Luzerne County Retirement System v. Kacprowski

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS SEP 15 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: MGM MIRAGE SECURITIES No. 16-15534
LITIGATION,
D.C. No.
------------------------------ 2:09-cv-01558-GMN-VCF
LUZERNE COUNTY RETIREMENT
SYSTEM; PHILADELPHIA BOARD OF
PENSIONS AND RETIREMENT; MEMORANDUM*
ARKANSAS TEACHER RETIREMENT
SYSTEM; STICHTING
PENSIOENFONDS METAAL EN
TECHNIEK, Lead Plaintiffs,
Plaintiffs-Appellees,
v.
NICKOLAS A. KACPROWSKI,
Objector-Appellant,
v.
MGM MIRAGE, AKA MGM Resorts
International; JAMES J. MURREN;
DANIEL J. D'ARRIGO; ROBERT C.
BALDWIN; DEBORAH HOWER LANNI,
Co-Executor of the Estate of J. Terrence
Lanni,
Defendants-Appellees.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Appeal from the United States District Court
for the District of Nevada
Gloria M. Navarro, Chief Judge, Presiding
Submitted September 13, 2017**
San Francisco, California
Before: SCHROEDER and TALLMAN, Circuit Judges, and WHALEY,*** Senior
District Judge.
Objector Nickolas Kacprowski appeals the district court’s approval of a $75
million settlement in a securities fraud class action related to a construction on the
Las Vegas strip. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
1. Kacprowski has standing to appeal the issues raised because he timely
objected to the approval of the settlement, see Churchill Vill., LLC v. Gen. Elec.,
361 F.3d 566, 572–73 (9th Cir. 2004), and we examine the settlement taken as a
whole, rather than its individual component parts, for overall fairness, Hanlon v.
Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998).1
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable Robert H. Whaley, Senior United States District Judge
for the Eastern District of Washington, sitting by designation.
1
Although he has not filed a claim form, Kacprowski also has standing to
appeal the fee award because he appeals the settlement as a whole, and not only the
fee award. Cf. Stetson v. Grissom, 821 F.3d 1157, 1163–64 (9th Cir. 2016)
(objector who fails to participate in settlement and objects only to class counsel’s
fees generally does not have standing to appeal the fee award); Knisley v. Network
Assocs., Inc., 312 F.3d 1123, 1126 (9th Cir. 2002) (standing issues arise when
objector fails to participate in settlement and appeals only the fee award); see also
2
2. The extensive notice efforts here satisfied the requirements of due
process and Federal Rule of Civil Procedure 23(c)(2). See Torrisi v. Tucson Elec.
Power Co., 8 F.3d 1370, 1374 (9th Cir. 1993). The claims administrator, Gilardi &
Co. LLC, mailed over 200,000 notices of the proposed settlement to potential class
members, including 252 institutions holding securities for the benefit of their
clients (i.e., nominee holders), approximately 4,200 financial institutions registered
with the SEC, and 456 institutions that monitor securities class actions for their
investor clients and regularly act on their behalf. Before mailing notices, Gilardi
checked the potential class members’ names and addresses against the U.S. Postal
Service’s National Change of Address database to identify any address changes.
And, it re-mailed notices returned as undeliverable after investigating the potential
class members’ alternative or updated address information using private databases
and address locator services.
Gilardi also published the settlement notice in the national edition of
Investor’s Business Daily, over a national newswire service, PR Newswire, and on
the Depository Trust Company’s Legal Notice System, and it established and
actively maintained a settlement-specific website (www.mgmmiragesecurities
litigation.com). Lastly, the parties sought and obtained a continuance of the
In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 948–49 (9th Cir. 2011)
(“[T]he class recovery and the agreement on attorneys’ fees should be viewed as a
‘package deal.’”).
3
settlement hearing and an extension of the deadlines to permit more time for absent
class members to receive notice, opt out, object, and submit their claims. 2 We
conclude that these procedures gave sufficient time and adequate notice “to all
class members whose names and addresses may be ascertained through reasonable
effort,” Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 173 (1974), and provided “the
best practicable notice under the circumstances,” Silber v. Mabon, 18 F.3d 1449,
1454 (9th Cir. 1994).
3. The district court did not clearly abuse its discretion in approving the
settlement here. See Allen v. Bedolla, 787 F.3d 1218, 1222 (9th Cir. 2015). In
determining that the settlement was fair, reasonable, and adequate, the district
court sufficiently considered the Churchill factors, 361 F.3d at 575, found that the
settlement was not the product of collusion among the negotiating parties, and gave
“a reasoned response to all non-frivolous objections.” Allen, 787 F.3d at 1224; see
In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 947 (9th Cir. 2011).3
2
The district court also continued the settlement hearing a second time sua
sponte.
3
For example, the district court found that the parties had sufficient
information to make an informed decision about the settlement because, among
other things, discovery produced over nine million pages of documents that the
parties “reviewed and analyzed significantly.” And, in objecting to the
settlement’s approval, Kacprowski conceded that he did not have access to that
information.
4
In addition, the parties reached a settlement after extensive negotiations
before a nationally recognized mediator, retired U.S. District Judge Layn R.
Phillips. Among other things, the district court properly relied on Judge Phillips’s
declaration stating that the settlement “represent[ed] a well-reasoned and sound
resolution of highly uncertain litigation” and was “the product of vigorous and
independent advocacy and arm’s-length negotiation conducted in good faith.”
Lastly, the district court’s approval of the settlement withstands the higher level of
scrutiny that we apply “when a settlement is negotiated absent class certification”
because none of the subtle signs of collusion we identified in Allen and Bluetooth
were present here.4 Allen, 787 F.3d at 1224; see Bluetooth, 654 F.3d at 947.
4. Nor did the district court abuse its discretion in approving the allocation
plan, which set a minimum threshold of $10 to receive a distribution from the
settlement fund. See In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 460 (9th Cir.
2000). It was not clearly erroneous for the district court to find that issuing very
small checks to class members would cause a disproportionate administrative
4
We reject Kacprowski’s argument that “evidence of collusion between the
parties was present in the form of a clear sailing provision,” because the settlement
provision providing that Defendants “shall take no position” as to Plaintiffs’ fee
application, neither set a ceiling for the amount of fees Plaintiffs could request, see
Allen, 787 F.3d at 1224, nor provided for the payment of fees separate and apart
from class funds, see Bluetooth, 654 F.3d at 947; see also id. at 948 (stating that
the presence of a neutral mediator is “a factor weighing in favor of a finding of
non-collusiveness”).
5
expense to the fund because of the costs of mailing the checks, tracking and
accounting for each payment, following up on uncashed checks, and reissuing
checks not cashed during their valid periods. The district court properly relied on
uncontroverted evidence showing that smaller checks, such as those under $10, in
many instances are never cashed. In addition, the court cited numerous cases that
have approved similar or higher minimum thresholds. See, e.g., Destefano v.
Zynga, Inc., No. 12-CV-04007-JSC, 2016 WL 537946, at *15 (N.D. Cal. Feb. 11,
2016) ($10 threshold); In re Merrill Lynch & Co., Inc. Research Reports Sec.
Litig., No. 02-MDL-1484JFK, 2007 WL 4526593, at *12 (S.D.N.Y. Dec. 20,
2007) ($50 threshold).
5. Lastly, the district court did not abuse its broad discretion in awarding
class counsel the benchmark award of 25% of the settlement fund as attorneys’
fees. See Powers v. Eichen, 229 F.3d 1249, 1256 (9th Cir. 2000). There were no
special circumstances here indicating that the 25% benchmark award was either
too small or too large. See Torrisi, 8 F.3d at 1376–77.
Objector shall bear all costs of appeal. See Fed. R. App. P. 39(a)(2).
AFFIRMED.
6