IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF GEOGIA BRUNSWICK DIVISION

Transcription

1 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF GEOGIA BRUNSWICK DIVISION LEONARDO DEL ROSARIO and ) EVELYN WEST, Individually and on ) Behalf of a Class of all Others Similarly ) Situated, ) ) Plaintiffs, ) ) v. ) CV ) KING & PRINCE SEAFOOD ) CORPORATION, et al., ) ) Defendants. ) JOINT MOTION TO APPROVE SETTLEMENT AND MEMORANDUM IN SUPPORT THEREOF COME NOW all parties through counsel, pursuant to Rule 23(e), Fed.R.Civ.P., and move the Court to approve the proposed settlement set forth in the agreement attached hereto as Exhibit A; order notice to the class; determine whether or not class members should be given a second opportunity to opt out of this action; set deadlines for class members to object to the settlement or to object to the proposed petition for fees and reimbursement of expenses; and to set a time, date and place for a hearing to consider final approval of the settlement, and the award of attorney fees and expenses to class counsel. Rule 23(e), as recently amended, now provides: (e) SETTLEMENT, VOLUNTARY DISMISSAL, OR COMPROMISE. The claims, issues, or defenses of a certified class may be settled, voluntarily dismissed, or compromised only with the court=s approval. The following procedures apply to a proposed settlement, voluntary dismissal, or compromise: (1) The court must direct notice in a reasonable manner to all class members who would be bound by the proposal. (2) If the proposal would bind class members, the court may approve it only

2 Rule 23(e), Fed.R.Civ.P. after a hearing and on finding that it is fair, reasonable, and adequate. (3) The parties seeking approval must file a statement identifying any agreement made in connection with the proposal. (4) If the class action was previously certified under Rule 23(b)(3), the court may refuse to approve a settlement unless it affords a new opportunity to request exclusion to individual class members who had an earlier opportunity to request exclusion but did not do so. (5) Any class member may object to the proposal if it requires court approval under this subdivision (e); the objection may be withdrawn only with the court=s approval. This action was filed on March 23, On March 7, 2006, this Court certified a class defined as follows: All terminated participants who received a distribution from the ESOP Trust during plan years 1998 through 2001 who (1) had ESOP account balances in excess of $5,000 at the time of their distribution; and (2) received a cash or cash rollover distribution from the ESOP Trust. A terminated participant is defined as an employee who stopped working for the Company for a reason other than death, disability or retirement at age 65. Notice was provided to members of the class as directed by the Court with the class members receiving notice by United States mail. Two members of the class requested that they be excluded from the class. The class, as certified, contains 162 members. The case was tried before the Court in October The decision of the Court of December 8, 2009, found that members of the class did not receive information as to their rights to sell stock during one of two put-option periods. The Court further found that the class members, if fully informed, likely would have elected to receive a stock distribution of stock from the King & Prince Seafood Corporation Employee Stock Ownership Plan (the ESOP ) rather than a cash or cash roll-over distribution, and that they likely would have tendered that stock for repurchase by the King & Prince Corporation (the Company ) during the second put-option period. The Court further concluded that under controlling decisions of the 2

3 United States Supreme Court, the Court lacked authority to order monetary relief to compensate class members for the damage that the Court concluded that they likely had suffered by failing to elect a stock distribution from the ESOP and selling the stock to the Company during the second putoption period. Plaintiffs appealed and Defendants cross-appealed. While the matter was on appeal, the United States Supreme Court decided the case of Cigna Corp. v. Amara, U.S., 131 S.Ct (2011), a decision that stated, inter alia, that a court sitting in equity could award monetary relief against an ERISA fiduciary in the form of an equitable surcharge. Id., 131 S.Ct. at By decision entered June 28, 2011, the United States Court of Appeals for the Eleventh Circuit vacated the District Court s prior judgment and remanded this action to the District Court for reconsideration in light of the Amara decision. Del Rosario v. King & Prince Seafood Corp., 2011 WL (11 th Cir.) Upon remand, this Court directed the parties to brief the impact of the Amara decision on the issues before the Court. The parties briefed their respective positions and simultaneously began settlement negotiations. The parties subsequently involved the services of Terrance White, Esquire, of Daytona Beach, Florida, a talented mediator who had previously mediated this matter without success. Over the following months, there were a number of interchanges of information between the parties and through Mr. White. Mr. White subsequently concluded that the positions of the parties had reached the point that it was reasonable to meet again in person to continue the mediation. The parties gathered at the offices of Bryan Cave in Atlanta on Monday, February 20, By the end of the day, the parties had reached a settlement that was memorialized in a preliminary term sheet. The parties have subsequently reduced their agreement to the settlement agreement that is submitted with this motion. It is undisputed that: (i) there are 162 members of the class; and (ii) that had each of these 3

4 class members elected to receive a stock distribution instead of cash or cash roll-over distribution from the ESOP, and had they sold that stock back to the Company in the second put-option period, they would have collectively received $1,640, more than they collectively received when they received their respective cash or cash roll-over distributions. This Settlement Agreement presented to the Court for preliminary approval represents a fair and reasonable resolution of this dispute. The Manual For Complex Litig. (Fourth) ' (2004) provides: Review of a proposed class action settlement generally involves two hearings. First counsel submit the proposed terms of settlement and the judge makes a preliminary fairness evaluation. In some cases, this initial evaluation can be made on the basis of information already known, supplemented as necessary by briefs, motions, or informal presentation by parties. If the case is presented for both class certification and settlement approval, the certification hearing and preliminary fairness evaluation can usually be combined. The judge should make a preliminary determination that the proposed class satisfies the criteria set out in Rule 23(a) and at least one of the subsections of Rule 23(b). See section If there is a need for subclasses, the judge must define them and appoint counsel to represent them. The judge must make a preliminary determination on the fairness, reasonableness, and adequacy of the settlement terms and must direct the preparation of notice of the certification, proposed settlement, and date of the final fairness hearing. Courts generally favor settlements of class actions. There is usually an initial presumption of fairness when a proposed class settlement, which was negotiated at arm's length by counsel for the class, is presented for Court approval. H. Newberg, A. Conte, Newberg on Class Actions (4th ed. 2002), ' There is generally a presumption that a settlement is reasonable if the parties negotiated at arm's length and conducted sufficient discovery. In re Pharm. Indus. Average Wholesale Price Litig., 588 F.3d 24, (1st Cir.2009). At the preliminary approval stage, the question for this Court is whether the settlement falls within the range of possible approval, and is sufficiently fair, reasonable and adequate to warrant dissemination of notice apprising class members of the proposed settlement and to establish 4

5 procedures for a final settlement hearing under Rule 23(e). Newberg, at The initial presumption of fairness of a class settlement may be established by showing that, (1) the settlement has been arrived at by arm=s-length bargaining; (2) sufficient discovery has been taken or investigation completed to enable counsel and the court to act intelligently; and (3) the proponents of the settlement are counsel experienced in similar litigation. Newberg, at See In re General Motors Corp. Pick-Up Truck Fuel Tank Products Liability Litigation, 55 F.3d 768, 785 (3d Cir.), cert. den. sub nom., General Motors Corp. v. French, 516 U.S. 824 (1995). In determining whether class action settlements should be approved, [c]ourts judge the fairness of a proposed compromise by weighing the plaintiff s likelihood of success on the merits against the amount and form of the relief offered in the settlement. [Citation omitted]... They do not decide the merits of the case or resolve unsettled legal questions.@ Carson v. American Brands, Inc., 450 U.S. 79, 88 n.14 (1981). This settlement is the result of arms-length bargaining. The record was fully developed, as this settlement was arrived at after trial and after an appeal. The Court can judge the diligence and competence of counsel. The settlement fund to be paid in settlement should provide a substantial recovery to class members. Findings made by the Court following the trial limited the potential recovery to the one year=s appreciation that would have been gained by class members had they elected to take a stock distribution and then sold the stock back to the Company during the second put option, plus prejudgment interest and attorney fees. This ruling by the Court was not challenged by any party on appeal. The gross recovery well exceeds the amount of one year=s appreciation for the class, and the net recovery after deduction of proposed fees and expenses will provide a net recovery above the one-year appreciation figure. 5

6 Few class action settlements result in a recovery for class members that is anywhere close to the full potential recovery. Moreover, settlement brings an end to the litigation, a not insubstantial factor as Defendants continued to challenge the right of the class to receive any recovery and further sought decertification of the class, matters that could well have led to a second appeal, further delay and a risk of no recovery. The parties submit that this settlement merits preliminary approval by the Court. The rules now permit a Court to provide for a second opt-out period when settlements are reached in a certified class action. Courts that have addressed this issue have been disinclined to order a second opportunity for class members to opt out, as this opportunity is believed to discourage defendants who desire an end to litigation from settling a certified class action. See e.g., In re Healthsouth Corp. Securities Lit., 334 Fed.Appx. 248 (11 th Cir. 2009); Denney v. Deutschebank A.G., 443 F.3d 253, 271 (2d Cir. 2006); Officers for Justice v. Civil Service Comm., 688 F.2d 615, 635 (9 th Cir. 1982) (allowing a second opt-out period would discourage settlements). The parties are submitting with this motion a proposed form of notice and a proposed order. The parties request that the Court: (a) grant preliminary approval of the settlement; (b) approve the form of notice, (c) set the deadlines for the filing of the application of Class Counsel for an award of fees and reimbursement of expenses, (d) set a deadline for class members to submit objections to the settlement or to the fee and expense application, (e) set a deadline for class members to give notice of a request to be heard at the hearing to consider final approval of the settlement and the application for fees and expenses, and 6

7 (f) to set the date, time and place for the hearing. Respectfully submitted, s/ John C. Bell, Jr. John C. Bell, Jr. Georgia State Bar No Lee W. Brigham Georgia State Bar No Bell & Brigham Post Office Box 1547 Augusta, Georgia (706) Helen N. Cleveland Cleveland Gilbreath LLC 4197 Sentinel Post Road NW Bldg 2 Atlanta, GA (404) James Lee Ford James Lee Ford, P.C. Building G, Suite Peachtree Dunwoody Road Atlanta, GA (678) ATTORNEYS FOR PLAINTIFFS 7

8 s/ W. Bard Brockman W. Bard Brockman Georgia State Bar No Matthew T. Peace Georgia State Bar No Bryan Cave LLP Fourteenth Floor 1201 W. Peachtree Street NW Atlanta, GA (404) Wallace E. Harrell Gilbert, Harrell, Sumerford & Martin, P.C. Post Office Box 190 Brunswick, GA (912) ATTORNEYS FOR DEFENDANTS 8