March 25, 1997
At a hearing on March 19, 1997, I approved the settlement in this securities class action. I will not reiterate the reasons I gave at the hearing for approving the settlement, but write to explain my award of attorneys' fees in the Final Judgment and Order of Dismissal issued with this memorandum.
Plaintiffs have requested a fee award for class counsel of 30% of the gross settlement fund of $ 1,057,905.40 (which is $ 1,000,000 plus accrued interest), plus reimbursement of $ 131,768.41 in expenses. So calculated, the requested award would have amounted to $ 317,371.62. In the Final Judgment and Order, I have awarded plaintiffs' counsel the exact dollar amount plaintiffs have requested. But I have arrived at this result via a rationale somewhat different from that advanced by plaintiffs.
My finding as to the appropriateness of the requested fee was based on a consideration of (1) the substantial risks involved in bringing the case; (2) the significant -- even if not munificent -- settlement obtained for the class; and (3) the lodestar calculation of approximately $ 590,000 worth of attorney hours. However, I have concluded that as a general matter a fee award in a "common fund" case should be calculated on the basis of the net settlement fund rather than the gross settlement fund. Accordingly, in directing payment of a fee of $ 317,371.62, I am approving a fee award of approximately 34.27% of the net fund -a percentage which, in the circumstances of this case, does not seem exorbitant.
This is a "common fund" case, in which attorneys' fees are awarded "to avoid the unjust enrichment of those who benefit from the fund that is created, protected, or increased by the litigation and who otherwise would bear none of the litigation expenses." Third Circuit Task Force Report on Court Awarded Attorney Fees, reprinted in 108 EF.R.D.F 237, 250 (1985); see also In re General Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 821 (3d Cir. 1995). From the point of view of the plaintiff class, the common fund is what is left after paying the expenses necessary to create the fund -- in this case, $ 926,136.99. It is this net sum that the plaintiff class properly should share with the counsel who acquired it for them.
Plaintiffs' counsel argued at the March 19 hearing that if attorneys' fees are drawn from the net fund, then counsel would receive less in cases that require substantial expenses than they would in less expensive cases. I do not find this result troubling. Such a fee calculation would deter unnecessary expenses; more importantly, because large expenses reduce the fund available to the plaintiff class, it is not inappropriate for counsel to share this loss.
Plaintiffs' counsel also object that unscrupulous defense counsel, knowing that plaintiffs' counsel will be rewarded on the basis of the net fund, may force plaintiffs' counsel into costly outlays by such tactics as scheduling depositions in distant locales. Because plaintiffs' counsel would in effect be paying a portion of the expenses themselves, they might feel pressured into acquiescing in a premature -- and, from the perspective of the plaintiff class, inadequate -- settlement. Given that (1) a court retains discretion to award fees on the basis of the gross fund rather than the net fund where the situation seems to call for such treatment, and (2) a court has ample authority to impose sanctions on attorneys who abuse the judicial process, the concerns voiced by plaintiffs' counsel do not seem to me persuasive.
For these reasons, I have approved an award of attorneys' fees in the amount requested, and in doing this I have adjusted the requested fee percentage upward in order to reflect that the award is a percentage of the net settlement fund.
FINAL JUDGMENT AND ORDER OF DISMISSAL WITH PREJUDICE OF CLASS ACTION
A. The above-captioned class action litigation is pending in this Court on behalf of:
ALL PURCHASERS OF THE COMMON STOCK OF NATIONAL MEDIA CORPORATION ("NATIONAL MEDIA") FROM JANUARY 13, 1994 THROUGH APRIL 21, 1994, INCLUSIVE (THE "CLASS PERIOD") (EXCLUDING ALL DEFENDANTS HEREIN AND ANY FIRM, TRUST, CORPORATION OR ENTITY CONTROLLED BY OR AFFILIATED WITH ANY OF THE DEFENDANTS), AS WELL AS THEIR LEGAL REPRESENTATIVES, HEIRS, PREDECESSORS OR SUCCESSORS IN INTEREST OR ASSIGNS (THE "CLASS").
B. The parties have proposed to settle their differences as set forth in the Stipulation and Agreement of Compromise and Settlement dated as of August 2, 1996 (the "Stipulation Agreement") and attached exhibits.
C. Plaintiffs' Counsel have caused a Notice of Pendency of Class Action, Class Action Determination, Proposed Settlement of Class Action, Settlement Hearing and Right to Appeal (the "Notice"), to be sent to all persons who may be eligible to participate in the Settlement. On December 13, 1996, Plaintiffs published a Summary Notice of Settlement in the national edition of The Wall Street Journal . Affidavits and/or declarations of mailing of the Notice and publishing of the Summary Notice were filed with the Court on February 28, 1997.
This Court has considered the arguments of counsel, the documents described above, all other pleadings, papers and files herein, and has held a hearing to permit persons opposed to the Settlement to make their views known. Good cause appearing therefor, IT IS HEREBY ORDERED AS FOLLOWS:
1. The Court finds that: (a) the members of the Settlement Class are so numerous that joinder of all Class Members in this action is impracticable; (b) there are questions of law and fact common to the Class Members; (c) the questions of law and fact common to the Class Members predominate over any questions affecting only individual members; (d) the claims of the Class Plaintiffs are typical of the claims of the Class; (e) the Class Plaintiffs and their counsel have fairly and adequately protected the interests of the Class; and (f) a class action is superior to other available methods for the fair and efficient adjudication of the controversy.
2. The Settlement Class, as defined above and in the Settlement Agreement, is hereby certified pursuant to Rule 23(b) (3) of the Federal Rules of Civil Procedure as to purchasers of National Media between January 13, 1994 and April 21, 1994, inclusive, (excluding all defendants herein and any firm, trust, corporation or entity controlled by or affiliated with any of the defendants), as well as the legal representatives, heirs, predecessors or successors in interest or assigns of all such purchasers.
3. The Notice provided to potential Class Members constitutes the best notice practicable under the circumstances and includes individual notice to all Class Members who could be identified by reasonable effort. The affidavits or declarations of mailing and publishing filed with this Court on February 28, 1997 demonstrate that this Court's orders with respect to the Notice have been complied with and further that the best notice practicable under the circumstances was in fact given and constituted valid, due and sufficient notice to members of the Class, complying fully with due process and Rule 23 of the Federal Rules of Civil Procedure.
4. For purposes of this Final Judgment, the Court adopts and incorporates the definitions in the Settlement Agreement.
5. This Court has jurisdiction of the subject matter of this litigation, of all actions within this litigation, and over all parties to this litigation, including all Class Members.
6. Having fully considered the nine factors required by the Court of Appeals for the Third Circuit in Girsh v. Jepson, 521 F.2d 153, 157 (3d Cir. 1975), and reaffirmed in In re General Motors Corp. Pick-Up Truck Fuel Tank Prod. Liab. Litig., 55 F.3d 768, 785 (3d Cir. 1995), to be reviewed in approving a settlement such as this, this Court hereby approves the proposed Settlement as fair, reasonable and adequate.
7. The Court hereby decrees that neither the Settlement, nor this Final Judgment, nor the fact of Settlement constitute an admission or concession by any Defendant of any liability or wrongdoing whatsoever. The Final Judgment is not a finding of the validity or invalidity of any claim asserted in the Action, or of any wrongdoing by and Defendant. Neither the Settlement, nor this Final Judgment, nor the Settlement negotiations, nor the Settlement proceedings, nor the fact of Settlement, nor any documents related to the Settlement shall be used or construed as an admission of any fault, liability, or wrongdoing by any person or entity, or shall be offered or received in evidence as an admission, concession, presumption or inference against any party in any proceeding other than such proceedings as may be necessary to consummate or enforce the Settlement.
8. The names and addresses of all persons and entities who made a timely request to be excluded from the Class, and are therefore not members of the Class or Settling Plaintiffs are set forth in Exhibit A to this order.
9. This action is hereby dismissed in accordance with the terms of the Settlement Agreement, without costs (except as provided in the Settlement Agreement), and upon the merits and with prejudice and in full and final discharge of any and all claims of Class Plaintiffs and Class Members.
10. The Released Parties are hereby released from the Released Claims, as defined in the Settlement Agreement. "Released Claims" means and includes any and all claims, actions, causes of action, rights and liabilities whatsoever, whether based on any federal, state or foreign law, foreseen or unforeseen, mature or unmatured, known or unknown, accrued or not accrued, against Value Vision or the individual defendants or any of its or their present or former members, officers, partners, directors, trustees, employees, agents, servants, investment bankers, advisers, attorneys, stockholders, heirs, executors, administrators, representatives, successors, assigns, subsidiaries, affiliates, parents, divisions, predecessors, insurers or reinsurers (collectively the "Released Parties"), that are alleged or that could have been alleged in the Action.
Notwithstanding the foregoing, the term "Released Claims," as used in this Settlement Agreement, does not include (a) any claims, causes of action, allegations or rights, whether now known or hereafter discovered, presently asserted or hereafter asserted by amendment or otherwise, by any of the plaintiffs in the National Media Actions, as defined in the Settlement Agreement, individually, directly or representatively on behalf of one or more classes or purchasers of securities of National Media (the "National Media Action Claims") or (b) any claims for indemnification or contribution between or among any of the Released Parties as defined in the foregoing paragraph by reason of, based upon, or arising out of or in connection with any matter presently or hereafter asserted in the National Media Actions ("Indemnification/Contribution Claims"). Without limitation of the foregoing, the Settlement and all findings of fact, conclusions of law, opinions, decisions, orders and all other proceedings in this Action shall not operate as the basis for any assertion of res judicata, collateral estoppel, claim preclusion, issue preclusion, release, bar, merger or the like as against the maintenance and prosecution of any National Media Action Claims or Indemnification/Contribution Claims; nor shall this Settlement nor any findings of fact, conclusions of law, opinions, decisions, orders and all other proceedings in this Action affect the admissibility of evidence or discovery of information relating to such National Media Action Claims or Indemnification/Contribution Claims; nor shall this Settlement nor any findings of fact, conclusions of law, decisions, orders and all other proceedings in this Action be admissible in evidence or cited as authority in connection with any proceedings relating to or arising from such National Media Action Claims or Indemnification/Contribution Claims.
11. It is expressly determined, within the meaning of Rule 54(b) of the Federal Rules of Civil Procedure, that there is no just reason for delay and the entry of this judgment is hereby expressly directed.
12. Without affecting the finality of this judgment in any way, this Court retains continuing jurisdiction: (a) over the implementation of this Settlement and any distribution to Settling Plaintiffs made pursuant to further orders of this Court; (b) over disposition of the Settlement Fund; (c) over the action until the final judgment contemplated hereby has become effective, and each and every act agreed to be performed by the parties shall have been performed pursuant to the Settlement; and (d) over all parties to the action for the purpose of enforcing and administering the Settlement.
13. Named Plaintiffs are hereby awarded the amount of $ 1,000.00 each, as compensation for their services as class representatives.
14. Plaintiffs' Counsel in the action are hereby awarded attorneys' fees in the amount of $ 317,371.62, to be paid in accordance with the terms of the Settlement Agreement, representing approximately 34.27% of the net settlement fund, which is defined herein as the Gross Settlement Fund reduced by those expenses which are reimbursed as provided in P 15 below.
15. Plaintiffs' counsel in the action are hereby awarded reimbursement of expenses in the amount of $ 131,768.41, to be paid in accordance with the Settlement Agreement.
16. Defendants have paid all monies and otherwise fully performed all obligations under the Settlement Agreement.
Dated: MARCH 28, 1997
Louis H. Pollak
United States District Judge
© 1992-2004 VersusLaw Inc.