MEMORANDUM AND ORDER
NAOMI BUCHWALD, District Judge
Before the Court is the plaintiff's Motion for Relief From Order, which seeks reconsideration of a Memorandum and Order entered by this Court on July 29, 2010. The motion is purportedly brought pursuant to Rules 59 and 60 of the Federal Rules of Civil Procedure (respectively, "Rule 59" and "Rule 60"). For the following reasons, the motion is denied.
Dumitru v. Princess Cruise Lines, Ltd., Nos. 09 Civ. 4792 (NRB), 10 Civ. 1790 (NRB), 2010 WL 3034226 (S.D.N.Y. July 29, 2010).
DISCUSSION
We begin by addressing the relevant standard for a motion for reconsideration of a non-final order — which the plaintiff does not reference in his moving papers. Applying the relevant standard, the motion could be denied on its face for its untimeliness and, even setting that aside, for its obvious failure to satisfy the relevant substantive standard. We nevertheless address the merits of the plaintiff's proffered grounds for reconsideration.
I. Timeliness of Motion for Reconsideration Under Local Civil Rule 6.3
Although the plaintiff styles his motion as one brought under both Rule 59 and Rule 60, neither of these rules is applicable given the procedural posture of this proceeding. These rules apply when litigants seek reconsideration of final orders or judgments. When an order is non-final, a motion for reconsideration must be brought pursuant to Local Civil Rule 6.3. Here, the order at issue granted a motion to compel arbitration and stayed the case pending resolution by arbitration. This was not a final order or judgment, since the Court has yet to enforce any arbitral award.
See, e.g., McGee v. State Farm Mut. Auto. Ins. Co., 684 F. Supp. 2d 258, 266 n. 2 (S.D.N.Y, 2010) (construing motion brought under Rule 59(e) seeking reconsideration of non-final order as motion under Local Civil Rule 6.3); Aguiar v. State of New York, No. 06 Civ. 03334 (THK), 2008 WL 4700030, *1 n. 1 (S.D.N.Y. Oct. 24, 2008) (construing motion brought under Rule 60(b) seeking reconsideration of non-final order as motion under Local Civil Rule 6.3).
See generally Jonesfilm v. Lions Gate Films, Inc., 65 Fed. Appx. 361, 362-63 (2d Cir. 2003); Filanto, S.P.A. v. Chilewich Int'l Corp., 984 F.2d 58, 60-61 (2d Cir. 1993).
Under Local Civil Rule 6.3, the plaintiff's motion is clearly untimely. The rule requires a motion for reconsideration of a non-final order to be served "withinfourteen (14) days after the entry of the court's determination of the original motion" (emphasis in original). The instant motion was filed and served on August 26, 2010 — twenty-eight days after our Memorandum and Order was entered.
II. Proffered Grounds for Reconsideration
Even assuming the plaintiff's motion were timely, it would not satisfy the substantive standard applicable to motions for reconsideration under Local Civil Rule 6.3.
A. Legal Standard
A motion for reconsideration is "an extraordinary remedy to be employed sparingly in the interests of finality and conservation of scarce judicial resources," In re Initial Public Offering Sec. Litig., 399 F. Supp. 2d 298, 300 (S.D.N.Y. 2005) (internal citation and quotation marks omitted), aff'd sub nom. Tenney v. Credit Suisse First Boston Corp., Nos. 05 CV. 3430, 05 CV. 4759, 05 CV. 4760, 2006 WL 1423785, at *1 (2d Cir. 2006), and appropriate only when a court overlooks "controlling decisions or factual matters that were put before it on the underlying motion" and which, if examined, might reasonably have led to a different result. Eisemann v. Greene, 204 F.3d 393, 395 n. 2 (2d Cir. 2000).
A motion for reconsideration is not, however, a "second bite at the apple" for a party dissatisfied with a court's ruling. Sequa Corp. v. GBJ Corp., 156 F.3d 136, 144 (2d Cir. 1998). Similarly, it is not appropriate to use a motion for reconsideration as a vehicle to advance new theories a party failed to articulate in arguing the underlying motion. See Griffin Ins., Inc. v. Petrojam, Ltd., 72 F. Supp. 2d 365, 368 (S.D.N.Y. 1999). The decision to grant or deny a motion for reconsideration is within the sound discretion of the district court. Id. (internal citations omitted).
We note that even if it were proper to bring a motion for reconsideration of our Memorandum and Order under either Rule 59(e) or Rule 60(b), the motion would still be denied.
The substantive standard applicable to Rule 59(e) motions for reconsideration is identical to that governing motions under Local Civil Rule 6.3. See, e.g., Manhattan Telecomms. Corp. v. Global Naps, Inc., No. 08 Civ. 3829 (JSR), 2010 WL 2976498, *1 (S.D.N.Y. July 12, 2010).
Rule 60(b) permits the court to relieve a party from an order in the event of mistake, inadvertence, excusable neglect, newly discovered evidence, fraud, or in exceptional or extraordinary circumstances. House v. Sec'y of Health and Human Servs., 688 F.2d 7, 9 (2d Cir. 1982). Like Local Civil Rule 6.3 and Rule 59(e), Rule 60(b) is not a vehicle for rearguing the merits of the challenged decision. Fleming v. New York Univ., 865 F.2d 478, 484 (2d Cir. 1989). The Second Circuit has instructed district courts that Rule 60(b) provides "extraordinary judicial relief" and can only be granted "upon a showing of exceptional circumstances." Nemaizer v. Baker, 793 F.2d 58, 61 (2d Cir. 1986) (citations omitted).
B. Analysis
We note at the outset that the issues that were the subject of our Memorandum and Order were extensively briefed. The plaintiff filed two cases in New York State court that were removed to this Court — one in May 2009 and another in March 2010 — and consolidated before us. In each case, the defendant moved to compel arbitration, and the plaintiff cross-moved to remand the case to state court. Between the two cases, eight briefs were filed, totaling nearly 150 pages, in addition to several notices of supplemental authorities that were filed by the plaintiff while the motions were pending. The Court also held a lengthy oral argument on July 12, 2010.
In light of the attention given to the plaintiff's case, we find it particularly nettlesome that plaintiff's counsel would file the instant motion, which, in addition to being untimely, raises numerous arguments that were previously made — and rejected. In particular, the plaintiff argues: (1) that we have "overlook [ed] or ignore[d]" the claim that Dumitru did not sign the Crew Agreement applicable to his service on the ship and that this therefore precludes arbitration (Pl. Mem. at 2); (2) that we "overlooked" pertinent sections of Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 714 (1985), to the effect that the arbitration of statutory rights is inappropriate where Congress has precluded a waiver of judicial remedies (Pl. Mem, at 2); and (3) that we "failed to appropriately appreciate" certain legislative history surrounding the United States' accession to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "Convention") (id. at 3). We have already addressed these arguments and decline to do so further. See Dumitru, 2010 WL 3034226, at *4, 8, 9-14.
Indeed, the motion appears to have been written on the assumption that because we did not specifically address each of the arguments made in the plaintiff's sixty-nine pages of briefs, that we somehow overlooked or misapprehended them. This is not the case, and if the plaintiff's assumption were accepted, the "definition of an order deserving of reargument would encompass any decision in which the court failed to respond to every allegation . . . or otherwise interlineate a party's brief."Compagnia Importazioni Esportazioni Rappresentanze v. L-3 Commc'ns Corp., No. 06 Civ. 3157 (NRB), 2010 WL 1378992, *1 (S.D.N.Y. Mar. 30, 2010). To grant such a motion "would set an impossible standard," particularly given the numerous and lengthy briefs in this proceeding. Id.
The plaintiff also suggests that we failed to recognize that the "overweening bargaining power" of a party may serve as "a basis to avoid a forum selection/arbitration provision." (Pl. Mem. at 3.) This is true as a broad proposition of law, but the plaintiff has pointed to no controlling authority warranting such a finding purely on the basis of an employer/employee relationship, which is inherently subject to some disparity in bargaining power. Furthermore, the Court's decision indirectly addresses the unequal bargaining power by severing legally unenforceable provisions from the arbitration agreement — in particular, the provisions specifying that Bermuda law would apply and that venue would lie in Bermuda.Dumitru, 2010 WL 3034226, at *14.
See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 632 (1985); M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 13 (1972).
Indeed, as a general matter, unequal bargaining power is not a defense that can preclude an otherwise proper arbitration under the Convention. See Bautista v. Star Cruises, 396 F.3d 1289 (11th Cir. 2005).
The plaintiff further argues that if he is compelled to arbitrate, he may be forced to pay an exorbitant filing fee under the rules of the International Center for Dispute Resolution. This, he claims, would "strip[]" him of another statutory protection of the Jones Act — an exemption from the pre-payment of court costs and fees. (Pl. Mem. at 3.) The plaintiff, however, concedes that this was "not argued in the briefs or at time of hearing." (Id.) In other words, the plaintiff's counsel, having failed to fully survey the potential arguments available to their client, asks us to begin the decisional process anew and ignore their failure. This is not an appropriate basis for granting a motion for reconsideration.
In any event, we note that the plaintiff has provided no support for the exorbitant filing fee he claims would be required. (See Pl. Mem. at 3 ("between $13,450 and $65,000").) If the fee is calculated as a function of the damages being sought, the large sum may be attributable to an unduly optimistic assessment of the damages that might reasonably be available to the plaintiff.
We also note that arbitration fees will virtually always substantially exceed the filing fees and costs in federal court. We do not think this should defeat an otherwise enforceable arbitration agreement, both as a general matter and where, as here, the plaintiff would have been excused from the pre-payment of court costs and fees. See Gawin v. Princess Cruise Lines Ltd., No. 09-23059-CIV, 2009 WL 6364038, *3 (S.D. Fla. 2009).
Moreover, as is often done in court proceedings, we assume that plaintiff's counsel is free to advance their client the costs of the arbitration.
Finally, the plaintiff takes issue with the statement in our opinion that he had "not cited any case in which a district court has remanded a Jones Act claim in the face of an arbitration agreement that falls under the Convention." (Pl. Mem. at 1 (quoting Dumitru, 2010 WL 3034226, at *15).) He claims that this is "not correct" and points to three decisions that were cited in the earlier briefing: (1) Thomas v. Carnival Corp., 573 F.3d 1113 (11th Cir. 2009); (2) Kovacs v. Carnival Corp., No. 09-22630-CV, 2009 WL 4980277 (S.D. Fla. Dec. 21, 2009); and (3) Pavon v. Carnival Corp., No. 09-22935-CV (S.D. Fla. Jan. 20, 2010). As an initial matter, none of these cases are controlling caselaw in this District and thus they are, on their face, inappropriate predicates for a motion for reconsideration.
In any event, Thomas, Kovacs, and Pavon are all distinguishable from the case at bar in crucial respects. It is true that inThomas, the Eleventh Circuit held that a Jones Act claim should be remanded to state court, but, as we noted in our earlier decision, the court also held that the plaintiff's Jones Act claim did not fall under the relevant arbitration clause. Thomas, 573 F.3d at 1120 n. 9; Dumitru, 2010 WL 3034226, at *10 n. 12. Here, we held that Dumitru's Jones Act claim did indeed fall within the parties' arbitration agreement. Both Kovacs and Pavon are distinguishable because the courts were ruling on the appropriateness of compelling arbitration on the assumption that foreign law would necessarily govern the proceedings. Neither case appears to have involved an agreement, such as the one in this proceeding, that contained both a choice-of-law provision and a severability clause. Thus, we were able to address the concern over the restrictiveness of foreign law by severing the Bermuda choice-of-law provision from the arbitration agreement and holding that United States law shall apply to the plaintiff's Jones Act claim. Dumitru, 2010 WL 3034226, at *12.
See Kovacs, 2009 WL 4980277, at *1 ("the Court finds it would be against public policy to compel arbitration of Plaintiff's Jones Act claim according to Panamanian law because to do so would deprive her of important statutory rights").
CONCLUSION
For the foregoing reasons, the motion (docket no. 25 in 10 Civ. 1790) is denied.
Dated: New York, New York
September 10, 2010
vidually, and it is therefore in the interest of all class members to proceed as a class. "The policy at the very core of the class action mechanism is to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights."
Amchem Prods.,
Inc. v. Windsor,
521 U.S. 591, 617 (1997) (quotation marks omitted). Accordingly, class treatment is often deemed superior in "negative value" cases,
i.e., where each individual class member's interest in the litigation is less than the anticipated cost of litigating individually.
Spagnola v. Chubb Corp.,
264 F.R.D. 76, 99 (S.D.N.Y. 2010).
See, e.g.,
Charrons v. Pinnacle Group NY LLC,
___ F. R. D. ___,
2010 WL 1752501, at *22 (S.D.N.Y. Apr. 27, 2010) (superiority satisfied where individual claims of proposed class members appeared too small to warrant individual adjudication);
In re Currency Conversion Fee Antitrust Litigation,
264 F.R.D. 100, 117 (S.D.N.Y. 2010) (similar);
Fogarazzo v. Lehman Bros., Inc.,
263 F.R.D. 90, 110 (S.D.N.Y. 2009) (similar);
In re Initial Public Offering Securities Litigation,
243 F.R.D. 79 (S.D.N.Y. 2007) (similar).
Cf. Kottler v. Deutsche Bank AG, No. 05 Civ. 7773,
2010 WL 1221809, at *5 (S.D.N.Y. Mar. 29, 2010) (superiority not satisfied where class members were high net-worth investors with large claims, capable of litigating individually).
Further, the Court is unaware of any existing parallel litigation which might counsel against certification of the class. See, e.g., Kottler, 2010 WL 1221809, at *5 (superiority not satisfied where 25 proposed class members had already filed individual lawsuits and where others had reached settlement without litigation).
Finally, the Court does not foresee any management-related difficulties that might be sufficiently acute to bar certification. Courts occasionally observe that "`[t]he greater the number of individual issues, the less likely that superiority can be established.'" Cohn v. Massachusetts Mut. Life Co., 189 F.R.D. 209, 219 (D. Conn. 1999) (quoting Castano v. American Tobacco Company, 84 F.3d 734, 745 n. 19 (5th Cir. 1996)). See, e.g.,Spagnola v. Chubb Corp., 264 F.R.D. 76, 99 (S.D.N.Y. 2010) (superiority not satisfied because of "the need for mini-trials on the resolution of each class member's claims and the applicability of affirmative defenses"). Conversely, the "failure to certify an action under Rule 23(b)(3) on the sole ground that it would be unmanageable is disfavored and should be the exception rather than the rule." In re Visa Check/MasterMoney Antitrust Litigation, 280 F.3d 124, 140 (2d Cir. 2001) (quotation marks omitted). See, e.g., Charrons v. Pinnacle Group NY LLC, ___ F. R. D. ___, 2010 WL 1752501, at *22 (S.D.N.Y. Apr. 27, 2010) (adjudicating liability elements of common claims where individual class members sought varying damages deemed "the most efficient way to proceed."); In re American Intern. Group, Inc. Securities Litigation, 265 F.R.D. 157, 188 (S.D.N.Y. 2010) (anticipated management difficulties in class action involving more than two million class members deemed "necessary evils in avoiding the undoubtedly much larger difficulties that would arise from resolving the controversy through thousands of smaller suits."); In re Currency Conversion Fee Antitrust Litigation, 264 F.R.D. 100, 117 (S.D.N.Y. 2010) (anticipated management difficulties outweighed by desirability of "[s]treamlining the litigation in one forum [to] simplify the process and avoid inconsistency," and "conservation of judicial resources."); Fogarazzo v. Lehman Bros., Inc., 263 F.R.D. 90, 110 (S.D.N.Y. 2009) (similar). Here, management concerns are further minimized by the fact that the parties contemplate no further litigation of their substantive claims. In aggregate, these factors persuade the Court that, by a preponderance of the evidence, the superiority requirement is met.
In accordance with the foregoing, the proposed class meets the requirements of Rules 23(a) and Rule 23(b)(3), and as such is certified subject to the above stated limitation with respect to the Class Period.
B. Proposed Settlement
Federal Rule of Civil Procedure 23(e) requires court approval of any settlement that effects the dismissal of a class action. Final approval of a proposed settlement may only be granted "after a hearing and on finding that it is fair, reasonable, and adequate." Fed.R.Civ.P. 23(e)(2). See, e.g., McReynolds v. Richards-Cantave, 588 F.3d 790, 803 (2d Cir. 2009); Central States Se. and Sw. Areas Health and Welfare Fund v. Merck-Medco Managed Care, L.L.C., 504 F.3d 229, 247 (2d Cir. 2007). Determining whether a settlement is fair, reasonable, and adequate requires consideration of the "`negotiating process leading up to the settlement, i.e., procedural fairness, as well as the settlement's substantive terms, i.e., substantive fairness.'" McReynolds, 588 F.3d at 803-04 (quoting D'Amato v. Deutsche Bank, 236 F.3d 78, 85 (2d Cir. 2001)). With respect to procedural fairness, the reviewing court must "ensure that the settlement resulted from arm's-length negotiations and that plaintiffs' counsel . . . possessed the necessary experience and ability, and have engaged in the discovery, necessary to effective representation of the class's interests." Id. at 804 (quotation marks omitted). Under such circumstances, the Second Circuit has recognized a presumption of fairness, reasonableness, and adequacy as to proposed settlements. See id. at 803; Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 116 (2d Cir. 2005). With respect to substantive fairness, the reviewing court must consider nine factors, namely:
(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; (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) (internal citations omitted),
abrogated on other grounds by Goldberger v. Integrated Res., Inc.,
209 F.3d 43 (2d Cir. 2000).
See McReynolds v. Richards-Cantave, 588 F.3d 790, 804 (2d Cir. 2009);
Wal-Mart Stores, Inc. v. Visa U.S.A., Inc.,
396 F.3d 96, 117 (2d Cir. 2005).
Preliminary approval of a class action settlement, in contrast to final approval, "is at most a determination that there is what might be termed `probable cause' to submit the proposal to class members and hold a full-scale hearing as to its fairness." In re Traffic Executive Association-Eastern Railroads, 627 F.2d 631, 634 (2d Cir. 1980). As such, it "is appropriate where it is the result of serious, informed, and non-collusive negotiations, where there are no grounds to doubt its fairness and no other obvious deficiencies . . ., and where the settlement appears to fall within the range of possible approval." Reade-Alvarez v. Eltman, Eltman Cooper, P.C., 237 F.R.D. 26, 33 (E.D.N.Y. 2006).See, e.g., Authors Guild v. Google. Inc., No. 05 Civ. 8136, 2009 WL 4434586, at *1 (S.D.N.Y. Dec. 1, 2009); Chin v. RCN Corp., No. 08 Civ. 7349, 2010 WL 1257586, at *2 (S.D.N.Y. Mar. 12, 2010).
Here, the proposed settlement falls within the range of possible approval. As set forth in the Stipulation, Defendants have agreed to pay $2 million into an escrow account (the "Settlement Fund") for the benefit of the class in exchange for the release of all Released Claims against any of the Released Parties. (Dkt. # 113, ¶¶ 2.2. 3.1.) Lead Plaintiff estimates that this sum represents $0.12 per share of SNSA ADRs before deduction of attorneys' fees and expenses. (Notice of Proposed Settlement of Class Action ("Notice") (Dkt. #
"Released Claims" is defined as
any and all claims, debts, demands, rights or causes of action or liabilities of any nature or description whatsoever (including, but not limited to, claims for damages, interest, attorneys' fees, expert or consulting fees, and any other costs, expenses, or liability whatsoever), whether based on federal, state, local, statutory or common law or any other law, rule or regulation, whether fixed or contingent, accrued or unaccrued, liquidated or unliquidated, at law or in equity, matured or unmatured, whether class or individual in nature, including both known claims and Unknown Claims . . ., that have been or could have been asserted in any forum by Lead Plaintiff or the Class Members or any of them or the heirs, successors, and assigns of any of them, against any of the Released Parties, which arise out of, are based on, or relate in any way, directly or indirectly, to any of the allegations, acts, transactions, facts, events, matters or occurrences, representations or omissions involved, asserted, set forth, referred to or that could have been asserted in the Litigation and arise out of, are based on, or relate in any way to the purchase of [SNSA] securities by any Class Member during the Class Period, including, but not limited to, any derivative claims that could have been asserted relating to the Released Claims.
(Dkt. # 113, ¶ 1.17.) "Unknown Claims" is defined as
any and all Released Claims which the Lead Plaintiff or any Class Member does not know or suspect to exist in his, her or its favor at the time of the release of the Released Parties, and any Released Defendants' Claims which any Defendant does not know or suspect to exist in his, her or its favor, which if known by him, her or it might have affected his, her or its decision(s) with respect to the Settlement. With respect to any and all Released Claims and Released Defendants' Claims, the Settling Parties stipulate and agree that upon the Effective Date, the Lead Plaintiff and Defendants shall expressly waive, and each Class Member shall be deemed to have waived, and by operation of the Order and Final Judgment shall have expressly waived, any and all provisions, rights and benefits conferred by any law of any state or territory of the United States, or principle of common law, which is similar, comparable, or equivalent to
California Civil Code § 1542, which provides: `A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.' Lead Plaintiff and the Class Members may hereafter discover facts in addition to or different from those which he, she or it now knows or believes to be true with respect to the subject matter of the Released Claims, but the Lead Plaintiff shall expressly waive, and each Class Member, upon the Effective Date, shall be deemed to have, and by operation of the Order and Final Judgment shall have, fully, finally, and forever settled and released any and all Released Claims, known or unknown, suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden, which now exist, or heretofore have existed, upon any theory of law or equity now existing or coming into existence in the future, including, but not limited to, breach of any duty, law or rule, without regard to the subsequent discovery or existence of such different or additional facts. Defendants may hereafter discover facts in addition to or different from those which they know or believe to be true with respect to the subject matter of the Released Defendants' Claims, but Defendants shall expressly waive, and by operation of the Order and Final Judgment shall have fully, finally, and forever settled and released any and all Released Defendants' Claims, known or unknown, suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden, which now exist, or heretofore have existed, upon any theory of law or equity now existing or coming into existence in the future, including, but not limited to, breach of any duty, law or rule, without regard to the subsequent discovery or existence of such different or additional facts. Lead Plaintiff and Defendants acknowledge, and the Class Members by operation of law shall be deemed by operation of the Order and Final Judgment to have acknowledged, that the inclusion of "Unknown Claims" in the definition of Released Claims and Released Defendants' Claims was separately bargained for and was a key element of the Settlement.
(Dkt. # 113, ¶ 1.23.) "Released Defendants' Claims" is defined as
any and all claims, rights or causes of action or liabilities whatsoever, whether based on federal, state, local, statutory or common law or any other law, rule or regulation, including both known claims and Unknown Claims . . ., that have been or could have been asserted in the Litigation or any forum by the Defendants, or the heirs, successors and assigns of any of them against the Lead Plaintiff, any of the Class Members or their attorneys, which arise out of or relate in any way to the institution, prosecution or settlement of the Litigation, excluding any claims for breaches of this Stipulation.
(Dkt. # 113, ¶ 1.18.) Although these definitions sweep broadly, the parties' authority to release is necessarily limited to claims that "arise [] out of the `identical factual predicate' as the settled conduct." Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 107 (2d Cir. 2005) (quoting TBK Partners, Ltd. v. Western Union Corp., 675 F.2d 456, 460 (2d Cir. 1982)). Finally, "Released Parties" is defined as
each and all of the Defendants, their respective past or present advisors, affiliates, agents, assigns, attorneys, banks or investment banks, co-insurers, consultants, directors, divisions, present and former employees, heirs, insurers, investment advisors, members, officers, parents, predecessors, principals, reinsurers, representatives, stockholders, spouses, subsidiaries, successors, related or affiliated entities, any entity in which any Defendant has a controlling interest, any member of an Individual Defendant's immediate family, or any trust of which any Defendant is the settlor or which is for the benefit of any Individual Defendant and/or member(s) of his family.
(Dkt. # 113, ¶ 1.19.)
113-2, p. 4.)) Lead Plaintiff further estimates that this sum represents approximately eight percent of the maximum recoverable damages for all Class Members. (Dkt. # 112, p. 10.)
"Securities class actions are generally complex and expensive to prosecute." In re Gilat Satellite Networks, Ltd., No. CV-02-1510, 2007 WL 1191048, at *10 (E.D.N.Y. Apr. 19, 2007). See Strougo v. Bassini, 258 F. Supp. 2d 254, 258 (S.D.N.Y. 2003) (it is "beyond cavil that continued litigation in this multi-district securities class action would be complex, lengthy, and expensive, with no guarantee of recovery by the class members." (quotation marks omitted)). Here, in light of the considerable risks involved in establishing liability, the anticipated costs involved, and the uncertainty of securing any recovery through further litigation, the proposed Settlement Fund amount and its relationship to Lead Plaintiff's estimated maximum recoverable damages weigh in favor of approving the settlement.
Further, the proposed settlement does not appear to be collusive. The negotiations leading to settlement appear to have been comprehensive, and the Stipulation forecloses any unduly preferential treatment to class representatives. Specifically, the Stipulation provides that after accounting for: (1) the costs of notice and administration of settlement; (2) the attorneys' fees and expenses to be awarded by this Court; and (3) taxes on the income earned by the Settlement Fund and tax expenses, the balance of the Settlement Fund (the "Net Settlement Fund") is to be distributed to all Authorized Claimants in accordance with the proposed Plan of Allocation, and no portion is to be returned to Defendants. (Dkt. # 113, ¶¶ 3.2, 3.6, 5.2, 6, 7.1, 7.12.) In turn, the Plan of Allocation provides that the Claim Administrator will first determine a "Recognized Claim" for each Authorized Claimant based on the dates on which their affected securities were purchased and sold, adjusted in accordance with the PSLRA's 90-day "lookback" limitation. (Dkt. # 113-2, pp. 21-29.) If all Recognized Claims can be borne by the Net Settlement Fund, each Authorized Claimant will receive an amount equal to their Recognized Claim. (Dkt. # 113-2, p. 21.) Otherwise, each Authorized Claimant will receive a share of the Net Settlement Fund corresponding to the percentage of all Recognized Claims represented by their Recognized Claim. (Dkt. # 113-2, p. 21.)
The Stipulation provides that Lead Counsel, as Escrow Agent, may allocate up to $200,000 of the Settlement Fund to a distinct Notice and Administration Fund, and without seeking further approval from the court, may draw from the Notice and Administration Fund to pay the costs of notice and administration of the settlement. (Dkt. # 113, ¶ 5.2.) The tasks involved, including mailing the notice to the class, publishing the summary notice, reviewing claims, compiling a distribution schedule, and mailing distribution checks, are to be performed by the Claims Administrator under Lead Counsel's supervision and subject to the court's authority. (Dkt. # 112, p. 12; Dkt. # 113 ¶ 5.1.)
According to the proposed Notice, Lead Plaintiff's counsel, if appointed as Class Counsel, intends to move for an award attorneys' fees not to exceed 33-1/3 percent of the Settlement Fund, and reimbursement of expenses not to exceed $100,000 as incurred in connection with the prosecution of this action, plus interest on both fees and expenses at the same rate as that earned by the Settlement Fund. (Dkt. # 113-2, pp. 3, 15.)
"Authorized Claimant" is defined as "any Class Member whose claim for recovery has been allowed" in accordance with the terms of the Stipulation. (Dkt. # 113, ¶ 1.1.)
The proposed Plan of Allocation is set forth as part of the proposed Notice to the class, but the Stipulation notes that this particular version of the Plan "is not a necessary term of this Stipulation and it is not a condition of this Stipulation that the Plan of Allocation be approved." (Dkt. # 113, ¶ 7.3.)
The Settlement will only effectively release the claims of the class after: (1) the court preliminarily approves the Settlement; (2) the class is notified in accordance with the approved method; (3) a Settlement Hearing is held during which class members are given an opportunity to object to the Settlement, the Plan of Allocation, or proposed counsel fees and expenses; (4) the court finally approves the Settlement as fair, reasonable, and adequate in accordance with Rule 23; and (5) all appeals have been exhausted and the opportunity for further review has expired. (Dkt. # 113, ¶¶ 1.6, 4.2, 11.1.) Meanwhile, the parties agree that Defendants shall retain an option to terminate the settlement, which may be exercised only if
the aggregate number of shares of [SNSA] securities purchased during the Class Period by Class Members who would otherwise be entitled to participate as members of the Class, but who timely and validly request exclusion, equals or exceeds a certain percentage of the total number of shares of [SNSA] securities traded during the Class Period, as set forth in a Supplemental Agreement between Defendants and Lead Plaintiff.
(Dkt. # 113, ¶ 10.1.) Defendants must give Lead Counsel advance notice of their intent to exercise this option to terminate. (Dkt. # 113, ¶ 10.2.) Upon such notice, Lead Counsel "may review the validity of any Class Member's request for exclusion and may attempt to cause retraction or withdrawal of any request for exclusion" in order to reduce the percentage of affected securities to a level falling below the threshold set forth in the "Supplemental Agreement." (Dkt. # 113, ¶ 10.3.) Lead Plaintiff's success in causing sufficient retractions of requests for exclusion automatically nullifies Defendants' right to exercise their option to terminate. (Dkt. # 113, ¶ 10.3.)
In securities class actions, the PSLRA limits damages to the purchase price of the security, reduced by its mean trading price for the 90-day period subsequent to the corrective disclosure (the "lookback" period). See 15 U.S.C. § 78u-4(e). When the subject security is sold before expiration of the lookback period, damages may not exceed the difference between the purchase price and the mean trading price during the interval beginning at the date of the corrective disclosure and ending at the date of sale. See id.
In sum, the Court at this stage finds no obvious deficiencies or significant grounds to doubt the settlement's fairness, and concludes that the settlement lies within the range of possible approval. Accordingly, preliminary approval is granted.
C. Appointment of Class Representative, Class Counsel, and Claims Administrator
With Defendants' consent, Lead Plaintiff seeks appointment as Class Representative, and Lead Counsel's appointment as Class Counsel. (Dkt. # 113, p. 4.) The parties propose Gilardi Co. LLC as Claims Administrator. (Dkt. # 112, p. 6.)
To appoint Lead Plaintiff as Class Representative, a court must "find, by a preponderance of the evidence, that he is both an adequate and typical representative of the class. . . ." In re Flag Telecom Holdings, Ltd. Securities Litigation, 574 F.3d 29, 40 (2d Cir. 2009). Here, the Court has made such findings as discussed under A-3 (Typicality) and A-4 (Adequacy of Representation), above. Accordingly, the Court appoints Lead Plaintiff as Class Representative.
Federal Rule of Civil Procedure 23(g)(1)(A) sets out the factors a court must consider in appointing Class Counsel, namely: (1) "the work counsel has done in identifying or investigating potential claims in the action;" (2) "counsel's experience in handling class actions, other complex litigation, and the types of claims asserted in the action;" (3) "counsel's knowledge of the applicable law;" and (4) "the resources that counsel will commit to representing the class." Fed.R.Civ.P. 23(g)(1)(A). Further, a court may "consider any other matter pertinent to counsel's ability to fairly and adequately represent the interests of the class." Fed.R.Civ.P. 23(g)(1)(B).
Here, the Court is satisfied that Lead Counsel has performed adequately in litigating and settling this case, and is sufficiently qualified and experienced to effectively represent the proposed class. (See Dkt. # 112-1.) Accordingly, the Court appoints Lead Counsel as Class Counsel.
Finally, the proposed Claims Administrator has submitted a detailed declaration describing the claim processing procedures that it will implement to effectuate the settlement, as well as its relevant experience and qualifications. (See Dkt. # 127-2.) Accordingly, the Court appoints Gilardi Co. LLC as Claims Administrator.
D. Proposed Notice
Lead Plaintiff seeks approval of its proposed notice to the class. Under Federal Rule of Civil Procedure 23(c)(2)(B), a "court must direct to class members the best notice that is practicable under the circumstances. . . ."
In the simultaneous certification and settlement context, notice to class members seems mandated by both Rules 23(c)(2)(B) and 23(e)(1). Rule 23(e)(1), which states that "[t]he court must direct notice in a reasonable manner to all class members who would be bound by the proposal," appears to require somewhat less than Rule 23(c)(2)(B), which states that "the court must direct to class members the best notice that is practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort. Thus, in the simultaneous certification and settlement context, as here, a single notice suffices if it constitutes the best notice that is practicable under the circumstances in accordance with Rule 23(c)(2)(B). See Manual for Complex Litigation, Fourth, § 21.311 (2004) ("If a class is certified and settled simultaneously, a single notice is generally used.").
With respect to substance, this requires that the notice clearly and concisely state in plain, easily understood language: (1) the nature of the action; (2) the definition of the class certified; (3) the class claims, issues, or defenses; (4) that a class member may enter an appearance through an attorney if the member so desires; (5) that the Court will exclude from the class any member who requests exclusion; (6) the time and manner for requesting exclusion; and (7) the binding effect of a class judgment on class members. Fed.R.Civ.P. 23(c)(2)(B). Where a proposed or final settlement agreement is published or otherwise disseminated to the class, the PSLRA further requires: (1) a statement of plaintiff recovery; (2) a statement of potential outcome of the case; (3) a statement of attorneys' fees and costs sought; (4) identification of lawyers' representatives; (5) the reasons for settlement; and (6) a cover page summarizing the information contained in the foregoing statements. 15 U.S.C. § 78u-4(a)(7).
Specifically, the "amount of the settlement proposed to be distributed to the parties to the action, determined in the aggregate and on an average per share basis." 15 U.S.C. § 78u-4(a)(7)(A).
Specifically, a "statement concerning the average amount of such potential damages per share," or "[i]f the parties do not agree on the average amount of damages per share that would be recoverable if the plaintiff prevailed on each claim alleged under this chapter, a statement from each settling party concerning the issue or issues on which the parties disagree." 15 U.S.C. § 78u-4(a)(7)(B).
Specifically, a statement indicating which parties or counsel intend to apply to the court for an award of attorneys' fees or costs from any fund established as part of the settlement, as well as "the amount of fees and costs that will be sought (including the amount of such fees and costs determined on an average per share basis), and a brief explanation supporting the fees and costs sought." 15 U.S.C. § 78u-4(a)(7)(C).
Specifically, "[t]he name, telephone number, and address of one or more representatives of counsel for the plaintiff class who will be reasonably available to answer questions from class members concerning any matter contained in any notice of settlement published or otherwise disseminated to the class." 15 U.S.C. § 78u-4(a)(7)(D).
With respect to method, Rule 23(c)(2)(B) requires "individual notice to all members who can be identified through reasonable effort." See Eisen v. Carlisle and Jacquelin, 417 U.S. 156, 176 (1974) ("[I]ndividual notice to identifiable class members is not a discretionary consideration to be waived in a particular case. It is, rather, an unambiguous requirement of Rule 23.").
Finally, in order to comport with due process, the notice "must be of such nature as reasonably to convey the required information . . . and it must afford a reasonable time for those interested to make their appearance." McReynolds v. Richards-Cantave, 588 F.3d 790, 804 (2d Cir. 2009) (quotation marks omitted). See Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 114 (2d Cir. 2005) (A "settlement notice must fairly apprise the prospective members of the class of the terms of the proposed settlement and of the options that are open to them in connection with the proceedings." (quotation marks omitted)). Proper notice under the foregoing rules allows class members to meaningfully evaluate their participation in a proposed settlement by, for instance, comparing the recovery per share under the settlement with the potential damages per share if the class prevailed at trial. See In re Independent Energy Holdings PLC Securities Litigation, 302 F. Supp. 2d 180, 184 (S.D.N.Y. 2003) ("One of the concerns Congress had in enacting the PSLRA was to ensure that class members received sufficient, comprehensible notice so
they could evaluate proposed settlements intelligently.").
Here, the Court has reviewed the proposed Notice (Dkt. # 113-2) and is satisfied that all foregoing requirements are met. Lead Plaintiff proposes to send this Notice and a Proof of Claim and Release form (Dkt. # 113-3) by first-class mail to each Class Member identified from SNSA's transfer records as purchasers of its securities during the Class Period. (Dkt. # 112, p. 11.) Lead Plaintiff further proposes to cause Summary Notice (Dkt. # 113-4) to be published once in the national edition of Investor's Business Daily (Dkt. # 112, p. 11) and to be posted on either thePR Newswire or the Business Wire (Dkt. # 125, ¶ 7). The proposed Notice and Summary Notice both indicate that the Claims Administrator will also maintain a toll-free telephone service and website which will serve to provide further information on the settlement and assistance to potential class members without charge, including copies of the Stipulation and Proof of Claim and Release form. (Dkt. # 113-2, p. 12; Dkt. # 113-4, p. 3.) The Court finds these notice methods adequate. Accordingly, the proposed notice to the class is approved provided that, prior to its dispatch, appropriate adjustments are made to the Notice, Proof of Claim and Release form, and Summary Notice in order to accurately reflect the Class Period parameters as certified herein.
IV. CONCLUSION
For the foregoing reasons, Lead Plaintiff's motion (Dkt. # 111) is GRANTED as modified herein. To effectuate settlement, the Court orders the following:
Within 20 days from the date of this order, Defendants shall provide the Claims Administrator with a list of all known purchasers of SNSA ADRs or ordinary shares during the Class Period in a form acceptable to the Claims Administrator.
Within 45 days from the date of this order, the Claims Administrator shall: (A) cause the Notice and Proof of Claim and Release form to be mailed to each class member; (B) cause the Summary Notice to be published once in the national edition ofInvestor's Business Daily and over the BusinessWire or PR Newswire; and (C) make available the toll-free telephone service and website described in the Notice and Summary Notice. Proof of compliance with the foregoing shall be served on Defendants' counsel and filed with the Court no later than 10 days prior to the Settlement Hearing.
On December 15, 2010, at 3:00 P.M. in Courtroom 2 of the United States District Court for the District of Connecticut, 450 Main Street, Hartford, Connecticut 06103, the Court shall conduct a Settlement Hearing in order to determine: (1) whether the proposed Settlement is fair, reasonable, and adequate and should be finally approved; (2) whether to approve the Plan of Allocation; (3) whether to approve Class Counsel's application for attorney's fees and costs; and (4) whether the action should be dismissed with prejudice. The Court may adjourn the Settlement Hearing without notice to members of the Class, and reserves the right to finally approve the proposed Settlement without further notice to members of the Class.
No later than 15 days before the Settlement Hearing, Plaintiffs shall file a motion for final approval of the settlement and supporting briefs.
No later than 15 days before the Settlement Hearing, Class Counsel shall file their application for attorney's fees and costs along with supporting brief in accordance with Fed.R.Civ.P. 23(h).
All Class Members have the right, pursuant to Rule 23(c)(2), to opt-out of the Action by filing a valid request for exclusion from the class with the Claims Administrator at the address included in the Notice no later than 30 days before the Settlement Hearing, unless otherwise accepted by the Court. Class Members who validly request exclusion shall not be entitled to any payment, and shall have no standing to object to the Settlement. All Class Members who do not request exclusion shall be bound by all determinations and judgments in this action.
Any Class member who does not timely or validly request exclusion from the Class and who has timely filed a notice of intention to appear may appear in person or by counsel at the Settlement Hearing and be heard in opposition to the fairness, reasonableness and adequacy of the Settlement, Plan of Allocation, or Class Counsel's application for attorney's fees and costs. All wishing to be so heard shall file a notice of their intention to appear with the Clerk of the Court, and serve the same on Class Counsel and counsel for Defendants, no later than 30 days before the Settlement Hearing, unless otherwise excused by the Court. Such notice must include proof of class membership, explanation for the opposition, and supporting documents. Class Members who do not object to the Settlement need not appear or take any other action to indicate approval.
SO ORDERED this 10th day of September, 2010.