D.N.Y. May 14, 2004) ................................. 16
Wal-Mart Stores, Inc. v. Visa U.S.A. Inc.,
396 F.3d 96 (2d Cir. 2005).................................................................................................... 3, 12
Velez v. Novartis Pharms. Corp., No. 04 Civ. 09194 (CM),
2010 WL 4877852, at *2 (S.D.N.Y. Nov. 30, 2010) ................................................................ 18
Statutes
15 U.S.C. §78u-4(a)(6) ................................................................................................................. 12
Rules
Fed. R. Civ. P. 23 .......................................................................................................................... 10
Fed. R. Civ. P. 23(a) ..................................................................................................................... 10
Fed. R. Civ. P. 23(b) ..................................................................................................................... 10
Fed. R. Civ. P. 23(e)(2) ................................................................................................................... 3
Fed. R. Civ. P. 23(f) ........................................................................................................................ 7
Fed. R. Civ. P.23(g) ...................................................................................................................... 10

The Representative Plaintiffs,1 on behalf of themselves and the Citco Settlement Class,
respectfully move for final approval of the $125 million proposed Citco Settlement and Plan of
Allocation, and an award of attorneys’ fees of 30% of the Settlement Amount and reimbursement
of expenses of $4,438,320.
I.

INTRODUCTION
The proposed Settlement provides for the Citco Defendants, to pay $125 million in

exchange for a release of all claims asserted against them in this Action. The Settlement
provides a substantial, immediate monetary benefit to the Settlement Class. The Settlement was
reached after the Court urged the parties on a number of occasions to try to resolve the case. The
parties ultimately accepted the recommendation of the mediator – a highly-experienced former
federal judge – but only after a two-year process that included three separate mediation sessions
and intense, arm’s-length negotiations. The Settlement also culminates over six years of hardfought litigation, which included comprehensive legal briefing on the pleadings and class
certification, as well as extensive investigation and discovery efforts by the Plaintiffs. The
Plaintiffs’ factual investigation involved the review of more than nine million pages of
documents, and depositions and interviews of over 100 fact and expert witnesses.
As discussed below and in the accompanying Joint Declaration, the proposed Settlement
is fair, reasonable and adequate and warrants approval by this Court. Plaintiffs and class
members faced significant hurdles to recovering more than the Settlement Amount, including
uncertainty over multiple complex legal issues and the collectability of a substantially greater
judgment from the Citco Defendants.

1

Capitalized terms used herein have the same meaning as in the Stipulation of Settlement (Dkt No. 1398)
and the Joint Declaration of Lead Counsel in Support of the Proposed Citco Partial Settlement and Fee
and Expense Request (“Joint Decl.”) filed herewith.

Lead Counsel respectfully seek attorneys’ fees of 30% of the Settlement Fund and
reimbursement of $4,438,320 in expenses. The requested attorneys’ fees represent less than 70%
of Lead Counsel’s unreimbursed lodestar of some $55.6 million, i.e., net of $13,812,500 in fees
previously awarded by the Court. See Joint Decl. at ¶ 99.
In light of (i) the result obtained for the Settlement Class, (ii) the amount and quality of
work done by Lead Counsel over the past six years, (iii) the risks involved in this litigation, (iv)
the complexity of the Action, and (v) the size of the fee in relation to the Settlement achieved,
the fee request of 30% of the Settlement Amount is fair and reasonable under the standards
applied in this Circuit. The notice distributed to Class Members (“Notice”) advised that Lead
Counsel would seek an award of up to 30% of the Settlement Fund and, to date, no Settlement
Class Member has objected to such an award. The requested expenses also are reasonable, as
they are of the type that are regularly reimbursed by courts in this Circuit, and were necessary for
the effective prosecution of the Action. The Notice advised that Lead Counsel would seek
reimbursement of their expenses not to exceed $5.5 million, and to date no Class member has
objected to the reimbursement of expenses.
II.

STATEMENT OF FACTS
The Joint Declaration details the factual and procedural background and the events that

led to the Settlement, and is incorporated herein by reference.2

2

Plaintiffs also respectfully refer the Court to the prior Joint Declarations in support of the FG Settlement
dated January 31, 2013 (Dkt. No. 1038), and the GlobeOp Settlement dated October 11, 2013 (Dkt No.
1205) for further information concerning Lead Counsel’s litigation efforts.

2

III.

ARGUMENT
A.

The Proposed Partial Settlement Should Be Approved as Fair, Reasonable
and Adequate

The Second Circuit recognizes a “strong judicial policy in favor of settlements,
particularly in the class action context.” Wal-Mart Stores, Inc. v. Visa U.S.A. Inc., 396 F.3d 96,
116 (2d Cir. 2005) (internal quotation marks and citation omitted).
In order to approve a settlement, a district court must find that it is “fair, reasonable, and
adequate.” Fed. R. Civ. P. 23(e)(2). This entails a review of both procedural and substantive
fairness. See, e.g., D'Amato v. Deutsche Bank, 236 F.3d 78, 85-86 (2d Cir. 2001). With respect
to procedural fairness, a proposed settlement is presumed fair, reasonable and adequate if it
culminates from “arm’s-length negotiations between experienced, capable counsel after
meaningful discovery.” McReynolds v. Richards-Cantave, 588 F.3d 790, 803 (2d Cir. 2009)
(internal quotation marks and citation omitted). The claims here were settled after over six years
of intense litigation, including exhaustive discovery. Highly competent counsel appeared on
both sides, and settlement was reached only after extensive negotiations with a highly-respected
mediator, former District Judge Layn Phillips, based on a mediator’s proposal.
In Detroit v. Grinnell Corp., 495 F.2d 448 (2d Cir. 1974), the Court of Appeals held that
the following factors should be considered in evaluating a class action settlement:
(1) the complexity, expense and likely duration of the litigation, (2) the reaction
of the class to the settlement, (3) the stage of the proceedings and the amount of
discovery completed, (4) the risks of establishing liability, (5) the risks of
establishing damages, (6) the risks of maintaining the class action through the
trial, (7) the ability of the defendants to withstand a greater judgment, (8) the
range of reasonableness of the settlement fund in light of the best possible
recovery, [and] (9) the range of reasonableness of the settlement fund to a
possible recovery in light of all the attendant risks of litigation.

3

Id. at 463 (citations omitted). See Charron v. Wiener, 731 F.3d 241, 247 (2d Cir. 2013) (district
court properly utilized the Grinnell factors).
This Court has applied the Grinnell factors to approve settlements, including prior
settlements in this case. See, e.g., Rubin v. MF Global, Ltd., No. 08 Civ. 2233 (VM) (Nov. 18,
2011) (Dkt No. 200, ¶ 6); FG Final Judgment (Dkt. No. 1097, ¶ 7); GlobeOp Final Judgment
(Dkt. No. 1232, ¶ 9); Tr. of hearing on FG Settlement (Nov. 30, 2012 hearing, Dkt. No. 1015).
B.

The Grinnell Factors Support Approval of the Settlement
1.

Complexity, Expense, and Likely Duration of the Action

A class action such as this one involving federal securities law and common law tort and
contract claims is complicated by its very nature. Courts have recognized the “overriding public
interest in favor of settlement” of class actions because it is “common knowledge that class
action suits have a well-deserved reputation as being most complex.” In re Michael Milken &
Assocs. Sec. Litig., 150 F.R.D. 46, 53 n.6 (S.D.N.Y. 1993) (Pollack, J.); In re Sumitomo Copper
Litig, 189 F.R.D. 274, 281 (S.D.N.Y. 1999) (securities class actions are “notably difficult and
notoriously uncertain.”). For this reason, “[c]lass action suits readily lend themselves to
compromise because of the difficulties of proof, the uncertainties of the outcome, and the typical
length of the litigation.” In re Luxottica Grp. S.p.A. Sec. Litig., 233 F.R.D. 306, 310 (E.D.N.Y.
2006) (Weinstein, J.).
Beyond these inherent elements of securities class actions, this case was extraordinarily
complex. Citco was the custodian and administrator of the largest group of feeder funds to the
Madoff Ponzi scheme for over a decade. Citco’s relevant operations were primarily conducted
in the Netherlands and Canada and fact witnesses were largely located overseas. There were
over 90 fact depositions and 22 expert witnesses whose reports totaled over 1900 pages. There

4

were some two million pages of Citco documents alone produced in discovery, and important
documents were in Dutch and had to be translated. The claims against the FG and PwC
Defendants were intertwined with those against Citco, and all defendants were represented by
outstanding law firms.
Moreover, there were a number of novel and unsettled legal issues, such as:


Whether Plaintiffs’ state law claims are barred by the Securities Litigation Uniform
Standards Act of 1995 (“SLUSA”).



Whether Plaintiffs’ federal securities claims are barred by Morrison v. National
Australia Bank, 130 S. Ct. 1869 (2010).



Whether certain of Plaintiffs’ claims are direct claims or are derivative claims that
belong to the Funds.



Whether a class can properly be certified.



The effect on Plaintiffs’ claims of various proceedings involving the liquidations of
BLMIS and of the Fairfield Funds.

See also Jt. Decl., ¶¶ 7-8.
In short, litigating the claims against Citco has been protracted and extremely
challenging. Absent settlement, it would continue to be so through trial and inevitable post-trial
proceedings and appeals, as well as judgment enforcement proceedings.
2.

The Settlement Class’s Response to the Settlement

The reaction of the Settlement Class to the Settlement is a significant factor to be
weighed in considering its adequacy. See Maley v. Del Global Techs. Corp., 186 F. Supp. 2d
358, 362 (S.D.N.Y. 2002) (McMahon, J.). Settlement Class Members have until October 16,
2013 to file objections to the Settlement. As of September 30, 2015, however, no objections
have been filed.

5

3.

The Stage of the Proceedings and the Amount of Information Reviewed
and Analyzed

In considering this factor, “‘the question is whether the parties had adequate information
about their claims,’ such that their counsel can intelligently evaluate the ‘merits of [p]laintiff’s
claims, the strengths of the defenses asserted by [d]efendants, and the value of [p]laintiffs’
causes of action for purposes of settlement.’” In re IMAX Sec. Litig., 283 F.R.D. 178, 190
(S.D.N.Y. 2012) (Buchwald, J.). Here, settlement was reached only after the completion of
extensive factual and expert discovery, which included review of millions of documents, and
over 100 fact and expert depositions.
4.

The Risks of Establishing Liability and Damages

Grinnell holds that, in assessing fairness, reasonableness and adequacy, courts should
consider such factors as the “risks of establishing liability” and “the risks of establishing
damages.” 495 F.2d at 463. While Plaintiffs and Plaintiffs’ Lead Counsel believe that the
claims asserted against the Citco Defendants are strong, there are risks inherent in a jury trial,
and legal issues which even if resolved favorably before the District Court, are subject to further
review on appeal.
All seven Representative Plaintiffs and Lead Counsel, who have extensive experience in
securities and complex shareholder class-action litigation, believe that the Settlement provides
the Settlement Class with significant and certain benefits now and eliminates the risk of years of
further uncertain litigation, including final disposition of the class certification order, a contested
trial and likely appeals.
In addition, Lead Counsel considered that, by reducing the number of defendants and
defense counsel in the litigation, and the factual and legal issues in dispute, the Settlement may
have a beneficial effect on Plaintiffs’ ability to successfully litigate the remaining claims against
6

the PwC Defendants, who are believed to have substantial assets that may through settlement or
judgment provide significant additional compensation to the Settlement Class.
5.

The Risk of Maintaining the Case as a Class Action

Plaintiffs believe the March 3, 2015 class certification order entered by the Court after
remand from the Court of Appeals is appropriate and likely to be sustained. See 306 F.R.D. 13.
Plaintiffs recognize, however, that risks are presented by Citco’s pending Petition for Rule 23(f)
review (now held in abeyance pending the requested approval of the Settlement). The
Settlement avoids any uncertainty with respect to whether a litigation class may be maintained
against the Citco Defendants. Such risk and uncertainty weigh in favor of the Settlement. See,
e.g., In re Marsh & McLennan Cos., Inc. Sec., No. 04 Civ. 8144, 2009 WL 5178546, at * 6
(S.D.N.Y. Dec. 23, 2009) (“Although Defendants have stipulated to certification of the Class for
purposes of the Settlement, there would have been no such stipulation had Lead Plaintiffs
brought this case to trial.”); In re AOL Time Warner, Inc. Sec. & ERISA Litig., MDL Docket No.
1500, 02 cv. 5575 (SWK), 2006 WL 903236, at *12 (S.D.N.Y. Apr. 6, 2006) (risk of plaintiffs’
not succeeding in certifying class supported approval of settlement); In re Global Crossing Sec.
& ERISA Litig., 225 F.R.D. 436, 460 (S.D.N.Y. 2004) (same).
6.

The Amount of the Settlement

The last three substantive factors courts consider are (i) the ability of the defendants to
withstand a greater judgment; (ii) the range of reasonableness of the settlement fund in light of
the best possible recovery; and (iii) litigation risks. Grinnell, 495 F.2d at 463.
Plaintiffs and Lead Counsel carefully considered the many risks of continued litigation,
some of which are noted above and in the Joint Declaration, as well as the potential difficulties in
collecting a substantially larger judgment. Recovering on a billion dollar-plus judgment would

7

require domesticating the judgment in one or more foreign countries and then finding and
executing on sufficient assets. Because the Citco Defendants’ assets may be limited and subject
to oversight by foreign banking regulators, there is substantial likelihood of difficulty in
collecting through potentially years more of enforcement proceedings, even if a trial in this
Action, and subsequent appeals, were all successful.
Approximately $3.3 billion in claims were filed in the $50.25 million FG Settlement
using the same class definition as the Settlement Class here. On that basis, the Settlement
proration for the Settlement Class would be approximately 3.8%, prior to fees and expenses.
See, e.g., Jt. Decl. ¶ 14.
In addition to amounts that they would receive under the Citco Settlement, all Settlement
Class Members received distributions from the $50.25 million FG Settlement, and investors in
the domestic funds received distributions from the $5 million GlobeOp Settlement. Class
Members have already received or are likely to receive additional cash distributions from
liquidation or bankruptcy proceedings involving the Funds,3 distributions from the Madoff
Victim Fund, and from continued prosecution of this action against PwC. See Jt. Decl. ¶¶ 14,
74-76.
Under Grinnell, the district court is asked to “‘consider and weigh the nature of the claim,
the possible defenses, the situation of the parties, and the exercise of business judgment in
determining whether the proposed settlement is reasonable.’” Id. at 462-3 (citation omitted).
The determination of a “reasonable” settlement “is not susceptible of a mathematical equation
yielding a particularized sum.” In re PaineWebber Ltd. P’ships Litig., 171 F.R.D. 104, 130

3

Liquidation proceedings involving Sentry, Sigma, and Lambda are pending in the British Virgin Islands
(Claim No. 0074/2009) (Lambda), Claim No. 0136/2009 (Sentry), Claim No. 0139/2009 (Sigma).
Bankruptcy proceedings involving Greenwich Sentry and Greenwich Sentry Partners were filed in the
Bankruptcy Court for the Southern District of New York (Case No. 10-16229 (BRL)).

8

(S.D.N.Y. 1997) (Stein, J.) (citation and internal quotation marks omitted). Instead, “in any case
there is a range of reasonableness with respect to a settlement.” Newman v. Stein, 464 F.2d 689,
693 (2d Cir. 1972).
“‘The fact that a proposed settlement may only amount to a fraction of the potential
recovery does not, in and of itself, mean that the proposed settlement is grossly inadequate and
should be disapproved.’” In re Marsh & McLennan Cos., 2009 WL 5178546, at *7, quoting
Grinnell, 495 F.2d at 455 & n. 2 (“In fact there is no reason, at least in theory, why a satisfactory
settlement could not amount to a hundredth or even a thousandth part of a single percent of the
potential recovery.”). See, e.g., In re IPO Sec. Litig., 671 F. Supp. 2d 467, 483 (S.D.N.Y. 2009)
(approving settlement based on a 2% recovery). The proposed settlement recovery here,
notwithstanding the multi-billion dollar class losses and many unique and novel legal issues,
when combined with the FG Settlement, would be about 5.4% of the FG claims amount; this
proration is several times greater than the median recovery in comparable cases. See Jt. Decl.,
¶¶ 87-88 (referencing statistics showing that during the past 15 years, the median recovery in
securities class actions with estimated damages between $1 billion and $5 billion was 1.1%).
C.

The Plan Of Allocation Is Fair, Reasonable And Adequate And Warrants
Approval

“‘To warrant approval, the plan of allocation must also meet the standards by which the .
. . . settlement was scrutinized – namely, it must be fair and adequate.’” Maley, 186 F. Supp. 2d
at 367 (citation omitted). “‘When formulated by competent and experienced counsel,’ a plan for
allocation of net settlement proceeds 'need have only a reasonable, rational basis.’” In re IMAX
Sec. Litig., 283 F.R.D. at 192, citing In re Telik Inc. Sec. Litig., 576 F. Supp. 2d 570, 580
(S.D.N.Y. 2008) (quoting In re Global Crossing, 225 F.R.D. at 462). Here the Plan, contained in
the Notice, includes a Net Loss formula that is intended to equitably apportion the Net
9

Settlement Fund among Settlement Class Members, based on each Class Member’s Net Loss.
This Court previously approved an identical allocation plan in the FG Settlement as being fair
and reasonable, and approved distribution of the FG Net Settlement Fund according to the terms
of that Stipulation and Plan of Allocation. See Dkt Nos. 1097, 1345.
D.

The Court Should Finally Certify The Settlement Class

The Court’s Preliminary Approval Order conditionally certified the Settlement Class
pursuant to the Stipulation. Dkt No. 1042. Because this Action fully satisfies the relevant
provisions of Rule 23, the Court should fully and finally certify the Settlement Class for
settlement purposes.
Rule 23(a) imposes four threshold requirements on a putative class action: numerosity,
commonality, typicality, and adequacy of representation. In addition, Rule 23(b) requires that:
(i) common questions must predominate over any questions affecting only individual members;
and (ii) class resolution must be superior to other available methods for the fair and efficient
adjudication of the controversy.
Although the Court, in the litigated class, excluded certain countries from the definition
of the Class to avoid prejudice to the defendants if those countries did not recognize the
preclusive effect of a litigated U.S. judgment (see 306 F.R.D. 134), that rationale does not apply
to the Settlement Class, where each claimant will be required to sign a release to participate in
the Settlement and where the Citco Defendants have consented to certification.
Rule 23(g) provides that class counsel “must fairly and adequately represent the interests
of the class.” Class counsel must be “qualified, experienced and generally able to conduct the
litigation.” See In re Drexel Burnham Lambert Group, 960 F.2d 285, 291 (2d Cir. 1992). Lead

10

Counsel are highly qualified in conducting class action and complex litigation and have
effectively prosecuted this Action, achieving a substantial benefit for the Settlement Class.
Under similar circumstances, this Court has previously certified settlement classes and
affirmed the appointment of Lead Counsel. See Dkt. No. 1097, ¶¶ 5-6; and 1232, ¶¶ 5-6.
E.

Lead Counsel’s Petition for an Award of Attorneys’ Fees Is Reasonable and
Should Be Granted
1.

Legal Standard

The Supreme Court has long recognized that “a lawyer who recovers a common fund for
the benefit of persons other than himself or his client is entitled to a reasonable attorneys’ fee
from the fund as a whole.” Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980); see
Goldberger v. Integrated Res., Inc., 209 F.3d 43, 47 (2d Cir. 2000). The purpose of the common
fund doctrine is to fairly and adequately compensate class counsel for services rendered and to
ensure that all class members contribute equally towards the costs associated with litigation
pursued on their behalf. See Goldberger, 209 F.3d at 47; In re Veeco Instruments Inc. Sec. Litig.,
No. 05 MDL 01695(CM), 2007 WL 4115808, at *2 (S.D.N.Y. Nov. 7, 2007) (McMahon, J.). In
addition to providing just compensation, awards of fair attorneys’ fees from a common fund
serve to encourage skilled counsel to represent those who seek redress for damages suffered by
entire classes of persons, and to discourage future alleged misconduct of a similar nature. See,
e.g., Hicks v. Morgan Stanley, No. 01-cv-10071 (RJH), 2005 WL 2757792, at *9 (S.D.N.Y. Oct.
24, 2005) (Holwell, J.) (“To make certain that the public is represented by talented and
experienced trial counsel, the remuneration should be both fair and rewarding.”) (citation
omitted); Maley v. Del Global Techs. Corp., 186 F. Supp. 2d 358, 369 (S.D.N.Y. 2002)
(McMahon, J.) (“Courts recognize that such awards serve the dual purposes of encouraging

11

representatives to seek redress for injuries caused to public investors and discouraging future
misconduct of a similar nature.”).
2.

The Requested Fee is Fair Under the Percentage-of-Recovery Method

Although the lodestar method and the percentage method are appropriate for setting a
reasonable fee in a class action, the Supreme Court has suggested that in common fund cases, the
fee should be determined on a percentage-of-recovery basis. See Blum v. Stenson, 465 U.S. 886,
900 n.16 (1984) (“[U]nder the ‘common fund doctrine,’ where a reasonable fee is based on a
percentage of the fund bestowed on the class . . .”) (citation omitted). District courts in this
Circuit have favored awarding fees according to the percentage method because it “‘directly
aligns the interests of the class and its counsel and provides a powerful incentive for the efficient
prosecution and early resolution of litigation.’” Wal-Mart Stores, Inc. v. Visa U.S.A. Inc., 396
F.3d 96, 122 (2d Cir. 2005) (citation omitted). Indeed, the “trend in this Circuit is toward the
percentage method.” Id.; Fogarazzo v. Lehman Bros., Inc., No. 03-cv-5194 (SAS), 2011 WL
671745, at *2 (S.D.N.Y. Feb. 23, 2011) (Scheindlin, J.); In re Comverse Tech. Inc. Sec. Litig.,
No. 06-CV-1825 (NGG), 2010 WL 2653354, at *2 (E.D.N.Y. June 24, 2010) (Garaufis, J.). In
re Blech Sec. Litig., No. 94 Civ. 7696 (RWS), 2002 WL 31720381, at *1 (S.D.N.Y. Dec. 4,
2002) (Sweet, J.) (“This court … continues to find that the percentage of the fund method is
more appropriate than the lodestar method for determining attorney’s fees in common fund
cases.”). See Private Securities Litigation Reform Act of 1995, 15 U.S.C. §78u-4(a)(6) (“Total
attorneys’ fees and expenses awarded by the court to counsel for the plaintiff class shall not
exceed a reasonable percentage of the amount of any damages and prejudgment interest actually
paid to the class.”).

12

This Court has applied the percentage-of-recovery method in awarding attorneys’ fees in
common fund cases, including earlier settlements in this action. See FG Final Judgment and
Order Awarding Fees and Expenses (Dkt No. 1099); GlobeOp Final Judgment and Order
Awarding Fees (Dkt No. 1233); Anwar v. Fairfield Greenwich Ltd (Da Silva Ferreira v. EFG
Cap. Int’l Corp., 11-cv-813); No. 09-cv-118 (VM), 2012 WL 1981505 (S.D.N.Y. June 1, 2012);
Rubin v. MF Global, Ltd. et al., 08-cv-2233 (VM), Order dated Nov. 18, 2011 (Dkt No. 198).
3.

The Requested Fee is Supported by the Second Circuit’s Goldberger
Factors

“[T]he fees awarded in common fund cases may not exceed what is ‘reasonable’ under
the circumstances.” In re Bear Stearns Cos. Sec., Deriv. & ERISA Litig., 909 F. Supp. 2d 259,
271 (S.D.N.Y. 2012), citing In re Giant Interactive Grp., Inc. Sec. Litig., 279 F.R.D. 151, 163
(S.D.N.Y. 2011) (quoting Goldberger, 209 F.3d at 47 (2d Cir. 2000)) (footnote and quotation
marks omitted). In determining reasonable attorneys’ fees, district courts are guided by the
factors first articulated by the Second Circuit in Detroit v. Grinnell Corp., 495 F.2d 448 (2d Cir.
1974). As summarized more recently in Goldberger, these factors include:
(1) the time and labor expended by counsel; (2) the magnitude and complexities of the
litigation; (3) the risk of the litigation . . . ; (4) the quality of representation; (5) the
requested fee in relation to the settlement; and (6) public policy considerations.
Goldberger, 209 F.3d at 50. As set forth below and in the Joint Declaration, application of these
criteria to the facts now before this Court shows that Lead Counsel’s fee request is reasonable
and warranted.
a.

Time and Labor Expended by Counsel

As detailed in the declarations submitted herewith, Lead Counsel have devoted
substantial time and effort to the prosecution this action and to the Settlement on terms favorable
to the Settlement Class. See Joint Decl. and Exhs. A-C.
13

Agreement to the substantive terms of the Settlement came after more than six years of
litigation in this exceedingly complex and difficult case. During this time, Lead Counsel have,
inter alia: (i) conducted an extensive investigation of public and non-public information with
respect to the Class’ claims; (ii) prepared initial complaints, a Consolidated Amended Complaint,
and the subsequent Second Consolidated Amended Complaint (“SCAC”), which were the
subject of extensive briefing; (iii) overcome in large part the Citco Defendants’ motions to
dismiss the SCAC; (iv) conducted extensive discovery including serving and responding to
demands, including third party subpoenas, and obtaining and producing documents; Plaintiffs
produced approximately 75,000 pages of documents and reviewed over nine million pages; (v)
responded to detailed interrogatories served on the Representative Plaintiffs and some 20
additional named plaintiffs, (vi) conducted over one hundred fact and expert depositions of
persons affiliated with defendants and non-parties and defended depositions of Class
Representatives and Named Plaintiffs; (vii) litigated and secured two orders certifying the Class;
(viii) briefed and defeated three motions by Citco to reargue the denial of dismissal of the SCAC;
(ix) participated with defense counsel in dozens of meet and confer sessions with respect to
document, deposition, and other aspects of merits discovery; (x) prepared letter-briefs and argued
to Magistrate Judges Katz and Maas multiple discovery disputes, including securing documents
and continued deposition testimony over Citco’s objections based on privilege; (xi) retained and
consulted with experts on investment fund auditing and administration; (xii) protected the
interests of putative class members outside the confines of this Action by, among other things,
initiating proceedings for the liquidation of Fairfield Sentry Fund in the British Virgin Islands,
succeeding in a motion before the High Court of the Eastern Caribbean to appoint a Liquidator
for Sentry, and actively participating in the liquidation process through the Sentry Liquidation

14

Committee; and (xiii) otherwise vigorously represented the interests of putative class members in
this extraordinarily complex dispute.
In total, Lead Counsel have expended over 107,000 hours of attorney and paralegal time
in prosecuting the Action through July 31, 2015, resulting in a combined “lodestar” amount of
$69,376,217 at Lead Counsel’s current regular billing rates. See Joint Decl. ¶ 97-99 and Exhs.
A-C. As the Second Circuit explained in LeBlanc-Sternberg v. Fletcher, 143 F.3d 748, 764 (2d
Cir. 1998), “current rates, rather than historical rates, should be applied in order to compensate
for the delay in payment.”
With respect to the hours worked, Lead Counsel submit that the substantial time devoted
to litigating the claims against the Citco Defendants reflects the tremendous effort needed to
prosecute those claims and to bring them to a favorable resolution. There are a number of core
attorneys on the case who have devoted large amounts of their time to the litigation in order to
ensure continuity and to build on their knowledge base.
As further supported by the lodestar cross-check, Lead Counsel submit that the first
Goldberger factor weighs strongly in favor of the requested attorneys’ fee.
b.

Magnitude and Complexities of the Litigation

Courts have long recognized that securities class actions are notoriously complex and
difficult to prosecute. See, e.g., Fogarazzo, 2011 WL 671745, at *3 (“securities actions are
highly complex.”) (citation omitted); Merrill Lynch Research Reports Sec. Litig., 246 F.R.D.
156, 172 (S.D.N.Y. 2012) (“Securities class litigation ‘is notably difficult and notoriously
uncertain.’”) (citation omitted).
Although the Madoff Ponzi scheme was a major news event, the facts of this case were
largely separate from Madoff and required vast amounts of investigation and analysis.
Moreover, Lead Counsel had to navigate a minefield of legal issues, any of which could have
15

defeated or severely limited the Plaintiffs’ claims or damages. Among those legal issues were
the application of the Martin Act, where we persuaded the Court to reach a precedent-setting
decision that was eventually cited with approval by the New York Court of Appeals; SLUSA;
Morrison; Credit Alliance Corp. v. Arthur Andersen & Co., 65 N.Y.2d 536, 493 N.Y.S.2d 435
(1985); a number of foreign law issues, and many others.
Moreover, efforts to resolve the claims that ultimately led to the Settlement were
protracted and required tremendous skill and tenacity on the part of Lead Counsel, who were
fully prepared to litigate the settled claims to judgment. Considering the magnitude and
complexity of this case, the 30% fee request is entirely warranted.
c.

Risks of the Litigation

The Second Circuit has identified “‘the risk of success as “perhaps the foremost” factor to
be considered in determining’” a reasonable award of attorneys’ fees.” In re Global Crossing
Sec. & ERISA Litig., 225 F.R.D. 436, 467 (S.D.N.Y. 2004) (quoting Goldberger, 209 F.3d at 54);
In re Telik, Inc. Sec. Litig., 576 F. Supp. 2d at 592 (“Courts have repeatedly recognized that ‘the
risk of the litigation’ is a pivotal factor in assessing the appropriate attorneys’ fees to award to
plaintiffs’ counsel in class actions.”). Courts continue to recognize that “[l]ittle about litigation
is risk-free, and class actions confront even more substantial risks than other forms of litigation.”
Teachers’ Ret. Sys. of La. v. A.C.L.N., Ltd., No. 01 Civ. 11814 (MP), 2004 WL 1087261, at *3
(S.D.N.Y. May 14, 2004) (Pollack, J.).
Although Representative Plaintiffs and Lead Counsel believe that the claims against the
Citco Defendants are strong, the contingency risk also is significant and thus fully supports the
requested fee. Lead Counsel undertook this action on a strictly contingent-fee basis, and
prosecuted the claims with no guarantee of compensation or recovery of any litigation expenses.
See In re Sumitomo Copper Litig., 74 F. Supp. 2d 393, 399 (S.D.N.Y. 1999) (Pollack, J.) (class
16

counsel not only undertook risks of litigation, but advanced its own funds and financed the
litigation). As discussed in the Joint Declaration, Plaintiffs faced numerous challenges. The
Citco Defendants vigorously maintain that they were not responsible for either intentional or
negligent misconduct giving rise to Plaintiffs’ losses and that since other professionals and even
the SEC did not detect the fraud, they, too, should not be liable. Other actions against Citco or
parties similarly situated who provided administrative and custody services have been
unsuccessful. See Short v. Westport National Bank, 3:09cv1955(VLB), WL 1316098 (D. Conn.
March 31, 2014) (denying motion for new trial against custodian of assets purportedly invested
by BLMIS on behalf of plaintiffs; jury found that the plaintiff had failed to prove proximate
cause); Stephenson v. Citco Grp. Ltd., 700 F. Supp. 2d 599 (S.D.N.Y. 2010), aff’d on other
grounds sub nom. Stephenson v. PricewaterhouseCoopers, LLP, 482 F. App’x 618 (2d Cir.
2012) (claims against Citco should have been pled as derivative claims).
In addition to the inherent risks in a jury trial and the many novel and difficult legal
issues presented by this case which might lead to reversal on appeal, there are foreseeable
obstacles to collection of a large judgment against Citco’s overseas assets.
d.

Quality of Representation

Lead Counsel respectfully submit that the quality of their representation supports the
reasonableness of the requested fee. Lead Counsel have many years of experience in complex
federal civil litigation, particularly securities litigation and other class actions. See Declarations
attached as Exhibits B, C, and D to Plaintiffs’ Memorandum of Law in Support of Motion for
Consolidation of All Actions and Appointment of Interim Co-Lead Counsel dated January 27,
2009, Dkt. No. 22.
The Settlement represents a favorable result for the Settlement Class in the face of
difficult legal and factual circumstances and can be attributed to the diligence, determination,
17

and hard work of Lead Counsel. See Veeco, 2007 WL 4115808, at *7 (“Plaintiffs’ Counsel’s
skill and expertise contribute to the favorable settlement for the class”) (citation and internal
quotation marks omitted).
The quality of opposing counsel is also significant. See In re Adelphia Commc’ns Sec. &
Deriv. Litig., No. 03 MDL 1529 (LMM), 2006 WL 3378705, at *3 (S.D.N.Y. Nov. 16, 2006),
aff’d, 272 F. App’x 9 (2d Cir. 2008) (“The fact that the settlements were obtained from
defendants represented by formidable opposing counsel from some of the best defense firms in
the country also evidences the high quality of lead counsels’ work.”) (citation and internal
quotation marks omitted). The attorneys from the Paul Weiss firm representing the Citco
Defendants are among the most respected and accomplished litigators in the country and were
sure to continue their vigorous and comprehensive defense through the remainder of the case.
e.

The Requested Fee in Relation to the Settlement

The fifth Goldberger factor, the relation of the requested fee to the Settlements, also
supports the requested attorneys’ fee. “When determining whether a fee request is reasonable in
relation to a settlement amount, ‘the court compares the fee application to fees awarded in
similar securities class-action settlements of comparable value.’” Comverse, 2010 WL 2653354,
at *3 (quoting In re Marsh & McLennan Co. Inc. Sec. Litig., 2009 WL 5178546, at *19). As
discussed above, the Settlement provides the Settlement Class with a cash benefit that was
achieved despite many obstacles and risks. Fees in the amount of 30% of settlements of this size
or above are within the range of fees that have regularly been awarded by the courts, particularly
where, as here, the requested fee is significantly less than the lodestar amount. See, e.g., Velez v.
Novartis Pharms. Corp., No. 04 Civ. 09194 (CM), 2010 WL 4877852, at *2 (S.D.N.Y. Nov. 30,
2010) (“District courts in the Second Circuit routinely award attorneys’ fees that are 30 percent
or greater.”); In re IPO Sec. Litig., 671 F. Supp. 2d 467, 516 (S.D.N.Y. 2009) (awarding fee of
18

one-third of $510 million settlement fund; adjusted lodestar multiple of .84); In re Priceline.com,
Inc. Sec. Litig., No. 3:00 cv 1884 (AVC), 2007 WL 2115592, at *4-5 (D. Conn. July 20, 2007)
(awarding fees of 30% of $80 million fund; 1.98 lodestar multiple); In re Bisys Sec. Litig., No.
04 Civ. 3840 (JSR), 2007 WL 2049726, at *3 (S.D.N.Y. July 16, 2007) (awarding 30% of $65.9
million settlement fund; lodestar multiple of 2.99); Kurweil v. Philip Morris Cos., Inc., No. 94
Civ. 2373 (MBM), 1999 WL 1076105 (S.D.N.Y. Nov. 30, 1999) (awarding 30% of $123.8
million settlement fund; lodestar multiple of 2.46).
f.

Public Policy Considerations

“Public policy concerns favor the award of reasonable attorneys’ fees in class action
securities litigation.” Flag Telecom Holdings Ltd. Sec. Litig., No. 02-cv-3400, 2010 WL
4537550, at *29 (S.D.N.Y. Nov. 8, 2010). Specifically, “[i]n order to attract well-qualified
plaintiffs’ counsel who are able to take a case to trial, and who defendants understand are able
and willing to do so, it is necessary to provide appropriate financial incentives,” quoting In re
WorldCom Inc., Sec. Litig., 388 F. Supp. 2d 319, 359 (S.D.N.Y. 2005). Moreover, attorneys’
fees must be sufficient “‘to encourage plaintiffs’ counsel to bring securities class actions that
supplement the efforts of the SEC.’” In re Am. Int’l Group Inc. Sec. Litig., No. 04 Civ. 8141
(DAB), 2012 WL 345509, at *5 (S.D.N.Y. Feb. 2, 2012) (citation omitted); Maley, 186 F. Supp.
2d at 373 (“In considering an award of attorney’s fees, the public policy of vigorously enforcing
the federal securities laws must be considered.”).
As a practical matter, lawsuits such as this one can be maintained only if competent
counsel can be retained to prosecute them. This will occur if courts award reasonable and
adequate compensation for such services where successful results are achieved, often after years
of litigation. As Judge Brieant noted:

19

A large segment of the public might be denied a remedy for violations of the securities
laws if contingent fees awarded by the courts did not fairly compensate counsel for the
services provided and the risks undertaken.
In re Union Carbide Corp. Cons. Prods. Bus. Sec. Litig., 724 F. Supp. 160, 169 (S.D.N.Y. 1989).
g.

Reaction of the Settlement Class to the Fee Request

“The reaction by members of the Class,” while not one of the formal Goldberger factors,
“is entitled to great weight by the Court.” Maley, 186 F. Supp. 2d at 374 (citation omitted); see
In re Telik, Inc. Sec. Litig., 576 F. Supp. 2d at 594 (“That only one objection to the fee request
was received is powerful evidence that the requested fee is fair and reasonable.”) (citation
omitted).
Pursuant to this Court’s Preliminary Approval Order, Lead Counsel caused more than
4,300 copies of the Notice of Pendency of Class Action and Proposed Settlement and Proof of
Claim forms (“Proof of Claim”) to be disseminated to potential Settlement Class Members.
See Rabe Aff. ¶ 10. A Summary Notice of Pendency of Class Action and Proposed Settlements
with FGG Defendants and Motion for Attorneys’ Fees and Expenses regarding the Settlements
and the Settlement Hearing was published in the international editions of The Wall Street Journal
on September 9-10, 2015, and transmitted for worldwide distribution over PR Newswire on
September 9, 2015. Id. ¶ 11. The Notice and Proof of Claim were also posted on the Claims
Administrator’s website dedicated to this Action for easy downloading by potential claimants.
Id. ¶¶ 12-13. The Notice advised Settlement Class Members of the procedures and deadlines for
objecting to any aspect of the Settlements. See Rabe Aff. Ex. A. It advised that Lead Counsel
intended to seek an award of attorneys’ fees that would not exceed 30% of the Settlement Fund,
and reimbursement of expenses not to exceed $5,500,000. Id. at pg. 5.

20

Although the deadline to object to the fee request is not until October 16, 2015, to date no
objection to the fee or expense requests has been submitted. If there are objections, Lead
Counsel will address them in reply papers.
h.

The Requested Fee is Reasonable Under the Lodestar “CrossCheck”

“‘The Second Circuit has authorized district courts to employ a percentage-of-the-fund
method when awarding fees in common fund cases, [and] has encouraged district courts to crosscheck the percentage fee against counsel’s ‘lodestar’ amount of hourly rate multiplied by hours
spent.’” In re Bear Stearns Cos., 909 F. Supp. 2d at 271, quoting Giant Interactive Grp., 279
F.R.D. at 163 (quoting Goldberger, 209 F.3d at 47) (internal citation and quotation marks
omitted). The lodestar is calculated by multiplying the number of hours expended on the
litigation by a particular timekeeper times his or her current hourly rate. The hourly billing rate
to be applied is the attorney’s normal hourly billing rate, so long as that rate conforms to the
billing rate charged by attorneys with similar experience in the community where the counsel
practices, i.e., the “market rate.” See Blum, 465 U.S. at 895-6; Luciano v. Olsten Corp., 109 F.3d
111, 115 (2d Cir. 1997) (“The ‘lodestar’ figure should be ‘in line with those rates prevailing in
the community for similar services by lawyers of reasonably comparable skill, experience, and
reputation.’”) (quoting Blum, 465 U.S. at 896 n.11).
With respect to billing rates, the standard hourly rates charged by Lead Counsel used for
calculating the lodestar range from $435 to $1150 for partners, $410 to $950 for counsel, and
$395 to $720 for associates. See Joint Decl. Exhs. A-C. Similar or higher billing rates have been
approved by other courts in this District. See, e.g., In re Lehman Bros. Sec. & ERISA Litig., No.
1:08-cv-05523 (LAK) (GWG) (S.D.N.Y. Mar. 2012) (approving billing rates up to $975 per
hour); In re Wachovia Sec. Litig., No. 09-civ. 6351 (RJS) (S.D.N.Y.) (same); see also Plumbers’
21

& Pipefitters’ Local #562 Supplemental Plan & Trust v. J.P. Morgan Acceptance Corp. I, No.
08-cv-01713 (PKC) (WDW) (E.D.N.Y. July 24, 2014) (same).
As noted, the total lodestar of Lead Counsel related to prosecuting the claims against
Defendants, derived by multiplying their hours by each firm’s current hourly rates, is
$69,376,217. This represents more than 107,000 hours spent by attorneys, paralegals,
investigators, and professional analysts furthering the prosecution of the claims. See Joint Decl.,
Exhs. A-C.4 Lead Counsel compiled these hours from contemporaneous time records. Because
attorneys’ fees totaling $13,812,500 were previously awarded from the FG and GlobeOp
Settlements, Lead Counsel’s unreimbursed lodestar through July 31, 2015 is $55,563,717.
Here, the lodestar “cross-check” fully supports the requested percentage fee. The
requested 30% fee (or $37,500,000) divided by Lead Counsel’s total unreimbursed lodestar
(excluding the lodestar of other Plaintiffs’ counsel), yields a fee equivalent to 67.5% of Lead
Counsel’s lodestar. The reasonableness of the requested fee is therefore confirmed by the
“negative” lodestar multiplier. In re Bear Stearns Co. Inc. Sec. Litig., 909 F. Supp. 2d at 271
(citing In re Blech Sec. Litig., No. 94 Civ. 7696(RWS), 2002 WL 31720381, at *1 (S.D.N.Y.
Dec.4, 2002)) (a lodestar cross-check that results in a negative multiplier is “a strong indication
of the reasonableness of the fee application.”). Lead Counsel recognize that a portion of the
work on which the lodestar calculation is based will be useful in pursuing the claims against the
PwC Defendants. If those claims are successful, whether through litigation or settlement,
Counsel anticipate applying for additional fee award(s) which may increase the lodestar multiple.

4

In addition, the three non-lead counsel, who have assisted in the prosecution of this action, recorded
over 7,800 hours, comprising a lodestar of in excess of $3,900,000 with respect to this Action.

22

IV.

PLAINTIFFS’ COUNSEL’S REQUEST FOR REIMBURSEMENT OF
EXPENSES SHOULD BE GRANTED
In addition to a reasonable attorneys’ fee, Plaintiff’s Counsel respectfully seek

reimbursement of $4,438,320 for litigation expenses reasonably incurred in connection with
prosecuting the claims against Defendants. Joint Decl., Exhs. A-D. It is well-established that
such expenses are properly recovered by counsel. See, e.g., Am. Int’l Grp., 2012 WL 345509, at
*6 (“‘Attorneys may be compensated for reasonable out-of-pocket expenses incurred and
customarily charged to their clients, as long as they were “incidental and necessary to the
representation” of those clients.’”) (citing In re Indep. Energy Holdings PLC Sec. Litig., 302 F.
Supp. 2d 180, 183 n.3 (S.D.N.Y. 2003) (Scheindlin, J.)).
The declarations submitted by Lead Counsel itemize the categories of expenses incurred.
See Joint Decl., Exhs. A-C.5 Lead Counsel submit that these expenses were reasonable and
necessary to prosecuting the claims and achieving the Settlement. Lead Counsel further submit
that these expenses are the type for which “the paying, arms’ length market” reimburses
attorneys and should therefore be reimbursed from the Settlement Fund. See Global Crossing,
225 F.R.D. at 468. The Notice advised potential Settlement Class Members that Lead Counsel
would seek reimbursement of expenses of up to $5,500,000.
V.

CONCLUSION
For all of the foregoing reasons, Plaintiffs respectfully request that the Court approve the

Settlement and enter the Final Judgment annexed as Exhibit B to the Stipulation filed August 12,
2015 (ECF No. 1398-5), subject to any modifications that may be requested by the Settling

5

Excluded from these calculations are over $1.4 million in accounting expert expenses that are directly
related to the prosecution of this Action against the PwC Defendants, such as fees paid to consultants and
experts with respect to the claims against PwC.

23

Parties in connection with the hearing before the Court scheduled for November 20, 2015, and
including attorneys’ fees and expense reimbursement as requested herein.

Dated: October 1, 2015
Respectfully submitted,
By:
Robert C. Finkel
WOLF POPPER LLP
845 Third Avenue
New York, NY 10022
Telephone: [phone]
Facsimile: 212.486.2093

Christopher Lovell
Victor E. Stewart
LOVELL STEWART HALEBIAN JACOBSON LLP
61 Broadway, Suite 501
New York, NY 10006
Telephone: [phone]

/s/ David A. Barrett
David A. Barrett
Howard L. Vickery, II
BOIES, SCHILLER & FLEXNER LLP
575 Lexington Avenue
New York, NY 10022
Telephone: [phone]
Facsimile: [phone]
Stuart H. Singer
Carlos Sires
Sashi Bach Boruchow
BOIES, SCHILLER & FLEXNER LLP
401 East Las Olas Boulevard, #1200
Ft. Lauderdale, Florida 33301
Telephone: [phone]
Co-Lead Counsel for Plaintiffs

24