Wilmington Trust Securities Litigation, In Re
Posted on Categories Class Actions, Court Decisions

By David C. Franceski, Jr.

*A settlement fund of $210 million, equal to 40% of claimed damages in a complex securities class action involving 8 years of litigation is both fair and reasonable under Rule 23(e) and Third Circuit standards. **An attorney’s fee of $58.8 million equal to 28% of the recovery to the class, and costs of approximately $6.8 million, are likewise fair and reasonable under the same standards, especially where no one in a class with 82% institutional investors objects to any aspect of the settlement.

Wilmington Trust Securities Litigation, In Re, No. 10-0990 (D. Del., 11/19/18).

Plaintiffs in this federal securities class action, for misrepresentations as to defendant bank’s financial condition and lending practices, moved for final approval of a $210 million settlement by defendant bank and its auditors, the second largest ever obtained in Delaware, and for attorney’s fees, costs, and lead plaintiff payments of approximately $6.8 million from the settlement fund. Applying the standards of Rule 23(e) and the Third Circuit Girsh factors to the fairness and reasonableness of the settlement fund, as well as the same court’s Gunter/Prudential factors to the fee request and lead plaintiff payment, and absent any objections from class members to either, the Court grants both motions.

Under Girsh and Prudential, the Court considers the complexity, expense and likely duration of the litigation, the class reaction to the settlement, the stage of the proceedings, the risks of continued litigation, the ability of defendants to withstand greater judgment, and the range of reasonable settlement in light of risks and potential recovery to conclude that the settlement is both fair and reasonable. Of particular note, the Court finds the issues highly complex, the absence of any objections from a sophisticated class in which 82% of the shares were held by institutional investors “remarkable,” the extent of the 8-year litigation, including 13 million documents and 39 depositions, “intense,” the parties’ consideration of the strengths, weaknesses and risks of further litigation more than sufficient to favor settlement, and the nearly 40% recovery of estimated damages well within the “range of reasonableness.”

As the Court notes, this is especially so in light of studies placing the median recovery in securities class actions at 5%. Turning to lead counsel’s 28% contingent fee, cost reimbursement and separate lead plaintiff payment requests and the Gunter/Prudential factors applicable to them, the Court approves those requests as well -- for many of the same reasons the settlement is approved. In so doing, the Court finds counsel skilled, experienced and efficient, the recovery substantial, the 28% contingent fee request notably less based on actual hours worked than the lodestar measure of nearly $80 million, within reason and commensurate with any private contingent arrangements which might have been negotiated at the time counsel were retained. Finally, the Court approves the approximately $7 million in costs, 68% of which were due to experts for the “highly technical and complicated nature of the subject matter, and the “reimbursement” to lead plaintiffs of $55,000 in costs and expenses “related to time spent on the case,” because they and their employees took an active role in the litigation and the settlement.

(D. Franceski: *It should not surprise that, though the Court ultimately approved the fee request as “not unreasonable,” it nonetheless found occasion to observe that it “could disagree with the ‘billing payment’ exercise in some of Counsel’s allocation of resources to certain tasks (too many lawyers assigned to accomplish certain tasks).” **We reported on the Court’s denial of defendants’ motions to dismiss in SOLA 2014-19, and the Court’s preliminary approval of the class settlement and Notice to the Class in SOLA 2018-34.)

(SOLA Ref. No. 2019-02-04)

NOTICE: The court decision synopsis published above represents an abbreviated description of the actual decision and is re-printed here for its educational value. The author's effort is to report concisely the substance of the decision or a selected portion of the decision; commentary or analysis is generally reserved for the italicized section at the bottom of the summary. Subscribers to SAC's Online Litigation Alert (SOLA), from which this synopsis is excerpted, have immediate access to the full decision, in addition to the synopsis. 

Like what you see here?

Twice a week we present blog posts consisting of one write-up from each of our two flagship weekly online Alert services. Consider a subscription to these publications to receive the full array of coverage right on your desktop every week. Give it a try and sign up for a free trial to the Securities Arbitration Alert and the Securities Litigation Alert.