Vaccaro v. New Source Energy Partners L.P. et al

Filing 73

OPINION AND ORDER re: 59 MOTION for Settlement, filed by William Slater, Enrico Vaccaro, F. Gregory Deneen, 61 MOTION for Attorney Fees, filed by William Slater, Enrico Vaccaro, F. Gregory Deneen. The Court GRANTED both Motions at the Settlement Fairness Hearing held on November 20, 2017 for reasons stated at the hearing and elaborated more fully herein...For the foregoing reasons, the Court GRANTED in full the Approval Motion and the Attorneys' Fees Motion. This resolves ECF Nos. 59 and 61, and as further set forth herein. (Signed by Judge Kimba M. Wood on 12/14/2017) (ras)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

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ENRICO VACCARO, F.GREGORY
DENEEN, and WILLIAM SLATER, on
behalf of themselves and all others similarly
situated,
Plaintiffs,

USDSSDNY
DOCUMENT
ELECTRONICALLY FILED
DOC#:~~~~-.-~:-­

DATE FILED:

{-:=l.

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I f1

OPINION AND ORDER

Class Action No. 15 CV 8954 (KMW)

-againstNEW SOURCE ENERGY PARTNERS L.P.,
KRISTIAN B. KOS, TERRY L. TOOLE,
DIKRAN TOURIAN, RICHARD D.
FINLEY, V. BRUCE THOMPSON, JOHN
A. RABER, STIFEL, NICOLAUS &
COMPANY, INC., ROBERY W. BAIRD &
CO. INC., JANNEY MONTGOMERY
SCOTT LLC, OPPENHEIMER & CO. INC.,
AND WUNDERLICH SECURITIES, INC.,
Defendants.

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KIMBA M. WOOD, United States District Judge:
This Opinion considers the Motion for Final Approval of the Class Action Settlement
("Approval Motion") and Motion for an Award of Attorneys' Fees and Expenses ("Attorneys'
Fees Motion"), both filed by Lead Plaintiffs Emico Vaccaro, F. Gregory Deneen, and William
Slater ("Lead Plaintiffs"). The Court GRANTED both Motions at the Settlement Fairness
Hearing held on November 20, 2017 for reasons stated at the hearing and elaborated more fully
herein.

I.

Introduction and Procedural History

On October 21, 2015, Plaintiffs filed this lawsuit in connection with an offering of $40
million worth of Series A Preferred Units (the "Offering") from New Source Energy Partners,
L.P. ("New Source"). 1 Plaintiffs sued New Source, along with certain individuals who were
officers or directors of New Source at the time of the Offering ("Individual Defendants"), and
certain firms that were underwriters to New Source in connection with the Offering
("Underwriter Defendants") (collectively, "Defendants"). Plaintiffs allege that Defendants made
materially false and misleading statements in various financial reports, including by allegedly
failing to disclose issues regarding the incompetency, fraudulent conduct, and unreliability of
New Source's contract operator, resulting in millions of dollars in damages and "curtailed"
efforts to drill new oil wells. (Second Am. Compl., ECF No. 38

~~

1-12.) On March 29, 2016,

this Court appointed Enrico Vaccaro, F. Gregory Deneen, and William Slater as Lead Plaintiffs,
and approved WolfHaldenstein Adler Freeman & Herz LLP and The Rosen Law Firm, P.A. as
Co-Lead Counsel. (Order, ECF No. 15). The next day, New Source and its affiliate, New
Source GP, LLC, filed bankruptcy petitions, which automatically stayed the case as against New
Source. (Stipulation and Order, ECF.No. 18.) Just shy of three months later, on June 20, 2016,
Plaintiffs filed an Amended Class Action Complaint. (ECF No. 19.)
On December 19, 2016, the Court granted Defendants' Motion to Dismiss the Amended
Complaint. (Order, ECF No. 37). After further analysis and investigation, Lead Plaintiffs filed a
Second Amended Class Action Complaint in January 2017. (ECF No. 38.) Defendants filed two

1

Plaintiffs initially filed this lawsuit in New York Supreme Court. (Notice of Removal, ECF No. 1.) Defendants
removed the case t6 thig
13, ZO 15. (Id.)

Court on November

2

motions to dismiss this Second Amended Complaint, (ECF Nos. 40, 43), both of which Plaintiffs
opposed. (ECF Nos. 45, 46.)
On June 19, 2017, after approximately one month of arm's-length negotiations, the
parties informed the Court that they had reached an agreement and submitted a stipulation of
settlement. (ECF No. 52.) On July 27, 2017, the Court preliminarily approved the settlement
and approved a Claims Administrator. (ECF No. 57.) The Court preliminarily certified a Class
(the "Settlement Class") as follows:
[A]ll Persons (including, without limitation, their beneficiaries) who purchased
Series A Preferred Units of New Source pursuant and/or traceable to its May 5,
2015 public offering prior to the commencement of this action on October 21,
2015.
(Stipulation of Settlement, ECF No. 52 ~ 1.29; Order, ECF No. 57 ~ 2.)
The proposed settlement resolves all claims against Individual Defendants Kristian B.
Kos, Terry L. Toole, Dikran Tourian, Richard D. Finley, V. Bruce Thompson and John A. Raber,
and Underwriter Defendants Stifel, Nicolaus & Company, Inc., Robert W. Baird & Co. Inc.,
Janney Montgomery Scott LLC, Oppenheimer & Co. Inc., and Wunderlich Securities, Inc.
(collectively, the "Settling Defendants"), in exchange for $2.85 million, plus interest. Co-Lead
Counsel requested attorneys' fees in the amount of $950,000.00 (representing 33.33% of the
settlement amount). The requested fees are 1.24 times the lodestar amount of $763, 998.25.
The Court granted final approval of the settlement, the plan of allocation, and the
application for attorneys' fees and reimbursement of litigation expenses at the November 20,
2017 Settlement Fairness Hearing, for the reasons that follow.
II.

Certification of the Settlement Class is Appropriate Under Rule 23

Courts in this Circuit may certify a class for settlement purposes. See Weinberger v.

Kendrick, 698 F.2d 61, 73 (2d Cir. 1982). "Classes certified for settlement purposes, like all

3

other classes, must meet the requirements of Rule 23(a) and at least one of three requirements set
forth in Rule 23(b)." In re Marsh ERISA Litig., 265 F.R.D. 128, 142 (S.D.N.Y. 2010)
(McMahon, J.) (citation omitted).

A. Requirements of Rule 23(a)
Certification is warranted under Rule 23(a) where, as here,
( 1) the class is so numerous that joinder of all members is
impracticable; (2) there are questions of law or fact common to the
class; (3) the claims or defenses of the class representatives are
typical of the claims or defenses of the class; and ( 4) the class
representatives will fairly and adequately protect the interests of the
class.

Id.
1. Numerosity
Because there are thousands of class members, the numerosity requirement is satisfied.

See Consol. Rail Corp. v. Town of Hyde Park, 47 F.3d 473, 483 (2d Cir. 1995) ("[N]umerosity is
presumed at a level of 40 members .... ").

2. Commonality
"Commonality does not demand that every question of law or fact be common to every
class member, but instead merely requires that the claims arise from a common nucleus of
operative facts." Marsh, 265 F.R.D. at 142. Here, there are questions oflaw and fact common
to the Settlement Class, the most significant of which are whether the Defendants made material
misrepresentations or omissions. See Fogarazzo v. Lehman Bros., 232 F.R.D. 176, 180
(S.D.N.Y. 2005) (Scheindlin, J.) ("In general, where putative class members have been injured
by similar material misrepresentations and omissions, the commonality requirement is
satisfied.").

3. Typicality

4

Lead Plaintiffs' claims are typical of the claims of the Settlement Class because they arise
from the same allegedly wrongful conduct by the Defendants. See In re NASDAQ Mkt.-Makers
Antitrust Litig., 169 F.R.D. 493, 511 (S.D.N.Y. 1996) (Sweet, J.) ("Rule 23(a)'s typicality

requirement is established where, as here, the claims of the representative Plaintiffs arise from
the same course of conduct that gives rise to the claims of the other Class members, where the
claims are based on the same legal theory, and where the class members have allegedly been
injured by the same course of conduct as that which allegedly injured the proposed
representatives.") (collecting cases).
4. Adequacy

Rule 23(a)(4) requires that "the representative parties ... fairly and adequately protect
the interests of the class." In evaluating adequacy, courts in this Circuit consider, "( 1) whether
the claims of the lead plaintiffs conflict with those of the class; and (2) whether the lead
plaintiffs' counsel is qualified, experienced and generally able to conduct the litigation." Marsh,
265 F.R.D. at 143. Lead Plaintiffs and Co-Lead Counsel have fairly and adequately represented
the interests of the Settlement Class. First, there is no "divergence of interests" between Lead
Plaintiffs and the other Settlement Class Members. See Kelen v. World Fin. Network Nat. Bank,
302 F.R.D. 56, 65 (S.D.N.Y. 2014) (Broderick, J.) (holding that this element of the adequacy
requirement is met where "no divergence of interests between Plaintiffs and the other class
members has been identified"). Second, Co-Lead Counsel are adequate because they have
litigated dozens of class actions in the United States, and "have recouped billions of dollars" in
securities class action cases. (WolfHaldenstein Firm Resume, ECF No. 63-1, at 3; The Rosen
Law Firm P.A. Biography, ECF No. 63-2.) Because of their considerable experience, the Court
also finds that Rule 23(g) is satisfied. See D.S. ex rel. S.S. v. New York City Dep 't of Educ., 255

5

F.R.D. 59, 74 (E.D.N.Y. 2008) (internal quotation marks and citation omitted) (noting that Rule
23(g) is satisfied where "the class attorneys are experienced in the field or have demonstrated
professional competence in other ways, such as by the quality of the briefs and the arguments
during the early stages of the case.").
B. The Requirements of Rule 23(b)(3) Are Satisfied

Rule 23(b)(3) is satisfied where, as here, "questions oflaw or fact common to class
members predominate over any questions affecting only individual members, and ... a class
action is superior to other available methods for fairly and efficiently adjudicating the
controversy." Here, questions of law or fact common to Class Members predominate over any
questions affecting only individual members, because every Class Member would be required to
prove the same misrepresentations in order to establish liability. See In re Deutsche Telekom AG
Sec. Litig., 229 F. Supp. 2d 277, 282 (S.D.N.Y. 2002) (Stein, J.) ("Courts have recognized that

class actions are generally appropriate when plaintiffs seek redress for violations of the securities
laws."). A class action is superior to other available methods for fairly and efficiently
adjudicating these claims because it spares Plaintiffs costly individual litigation. See id. ("Class
actions are generally well-suited to securities fraud cases such as this one because they avoid the
time and expense of requiring all class members to litigate individually.").
III.

Final Approval of the Settlement

"Settlement approval is within the Court's discretion, which should be exercised in light
of the general judicial policy favoring settlement." In re Sumitomo Copper Litig., 189 F.R.D.
274, 280 (S.D.N.Y. 1999) (Pollack, J.) (internal quotation marks and citation omitted). "In a
class action settlement, there is a presumption of fairness, reasonableness and adequacy when the
settlement is the product of 'arms-length negotiations between experienced, capable counsel after

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meaningful discovery." Marsh, 265 F.R.D. at 138 (quoting Sumitomo, 189 F.R.D. at 280).
Adequate notice of the proposed settlement must be provided to potential class members. Fed.
R. Civ. P. 23(e)(l).
"A court may approve a class action settlement if it is fair, adequate, and reasonable, and
not a product of collusion." Wal-Mart Stores, Inc. v. Visa U.S.A. Inc., 396 F.3d 96, 116 (2d Cir.
2005) (internal quotation marks and citation omitted). To evaluate the settlement's fairness, a
court should consider "both the settlement's terms and the negotiating process leading to
settlement." Id. (internal quotation marks and citation omitted).
A. Adequacy of Notice

Under Rule 23(e)(l), the Court "must direct notice in a reasonable manner to all class
members who would be bound by the proposal." "A notice program must provide the 'best
notice practicable under the circumstances including individual notice to all members who can
be identified through reasonable effort." In re Advanced Battery Techs., Inc. Sec. Litig., 298
F.R.D. 171, 182 (S.D.N.Y. 2014) (McMahon, J.). If the average class member understands "the
terms of the proposed settlement and of the options that are open to them in connection with
[the] proceedings," then the notice is adequate. Weinberger v. Kendrick, 698 F.2d 61, 70 (2d
Cir. 1982) (alteration in original) (internal quotation marks and citation omitted).
The Court's July 27, 2017 Preliminary Approval Order appointed a claims administrator
who sent notice of the settlement to potential Class Members. Notice was mailed to over 2,200
potential class members and nominees and over 1,400 banks, brokerage companies, mutual
funds, insurance companies, pension funds, and money managers; published in Investor's
Business Daily; transmitted over Globe Newswire; and transmitted to the Depository Trust
Company for publication on the Legal Notice System. The notice provided:

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(i)

an explanation of the Action;

(ii)

the definition of the settlement class;

(iii)

the amount of the settlement and the reasons for it;

(iv)

the plan of allocation;

(v)

an approximation of the attorneys' fees and costs to be requested;

(vi)

an explanation of the right to opt-out or object; and

(vii)

an explanation of the binding effect of the Court's judgment on the Class
Members.

The Court finds that notice was adequate. See Weinberger, 698 F.2d at 70.
B. Procedural Fairness

When settlement is achieved through arm's-length negotiations, between experienced and
capable counsel, after meaningful discovery, a "presumption of fairness, adequacy, and
reasonableness" will apply to the class settlement. Wal-Mart, 396 F.3d at 116 (internal quotation
marks and citation omitted). In this case, the parties engaged in protracted, arm's-length
negotiations between experienced counsel, who were well-versed in the strengths and
weaknesses of the case. Thus, the Court finds the settlement to have been achieved through a
fair and reasonable process.
C. Substantive Fairness

Courts in this Circuit examine the following nine factors to determine whether a
settlement is fair, adequate, and reasonable:
(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;

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(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.

City of Detroit v. Grinnell Corp., 495 F.2d 448, 463 (2d Cir. 1974) ("Grinnell") (internal
citations omitted), abrogated on other grounds by Goldberger v. Integrated Reserves, Inc., 209
F.3d 43 (2d Cir. 2000); Marsh, 265 F.R.D. at 138. A court may consider the totality of the
factors "in light of the particular circumstances." In re Merrill Lynch & Co., 02-MDL-1484,
2007 WL 313474, at *9 (S.D.N.Y Feb. 1, 2007) (Keenan, J) (citation and internal quotation
marks omitted).
1. Complexity, Expense, and Likely Duration of the Litigation

Further litigation would have required substantial additional expenditures of time and
money, including discovery, further motion practice, trial, and appeal. See Sumitomo, 189
F.R.D. at 281 (holding that this element was satisfied in a class action suit, and noting that "class
action suits in general have a well-deserved reputation as being most complex," and are "notably
difficult and notoriously uncertain") (internal quotations and citations omitted). Thus, this factor
supports approval of the settlement.
2. Reaction of the Class to the Settlement
The claims administrator distributed notice to thousands of potential class
members. Two class members submitted requests to be excluded from the settlement

agreement. Three class membern (.1 % of thY 21283 class members notified), Sherman
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Brathwaite, Michael L. Sklar, and Thomas M. Bloom, submitted timely objections to the
settlement. None of the three objectors attended the Settlement Fairness Hearing. The
small number of objectors weighs in favor of final approval. See Grant v. Bethlehem
Steel Corp., 823 F.2d 20, 22-23 (2d Cir. 1987) (holding that district court did not abuse

discretion in approving class settlement where 36% of class objected to the amount of the
settlement); United States v. City of New York, No. 07-CV-2067, 2015 WL 1063403, at
*14 (E.D.N.Y. Mar. 11, 2015) (weighing reaction of class in favor of final approval
where "only 6. 7% of eligible claimants (98 out of 1,4 70), a relatively small percentage,
have in fact objected").
The substantive points made by the objectors are without merit, as described
below.
Mr. Brathwaite explicitly did not "object to the case as a whole." (Bravata Deel.,
ECF No. 64, Ex. E.) Mr. Brathwaite stated that he simply wanted his "money back, just
as others are about to get their money back." (Id.) The Claims Administrator
subsequently contacted Mr. Brathwaite, who suffered no "recognized losses" because Mr.
Brathwaite purchased units only "after the last corrective disclosure of September 30,
2015." (Suppl. Bravata Deel., ECF No. 68-1, at 2-3.) Mr. Brathwaite's objection is thus
meritless.
Mr. Sklar raised three arguments. First, Mr. Sklar argued that the "investors' loss
was caused by possible fraud, actionable carelessness or breach of duty, or a combination
of all three." (Sklar Obj. at 1-3.) But Mr. Sklar provided no facts supporting a cause of
action not already the subject of this lawsuit. In fact, Co-Lead Counsel vigorously and
thoroughly litigated this case, yet chose not to assert the additional claims mentioned by

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Mr. Sklar. The Court rejects this argument as factually unsupported and conclusory. See
In re Merrill Lynch & Co. Research Reports Sec. Litig., 246 F.R.D. 156, 168 (S.D.N.Y.

2007) (Keenan, J.) ("These conclusory statements are not sufficient to weigh against
approval of the Settlement as fair and reasonable."). Second, Mr. Sklar argued that the
settlement is "inadequate." The Court disagrees. $2.85 million is an adequate settlement,
particularly when taking into account the costs and risks Plaintiffs faced in litigating this
case. Third, Mr. Sklar argued that the "underwriters and professionals are financially
strong and insured and the company's principals appear to be people of means," so these
Defendants "should be held accountable and fund a more generous settlement." (Sklar
Obj. at 3-4.) But as discussed below, although the Settling Defendants may have been
able to withstand a larger settlement, that fact alone does not render the settlement unfair.
Mr. Sklar's objection is thus overruled.
Finally, Mr. Bloom objects to the settlement as a "scam," and "the equivalent of
robbery," and argues that "[p ]eople should be jailed and victims should be paid in excess
of their losses." The Court overrules Mr. Bloom's objection as conclusory and
unsupported. See Merrill Lynch, 246 F.R.D. at 168.
3. Stage of the Proceedings and Amount of Discovery Completed

Although the action did not proceed to formal discovery, Lead Plaintiffs (i)
reviewed vast amounts of publicly available information, (ii) conducted interviews of
numerous individuals, and (iii) consulted experts on the oil and gas industry. The Court
finds that Lead Plaintiffs were well-informed to "gauge the strengths and weaknesses of
their claims and the adequacy of the settlement." In re AOL Time Warner, Inc. Sec. and

11

"ERISA" Litig., No. 02-CV-5575, 2006 WL 903236, at *10 (S.D.N.Y. Apr. 6, 2006)

(Kram, J.).
4. Risks of Continued Litigation

A court must also consider the likelihood that the class would prevail at trial when
determining the reasonableness, fairness, and adequacy of settlement. Specifically, a court
should consider "the risks of establishing liability," "the risks of establishing damages," and "the
risks of maintaining the class action through the trial." Grinnell, 495 F.2d at 463. First, as to
liability, Plaintiffs faced difficulty proving materiality. In fact, Plaintiffs' prior complaint was
dismissed for not adequately pleading materiality. (Order, ECF No. 37, at 13-17.) Second, as to
damages, Plaintiffs may have been unable to prove that Defendants' misleading statements were
the cause of Plaintiffs' losses, rather than other market factors. For example, Plaintiffs may have
had difficulty proving that the stock price decline on September 28, 2015 was caused by
Defendants' misrepresentations. Finally, as to maintaining the class action through trial,
certification was never briefed and Defendants could have moved to decertify the class at any
time. The "process of class certification would have subjected Plaintiffs to considerably more
risk." Jn re AOL Time Warner, Inc., 2006 WL 903236, at *12. Accordingly, this factor weighs
in favor of final approval.
5. Ability of the Defendants to Withstand a Greater Judgment

Although Defendants may have had the ability to withstand a greater judgment,
this factor does not render the settlement unfair, given the force of the other Grinnell
factors.
6. Range of Reasonableness in Light of Best Possible Recovery and All
Attendant Risks of Litigation

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Co-Lead Plaintiffs estimate that the maximum recoverable damages would be
approximately $44,000,000. The $2,850,000 settlement represents 6.5% of the maximum
recoverable damages. This settlement amount is reasonable and in line with other
settlements in securities class actions. See In re Giant I~teractive Grp .. Inc. Sec. Litig.,
279 F.R.D. 151, 162-63 (S.D.N.Y. 2011) (Engelmayer, J.) ("[T]he average settlement in
securities class actions ranges from 3% to 7% of the class' total estimated losses.")
(citation omitted).
In sum, the Grinnell factors support the Court's approval of this settlement as fair,
reasonable, and adequate.
D. Plan of Allocation

The Court approves the parties' Plan of Allocation, which apportions the settlement
proceeds based on each claimant's respective market loss, based on the timing of
purchases and sales. The Plan of Allocation was formulated by Co-Lead Counsel in
consultation with a damages expert. The Court deems the Plan of Allocation to be fair,
reasonable, and adequate.
IV.

Approval of Attorneys' Fees and Reimbursements

Co-Lead Counsel request a fee award of $950,000, representing 33.33% (1/3) of the
$2,850,000 settlement fund. Co-Lead Counsel also request (i) reimbursement oflitigation
expenses in the amount of $28,300.84, and (ii) reimbursement of litigation costs for each of the
three Lead Plaintiffs, in the total amount of $15,000 ($5,000 for each Lead Plaintiff).
"[W]here an attorney succeeds in creating a common fund from which members of a class
are compensated for a common injury inflicted on the class ... the attorneys whose efforts
created the fund are entitled to a reasonable fee-set by the court-to be taken from the fund."

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Goldberger, 209 F.3d at 47 (citations omitted). District courts in this Circuit typically award
fees to plaintiffs' counsel in a class action using either the "percentage" method or the "lodestar"
method:
Under the peroentage method, the fee is calculated simply as a percentage of the
recovery. Under the "lodestar" method, the court determines the lodestar-that is,
the number of hours reasonably expended on the case multiplied by the
appropriate hourly rates-based on submissions from counsel regarding the work
they performed. This lodestar is then adjusted, usually upward (by a "multiplier"),
to arrive at the appropriate fee award for the case.

Marsh, 265 F.R.D. at 146. Courts in this Circuit typically use the percentage method, though a
court may use either method at its discretion. Id. "Regardless of which method is used, several
factors identified by the Second Circuit in Goldberger (the "Goldberger factors") ... ultimately
determine what is a reasonable fee." Id.
Given the circumstances in this case, counsel's request for attorneys' fees totaling
33.33% of the recovered funds is reasonable under Goldberger, as more fully discussed below.
A. Goldberger Factors to Assess Reasonableness of Attorneys' Fees
Attorneys who create a "common fund" are entitled to "a reasonable fee-set by the
court-to be taken from the fund." Goldberger, 209 F.3d at 47. Co-Lead Counsel have created a
"common fund" of $2,850,000 in the form of a settlement award for the Class. In this Circuit,
courts weigh the Goldberger factors to determine whether attorneys' fees are reasonable:
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 settlement"; and
6. "public policy considerations."

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Wal-Mart, 396 F.3d at 121-22 (citing Goldberger, 209 F.3d at 50).
1. Time and Labor Expended by Counsel: the Lodestar

Co-Lead Counsel have billed 1,124.50 hours to this litigation and Plaintiffs' counsel have
collectively billed 1,224.80 hours, 2 including for the following tasks:
Investigating facts and interviewing knowledgeable individuals;

1.

Drafting a Complaint, Amended Complaint, and Second Amended Complaint;

11.

111.

Drafting opposition briefs to Defendants' motions to dismiss the Amended
Complaint and the Second Amended Complaint;

1v.

Consulting with experts on damages and the oil industry; and

v.

Negotiating and finalizing a settlement.

The Court has reviewed the billing records documenting these hours and finds them to be
reasonable. The total lodestar value of Plaintiffs' counsel's work is $763,998.25. (Harrar Deel.,
ECF No. 63

~

28.) Plaintiffs' counsel are requesting $950,000, which would result from a

lodestar multiplier of 1.24. A multiplier of 1.24 is within the range of lodestar multipliers
approved in this Circuit for cases with settlement amounts under $10 million. See, e.g., In re
China Sunergy Sec. Litig., No. 07-CV-7895, 2011 WL 1899715, at *2, *6 (S.D.N.Y. May 13,

2011) (Batts, J.) (awarding 33 1/3% of$1,050,000 settlement and approving a lodestar multiplier
of 1.41 ). Thus, this factor suppoi:ts the requested fee.

2 Criden & Love, P.A., and Nussbaum Law Group, P.C., collectively billed 100.3 hours representing Plaintiffs in
this litigation. (Suppl. Harrar Deel., ECF No. 66.) Most of this time was billed while initially investigatmg the case
and preparing a first draft of a complaint before referring the li'15~ to C:o-Lead Counsel. (Id ~ 4.)

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2. Magnitude and Complexity of the Litigation
Securities class actions are "notably difficult and notoriously uncertain." Jn re Milken &

Assocs. Sec. Litig., 150 F.R.D. 46, 53 (S.D.N.Y. 1993) (Pollack, J.) (internal quotation marks
omitted). Investigating and litigating this action was complex and required consultation with
experts. Thus, this factor also supports the requested fee.

3. Risk of the Litigation
The risk of the litigation is "perhaps the foremost factor to be considered in determining
the award of appropriate attorneys' fees." Merrill Lynch & Co. Research Reports Sec. Litig.,
2007 WL 313474, at* 16 (internal quotation marks omitted). Specifically with respect to
contingency fee cases, like this one, "[n]o one expects a lawyer whose compensation is
contingent upon his success to charge, when successful, as little as he would charge a client who
in advance had agreed to pay for his services, regardless of success." Grinnell, 495 F .2d at 470.
Plaintiffs also faced significant difficulties in this litigation. The Court previously
dismissed the Amended Complaint. Plaintiffs continued to face difficulty in proving materiality.
Plaintiffs faced a significant risk of recovering nothing from Defendants. This factor also
supports the requested fee.

4. Quality of Representation
The Court has reviewed the backgrounds of the attorneys working for the class. Counsel
all have ample experience in class action litigation. Co-Lead Counsel vigorously investigated
and prosecuted the case. The high quality of the representation supports the requested fee.

5. Requested Fee in Relation to Settlement
Lead Counsel requests $950,000, or 33.33% of the Settlement Fund of $2.85 million.
This percentage is within the range of what is reasonably granted in this Circuit. See, e.g., In re

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China Sunergy Sec. Litig., 2011WL1899715, at *2, *6 (awarding 33 113% of$1,050,000

settlement). Thus, this factor also supports the requested fee.
6. Public Policy Considerations

"Public policy concerns favor the award of reasonable attorneys' fees in class action
securities litigation." Merrill Lynch, 2007 WL 3134 74, at *21. Thus, this factor also supports the
requested fee.
B. Reaction of the Settlement Class

The Class Members received notice that Lead Counsel would apply for attorneys' fees
not to exceed 33.33% of the settlement fund. The fact that no class members have explicitly
objected to these attorneys' fees supports their award. 3 See Jn re Facebook. Inc. !PO Sec. &
Derivative Litig., No. MDL 12-2389, 2015 WL 6971424, at *10--12 (S.D.N.Y. Nov. 9, 2015)

(Sweet, J.) (holding that attorneys' fees of 33% of the settlement fund were reasonable despite
objections from two class members that the fees were too high), ajj'd sub nom. In re Facebook,
Inc., 674 F. App'x 37 (2d Cir. 2016).
C. Reimbursement of Litigation Expenses

Counsel have requested reimbursement of $28,300.84 in litigation expenses. The bulk of
these expenses ($22,271.62) went toward Plaintiffs' experts and consultants, and toward
investigator fees. Notice to the Class stated that the expense reimbursement request would not
exceed $35,000, and there have been no objections to this request. The Court has reviewed these
expenses and finds them to be reasonable.

3 Mr. Sklar included in his objection a faint suggestion that the requested fees are too high because Class Members
"will receive a paltry 5% of their investment net of disclosed costs and expenses." (Sklar Obj. at 3.) Although this
fee~. thb etrgumcnt i5 ~on~hm>ry and without merit.
could be construed as an objectil'>l'\ tn the reque~ted

anomeyf
17

D. Litigation Expenses for Named Plaintiffs
Lead Counsel has requested a total of $15,000 in litigation costs and expenses for the three
Lead Plaintiffs-that is, $5,000 to each Lead Plaintiff. The notice provided to class members
stated that the Lead Plaintiffs could receive this amount and type of award. Litigation costs and
expenses are warranted for these Lead Plaintiffs because they assisted in the litigation
communicating with counsel, reviewing pleadings, and monitoring settlement negotiations. (See
Vaccaro Deel., ECF No. 66-3; Slater Deel., ECF No. 67-2; Deneen Deel., ECF No. 67-3.)

V.

Conclusion

For the foregoing reasons, the Court GRANTED in full the Approval Motion and the
Attorneys' Fees Motion. This resolves ECF Nos. 59 and 61.
\1_,~

SO ORDERED.

\L\.- \1

J~v>v.~

Dated: New York, NY
December ~' 2017

KIMBA M. WOOD
United States District Judge

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