McIntyre v. Chelsea Therapeutics International, LTD. et al

Filing 135

ORDER PRELIMINARILY APPROVING SETTLEMENT AND PROVIDING FOR NOTICE: Hearing set for 9/19/2016 10:00 AM in Courtroom, 401 W Trade St, Charlotte, NC 28202 before District Judge Max O. Cogburn Jr.). Signed by District Judge Max O. Cogburn, Jr on 6/1/2016. (chh)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
CIVIL ACTION NO. 3:12-CV-213-MOC-DCK

CAMERON MCINTYRE,
Plaintiff,
v.
CHELSEA THERAPEUTICS
INTERNATIONAL, LTD., et al.,
Defendants.

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ORDER PRELIMINARILY APPROVING SETTLEMENT AND
PROVIDING FOR NOTICE
WHEREAS, Lead Plaintiff Roman Zak (“Lead Plaintiff”), on behalf of all Class
Members, on the one hand, and Defendants Chelsea Therapeutics International, Ltd., Simon
Pedder, and William D. Schwieterman (collectively “Defendants” and together with Lead
Plaintiff, the “Settling Parties”), on the other hand, by and through their respective counsel, have
made an application, pursuant to Rule 23 of the Federal Rules of Civil Procedure, for an order
preliminarily approving a settlement in the above-captioned class action (the “Action”) in
accordance with a Stipulation and Agreement of Settlement dated as of May 23, 2016 (the
“Stipulation”), which, together with the exhibits annexed thereto, sets forth the terms and
conditions for settlement in the Action and for dismissal with prejudice of the Action as against
Defendants;
WHEREAS, the Court, having read and considered the Stipulation and the exhibits
annexed thereto; and

WHEREAS, unless otherwise defined, all defined terms herein have the same meanings
as set forth in the Stipulation.
NOW, THEREFORE, IT IS HEREBY ORDERED, ADJUDGED, and DECREED
THAT:
1.

The Court preliminarily approves the Settlement as being fair, reasonable, and

adequate, subject to further consideration at a hearing to be held before this Court on MONDAY
SEPTEMBER 19, 2016, AT 10 A.M. (which is a date at least 100 days from the date of entry
of this Order) (the “Final Fairness Hearing”) to determine whether the proposed Settlement of
the Action on the terms and conditions provided for in the Stipulation is fair, reasonable, and
adequate and should be approved by the Court; whether the Order and Final Judgment, attached
as Exhibit B to the Stipulation should be entered; whether the proposed Plan of Allocation is
reasonable and should be approved; whether Lead Counsel’s application for an award of
attorneys’ fees and expenses and an expense award for Lead Plaintiff should be granted; whether
Lead Plaintiffs’ application and reimbursement of costs and expenses incurred as a result of its
representation of the Class should be approved; to hear any objections by Class Members to the
Settlement or proposed Plan of Allocation and to any award of fees and/or expenses to Lead
Counsel and to Lead Plaintiff; and to consider such other matters as the Court may deem
appropriate.
2.

The District Court finds, preliminarily and for purposes of Settlement only, that

the prerequisites for a class action under Rule 23(a) and (b)(3) for the Federal Rules of Civil
Procedure have been satisfied in that: (a) the number of Class Members is so numerous that
joinder of all members of the Class is impracticable; (b) there are questions of law and fact
common to each Class Member; (c) the claims of Lead Plaintiff are typical of the claims of the

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Class they seek to represent; (d) Lead Plaintiff will fairly and adequately represent the interests
of the Class; (e) the questions of law and fact common to Class Members predominate over any
questions affecting only individual members of the Class; and (f) a class action is superior to
other available methods for the fair and efficient adjudication of the controversy.
3.

Pursuant to Rule 23 of the of the Federal Rules of Civil Procedure, preliminarily

and for the purposes of Settlement only, Lead Plaintiff is certified as the class representative on
behalf of the Class and the Lead Counsel previously selected by Lead Plaintiff and appointed by
the District Court, Faruqi & Faruqi, LLP, is hereby appointed as Class Counsel.
4.

The Class is defined as all Persons who purchased or otherwise acquired Chelsea

common stock in the United States or on the NASDAQ Stock Market during the Settlement
Class Period who were allegedly damaged thereby. Excluded from the Class are Defendants;
members of the immediate families of Defendants; any firm, trust, partnership, corporation,
officer, director, or other individual or entity in which a Defendant has a controlling interest or
property interest; and the legal representatives, heirs, successors-in-interest or assigns of such
excluded Persons with respect to that excluded purchase or acquisition of Chelsea common
stock. Also excluded from the Class is (1) any Person who properly excludes himself, herself, or
itself by filing a valid and timely request for exclusion in accordance with the requirements to be
set forth in the Settlement Notice; and (2) any Person who suffered no compensable losses (such
as Persons who purchased Chelsea common stock during the Settlement Class Period but sold
prior to any partial corrective disclosure).
5.

The Court appoints Rust Consulting, Inc. (the “Claims Administrator”) to

supervise and administer the notice procedure and processing of claims pursuant to the
Stipulation.

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6.

The Court approves the form of the Settlement Notice and Publication Notice,

attached hereto has Exhibits A-1 & A-3, respectively, and finds that the mailing and distribution
of the Settlement Notice and publishing of the Publication Notice meet the requirements of Rule
23 and due process, and are the best notice practicable under the circumstances and shall
constitute due and sufficient notice to all Persons entitled to notice.
7.

The Claims Administrator shall cause the Settlement Notice and the Proof of

Claim form, substantially in the forms annexed hereto as Exhibits A-1 & A-2, respectively, to be
mailed, by first-class mail, postage prepaid, on or before JUNE 21, 2016 (i.e., within twenty
(20) days of the date of entry of this Order) (“Notice Date”), to all Class Members who can be
identified through reasonable effort. Lead Counsel shall cause the Claims Administrator to
publish the Settlement Notice and Proof of Claim on a website designated for the Action by the
Notice Date. Lead Counsel shall serve on counsel for each of the Defendants and file with the
Court, no later than thirty-five (35) days before the Final Fairness Hearing, proof of mailing of
the Settlement Notice and Proof of Claim.
8.

The Claims Administrator shall cause the Publication Notice, substantially in the

form annexed hereto as Exhibit A-3, to be published once in the national edition of the Investor’s
Business Daily and once over PR Newswire, within ten (10) days of the Notice Date. Lead
Counsel shall, no later than thirty-five (35) days before the Final Fairness Hearing, file with the
Court proof of publication of the Publication Notice.
9.

The Claims Administrator shall be responsible for the receipt of all Proofs of

Claim and requests for exclusion and, until further order of the Court, shall preserve all Proofs of
Claim and requests for exclusion from any Person in response to the notice. The Claims
Administrator shall scan and send electronically copies of all requests for exclusion from the

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Settlement in .pdf format (or such other format as shall be agreed) to counsel for each of the
Defendants and to Lead Counsel expeditiously after the Claims Administrator receives such
requests for exclusion.
10.

As part of their reply papers in support of their motion for final approval of the

Settlement, Lead Counsel will provide a list of all Persons who have requested exclusion from
the Class as defined in the consolidated complaint and all of the information provided to the
Claims Administrator for those Persons requesting exclusion, and shall certify that all requests
for exclusion received have been copied and provided to counsel for each of the Defendants and
Lead Counsel.
11.

The Claims Administrator shall use reasonable efforts to give notice to nominee

owners such as brokerage firms and other persons or entities who purchased or otherwise
acquired Chelsea common stock during the Settlement Class Period as record owners but not as
beneficial owners. Such nominees who hold or held Chelsea common stock for beneficial
owners who are members of the Class are directed (a) to provide the Claims Administrator with
lists of the names and last known addresses of the beneficial owners for whom they purchased or
otherwise acquired Chelsea common stock during the Settlement Class Period within seven (7)
days of receipt of the Settlement Notice, or (b) to send the Settlement Notice and Proof of Claim
to the beneficial owners. If the nominee owner elects to send the Settlement Notice and Proof of
Claim to the beneficial owners, the nominee owner is directed (i) to request additional copies of
the Settlement Notice and Proof of Claim within seven (7) days of receipt of the Settlement
Notice, and (ii) to mail the Settlement Notice and Proof of Claim within seven (7) days of receipt
of the copies of the Settlement Notice from the Claims Administrator, and upon such mailing the
nominee owner shall send a statement to the Claims Administrator confirming that the mailing

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was made as directed. Such nominee owners shall be reimbursed from the Settlement Fund,
after receipt by the Claims Administrator of proper documentation, for the reasonable expenses
of sending the Settlement Notice and Proof of Claim to the beneficial owners.
12.

All notice and administrative expenses shall be paid as set forth in the Stipulation.

13.

The Claims Administrator is authorized and directed to undertake the actions

contemplated by the Stipulation, including the payment or reimbursement of any Taxes or Tax
Expenses out of the Settlement Fund and the preparation of tax returns, without further order of
the Court.
14.

Any Class Member who wishes to participate in the distribution(s) from the Net

Settlement Fund must complete and submit a Proof of Claim in accordance with the instructions
contained therein. Unless otherwise ordered by the Court, all Proofs of Claim must be
completed and submitted no later than seventy-five (75) days from the Notice Date. Unless
otherwise ordered by the Court, any Class Member who does not complete and submit a valid
Proof of Claim within the time provided shall be barred from sharing in the distribution of the
Net Settlement Fund.
15.

All eligible Persons who do not request exclusion from the Class at least twenty-

one (21) days prior to the Final Fairness Hearing, and in the form and manner set forth in the
Stipulation and the Settlement Notice, will be bound by the Stipulation, including, but not
limited to, the releases provided therein, and by any judgment or determination of the Court
affecting the Class.
16.

All eligible Persons requesting exclusion from the Class shall not be entitled to

receive any payment out of the Net Settlement Fund as described in the Stipulation and
Settlement Notice.

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17.

Any eligible member of the Class who has not requested exclusion from the Class

may appear at the Final Fairness Hearing to show cause why the proposed Settlement should not
be approved as fair, reasonable and adequate and why a judgment should not be entered thereon;
provided, however, that no eligible member of the Class shall be heard or entitled to contest the
approval of the terms and conditions of the Settlement and the Order and Final Judgment to be
entered approving the same unless no later than twenty-one (21) days prior to the date set for the
Final Fairness Hearing, such eligible Class Member has served by hand, mail or by overnight
delivery written objections and copies of any supporting papers and briefs (which must contain
proof of all purchases of Chelsea common stock during the Settlement Class Period and price(s)
paid) upon each of the following:
Richard W. Gonnello
FARUQI & FARUQI, LLP
685 Third Avenue
26th Floor
New York, NY 10017
Barry M. Kaplan
WILSON SONSINI GOODRICH & ROSATI, PC
701 Fifth Avenue
Suite 5100
Seattle, WA 98104
and has filed said objections, papers and briefs, showing due proof of service upon Lead Counsel
and counsel for each of the Defendants, with the Clerk of the United States District Court for the
Western District of North Carolina, 100 Otis Street, Asheville, NC 28801. Persons who intend
to object to the Settlement and desire to present evidence at the Final Fairness Hearing must
include in their written objections the identity of any witnesses they may seek to call to testify
and exhibits they may seek to introduce into evidence at the Final Fairness Hearing. Any party
has the right to object to any testimony or other evidence which a Person objecting to the

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Settlement seeks to introduce.
18.

Unless the Court otherwise directs, no Class Member or other Person shall be

entitled to object to the Settlement, or the Order and Final Judgment to be entered herein, or
otherwise be heard, except by serving and filing written objections as described above. Any
person who does not object in the manner prescribed above shall be deemed to have waived such
objection in this or any other action or proceeding and shall be bound by all the terms and
provisions of the Settlement and by all proceedings, orders and judgment in the Action.
19.

Lead Counsel shall submit papers in support of final approval of the Settlement

and its application for an attorneys’ fees and expenses award by no later than thirty-five (35)
days prior to the date set for the Final Fairness Hearing. Reply papers addressing requests for
exclusion or objections to the Settlement, Plan of Allocation, or application for attorneys’ fees
and expenses, shall be due seven (7) days prior to the Final Fairness Hearing.
20.

Neither Defendants nor Defendants’ Counsel shall have any responsibility for any

Plan of Allocation of the Net Settlement Fund or any application for an attorneys’ fees and
expenses award submitted by Lead Counsel or for an expense award for Lead Plaintiff, and such
matters will be considered separately from the fairness, reasonableness, and adequacy of the
Settlement. Lead Counsel shall be responsible for the apportionment of fees and expenses
amongst Lead Counsel.
21.

Pending final determination of whether the Settlement should be approved, Lead

Plaintiff, all Class Members, and each of them, and anyone who acts or purports to act on their
behalf, shall not institute, commence, or prosecute any action which asserts the Released Claims
against the Released Parties.
22.

The administration of the Settlement and the determination of all disputed

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questions of law and fact with respect to the validity of any claim or right of any person to
participate in the distribution of the Net Settlement Fund shall be under the authority of this
Court.
23.

The Court retains exclusive jurisdiction over the Action to consider all further

matters arising out of or connected with the Settlement.
24.

Neither the Settlement, nor any of its terms or provisions, nor any of the

negotiations or proceedings in connection therewith, shall be construed as an admission or
concession by the Defendants or any other Released Parties of the truth of any of the allegations
in the Action, or of any liability, fault, or wrongdoing of any kind, or as an admission by the
Lead Plaintiff or any Class Members of any lack of merit of the allegations in the Action in any
respect.
IT IS SOJune 1, 2016
Signed: ORDERED.

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